The unemployment subsidy benefit further increased the subsidy. Because everyone was now eligible for the Enhanced Silver 94 plan, we switched this member from the Gold to the Silver plan. The new subsidy of $1,016.53 dropped the health plan rate to $1 per month. The better member cost-sharing for copayments and coinsurance will save the family even more money.
Advance Premium Tax Credit
Posts related to the Advance Premium Tax Credit health insurance subsidy from Covered California.
Covered California has worked with the health plans to transfer any accumulation of member health care expenses from the off-exchange plan to a new on-exchange plan through Covered California. For example, if you have spent $1,000 toward meeting your deductible under your current plan, that $1,000 accumulation would be transferred to the new plan. Many health plans have announced they will participate in the transfer.
Taxpayers who have already filed their 2020 tax return and who have excess APTC for 2020 do not need to file an amended tax return or contact the IRS. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer. The IRS will reimburse people who have already repaid any excess advance Premium Tax Credit on their 2020 tax return.
The household contribution percentages progressively increase until they reach 8.5 percent when the Modified Adjusted Gross Income is at 400 percent of the FPL. There is no cap on the household income in order to receive the federal Premium Tax Credit subsidy. As long as the Second Lowest Cost Silver Plan exceeds 8.5 percent of the household income, there will be a subsidy to lower the cost.
The American Rescue Plan is federal legislation that applies to federal Premium Tax Credits. It does not apply to any repayment suspension or forgiveness of the California subsidy. One odd twist is that some consumers may have a higher MAGI, over 400 percent of FPL, and not have to repay the federal subsidy and also pick up the California Premium Assistance subsidy on their California income tax return.
For example, if the annual cost of the SLCSP is $6,200 and 8.5 percent of your household income is $5,000, then the subsidy is $1,200. When divided by twelve months, that would be $100 per month to lower the cost of any health plan offered to you through Covered California. If 8.5 percent of your household income $7,000, and the SLCSP is $6,200, there is no subsidy.
The 56-year-old San Mateo County resident purchased health insurance through Covered California in 2020 and 2021. The estimated income was $45,000. In 2020, after the Covered California subsidy, the individual paid $109.98 per month for the Kaiser Silver 70 plan. In 2021, the Kaiser Silver plan jumped to $285.71, a 160 percent increase over the prior year.
In scenario III, the income situation is reversed. The couple estimated a MAGI of $25,000, but ended up with a final MAGI of $55,000. However, they don’t have to repay all of the $4,375 excess federal Premium Tax Credit they received from the federal government because there is a repayment limitation. In their case, they only have to repay $2,700. The higher income puts the couple into the California subsidy income zone and they get to claim a $376 tax credit on their California income tax return.
The starting point for the subsidy calculation is also the end point for reconciling the subsidy on the California 540 income tax return. First, your Modified Adjusted Gross Income (MAGI) is converted into a percentage of the federal poverty level (FPL), which varies by household size. That FPL percentage is then matched to the Applicable Figure. The Applicable Figure is itself a percentage, the percentage of the household’s fair share or consumer responsibility for health insurance. It is a sliding scale with income closer to the FPL being responsible for less of the health insurance premium.
The new California Franchise Tax Board (FTB) 3895 is a close mirror image of the federal 1095A. The FTB 3895 statement reports important data regarding your health insurance through Covered California such as the monthly premiums, Second Lowest Cost Silver Plan, and how much Covered California paid to your health insurance company to lower your premiums.