Covered California: Health plan subsidies averaged $5K+ in 2014
The federal government provided on average more than $5,200 last year to people who bought subsidized individual health plans through Covered California, the state insurance exchange said Monday. It added that a majority of consumers who received subsidies also saved on average more than $1,000 in out-of-pocket health costs in 2014, thanks to reductions triggered by the Affordable Care Act.
Covered California also announced that it will start mailing out a new IRS form this week, Form 1095-A. This form will inform consumers how much they received in health insurance subsidies during the year, information they will need as they file their taxes.
There were roughly 800,000 households that received a subsidy on their 2014 policies, said Covered California. The total amount was $3.2 billion, which meant that for every dollar a subsidized consumer spent on health premiums, the federal government spent three, the agency said.
In addition, more than 60 percent of the people who received subsidized coverage also qualified for cost-sharing reductions triggered by the Affordable Care Act, said Covered California Executive Director Peter Lee. That lowered their average 2014 out-of-pocket expenses by about $1,200, he said.
The subsidy is considered a tax credit, and the amount will be listed on the 1095-A forms that Covered California will start mailing out this week. Taxpayers will use the 1095-A when they fill out Form 8962, the form that will determine whether their credit was too large or too small.
If an individual's income turned out to be higher than what he had estimated for 2014, then he may owe more in taxes. If it turned out to be lower, he may owe less.
Here is a sample 1095-A form, and here is a blank 1095-A along with the instructions.
Covered California has been working with the IRS and insurance plans for months "to refine the process of issuing 1095-A's," said Lee. "Still, we know it won't be perfect, and we will learn things in the first year and make improvements before we do it again for 2015."
Many tax preparers and commercial tax software products can accept information from Form 1095-A, Covered California asserted. It added that taxpayers at certain income levels may be able to get free software or in-person tax filing assistance.
The open enrollment period to sign up for a 2015 individual plan continues until Feb. 15.