Obamacare subsidies — how they work

If I qualify for a subsidy to help pay for my health care, how does it work?  Do I just get a check every month?  Or do I have to wait until the end of the year and then get it like a tax refund?

Short On Cash

Dear Short On Cash,

The tax credit to help you buy health insurance is “advance-able”, meaning that you do not have to wait until the end of the year.  The government will pay the health insurer directly for your health insurance; you will pay the difference between what the government pays the total cost.

Your subsidy is based upon your income, which you will report as part of your application to a plan.  When you file your taxes for 2014, you will have your actual income which may be higher or lower than what you reported earlier.  So, if you qualify for less subsidy than you got (which would happen if your income went up), you will pay the government back; and vice versa, if you qualify for more subsidy, your tax refund will be greater.

You can get an estimate of your subsidy at the Kaiser Family Foundation website.   Keep in mind that these calculators are estimating what your plan will cost.  They may be higher or lower than what you see on the calculator.

There are also subsidies for paying your plan’s deductible and co-pays.  These are also based upon your income, though it’s not clear how these would be adjusted “after the fact” if your income goes up or down.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.