What’s better take the Subsidy – APTC now or at tax time? 

Advantages

Certainly the BIG advantage, is lower, more affordable premiums during the year.  Plus, you might qualify for Enhanced Silver Benefits!  Which lowers Co-Pays, Deductibles and the OOP Out of Pocket Maximum.

Disadvantages

If you took more creidt than what your tax return 1040 and 8962 show, you have to pay back the excess or a maximum amount.

You are mandated to report changes in expected MAGI income within 30 days.

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Check out the brochure from Covered CA on the take it now or later options.

Three Tax Considerations during Marketplace Open Enrollment

1. Advance credit payments lower premiums – You can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit  (APTC) or advance credit payments.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.
   1. Possible SNAFU’s – Insurance Company asking for excess credits back… OC Register 7.27.2016
2. A tax return may be required – If you received the benefit of advance credit payments, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.
3. Credit can be claimed at tax time – If you choose not to get advance credit payments, or get less than the full amount in advance, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. This will increase your refund or lower the amount of tax that you would otherwise owe.

 

Questions and Answers on IRS.gov/ca for information about the premium tax credit.

• Insure Me Kevin.com
• FREE Tax Calculation, Quote and Coverage Benefits

Related Pages in Tax Credit and FAQ Section

1095 A – Proof of Coverage from Covered CA  – shows amount of tax credit you rec’d during the year, that was paid to the Insurance Company to reduce premiums.

CHCF What is the premium tax credit?

IRS.Gov FAQ’s on the Premium Tax Credit

Publication 5120 –Your Credit, Your Choice – Get it Now or Get it Later   English | Spanish

Publication 5121 –Need help paying for health insurance premiums?   English | Spanish

Publication 5152 –Report changes to the Marketplace as they happen  English | Spanish

What if you don’t tell Covered CA in advance that you want the credit, can you still get the deduction when you file taxes, as long as you got your coverage though Covered CA?

• Commission Income?
• Estimated Income – Credit now or later?
  • 2 year old tax return vs projected next years income?
  • Credit at tax time if not requested initially?
  • Monthly Income vs Annual MAGI?

 

Historical

Here’s screen shots of Covered CA’s ONLINE Application of how you might want to take less or zero subsidy and just even out at tax time.  Covered CA brochure on take it now or later Page 4.  It may also help keep you out of Medi-Cal if your income is too low, see  Federal Poverty Level –FPL chart or get a quote.

• Changing APTC – Recorded Webinar
• Changing APTC –  PDF of Webinar Presentation

• Changing APTC – Job Aid 2015