Let’s chat through the why related to you paying less for your insurance when you were enrolled on the Marketplace.
Many people qualify for the APTC, which is the advanced premium tax credit. This is the tax credit that you take ahead of time, instead of waiting for tax season to come and call and claim it.
But you do have to have Marketplace insurance to use it. The advanced premium tax credit looks at your income, it looks at your family size, your zip code, and the cost of your premium in relation to your income- it can’t be more than 9.2%. And if it is, then you get a credit for an amount over your premium – again, it will depend on the plan you choose.
For instance, if your tax credit is $300, and you pick a plan that costs $300, you will pay zero for your premium. If you pick a plan that costs $500, then you will pay $200 for your insurance. That’s how it works.
This is why I tell people it’s very important that we list your insurance and your income correctly. If your income changes significantly, either way, we need to adjust your application. This is to ensure that you’re not under OR underpaying that year. We can do that at any time.
People don’t realize this – yes, you can wait till tax time if you want to make the change on your application. But, I strongly encourage you to maybe do it mid-year.
If your income is hard to gauge, I have a lot of people who do this, just call me and let me know mid-year where you are income-wise, and if we need to change the original number.
The key to this is yes, you could end up at some point making too much where you don’t receive the tax credit. Or if you make too little, which is crazy, I know. But if you make too little, then you don’t qualify for the tax credit either. Crazy but true.
It’s really important to keep that accurate. If you have any major changes, such as a move, a baby, a death in the immediate family, or anything like that, it is very important that we update that, so that your income is correct. We want you to be paying as close to the correct premium amount.
If you have any questions please feel free to reach out to me.
