You are welcome. Like I mentioned in the video, I get many of my ideas for the videos from people who reach out to me with questions that are unique to their family situation. Then I think to myself, "Oh gosh, how does that work and what are the implications?"
I am so grateful I came across your channel! I recently received my insurance license with California, and I was wondering if you have any tips to for a beginner in this health insurance industry. I currently work for a small firm in Los Angeles, and I want to become really good at helping people find the right coverage for them. Besides watching your videos, what do you suggest I study and read to become as successful as you? Thank you so much for sharing your knowledge!
Pretend you are the client. What would you want to know about when it comes to how a health plan works? Understand how the subsidies are calculated. Don't forget about Medi-Cal and how children are often Medi-Cal and parents are in Covered California with the subsidy. Talk to your clients about how they use health insurance, what they need. Then there is HMO, EPO, and PPO plans, another confusing element. Most importantly, let your clients know they can call, text, or email you anytime with questions. You may not have the answer on the top of your desk, but let them know you will find it. Reading material includes the Evidence of Coverage for the various health plans offered in your area. Instructions for IRS form 8962 Premium Tax Credit reconciliation. Learn about how Medi-Cal works.
@@KevinKnauss Thank you so much for the advice Kevin. I will definitely start thinking like the client and pursue higher knowledge on the plans being offered by these insurance companies.
Great video very informative. If your income excess to 400% poverty line threshold in my tax Modified gross income , do we have to repay all amount of subsidy given by covered California? Or there is a computation amount as you discussed in this video?
The 400% FPL cliff was repealed in 2021. What still remains is the absence of a repayment limitation. IF the income is under 400% FPL and you must repay excess subsidy, the repayment amount is limited. It increases slightly every year and you can find the repayment limitation in IRS publication 8962. If your income is over 400% FPL you must repay all of the excess subsidy you may owe. That does not mean you were not entitled to a subsidy for the year. For example, you received $10,000 in Premium Tax Credit subsidy, but were only eligible for $6,000. You would have to repay $4,000.
This happened to me. It's amazingly unfair and i owe over $3k and only made like 64k. And in Southern Cali that's classified as low income in 2023. I buy basically food gas and rent almost nothing more and this wiped out my little bit of savings. I'd hoped to get a refund lol. Oh well. So there goes half my savings of the whole year. Worse. I didn't make a single doctor visit in 2023. So over $3k for nothing but a flu and covid shot. Off to cancel the insurance cause i can't remotely afford the monthly cost without a subsidy. I need to move to Canada. edit: on top of that i just remembered i also paid the $100+ monthly premium i already couldn't afford every month of 2023. criminal.
The income section is complicated. People really need to think about the past income, current situation, and what may happen in the future in terms of income to avoid the shock of repaying excess subsidies.
I canceled my health insurance. It’s cheaper to pay the penalty than to pay over $400 a month. I have other bills to pay. Even going down to the lowest tier would cost around $300 a month.
Cancelling health insurance is not less expensive than an ER visit, or dealing with an unknown illness that requires lots of tests, labs, and imaging. Sure, I dislike paying for my car insurance, but if I am in an accident, I cannot replace my car for the amount of car insurance premiums I saved.
Thank you for posting this. My question is I’m in LA care (LA COUNTY) my adult son is on Medical full coverage he has disability and wondering if different counties treat it differently throughout California thinking about moving to Ventura County /San Diego County?
There should be no changes to his Medi-Cal coverage simply by moving from one county to another. You will want to alert L.A. County of the impending move so they can transfer the case to Ventura County. That makes their jobs a lot easier and reduces any hiccups in services.
If the scenario was different, let's say their income stayed the same all year and they kept covered california for the full year and then left at year end, with their adjusted gross income on their 1040 stating no more than $50,000. The next year their income increases after leaving covered ca at the proper time, would they still owe covered ca anything?
The subsidies are based on the calendar year January to December. Income prior to or after the plan year would have no impact. It is all based on the federal tax return and the final Modified Adjusted Gross Income for that specific year.
The withdrawal of some IRA funds does trigger a taxable income event. Check with your financial institution to see what type of IRA you have and if the withdrawal must be included on your tax return.
If I stay in covered CA, and the income changed in December due to Roth conversions, going from $48k up to 120k for Household of 2, would the repayment be prorated for December only since I’m still in the plan? Thanks… this is complicated. Also is there no penalty added by the IRS, only repayment?
From working through the IRS reconciliation of the Premium Tax Credits on form 8962, your final income applies to all the months that your were in Covered California. In other words, if your income spikes in December, your annual subsidy is based on that final AGI number. Consequently, you were receiving too much monthly Advance Premium Tax Credit subsidy in the earlier months before you income went up based on your final income number.
