How to Qualify for More Health Insurance Savings
Has the spread of the coronavirus (COVID-19) suddenly changed your ability to work? If so, now is a good time to re-estimate how much money you think you will make this year. There is a chance you may now qualify for a larger Advanced Premium Tax Credit, and that means your health insurance will cost you less every month!
How the Advanced Premium Tax Credit Works
When applying for health insurance, you are asked to estimate your income for the year. This helps determine if you are eligible for an Advanced Premium Tax Credit. Also known as a health insurance subsidy, this tax credit is money the government pays toward your monthly health insurance payments. How much money you receive depends on your income.
Typically, the government gives you a refund at tax time if you make less money than you predicted. However, you are also allowed to update your application during the year in order to start paying a lower plan price right away.
Stride Tip → Depending on how low your income estimate is, you may qualify for Medicaid. This is a program for very low-cost or free health coverage offered by your state. If you ever are told that you qualify for Medicaid, you should reach out to your local agency.
How to Estimate Your Income for the Year
Step #1: Predict how much money you’ll make this year.
Predicting your annual income when you’re self-employed can be tricky, especially with current economic uncertainties. We recommend assuming that things will slow down for March and April of this year.
If you DO currently have health insurance, take the income amount you submitted on your application and adjust that number by the amount you think you’ll make in March and April. If after two months things are not back to normal, you can update your application again.
If you DON’T have health insurance, but now are eligible to apply, you can make an estimate assuming the rest of the year will look similar to your regular income in January and February, with an adjusted amount for March and April. If work continues to slow down after April, you can update your application again.
Step #2: Predict how much you’ll spend on business expenses.
If a large portion of your income is from 1099 work, like driving for Uber or freelancing, then you need to add up your business expenses. This includes things like mileage, cell phone bills, health insurance premiums, and other supplies you use to run your business. Go ahead and estimate (based on previous months) your average monthly business expenses.
Stride Tip → For your mileage deduction calculate: Estimated Monthly Work Mileage x 0.575
Step #3: Calculate your business profit.
Now, it’s time to subtract your business expenses from your income! This will provide the final number you should submit when updating your health insurance application.
Business Profit = Income - Expenses
Read this step-by-step guide for more details.
How to See if You Qualify for a New Subsidy Amount
Once you’ve estimated an updated income amount, you can see if you qualify for bigger health insurance savings.
If you DON’T currently have health insurance
Due to concerns about coronavirus (COVID-19), many states are now offering limited-time Special Enrollment Periods for people who don’t have insurance. If you live in one of these states, you can apply for a plan with your new income estimate. Learn more here.
If you DO currently have health insurance
When your average income changes, you should update your health insurance account as soon as possible. This allows the government to adjust the price of your plan accordingly. You can start saving money as soon as the following month! The process for updating your information looks a little different based on where you live:
If you live in California or a Healthcare.gov state
As a Stride member, you can login into your Stride account and select “Update Application.” You’ll be able to add your new income in just a few simple steps!
Not a Stride member? Log in to your Healthcare.Gov or Covered California account and change your application there. Healthcare.Gov directions are available here.
If you live in a state with its own health insurance marketplace
Applies to: Colorado, Connecticut, Washington DC, Idaho, Massachusetts, Maryland, Minnesota, New York, Rhode Island, Washington, Vermont
Since your state runs its own website for selling health insurance, you should log in to your account there and find the option to report a change:
For more detailed instructions, check out our FAQ guide here. You can also head here for answers to your questions.
