Year 2 under Obamacare: Our tax credit was just lowered because we could not prove our income
Eileen St. Pierre, The Everyday Financial Planner
Being sole proprietors, my husband and I are grateful for being able to purchase individual health insurance in the Marketplace with the help of a tax credit. Last year we were asked to provide documentation to prove our income. We did our best to estimate what we would earn in 2014 – and the government accepted it. We were not that lucky this year.
What more information do you want?
When we re-enrolled for this year, we told the Marketplace to use the same income information as last year. We are expecting to earn more this year, but we have no idea how much. We figured we would just pay back any tax credit we were not entitled to when we file our 2015 taxes. It was just easier to keep the same policy since we were happy with it.
Starting in December 2014, we started getting messages from the Marketplace asking us to provide information to prove our income. I uploaded the same types of information as last year. Then on March 17, we were told the information we provided was not sufficient.
Our tax credit was lowered by $48 per month starting in April 2015.
A series of emails followed. Our current policy was cancelled and we were enrolled in a new policy starting April 1. Everything was the same except the deductible. It went from $1,500 to $5,000 (individual, in-network). So in addition to having to pay $48 more per month, we lost most of our cost-sharing.
Kudos to Leo at the Marketplace Call Center.
The information being provided by my health insurance provider only added to my confusion. So I called the Marketplace Call Center just to make sure I knew what our new policy was covering and what it would now cost us. I went through my whole story, which took several minutes to explain. The representative named Leo repeated everything back to me word-for-word. Never have I talked to a customer-service representative who did that! You always have to repeat something.
But not this time – Wow, what a difference 18 months makes! Leo was on the ball and explained everything to me. I guess they have finally worked out all the bugs with Healthcare.gov.
In the end, we ended up with the policy we probably should have had from the start.
We were told that the Marketplace used current income data on file to determine our eligibility for a tax credit and any cost-sharing reductions. Turns out that was income from our 2013 tax return. This was the year I left my university position and we launched our business. After looking at what we “officially” earned in 2013, the amount was similar to what I thought we would earn this year.
I guess in a weird way everything worked out. If all goes as expected, we will not have to pay back that much of the tax credit. But if we have to pay more, this just means our business was a lot more successful. I’ll take that.