During the Open Enrollment Period (OEP) when you purchased a plan, you should have received an eligibility letter. In order to receive a subsidy, the letter states that you’re required to submit proof of income, residency, or citizenship, or all of the above. So when you purchased the plan -let’s say on December 1st – the insurance company then gave you 90 days to submit the required documentation.
Healthcare.gov lists all the forms and documentation that they’ll accept on their website. For instance, you can send them a complete tax return. In addition, they’ll accept a W-2 statement or a K-1 form. Again, all the acceptable forms are listed on Healthcare.gov.
How You Can Lose Your Subsidy AND Even Your Coverage
If, however, you fail to submit the required documentation, then you’re liable to lose your tax credit. Let’s say that your initial premium is $800/month. With the tax credit though, your premium is now only $100/month. If after the 90-day period you still haven’t submitted the necessary forms, they’ll cut off the subsidy, making your premiums the full $800.
If you continue to pay the $100/month premium after losing your subsidy, then you’ll enter into a grace period in which you have 3 months to pay the full premium. However, you do not want to wait to pay because you will not have coverage; you only have coverage for the time for which you paid.
So if you purchased a plan on December 1st, then you have until March 1st to submit the required forms. Without the documentation, your March premium will be adjusted from $100 to $800. If only $100 is paid, then you’ll be $700 in the hole for March. Then April comes around, and you receive another bill for $800. Unaware of why your premium has increase, you continue paying the $100 premium. This payment for April actually goes towards your March payment so now you owe $600 for March coverage. If you pay the $100 premium for May, then you’ll lose your coverage for non-payment.
At this point, you have no way of regaining qualified coverage because it’s outside of open enrollment and you don’t qualify for a special enrollment. Your options are limited. You can either get a short term medical plan or a fixed indemnity plan. Neither option is qualified. Without qualified coverage, you’re subject to the penalty.
How You Can Retain Your Subsidy Even After the 90-Day Period
Let’s consider another scenario. Let’s say you don’t submit the forms for tax credit eligibility. But when you get the bill for $800 after the 90-day period, you call of the carrier. The carrier will then tell you to call Healthcare.gov, who will then review your eligibility form. They’ll tell you which documents are missing, such as your proof of income. You can either go to Healthcare.gov and upload the needed form, or you can mail it to Empower; we’ll make sure it uploads.
Even though you’ve submitted the documents successfully, you’ll still be required to pay the $800. Because the 90-day period has passed, you have to pay the $800 bill. However, when April comes around, your premium will once again be $100.
If, like in the previous example, you fail to pay the $800 for March, you’ll lose coverage in May. Though the documentation was submitted, it was submitted late. The only way to avoid paying the full premium is by submitting proof of eligibility on time.
Be aware of certain difficulties when uploading to Healthcare.gov. For instance, there are times when you upload documentation, and it doesn’t process. If you get an email from Healthcare.gov telling you to upload something even though you’ve uploaded, then upload it again. In some cases, people have to upload documents five times before it’s received. It’s definitely stressful, but it’s the difference between paying $100 and $800 per month.
Moral of the this article: don’t procrastinate! If the government requires documentation, then don’t delay. Procrastinating in this case has costly consequences. Not submitting the necessary paperwork is the primary way people are losing their tax credits and ultimately their coverage.
Since insurance is oftentimes overwhelmingly confusing, we want to shed light on this industry by answering YOUR questions. So if you have any questions or concerns, comment below and your question may be the topic of our next video!
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