Covered California Health Insurance Subsidies

W

unread,

Oct 5, 2016, 11:29:03 PM10/5/16

to

For the 2017 tax year, the California state program "Covered California"
offers qualifying persons a monthly healthcare insurance subsidy against
qualifying health plans. The subsidy program only applies to persons with
adjusted gross income of between $16,395 and $47,080 for the 2017 tax year.
My question is does anyone have a table showing the amount of the actual
monthly subsidy for each qualifying income level?

--
W

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

Arthur Rubin

unread,

Oct 6, 2016, 2:47:45 PM10/6/16

to

On Wednesday, October 5, 2016 at 8:29:03 PM UTC-7, W wrote:
> For the 2017 tax year, the California state program "Covered California"
> offers qualifying persons a monthly healthcare insurance subsidy against
> qualifying health plans. The subsidy program only applies to persons with
> adjusted gross income of between $16,395 and $47,080 for the 2017 tax year.
> My question is does anyone have a table showing the amount of the actual
> monthly subsidy for each qualifying income level?

You can find the formula on the IRS web site:

A = second lowest annual cost of available silver plans
B = MAGI (modified Adjusted Gross Income)
C = Federal poverty line.

Calculate B/C, and round to the nearest percentage point.
Use the table on page 8 of the form 8962 instructions to find in income inclusion ratio (T). I think it's a piecewise linear function which is 2% of B/C < 133, and 9.56% if 300 <= B/C <= 400. (I could look up what the formula is supposed to be in explanations of the law, but, since you need to use the table when filing the reconciliation form next year, there's little point.) There is no subsidy if B/C > 400%.

Annual subsidy is then A - T*B

Covered California uses the same formulas, but the MAGI you report to them may be slightly larger than your actual MAGI, as you're not allowed to use certain (expected) adjustments or negative AGI components.

If your expected ratio (B/C) is less than 133%, you are ineligible for the subsidy, and must sign up for Medi-Cal. There is some protection if your actual ratio is less than 133%, or is greater than your expected ratio, but the subsidy must be returned if your actual ratio exceeds 400%.

--
Arthur L. Rubin, AFSP, CRTP (but not insurance assistor), Brea, CA

Alan

unread,

Oct 6, 2016, 3:18:02 PM10/6/16

to

On 10/6/16 11:45 AM, Arthur Rubin wrote:
> On Wednesday, October 5, 2016 at 8:29:03 PM UTC-7, W wrote:
>> For the 2017 tax year, the California state program "Covered California"
>> offers qualifying persons a monthly healthcare insurance subsidy against
>> qualifying health plans. The subsidy program only applies to persons with
>> adjusted gross income of between $16,395 and $47,080 for the 2017 tax year.
>> My question is does anyone have a table showing the amount of the actual
>> monthly subsidy for each qualifying income level?
>
> You can find the formula on the IRS web site:
>
> A = second lowest annual cost of available silver plans
> B = MAGI (modified Adjusted Gross Income)
> C = Federal poverty line.
>
> Calculate B/C, and round to the nearest percentage point.
> Use the table on page 8 of the form 8962 instructions to find in income inclusion ratio (T). I think it's a piecewise linear function which is 2% of B/C < 133, and 9.56% if 300 <= B/C <= 400. (I could look up what the formula is supposed to be in explanations of the law, but, since you need to use the table when filing the reconciliation form next year, there's little point.) There is no subsidy if B/C > 400%.
>
> Annual subsidy is then A - T*B
>
> Covered California uses the same formulas, but the MAGI you report to them may be slightly larger than your actual MAGI, as you're not allowed to use certain (expected) adjustments or negative AGI components.
>
> If your expected ratio (B/C) is less than 133%, you are ineligible for the subsidy, and must sign up for Medi-Cal. There is some protection if your actual ratio is less than 133%, or is greater than your expected ratio, but the subsidy must be returned if your actual ratio exceeds 400%.
>
> --
> Arthur L. Rubin, AFSP, CRTP (but not insurance assistor), Brea, CA
>

138%, not 133%.

W

unread,

Oct 6, 2016, 4:28:37 PM10/6/16

to

"Arthur Rubin" <ronni...@sprintmail.com> wrote in message
news:171e2ea9-c3e9-4684...@googlegroups.com...

I think you meant 138% but I get the point and this was very helpful thank
you!

Since A is a constant for a given tax year, where can we find the value
assigned to A for a given tax year?

