Tax Prep by Deb Posted February 15, 2015 Report Share Posted February 15, 2015 I've posted this before, but I'm going to ask it again. Is there anyone out there with clients covered thru the California Covered Health exchange that is coming out even? Every single one I've done owes back and yet I know the client in this case would not have altered his income, and I know the agent who helped him is an up and up guy, yet my client's income went down this year and yet he still owes back. I just don't get how this is working. I have manually done the worksheets, not relying on the computer, but it comes out the same. I just don't get this subsidy thing and how any of it comes out right. I do know mistakes have been made by Covered California, I have another client with two separate 1095-A's with overlapping coverage and totally different amounts (expected two because they moved to a different county and had to select a different plan) but if I include the info from both of these, there payback is horrible. Just wondering if any other California Preparers are experiencing this, or am I doing something wrong? Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 15, 2015 Report Share Posted February 15, 2015 Put the number for each of the three columns, filing status, and MAGI (ss income, etc) and we will tell you if you are correct. Remember to place a 0 on dependents, ss income and the other box if appropriated. Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted February 16, 2015 Author Report Share Posted February 16, 2015 Married couple with 2 children, therefore household size 4. The second child was born in May of 2014, and was not factored in when my client enrolled thru covered California. The first child was covered thru MediCal for all of 2014, and the mother was covered thru MediCal for January - June. The husband had coverage thru his job for January - April at which time the employer coverage was dropped. He enrolled in covered California in May for self only coverage for May and June. Then starting with July to December, he and his wife were covered under the covered California plan and the two children remained on MediCal. Their total household income was $54,049 They have two 1095-A which are as follows: May & June exactly the same: Colum A $195.20 Colum B $284.70 and Colum C $68.00 (per month) July - December are exactly the same: Colum A $573.47 Colum B $573.47 and Colum C $408.00 (per month) They all had health coverage for the entire year. I am calculating that they have to pay back 1132.00 of the subsidy. I would sure appreciate someone looking at this for me, as I have stated that as of yet I have not had a single client that did not owe the subsidy back. I know these people personally, I know the Insurance Agent that assisted him personally, I do not believe that anything was done to change numbers to get a larger subsidy, and to top it off his family size went up, his income went down from what he used when applying for coverage. So I just don't get what is happening here. Thanks again. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 17, 2015 Report Share Posted February 17, 2015 I come up with the same $1132 payback that you did. According to the calcs this family was able to contribute $331 per month to their insurance coverage. Then in part 2 of the form 8962 in the months of May and June, the cost of their plan and the SLCSP were both lower than their $331. That is why they shouldn't have had a subsidy for that month yet they received $68 in each of those months. Then for July - Dec the premium for their plan and the SLCSP were the same at $573. After their contribution of $331 they should have received $242 in subsidy yet they got $408 in help each month, so each month this family received $166 to much from July - Dec plus the $68 for the 2 earlier months. What the above is concluding is that if the $408 of subsidy was accurate and based on the SLCSP of $573, this couple's monthly contribution would have had to be only $165 per month (the SLCSP - subsidy, $573 - $408), and in order to get to that low a number, the income would have had to be something like 1/2 of the actual household income. I can see why you are asking for input from other CA preparers. In this case, I'd be very curious to see how the application was filled out and what income was used on the application. Is it possible that when the application was done that only that of the primary applicant was included or considered? Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted February 17, 2015 Author Report Share Posted February 17, 2015 No. I know both the taxpayer and the insurance agent. Both are on the level and would not use wrong info. And this has been the case with everyone I've done. One clients income rose by the cost of living increase to social security, only 300 and they ended up owing 900. I honestly think it's an issue with covered California, either now or when they applied for insurance. Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 17, 2015 Report Share Posted February 17, 2015 Go to the exchange website and enter the same salary as last year and see how much they have to pay and see how much they actually paid. You are right, maybe the website was too generous last year. 1 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 17, 2015 Report Share Posted February 17, 2015 The entire marketplace system is/was a disaster. To expect the marketplace numbers to match reality is a fantasy. This is our government at its finest. 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 17, 2015 Report Share Posted February 17, 2015 Deb, I have not done enough to get you an accurate opinion. I will watch for it and see if my results mirror yours. Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 17, 2015 Report Share Posted February 17, 2015 No. I know both the taxpayer and the insurance agent. Both are on the level and would not use wrong info. And this has been the case with everyone I've done. One clients income rose by the cost of living increase to social security, only 300 and they ended up owing 900. I honestly think it's an issue with covered California, either now or when they applied for insurance. Deb, it actually might be an issue with the CA calculations. As I said, the income would have had to be much, much smaller for them to arrive at the monthly subsidy they received starting in July, or perhaps there's some problem with the CA exchange where it is only picking up the one person's income if only one person in the household is applying for coverage like this family did for May and June. That may be where this particular family's problem started, and then they went back to the exchange and added the wife for July through year-end. We can see how the premium and the SLCSP both increased in those later months. I'd still like to see that application. Obviously, if the income is the same with similar persons covered and premium amounts, this couple should reduce the monthly subsidy somewhat for 2015. If they don't do that and this pattern continues on for the remainder of the year, this couple will have to repay more next year, capped at $1,500. One big thing to watch for with these 8962s and 1095-As is that the 1095-A SLCSP amounts can be wrong IF the "tax family" or "coverage family" changes and the taxpayer does NOT notify the exchange. If that is the case, we have to enter a different amount for the SLCSP on the 8962 than is shown on the 1095-A. The definitions for "tax family" and "coverage family" are on page 2 of the instructions for the 8962. It appears that Deb's client's 1095-A is correct since the wife was added starting in July and the amount doubled. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 17, 2015 Report Share Posted February 17, 2015 I don't know if Covered CA changed their formulas, but I played with the site and filled out some of the basics: $54K of income, 2 persons enrolling both age 35, two children ages 5 & 1 not enrolling That calculated a monthly subsidy of $170. When I used the same demographics and reduced the income to $40K, I got a monthly subsidy of $335. With that reduced income at $40K, if I remove one adult so that it's like what this couple had where only the husband applied for coverage in May & June, it calcs a monthly subsidy of $87 per month. Those figures based on around $40K are pretty close to what this couple received each month as advanced subsidy. Based on this, I still think it is a problem with how the application was filled out or entered. Deb, what is the income of husband only? Is it around that $40K level? Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted February 17, 2015 Author Report Share Posted February 17, 2015 His income is 45,000 Quote Link to comment Share on other sites More sharing options...
Tax Prep by Deb Posted February 17, 2015 Author Report Share Posted February 17, 2015 (edited) One big thing to watch for with these 8962s and 1095-As is that the 1095-A SLCSP amounts can be wrong IF the "tax family" or "coverage family" changes and the taxpayer does NOT notify the exchange. If that is the case, we have to enter a different amount for the SLCSP on the 8962 than is shown on the 1095-A. The definitions for "tax family" and "coverage family" are on page 2 of the instructions for the 8962. It appears that Deb's client's 1095-A is correct since the wife was added starting in July and the amount doubled. How would we know what to enter if the amount shown on the 1095-A is incorrect based on the tax family or coverage family changes? Edited February 17, 2015 by jklcpa formatting of the quote Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 17, 2015 Report Share Posted February 17, 2015 How would we know what to enter if the amount shown on the 1095-A is incorrect based on the tax family or coverage family changes? When you have clients with situations like you've presented here, you have to ask them if they notified the exchange with each change of "coverage family". This 1095-A appears to be correct since the amounts shown for SLCSP effectively doubled beginning in July indicating that the exchange was notified since the wife's coverage came through the exchange also. I think where this could have been a problem is if when the infant was born, if the parents contacted the insurance company directly to add the baby and didn't notify the exchange. In that case, the coverage family would have increased by one person but the 1095-A reporting of the SLCSP would still have been based on only two people. This was NOT the case with your client because both children are covered by medicaid, and they were not part of the coverage family for this purpose. Another good example would be a married couple where one of the parties went on Medicare during the year and didn't notifying the exchange. The 1095-A would have reported the cost of the SLCSP for 2 people but should have decreased to one person starting with the month that Medicare coverage started. Third example is if someone moved and didn't notify the exchange and the cost of the SLCSP was different in the new location. In each of these scenarios, we would have to look up the cost of that SLCSP for the proper number of people for that locale. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted February 18, 2015 Report Share Posted February 18, 2015 Wow, Judy, that's a great explanation! I've had only two people come in with 1095-As. Both overestimated income, and got a credit. Quote Link to comment Share on other sites More sharing options...
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