For the last 3 years I’ve been on subsidized marketplace health insurance because I have been in grad school with very minimal income. I just graduated in May and started a new job this month. The new job offers health insurance starting 1 month after being at the job.
However, I am currently 7 months pregnant due in December and I’ve already met my deductible with my current health insurance through the marketplace, meaning all my remaining appointments for the rest of the year are paid for which is so nice! If I switch to employer insurance, that deductible resets to $4,500. Because of this I’m inclined to remain on my marketplace plan and then switch to employer insurance on the first of the new year.
My question is, is this allowed? Technically my total annual income for this year will still fall into the subsidized “low income” bracket since I’m only starting with 3 months left in the year. But because my employer offers an “affordable” healthcare plan, am I obliged to take it in the eyes on the government and therefore no longer qualify for marketplace subsidized plan?
You and pagi-7 can keep the plan, but you MUST call the marketplace to stop the subsidies and update the “employer coverage” question to yes. If you don’t, you’ll start building up a 10% monthly penalty on top of the full price you should have been paying. This can lead to fines in the five-figure range in just one year, and the IRS might not audit you for 4-7 years.
Also, the 1095-A form you file with your 1040 will be incorrect, as it will show subsidized plans in two of the three columns instead of the same full-price plan. This will make it look like you received fewer subsidies, lowering your taxable income and causing you to file a false tax return. Since it’s your responsibility, this can lead to civil penalties.
Does this still qualify since my annual income for 2024 will be within the low-income bracket? I’m only starting work late in the year and will only have 3 months of work until 2025. My total income for 2024 will still be less than $30k. I know next year will be a different situation, but since I won’t make much money with my employer this year, I assume I still qualify for the subsidy for the rest of 2024?
They look at the monthly premium for each person in the household. They do this using the 1095-B or 1095-C forms employers send out. In some states, there’s also a Shared Responsibility Notice that lists who is applying for subsidies and whether the employer faces fines for not offering coverage.
If the insurance meets the minimum value rule (8.39% of household income per person), those individuals aren’t eligible for subsidies. Sometimes, subsidies for the whole household stop until those individuals switch to the employer plan, but others in the household might still keep their subsidies.
Yes. They look at it monthly and you will not qualify once your employer offers you affordable, ACA compliant insurance. We have to do a month by month reporting of this to the Federal government telling which employees were eligible for our plans in which months (I have to do this for my work, and it’s a huge pain ). It will take a while but they will eventually want the subsidy back for any months you weren’t eligible for the subsidy.
). It will take a while but they will eventually want the subsidy back for any months you weren’t eligible for the subsidy.