If I understand the basic idea here, they are actually penalizing the person
who has less than 138% of Federal Poverty Line by the requirement to use
Medical. Because Medical has additional tests based on assets, it would be
possible for a person who makes less than 138% of Federal Poverty Line to
end up not qualifying for any subsidy at all. I guess that is just
government being government.

--
W

Alan

unread,

Oct 6, 2016, 4:48:55 PM10/6/16

to

You are incorrect. There is no asset test for Medicaid until you become
eligible for Medicare. Additionally, anyone who is eligible for
government funded health care (e.g., Medicaid) is not eligible for the
premium tax credit (aka the subsidy).
And finally, the criteria for CHIP (Children's Health Insurance Program)
is much higher than 138%. In CA, depending on the age of the dependent
child, children can be covered at up to 317% of FPL.

Arthur Rubin

unread,

Oct 6, 2016, 4:48:56 PM10/6/16

to

On Thursday, October 6, 2016 at 12:18:02 PM UTC-7, Alan wrote:
> 138%, not 133%.

It's 133% in the instructions for the reconciliation form. We all know that IRS publications are not law, but it seems the sort of thing a proofreader would catch.

--
Arthur L. Rubin, AFSP, CRTP, Brea, CA

Arthur Rubin

unread,

Oct 6, 2016, 4:59:03 PM10/6/16

to

On Thursday, October 6, 2016 at 1:28:37 PM UTC-7, W wrote:

> Since A is a constant for a given tax year, where can we find the value
> assigned to A for a given tax year?

You find A by entering the taxpayer's information (county, number of people in household, and ages) and sort the insurance listings for Silver plants by cost. It's not constant for a given tax year, as insurance premiums may depend on age.

> If I understand the basic idea here, they are actually penalizing the person
> who has less than 138% of Federal Poverty Line by the requirement to use
> Medical. Because Medical has additional tests based on assets, it would be
> possible for a person who makes less than 138% of Federal Poverty Line to
> end up not qualifying for any subsidy at all. I guess that is just
> government being government.

In states which accepted expanded Medicaid, including California, there are no additional requirements for Medicaid/Medical. However, in other states, you may be correct.

--
Arthur L. Rubin, AFSP, CRTP, Brea, CA

Alan

unread,

Oct 6, 2016, 9:26:51 PM10/6/16

to

On 10/6/16 1:47 PM, Arthur Rubin wrote:
> On Thursday, October 6, 2016 at 12:18:02 PM UTC-7, Alan wrote:
>> 138%, not 133%.
>
> It's 133% in the instructions for the reconciliation form. We all know that IRS publications are not law, but it seems the sort of thing a proofreader would catch.
>
> --
> Arthur L. Rubin, AFSP, CRTP, Brea, CA
>

The table actually goes from less than 133% to 400%. That's in order to
handle those states that are using medicaid eligibility levels below
133%. For CA, eligibility starts at $1 less than 138%. The $ income
level in the OP, were the 2017 FPLs times 138% for CA. At that level,
you would not be eligible for Medi-CAl and would be eligible for the PTC.

W

unread,

Oct 6, 2016, 11:58:13 PM10/6/16

to

"Arthur Rubin" <ronni...@sprintmail.com> wrote in message

news:ba79a0fd-d7a4-4b58...@googlegroups.com...

> On Thursday, October 6, 2016 at 1:28:37 PM UTC-7, W wrote:
>
> > Since A is a constant for a given tax year, where can we find the value
> > assigned to A for a given tax year?
>
> You find A by entering the taxpayer's information (county, number of
people in household, and ages) and sort the insurance listings for Silver
plants by cost. It's not constant for a given tax year, as insurance
premiums may depend on age.

You enter this information where?

--
W

Arthur Rubin

unread,

Oct 9, 2016, 4:23:59 PM10/9/16

to

On Thursday, October 6, 2016 at 8:58:13 PM UTC-7, W wrote:
> "Arthur Rubin" <ronni...@sprintmail.com> wrote in message
> news:ba79a0fd-d7a4-4b58...@googlegroups.com...
> > On Thursday, October 6, 2016 at 1:28:37 PM UTC-7, W wrote:
> >
> > > Since A is a constant for a given tax year, where can we find the value
> > > assigned to A for a given tax year?
> >
> > You find A by entering the taxpayer's information (county, number of
> people in household, and ages) and sort the insurance listings for Silver
> plants by cost. It's not constant for a given tax year, as insurance
> premiums may depend on age.
>
> You enter this information where?

Covered California (or your Marketplace website). There is no other definitive source for the information. In fact, even if the Marketplace is wrong, it still provides the numbers you use on your return.

--
Arthur L. Rubin, AFSP, CRTP, Brea, CA