04 September 2014
If you received too much financial assistance from Obamacare, you may owe the Feds. If money equals happiness then the IRS may drain your tax refund like a Dementor's kiss.
Health insurance applicants were spoiled by the honor system last year. They could easily apply through an agent or online without showing proof of income or citizenship for 90 days. Many applicants forgot to and Covered CA didn't really stay on top of it.
But Covered California is finally mailing reminders to over 98,000 Californians almost a full year after open enrollment began. Since 2013, Covered CA verified over 700,000 documents that were sent via snail mail, faxed, or uploaded online.
In order to keep your health insurance, your documents must show accurate citizenship status and income. If government computers don't verify your information they should already have in the first place, you could lose your coverage.
Coming to a mail box near you, the letters will request proof of citizenship and/or income with instructions how to return them. Accepted forms of lawful presence include: US birth certificate, US passport, certificate of naturalization, or certificate of citizenship. More accepted documents are listed here.
Note: They will not be used for immigration purposes! As long as the applicant's citizenship checks out, Covered CA will simply match the proof of income with the projected income placed on last year's health insurance application.
No matter what time of the year, Californians are expected to maintain a "flawless" health insurance application by reporting a change in income, a change in family size, or a change of address within 90 days to Covered CA. Since data on an application determines how much in health insurance tax credits you receive, Obamacare wants nothing less than perfection. That's what it's paying for, right?
If you earned more income than you reported on your application, and you received health insurance subsidies (tax credits) every month, you may owe some to Uncle Sam. And yes, the amount may come out of your tax refund.
Income brackets and caps on subsidy refunds may help safeguard Californians from owing too much. The IRS posted examples of subsidy refunds if someone underreports income, but the amounts may not be definitive until tax season.
A person earning between $22,000 - $34,470 may owe up to $750 in insurance subsidy refunds to the IRS. Someone making less than $22,000 may owe back only $300. The amounts really depend on income, family size, and age.
How does the Land Rover dealership verify my income before selling me a car but my health insurance agent can't? If Beyonce sold insurance, every application would be flawless.
Speaking of flawless: RIP Joan Rivers. And Happy Birthday, Beyonce!