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Thursday, October 10, 2013 12:58:10 PM

What happens if my income changes after I get an Obamacare subsidy for health insurance?

When you get health insurance through Obamacare, depending on your estimated income, you may be eligible for a tax credit or subsidy that reduces your premium.

You can opt to have all, some, or none of your estimated tax credit paid in advance directly to your insurance company to be applied to your monthly premiums. If you choose an advance credit, you have to indicate the amount on your income tax return and reconcile it against your actual actual household income. This means that your actual premium tax credit for the year could be different than the advance credit amount you receive.

This difference could occur if your family size and estimated income at the time of enrollment are different from what you report on your tax return. If your actual allowable credit on your return is less than your advance tax credit payments, the difference (up to certain limits), will be subtracted from your tax refund. If your actual allowable credit is more than your advance tax credit payments, the difference will be added to your refund due.

Here are some situations that can affect the amount of your actual premium tax credit:

  • Having increases or decreases in your household  income
  • Getting married
  • Getting divorced
  • Having or adopting a child
  • Having additional or fewer dependents
  • Gaining or losing eligibility for government-sponsored or employer-sponsored health care coverage
If you do not opt for advance credit payments, you may claim the credit when you file your tax return for the year, which may either increase or decrease the amount of tax you owe or your tax refund.

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Laura Adams is a personal finance expert, award-winning author, and consumer advocate. As Senior Insurance Analyst, she represents insuranceQuotes in the media and works to make sure consumers protect their financial futures by having the right kinds of insurance.

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