HI with the Exchange

[street]

So for 2017 I have qualified for subsidies on my HI premiums. I had the option of how much of the benefit I wanted to use toward my premium.

My question is if mu projected income for 2017 is what I estimated it at and I have opted to pay more for my I through the exchange will I receive money back or how does that work? I do know if I go over what I estimated I will owe the Gov. Right.

 

[MBSC]

Yes, if you opted to take only a percentage (or none) of the premium subsidy in advance and your actual income matches your estimate you will receive the remainder of the subsidy when you reconcile your 2017 tax return in early 2018. This increases your refund or reduces the tax due.

If your actual income is a little lower, you will receive the remainder plus an additional subsidy amount.

If you underestimated your income and have to pay back some of the advanced subsidy, there are repayment limits. The limits are in the chart in this link. Advanced Tax Credit Repayment Limits - Obamacare Facts

Note that if your actual income is over 400% FPL, you repay the entire premium subsidy which could lead to an underpayment of estimated tax penalty if you do not take steps to avoid this.

Premium Tax Credit. You may be eligible to claim the premium tax credit (PTC). Advance payment of the PTC may be made through the Marketplace directly to your insurance provider. If you received premium assistance through advance payments of the PTC, and the amount advanced exceeded the amount of PTC you can take, you could be subject to a penalty for underpaying your estimated tax.

Reference: https://www.irs.gov/pub/irs-pdf/i2210.pdf

 

[street]

I thank you very much!

So how does that remainder come back to me? Is it paid back in a check after "true Up" after taxes are done or is there just another credit so lower my HI premium?

 

[MBSC]

The remaining subsidy after "true up" increases your tax refund if you are due a refund. It reduces the tax due if you owe federal taxes.

 

[gauss]

IRS Form 8962 is used when you purchase a Marketplace policy. It calculates the excess or deficit of any subsidy (PTC) received wrt the correct subsidy based on the years income.

The results are carried forward to page 2 of form 1040.

In 2016 the 1040 line numbers are as follows:

• line 46 "Excess advance premium tax credit repayment"
• line 69 "Net premium tax credit"

-gauss