Beware that bonus!

Two days ago I wrote a post about the proposed health insurance exchanges and the federal premium subsidies.

Beginning in 2014, if you buy health insurance from a state-run exchange, your estimated 2014 income will determine if you qualify for a subsidy.

You will need to supply that information to the insurance exchange when you sign up for health insurance. If you qualify for a subsidy, the exchange will then apply to the federal government for the extra funds to cover your premiums.

When you prepare your 2014 tax return (in 2015), you will discover how accurately you guestimated.

The subsidy cut-off is 400% of federal poverty level (FPL). If your income places you at 401% of FPL, you will lose any subsidy.

If you guessed correctly, no worries.

If, however, you guessed incorrectly or had unexpected income such as a bonus, overtime, an inheritance or a lottery win, you might find you no longer qualify for the subsidy and you will be expected to pay that money back to the government.

What a shame if a holiday bonus actually costs a family money.



Comments are closed.