You can use the 2023 Covered California Shop and Compare Tool. Run the numbers at the low income, get the monthly subsidy, multiply x 12 for the annual amount. Then run the scenario at the higher income number, monthly subsidy x 12 for annual. Find the difference between the 2 annual amounts and that will the approximate amount of excess subsidy repayment assuming all other conditions remain the same such as residential zip code, no health plan changes, etc.@@gewickG
What if you estimated your income at 70k for the year. Knowing you are a salaried employee. Covered California gives you some plans to choose from. You pick one and pay your monthly bill based on what they told you. Tax time comes around and lo and behold the AGI is exactly what you gave to Covered California, but form 8962 says you owe 1400 bucks back. How is that possible?
There are a couple of issues that might be coming into play. 1. the subsidy is based on the Modified AGI, not just the AGI. It is modified by Social Security earnings, tax-exempt interest, and foreign earned income. The MAGI may be higher than the AGI, reducing the Premium Tax Credit you are eligible for. 2. Is the household size correct? Sometime people enter CC with a household of 3, but on the tax return they are a household of 2. 3. If you have dependent, there are times when that dependent's income is added to your AGI within the MAGI. 4. Is the 1095A correct? Does it show the correct second lowest cost Silver plan premiums. Does it show the correct subsidy (APTC) that you received? All of this information is contained on form 8962, the instructions for 8962, and publication 974.
@@KevinKnauss thank you. After digging I found out that my wife had added our disabled daughter to covered ca as a dependent. The tax preparer is using just the two of us. Ugh. Thanks for the help.
@@chriskoski810 The household size can change the Applicable Figure or Consumer Fair Share percentage for health insurance. With a larger household, even if one or more of the household members are not enrolled in CC, the remaining individuals will have a lower percentage they must pay for health insurance. In other words, a larger subsidy.
It's such a crock that you have to repay help that you originally qualified for. What are you supposed to do, not take that high paying job with the fabulous health insurance and stay on covered California?
It is a bitter situation. It is worse if you have to repay the subsidies because you forgot to add in Social Security retirement income. I think it should be a mandatory disclaimer when someone enters Covered California that there is the possibility of having to repay excess Premium Tax Credits if the final income is substantially higher than the original estimate.
Thanks for all the amazing advice you provide
You are welcome. Like I mentioned in the video, I get many of my ideas for the videos from people who reach out to me with questions that are unique to their family situation. Then I think to myself, "Oh gosh, how does that work and what are the implications?"
I am so grateful I came across your channel! I recently received my insurance license with California, and I was wondering if you have any tips to for a beginner in this health insurance industry. I currently work for a small firm in Los Angeles, and I want to become really good at helping people find the right coverage for them. Besides watching your videos, what do you suggest I study and read to become as successful as you? Thank you so much for sharing your knowledge!
Pretend you are the client. What would you want to know about when it comes to how a health plan works? Understand how the subsidies are calculated. Don't forget about Medi-Cal and how children are often Medi-Cal and parents are in Covered California with the subsidy.
Talk to your clients about how they use health insurance, what they need. Then there is HMO, EPO, and PPO plans, another confusing element. Most importantly, let your clients know they can call, text, or email you anytime with questions. You may not have the answer on the top of your desk, but let them know you will find it.
Reading material includes the Evidence of Coverage for the various health plans offered in your area. Instructions for IRS form 8962 Premium Tax Credit reconciliation. Learn about how Medi-Cal works.
@@KevinKnauss Thank you so much for the advice Kevin. I will definitely start thinking like the client and pursue higher knowledge on the plans being offered by these insurance companies.
Great video very informative.
If your income excess to 400% poverty line threshold in my tax Modified gross income , do we have to repay all amount of subsidy given by covered California? Or there is a computation amount as you discussed in this video?
The 400% FPL cliff was repealed in 2021. What still remains is the absence of a repayment limitation. IF the income is under 400% FPL and you must repay excess subsidy, the repayment amount is limited. It increases slightly every year and you can find the repayment limitation in IRS publication 8962.
If your income is over 400% FPL you must repay all of the excess subsidy you may owe. That does not mean you were not entitled to a subsidy for the year. For example, you received $10,000 in Premium Tax Credit subsidy, but were only eligible for $6,000. You would have to repay $4,000.
This happened to me. It's amazingly unfair and i owe over $3k and only made like 64k. And in Southern Cali that's classified as low income in 2023. I buy basically food gas and rent almost nothing more and this wiped out my little bit of savings. I'd hoped to get a refund lol. Oh well. So there goes half my savings of the whole year. Worse. I didn't make a single doctor visit in 2023. So over $3k for nothing but a flu and covid shot. Off to cancel the insurance cause i can't remotely afford the monthly cost without a subsidy. I need to move to Canada. edit: on top of that i just remembered i also paid the $100+ monthly premium i already couldn't afford every month of 2023. criminal.
