When you are using the Health Insurance Marketplace for your family’s health insurance, you may be receiving assistance with the premiums in the form of a premium tax credit. This credit is paid to the health insurance provider, allowing your monthly premium to be lower.
These premium credits are based upon your residence, income, family size, and eligibility for health insurance via other avenues, such as through a new employer. If something has changed in your life, you may be receiving too much or too little in premium tax credits. The IRS recently issued a Health Care Tax Tip designed to help you understand if you need to make a change to the premium credit you’re receiving to avoid unpleasant surprises at tax time.
The actual text of IRS Health Care Tax Tip- 2014-15 dated July 18, 2014 follows:
IRS: Now is the Time for a Mid-Year Premium Tax Credit Checkup
If you have insurance through the Health Insurance Marketplace, you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Changes in your income or family size may affect your premium tax credit. If your circumstances have changed, the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving. You should report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur.
Changes in circumstances that you should report to the Marketplace include, but are not limited to:
· an increase or decrease in your income
· marriage or divorce
· the birth or adoption of a child
· starting a job with health insurance
· gaining or losing your eligibility for other health care coverage
· changing your residence
Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing out on premium assistance to reduce your monthly premiums.
Repayments of excess premium assistance may be limited to an amount between $300 and $2,500 depending on your income and filing status. However, if advance payment of the premium tax credit was made but your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.
Changes in circumstances also may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances. You can find Information about special enrollment at HealthCare.gov.
Find out more about the premium tax credit and other tax-related provisions of the health care law at IRS.gov/aca.
Post originally appeared as Don’t Let the Premium Tax Credit Hang You Out to Dry on Getting Your Financial Ducks In A Row
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