The subsidy rules are complicated and a little strange. A great way to learn is to take this quick quiz – and I gave you the answers:
1) A single employee whose small employer offers a bronze plan? NO, his employer offers coverage.
2) The same employee cannot afford the dependent coverage offered by his employer. Can they get a subsidy? NO- his employer offers the coverage
3) Dependents of an employee of a large company that offers single-only coverage. Their earning are below the 400% Federal Poverty Level line. YES
4) Employee of a small company whose employer offers coverage but does not pay for it? MAYBE- depends on their income and how much the coverage costs.
5) Unemployed person with an income of less than $5000 a year. NO- they will have to go on Medicaid
6) Person who works from home, earns 10,000 a year, and does not have insurance now. NO- in some states they will go on Medicaid, but in many states that have refused the “Medicaid Expansion” they are not eligible for either a subsidy or Medicaid. However, they are eligible to be fined $95 for not having coverage!
A person applies to the exchange and gets a subsidy. While the plan costs $500 a month on the open market, they only have to pay $250 a month. What happens if, 6 months into the year, if their income increases beyond the subsidy levels?
Answer- At the end of the year, the IRS will verify their eligibility for the subsidy, which is really a tax credit. In this case, they probably owe the government $1500 ($the $250 a month paid by the government for the 6 months of higher income).
If you know someone that needs guidance, just have them call the office. We are always glad to help!