Should you fib to get a health insurance subsidy?
Shortly after the announcement that the employer mandate is delayed until 2015, the federal government announced another change to the implementation of the Affordable Care Act (ACA).
This time the change is regarding how an individual’s eligibility for a health insurance subsidy will be verified.
A person is eligible for a subsidy if:
(1) he or she earns less than 400% of federal poverty level (those earning less than 133% may be eligible for Medicaid); and
(2) he or she does not have access to affordable coverage (costing less than 9.5% of income) from his/her employer.
The initial plan was for the exchange to instantaneously verify a person’s eligibility at the time of purchase by running the inputted data against a federal database. However, this new announcement means that consumers will be on the “honor system” when it comes to reporting their income and access to employer-sponsored coverage.
So, should you fib to get a subsidy?
We don’t recommend it, as the truth will come out on your 2014 tax return. And, the penalty for lying is pretty steep: as much as $25,000, plus paying back the subsidy.
Wondering if you will be eligible for a subsidy? Confused about how to purchase insurance on the exchange? Give us a call! We can help.
Jonathan, When you say people will be on the honor system, won’t the applications for applying to the exchange,AKA , the marketplace, have questions still asking what their income is, then are they employed , if so , does employer have a plan in place , if so , will your contribution be less than the 9.5% of your income??? And only if the answer allow you to , then purchase thru 1 of the exchanges? I agree , a person can lie about their income and get penalized when the return is filed, but doesn’t the app specifically ask about employer coverage being available? How are you , by the way?
Hi Alan, thanks for your questions! Our understanding is that the application for an exchange based plan will inquire if an individual has “affordable” coverage available through their employer. At this time there is no mechanism in place for next year to verify this information. Because the calculation can be a bit complex I think there is an opportunity for applicants to answer this questions incorrectly unintentionally.