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Why Is My Health Insurance Bill So Expensive this Month?

Introduction

Nothing is more confusing and disheartening than opening a billing statement only to be shocked by an exorbitant billing amount. If you bought health insurance through the Health Insurance Marketplace, you too might open a billing statement from your health insurer and see a monthly billing rate that is hundreds of dollars higher than normal. A common cause for the leap in price is that consumers fail to take the steps necessary to keep their tax credits. A tax credit is a privilege—not a right. Health insurance consumers can afford health insurance premiums through tax credits by following certain steps.

What is a Tax Credit?

Simply put, the United States government helps citizens pay for health insurance by issuing tax credits. Officially called the Premium Tax Credit, these are payments that the United States Government makes on the behalf of individuals to different health insurance companies. In other words, the government pays a portion of your monthly insurance premium payments for you.

Family size and household income are the factors that have the largest impact on determining tax credits. Officially, individuals and families must have an income within the range of 100% to 400% of the federal poverty level to qualify. What this means is that an individual filing taxes for next year must have a minimum yearly income of $11,880 to qualify for tax credits. A family of four would have to have a minimum income of $24, 300 to qualify for tax credits.

The most important rule in getting a tax credit is that one must file income taxes. The government issues tax credits based on household income for the filing year, and make no mistake, the government will ask to verify household income. The tax credit is not a handout—the subsidy is sent to insurance company is based on an individual’s or a family’s need for assistance to pay for health insurance. An individual or family must verify their income in order to continue receiving the tax credit.

How Do I Verify My Income?

Every time a person applies for health coverage through the Health Insurance

Marketplace, the same person receives an Eligibility Notice. This wealth of information presents one’s status of eligibility in order to receive tax credits. If a consumer sees the words “Temporarily Eligible” on a table on the first page of the report, then he needs to
provide documentation to prove his income. If he sees “Eligible,” no action is required.

The Health Insurance Marketplace populates a list of the documents it accepts to verify one’s income. These are the “usual suspects”—W2s, 1040 Tax Returns, 1099 forms, and various Self-Employment forms are included on the Eligibility Notice. The easiest way to verify one’s income is if he sends the Marketplace a paystub. Companies issue paystubs frequently and regularly, so a person does not have to wait long periods of time to receive this documentation.

 

Where Do I Send My Proof of Income?

Good Question! There are two options to achieve this end. First, there is always an option to mail copies of your proof of income documents to the Health Insurance Marketplace. Here is the address:

Health Insurance Marketplace

    Department of Health and Human Services

          465 Industrial Boulevard

                London, Kentucky 40750-0001

Second, one can always upload proof of income to the Health Insurance Marketplace. Simply login to your healthcare.gov account, find your application for the current calendar year, and look for the “Applications Details” tab. By scrolling down, one can plainly see a large green button saying “Verify.” From here, click this button and follow the prompts to upload your income documentation.

The second approach is recommended over the first approach. It takes five minutes to scan and upload documents to the marketplace. This is the best way to make sure that the right documents are placed in the right hands.

How Long Do I Have to Verify My Income?

You have 90 days to prove your income. Marketplace officials will verify W2s, tax returns, paystubs and other documents to confirm that one is reporting accurate income. As stated above, this is an easy and painless process. First, login to your account, find your application for the calendar year, and finally click “Application Details” on the left-hand side. In five minutes or less, one can scan and upload the necessary documents.

Mark your calendars for the due date for submitting your proof of income! Your best bet is to make sure to submit your proof of income when it is due to avoid losing your tax credit. By losing your tax credit, you will have to pay full price for your monthly health insurance premiums—losing tax credits could raise your premiums by hundreds of dollars!

If you are having trouble receiving your income tax documentation, then you may extend your deadline to submit proof of income documentation. This is a simple process as well. All you have to do is access your application for the calendar year. Proceed through the application without making any changes, and then resubmit the application. This will generate a new Eligibility Notice with an extension of 90 days.

How Would I Not Qualify for a Tax Credit?

This is a question of one’s access to health insurance coverage. Before enrolling in a plan on the Health Insurance Marketplace, one needs to disclose if he or she is offered health insurance coverage through another source. If a consumer is offered a health plan through a spouse, an employer, or if a consumer is deemed eligible for a Medicaid or Medicare, then this consumer is not eligible for a tax credit.

A person insured under an employer plan may still qualify for tax credits. If a person pays more than 9.66% of household income to maintain an employer-sponsored plan, then the plan is deemed unaffordable. In this case, the same person can decline employer coverage and switch to a Marketplace plan. Eligibility for a tax credit at this point would depend on the individual’s family size and household income.

I’ve Uploaded My Proof of Income. Now What?

You wait.

Do not expect quick turnaround times from the Marketplace—they are not the most efficient authority in processing proof of income in a timely manner. A good way to verify if the Marketplace accepted one’s income documentation is by calling the Marketplace every two weeks. A Marketplace agent can confirm if it verified a person’s Proof of Income. The Health Insurance Marketplace can be reached at 1-800-318-2596.

An agent can also verify if the Marketplace accepted proof of income. An American Exchange agent can access applications in less than five minutes, and we can see if the Marketplace confirmed one’s income or not. Wait times are greatly reduced by calling an agent as opposed to calling the Health Insurance Marketplace.

Once a consumer receives verification that the Marketplace accepted his proof of income documentation, then he can rest assured that he has earned the rightful tax credit. However, a consumer must report any changes in family size and income to the Marketplace. Health insurance costs are subject to upward or downward fluctuation according to the changes reported.

Is There a Way to Reinstate My Tax Credit?

Yes.

First access your application, and go through the application step-by-step to make sure all of the information is correct. If the information in the application is correct, then resubmit the application. Often this process resets the tax credits, but it is not a definitive way to recuperate tax credits. In any event, it is worth a try.

Income inconsistencies are a common cause of losing a tax credit. By miscalculating income, a person places himself in the required position to send proof of income documents to the Marketplace. Correcting these miscalculations often frees one of his obligations to send in proof of income documentation.

Income varies from year to year for millions of people in the United States. According to the tax authorities, it is not always enough to correctly state income one year if one’s income varies from year to year over a period of time. If you stated your income correctly on your current Health Insurance Marketplace, but you have income that is erratic, then you may be obligated to send in proof of income to verify your income.

Philip Strang is an enrollment specialist at American Exchange, and is a Marketplace Certified Agent/Broker. To contact him with any questions or comments you can email him at p.strang@americanexchange.com or call at 1-888-995-1674