The income section is complicated. People really need to think about the past income, current situation, and what may happen in the future in terms of income to avoid the shock of repaying excess subsidies.
I canceled my health insurance. It’s cheaper to pay the penalty than to pay over $400 a month. I have other bills to pay. Even going down to the lowest tier would cost around $300 a month.
Cancelling health insurance is not less expensive than an ER visit, or dealing with an unknown illness that requires lots of tests, labs, and imaging. Sure, I dislike paying for my car insurance, but if I am in an accident, I cannot replace my car for the amount of car insurance premiums I saved.
Thank you for posting this. My question is I’m in LA care (LA COUNTY) my adult son is on Medical full coverage he has disability and wondering if different counties treat it differently throughout California thinking about moving to Ventura County /San Diego County?
There should be no changes to his Medi-Cal coverage simply by moving from one county to another. You will want to alert L.A. County of the impending move so they can transfer the case to Ventura County. That makes their jobs a lot easier and reduces any hiccups in services.
@@KevinKnauss thanks for your quick reply that’s great 😀 to know :)
If the scenario was different, let's say their income stayed the same all year and they kept covered california for the full year and then left at year end, with their adjusted gross income on their 1040 stating no more than $50,000. The next year their income increases after leaving covered ca at the proper time, would they still owe covered ca anything?
The subsidies are based on the calendar year January to December. Income prior to or after the plan year would have no impact. It is all based on the federal tax return and the final Modified Adjusted Gross Income for that specific year.
If you pull money from an IRA does that count as income.
The withdrawal of some IRA funds does trigger a taxable income event. Check with your financial institution to see what type of IRA you have and if the withdrawal must be included on your tax return.
If I stay in covered CA, and the income changed in December due to Roth conversions, going from $48k up to 120k for Household of 2, would the repayment be prorated for December only since I’m still in the plan? Thanks… this is complicated.
Also is there no penalty added by the IRS, only repayment?
From working through the IRS reconciliation of the Premium Tax Credits on form 8962, your final income applies to all the months that your were in Covered California. In other words, if your income spikes in December, your annual subsidy is based on that final AGI number. Consequently, you were receiving too much monthly Advance Premium Tax Credit subsidy in the earlier months before you income went up based on your final income number.
I see @@KevinKnauss - no proration. Is there any additional penalty by the IRS? I don't see anything on the web.
No penalty. It is just repaying the excess premium tax credit, which can be significant if you have not planned on it. @@gewickG
Thank you @@KevinKnauss I was trying to estimate it but it seems I need my 1095-A for year 2023/
You can use the 2023 Covered California Shop and Compare Tool. Run the numbers at the low income, get the monthly subsidy, multiply x 12 for the annual amount. Then run the scenario at the higher income number, monthly subsidy x 12 for annual. Find the difference between the 2 annual amounts and that will the approximate amount of excess subsidy repayment assuming all other conditions remain the same such as residential zip code, no health plan changes, etc.@@gewickG
What if you estimated your income at 70k for the year. Knowing you are a salaried employee. Covered California gives you some plans to choose from. You pick one and pay your monthly bill based on what they told you. Tax time comes around and lo and behold the AGI is exactly what you gave to Covered California, but form 8962 says you owe 1400 bucks back. How is that possible?
There are a couple of issues that might be coming into play.
1. the subsidy is based on the Modified AGI, not just the AGI. It is modified by Social Security earnings, tax-exempt interest, and foreign earned income. The MAGI may be higher than the AGI, reducing the Premium Tax Credit you are eligible for.
2. Is the household size correct? Sometime people enter CC with a household of 3, but on the tax return they are a household of 2.
3. If you have dependent, there are times when that dependent's income is added to your AGI within the MAGI.
4. Is the 1095A correct? Does it show the correct second lowest cost Silver plan premiums. Does it show the correct subsidy (APTC) that you received?
All of this information is contained on form 8962, the instructions for 8962, and publication 974.
@@KevinKnauss thank you. After digging I found out that my wife had added our disabled daughter to covered ca as a dependent. The tax preparer is using just the two of us. Ugh. Thanks for the help.
@@chriskoski810 The household size can change the Applicable Figure or Consumer Fair Share percentage for health insurance. With a larger household, even if one or more of the household members are not enrolled in CC, the remaining individuals will have a lower percentage they must pay for health insurance. In other words, a larger subsidy.
It's such a crock that you have to repay help that you originally qualified for. What are you supposed to do, not take that high paying job with the fabulous health insurance and stay on covered California?
It is a bitter situation. It is worse if you have to repay the subsidies because you forgot to add in Social Security retirement income. I think it should be a mandatory disclaimer when someone enters Covered California that there is the possibility of having to repay excess Premium Tax Credits if the final income is substantially higher than the original estimate.
@@KevinKnauss I agree.