Am I Responsible If The Insurance Exchange Flubs My Subsidy?

Insurance and the subsidies available to buy it can be confusing. Here are some answers to recent questions from people who are running into difficulties with premiums and tax credits on their marketplace plans.

My 63-year-old husband has Alzheimer's disease. Our annual income is $41,000, from a combination of his Social Security disability insurance (SSDI) and a disability policy he had from a previous job. Last year I bought a single policy on the health insurance exchange. My husband gets coverage through the Department of Veterans Affairs. The monthly premium was reduced by a $278 tax credit based on our estimated annual income. Now I'm reviewing IRS form 8962 that's used to reconcile what we received in premium tax credits against what we should have received based on our actual income. It looks like we'll have to repay $2,500! We can't afford that. If the marketplace made a mistake in figuring our tax credit, do we still have to pay the money back?

If you received too much in premium tax credits, you'll generally have to pay some or all of it back. Health policy experts say they know of no provision in the health law or rules that would excuse someone from repayment if an error that resulted in a tax credit overpayment was made by the online marketplace. An administration official didn't respond to a request to clarify whether those situations would be handled differently than if someone underestimates their own income and receives too much.

The amount you'll have to repay is capped based on your income. A couple with an income between 200 and 300 percent of the federal poverty level ($31,460 to $47,190 for a family of two in 2014) would have to repay up to $1,500. (People with incomes above 400 percent of poverty — $62,920 for a couple — would have to repay the entire amount.)

It's hard to know if or where an error occurred. It's possible that you or the marketplace calculated your income incorrectly. SSDI counts as income when figuring your eligibility for premium tax credits, but disability insurance payments received from an employer policy may or may not count as income depending on who paid the premium.

Perhaps you or the marketplace entered information incorrectly, transposed figures or made some other manual or computer entry error.

By early February you should receive Form 1095-A from the marketplace detailing how much you received in tax credits for reconciliation purposes. It will be important to use that to make sure your calculations on Form 8962 are correct.

If you discover there was an error in your premium tax credit last year, you'll still have time to sit down with a navigator to go over your 2015 coverage choices before open enrollment ends Feb. 15.

I had coverage through a health insurance marketplace plan last year, and this year I'm told my costs will increase significantly. The actual premium the insurance company will charge won't change and my income hasn't changed. But the amount of premium tax credit I receive will go down. What can I do?

Before you renew your coverage with the same plan you had last year, go back to the marketplace and check out what else is available. It sounds as if the benchmark plan in your area may have changed, and that could mean a higher bill for you unless you switch plans.

Here's how it works: Premium tax credits are based on the second-lowest-cost silver plan in your area, called the benchmark plan. If the cost of the benchmark plan this year is lower than it was last year, your tax credit may be lower as well. That's not a problem if you switch to the new, cheaper benchmark plan. But if you renew your old plan, you'll have to pay the difference in cost between its higher premium and that of the new benchmark plan.

"Even though your premium didn't change and your income didn't change, you could see a significant difference in what your contribution is because the premium for the second-lowest-cost silver plan is different," says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

I am being told that I must furnish automatic debit card information before an insurance company will provide me with coverage through the exchange. Can they do that?

Health insurers that sell coverage on the marketplaces are required to accept various forms of payment, says Sandy Ahn, a research fellow at Georgetown University's Center on Health Insurance Reforms. That includes paper and cashier's checks, money orders, electronic funds transfers and prepaid debit cards.

An insurance industry representative said this sounded like a misunderstanding. "Plans accept various forms of payment and wouldn't limit a consumer only to a debit card," says a spokeswoman for America's Health Insurance Plans, an insurance industry trade group. "Health plans regularly work with their members to establish the payment plan that works best for them."