Cost Sharing Reduction

[Refresher]

I see the lower deductibles, co pays, and maybe other benefits if one is on a silver plan with cost sharing. Eligibility for this plan is based on projected 2014 MAGI as we know. In many cases 2014 MAGI come from 2012 tax returns.

OK good deal if you 2014 income is as 2012, but what happens if there is a big income increase. Seems like not only will you owe the difference in premiums for higher income come 2015 but what about all the benefits CSR provided?
Can it man payback for the difference between deductibles, co pays etc.

Any ideas?

 

[MichaelB]

I see the lower deductibles, co pays, and maybe other benefits if one is on a silver plan with cost sharing. Eligibility for this plan is based on projected 2014 MAGI as we know. In many cases 2014 MAGI come from 2012 tax returns.

OK good deal if you 2014 income is as 2012, but what happens if there is a big income increase. Seems like not only will you owe the difference in premiums for higher income come 2015 but what about all the benefits CSR provided?
Can it man payback for the difference between deductibles, co pays etc.

Any ideas?

If your actual income is higher than expected you are responsible for paying back the excess premium assistance you received, but not the cost sharing.

Edit: Here's a KFF brief with more detail. http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8154.pdf

 

[Sue J]

Here's another article about income fluctuations -
What happens to my premium subsidy if my income fluctuates? - Yahoo Finance

 

[pb4uski]

Actually, I'm wondering about a similar issue. The lowest bronze plan exceed 8% (actually 8.2%) of my projected 2014 MAGI so I am applying for an exemption certificate to buy catastrophic coverage for 2014 even though we are over 30.

What if our actual 2014 income is higher and the lowest cost bronze plan is less than 8% of our actual 2014 MAGI. What are the consequences?

Has anyone seen anything on this situation?

 

[MichaelB]

Actually, I'm wondering about a similar issue. The lowest bronze plan exceed 8% (actually 8.2%) of my projected 2014 MAGI so I am applying for an exemption certificate to buy catastrophic coverage for 2014 even though we are over 30.

What if our actual 2014 income is higher and the lowest cost bronze plan is less than 8% of our actual 2014 MAGI. What are the consequences?

Has anyone seen anything on this situation?

When your circumstances or projected income changes you are required to present the new information to the exchange. If this affects your eligibility for a particular plan you would be expected to change plans.

There is no mid year review. Right now it is on the honor system. The only formal reconciliation process is carried out when you file your tax return. If you received excess tax credit premium assistance the difference will be charged to you.

 

[jflynn4]

Just a thought ....

Since there are no actual penalties for "under-estimating" income, wouldn't it be considered somewhat smart to do so, expecting to true things up when tax filing occurs? Effectively, isn't that pretty much the same as an interest free loan from the government for a years worth of subsidy?

I THINK I've estimated things fairly closely but it's dawned on me that, if something unexpected happens and I end up needing to increase my taxable income by a larger than expected IRA withdrawal, the worse case scenario is that I'm ending up getting more than $11,000 in subsidies that'll need to be repaid and that money has cost me nothing for a years use.

Am I missing something?