05 Aug How Unemployment and Stimulus Checks Affect Household Income and Health Insurance
At Bancorp Insurance, we have fielded many questions about unemployment and stimulus checks regarding the gross household income subsidy with the health insurance marketplace. We investigated the situation further in order to determine whether these payments would affect our client’s premium tax credit, which helps with the cost of their insurance.
Are Stimulus Checks Taxed?
No, stimulus checks will not be taxed. This means the amount will not go to your taxable income and will not affect your premium tax credit amount if you are receiving premium assistance through Healthcare.gov.
Stimulus checks are technically an advance of a special tax credit for the 2020 tax year. Some tax credits reduce your overall tax bill, meaning you owe less. Other tax credits, such as the Earned Income Tax Credit, are refundable, which means if you do not owe any federal income taxes, the government sends you a check for the credit.
You will claim the stimulus tax credit on your 2020 taxes if you make enough in 2020 to need to file a return. Assuming you already received the money (the stimulus checks this spring), the credit will essentially wash itself out, so you won’t be able to benefit from it twice. These payments are nontaxable and will not be included in your 2020 income.
Will the Extra $600 Unemployment Benefit Affect My Premium Tax Credit?
Because unemployment is taxable income, if you are receiving unemployment benefits, that will affect your premium tax credit through Healthcare.gov. If your income is higher than you estimated for the 2020 plan year, you may have to pay some of the Advance Premium Tax Credit (APTC) back to the government when you file your 2020 federal tax return. If your income is lower than you estimated, even with the additional $600/week of unemployment, you may have money coming back to you from your health insurance subsidy, when you file your 2020 federal tax return.
How Can I Update My Estimated Household Income?
Bancorp Can Answer Your Healthcare Questions
For individuals and families who obtain their healthcare through Healthcare.gov, 2020 may pose many difficult questions. Bancorp Insurance is your trusted partner in navigating the insurance world and we can help guide you through the process of updating your estimated household income and answer questions you may have about healthcare coverage in 2020 and beyond. Reach out to Bancorp Insurance and one of our agents can assist you with your health insurance subsidy.