Subsidy - Blocks
May 25, 2023 By Bob Viñal

It’s Time to Double Check Your Healthcare Subsidy Calculations


Like millions of Californians, you might be glad that you receive a subsidy that helps you to afford healthcare plan premiums. But there’s one very important reason that we should all check and double check our calculations: If your subsidy is calculated incorrectly, you could end up owing money back to the government later. That’s an unpleasant surprise no one wants to face! And it happens more often than you might think. 

How does this happen? Subsidies are calculated according to your expected earnings for the year and paid through the Advance Premium Tax Credit (APTC). The APTC is paid directly to your insurance company each month, and it reduces the amount that you owe for your premiums. 

But if your income is estimated too low, you will receive a larger APTC than you should have… And when this is discovered later (usually in the fall, during Open Enrollment, when you log into the system to apply for the next year), you could owe the difference between what you should have received and what you did receive. 

As you might imagine, some exceptions do apply. Depending upon how you fall into income brackets, you might only owe a portion of the overage. But owing anything at all is probably a risk you don’t want to take. 

That’s why double checking your income toward the middle of the year is a great idea for anyone who receives a healthcare subsidy. Just review the calculations that were originally made to determine your subsidy and compare your current income to the expected income for the year. 

Sometimes income can increase due to a raise, working overtime hours, or your spouse getting a new job. If your household income has increased, it’s better to notify Covered California. Just log into the online portal and report your new income. 

If you have any questions about your income and how it relates to healthcare subsidies (APTC), just give us a call and we can explain how the system works. 

About Author

Bob Viñal

Bob Viñal has been working in the insurance industry for more than 30 years, handling everything from plan design to claims and rating structures.

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