You Got Insurance…Now What?


Much of the attention and assistance since the start of the Affordable Care Act’s open enrollment season has centered on how to get coverage and checking eligibility for a government subsidy.

But what if you bought a plan, got a subsidy and things changed? Whether you lost your job, had a baby or got a promotion, they can all have an impact on your government discount and your 2014 tax bill.

“If your salary is completely unpredictable and there’s a chance you will make more money or less there’s a claw back provision,” says Kevin Luss, owner of financial services company The Luss Group. Whether or not reporting a change will be easy or a headache is yet to be seen since most of the health plans are just starting to kick in.

The government-run health exchanges determine subsidy eligibility to help cover the cost of insurance by asking a series of questions and then using the information to identify any government assistance. If your personal or financial situation changes after using the subsidy, you could end up owing the government money come tax time. However, that claw back provision works both ways, which means if you have a baby or lose your job and are eligible for a higher subsidy.

New parents have two options when it comes to changing their subsidy, according to Michael Stahl, senior vice president at HealthMarkets. They can go update their family count on the health exchange website and have the subsidy recalculated and continue with their existing plan, but pay less or they can choose an entirely new plan because they’ve experienced a major life event.

However, either option might be easier said than done. Stahl says the technology on the exchanges isn’t there yet to execute any life event changes, which mean you may not get the extra savings automatically or know how much more you need to pay for coverage to avoid a tax penalty.

“What we are telling people [if they have life event] is to call their agent or the carrier on their own,” says Stahl. “You won’t be able to switch plans, but you can expand your current plan.” He adds that it could be some months before the exchange sites will be able recast the subsidy automatically.

Many consumers are also eligible for a subsidy that caps their maximum out of pocket costs for the year. But this amount can change depending on income changes and the addition of new family members. “Let’s say you buy a silver plan where the max out of pocket is $6,300 for an individual,” says Luss. “What happens if you get a new amended out of pocket max of $4,000. You would have to pay [the difference] back.”

He recommends filling out the subsidy information forms as accurately as possible. He points to one customer who overestimated her income for the year and then received less of a subsidy but didn’t have to worry if her she or her husband made extra income.

If you are lucky enough to see your income rise enough to wipe out or greatly reduce your subsidy, Stahl suggests putting money aside so you aren’t shocked when your tax bill comes for 2015. “If the difference is a $100 a month than each month put $100 away,” he says. “You always have to be your own advocate and figure out any sort of tide in what you should be paying versus what you are getting. You have to figure it out. There are no ifs, ands or buts. It is what it is.”