Covered California: Tax Filing Requirement for Consumers Receiving Premium Assistance
Some Californians, individuals, and families enrolled in Covered California (Covered CA) plans are eligible for financial assistance to lower the cost of their health insurance. Anyone who receives financial assistance with Covered CA is required to file a federal tax return as a condition of eligibility.
Covered CA offers two main ways to get assistance with health care coverage costs:
- Premium Assistance (formally called the Advanced Premium Tax Credit or APTC) is a tax credit to reduce an individual’s monthly premium.
- Cost-Sharing Reductions is a subsidy to reduce an individual’s out-of-pocket costs (their copay’s, coinsurance, deductible and out-of-pocket maximum).
Important Information Regarding Premium Assistance and Tax Filing
All Covered CA consumers who receive Premium Assistance/APTC, must file federal taxes for each calendar year they receive the assistance. If they fail to file their taxes, they will lose their eligibility for Premium Assistance/APTC. The consumer will then be responsible for paying the full premium amount and will have a higher cost-sharing for health care services.
Covered CA has mailed warning notices to those who are at risk of losing their Premium Assistance/APTC. These notices were sent to consumers who in 2017:
- Received Premium Assistance/APTC in the calendar year but did not file a federal tax return for that year;
- Filed a federal tax return but did not include IRS Form 8962; or
- Requested an extension to file a federal tax return but did not end up filing the return.
Covered CA consumers who fall within any of these categories will have until May 15, 2019, to preserve their Premium Assistance/APTC by reconciling their premium assistance and contacting Covered California to attest to having done so.
If consumers fail to take these steps, they will receive another notice, in a pink envelope, that tells them when their financial assistance will end if no action is taken. Covered CA consumers who fail to take corrective action will lose their current financial help starting July 1, 2019.