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What happens if I overestimate my income when applying for an ACA health insurance plan?

+9 votes
I'm concerned that I will accidentally overestimate my actual income when applying for a subsidized health insurance and then won't qualify.  What will happen if I end up making less than the federal poverty level?  What happens if I end up earning too much?
asked Mar 17, 2016 by John (430)

1 Answer

0 votes

The income estimates for ACA are a pretty common measure for anyone who is applying for federal assistance on their insurance. You are welcome to purchase insurance through the marketplace at any time, but you must ensure that you are checking on your income levels every few months. You will be asked to report your income every year when you apply again, and the government does not have time to check your income to learn just how much they should be paying.

The Government Only Asks Once

The government only asks you for your income once, and you are expected to give them an estimate of what your income will be. The income you are earning cannot be tallied to an exact amount if you are self-employed, and you must estimate to the best of your ability. You may earn more or less than the total you have listed, but your income tax return will typically handle the balance.

How Does The Government Determine How Much Assistance You Receive?

You are given assistance based on the tax return you file at the end of the year, and you must ensure that you list your income correctly on your return. The government will give you a refund based on the income you earned for the year, and you will be asked to make an estimate the next year when you apply for your health insurance. Your health insurance premiums will change every year based on the estimates you make, and the government will eventually catch on if you continue to make the wrong predictions.

What Happens If You Overestimate Your Income?

Overestimating your income is a problem that you solve when you send in your tax return at the end of the year. You will get a little less money back at the end of the year, and your entitlements will start over for the next year. You are not in danger of drawing the ire of the government when you make an improper guess, but you must be honest on your tax return at the end of the year to bring everything back into balance.

You should not be afraid when you estimate your income for your ACA insurance, but you must recall that your tax return will help you bring things into balance. Your ACA insurance is not adversely impacted by your income estimates, but you must ensure that you do your best to make a proper guess every year.

answered Mar 21, 2016 by douglas (680)
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