How Will My Subsidy Be Paid?

A THCB reader writes in:

“I understand that part of the population will qualify for subsidies and others will not.

What I do not understand, nor do I think that those getting subsidies understand, is how will the monthly cost be paid.

For example (this is made up), the insurance I am quoted costs $1,200 per month, however, I qualify for a $500 per month subsidy.  When I pay the bill each month do I pay $1,200 or $700.   My understanding is that the ACA is showing people the Net cost with the subsidy applied.   I would assume that one would pay the full amount and hope to get the subsidy as a refund when taxes are filed.

Unfortunately, I can not afford to pay $1,200 per month up front and am unable to wait to file taxes and hope to get the refund in a timely manner.  Those that get subsidies are most likely lower paid, already struggling to make ends meet, and will be unable to pay the up front value.  How does the ACA work regarding paying the monthly costs?  What happens if a person is audited?  Does it delay their subsidy?

What happens if refunds are late?  How are people supposed to pay their bills if they are counting on the subsidy in their refund?

If those that do receive subsidies have to pay the entire cost up front, then this will turn into a very big cash flow issue for them.   Is this how the program works?  If the ACA Website is showing the net cost with the subsidy applied, however, does not clearly state that you pay the full cost up front and receive the subsidy with your tax refund, then I find that to be very shady advertising.”

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13 replies »

  1. I can’t seem to find a straight answer to my question….lets say I normally get a tax refund of 4000 ,then I sign up for obamacare and the gov pays a subsidie credit on my behalf of 2400 a year. Will my tax return be deducted by this amount, the amount the gov paid on my behalf? In other words do they give you a smaller tax return?

  2. As I continue to point out, you have the choice of Republican abandonment, or, Democrat dependency. Republicans only are interested in money, war, and setting societal standard back to the 50s, that is the 1750s.

    Democrats also are interested in money, only making sure everyone else but themselves are spending it, and also controlling societal standards, be it those of the 50s, the USSR 1950s, and frankly, they love war, just within the culture, not between cultures.

    Wow, what choices you Americans have in 2014. And that is why we have a Republocrat party ruling America.

    I lean to a Libertarian type of philosophy simply because I like to do what is right, responsible, and fair, and all three of those terms are highly despised by both ends of that polluted aisle of Republocrats.

    Gee, what will historians have to say about the first 20 years of this millennium of America? A protracted, unnecessary war by America in the Middle East, and then a protracted, unnecessary war in America by alleged representatives of elected officials.

    Let the usual partisan hacks commence!

  3. Polly want a cracker there Peter1?

    Oh, and nice argument with SS, Medicare, and Medicaid as rebuttals.

    Obvious programs you either do not use or have no clue what RESPONSIBLE coverage means.

    But, that word RESPONSIBLE doesn’t exist in Democrat World, eh?

  4. BTW, Barry Carol, “The Sweetheart deal with the AHIP Devil” is simply what the situation is, the feds giving money to private companies. Don’t know where you got from that that i favored giving people — well, — federal “vouchers” for purchasing health insurance. That’s a Paul Ryan — cough, cough, “Conservative” — notion.

  5. “The Sweetheart deal with the AHIP Devil.”

    Bobby Gladd –

    If the subsidy went straight to the individual and he spent / squandered the money on something else, then what? Having the subsidy flow straight to the insurance company ensures that this won’t happen.

  6. “Name One government program that handled reimbursements accurately for the public prior to now.”

    SS, Medicare, Medicaid.

    Joel, have you contacted professional help yet. It’s covered under the ACA.

  7. After further research, you are only partially correct. The law states that you can submit documentation to have the gov’t send the subsidy payment to the insurance provider or get reimbursed with your taxes. Has anyone even seen the form that has to be submitted. If the Gov’t can’t even get the applications processed to apply for insurance, has admitted to the back end of the system that handles payments is not even developed, then how would one expect the Millions of forms that will be submitted to be catalogued, procesed, and then sent to insurance companies? What happens if you switch jobs, get a job with insurance, have life changes, etc. How will all of this money be handled? If you get a job and the subsidy is no longer needed will the insurance company just send the money back to the Gov’t. If there are issues (and we know there will be) will the taxpayer be liable for paying the full cost and then have to deal with the IRS to resolve it? (We know how cooperative they are!) There are too many variables on a large scale for this to work with the government paying insurers directly. They could not even set up an ecommerce site after three years, how will they be able to do this as well?

  8. “The remaining $500 will normally go straight from the federal government to your insurance company.”

    The Sweetheart deal with the AHIP Devil.

  9. Once again a wonderful question not thought through as the owners of this legislation never spent one moment to read it thoroughly to consider this consequence before passing it.

    Just wait til IPAB begins, then you will all realize how contemptible this agenda is about. But, I wait to read how government will mandate ALL physicians have to participate with Obamacare. That will be a hoot, right, colleagues!?

    Oh, and to assume the moneys from subsidies will automatically be applied, did you all consider these involved payments are for what, 15 million people at least? Name One government program that handled reimbursements accurately for the public prior to now.

    Terminal faith and reckless naivete, just what politicians depend on!

  10. No, you only have to pay the $700 (responsibility after subsidy) up front. The remaining $500 will normally go straight from the federal government to your insurance company. Source: http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=97 (see “advanced payment”)

    However, if your income at tax time is different from what you estimated in your application, you may have to pay the difference between the subsidies sent on your behalf and subsidies you were actually entitled to, as part of your tax bill.

    So for example, if your income unexpectedly ended up so high that you were not actually eligible for a subsidy ($46K for a single person, $94k for a family of 4), the annual subsidies (500 * 12 = $6,000) would be added to your tax bill. Alternatively, if you were actually eligible for a $200 premium per month instead of $700, your tax bill would be reduced by $5,000 (refundable), the amount you overpaid.