Obamacare Income Verification Penalty: What You Need to Know
For those who have benefitted from the Affordable Care Act (ACA), you may have faced a difficult situation like the one described in the post above. The individual had signed up for Obamacare for the first six months of the year, then switched to their employer’s health insurance after starting a new job in July. When filing their 2018 taxes, they received a penalty of $2,000 due to earning more than the threshold to receive ACA subsidies.
Income Verification Penalty
The ACA requires individuals to have health insurance or pay a penalty. The amount of the penalty is based on your income and the number of months you are uninsured. If you receive a subsidy to help pay for health insurance, you must reconcile it when you file your taxes. If you earn more than the amount you estimated when you applied for the subsidy, you may have to pay back some of the money. This is known as the income verification penalty.
How to Avoid the Penalty
– The best way to avoid the income verification penalty is to accurately estimate your income when you apply for a subsidy.
– If you expect your income to change during the year, you should update your estimate with the Health Insurance Marketplace.
– If you earn more than the amount you estimated, you can pay back the excess subsidy when you file your taxes.
Conclusion
The income verification penalty is a common issue for people who receive ACA subsidies. If you are concerned that you may have to pay the penalty, you should contact a tax professional or the Health Insurance Marketplace for assistance.
Question? or Need a Free Quote?
Contact Us
Reach out to us for free expert insurance advice and solutions. We will help you solve ACA (Obamacare) related questions and problems. Will contact you within 24 hours of receiving your message.