Income & It's Affect on Subsidy
A lot of clients do not understand how Income affects Marketplace Subsidy--especially when they have to pay some subsidy back.

How I try to explain it to clients:

• In November--you contacted Marketplace for health insurance. They asked your family size, zip code, and what you think your income for the next year will be.
• Let's pretend the policy you pick cost $1,000 a month.
• Based off your family size and what you projected your income to be, Marketplace says you can only afford to pay $100 a month, so they pay the rest (that is subsidy)
• Well, no one really knows exactly what they are going to make in the year--
• Let's say you get sick or hurt, or lose your job, or a hurricane comes and you make less than you projected--then Marketplace should help you out more and they will end up owing you money
• But the reverse is also true, let's say you get a lot of overtime, a promotion, a new job, and make more money, then they shouldn't have paid as much for you, so you can end up owing money back.
• This is why it is so very important to let them know right away if your income changes--to try to avoid these issues.

Once I explain it this way, they have a better understanding of how it works .

Unfortunately, we had several clients this year that were hit with some very large repayments because they did not understand how the subsidy works. 
Sometimes there are unplanned increases in income that can affect them: for example, two of our clients received unforeseen inheritances during the last quarter of the year which put one well over the 400% Poverty level line forcing a total repayment of over $11,000.  
**If these clients would have spoken to a financial advisor, they might have been advised to roll the money into an IRA and perhaps avoided this large repayment.

We also had some new clients who came in that had taken large distributions from their retirement accounts for various reasons that forced some partial and total repayments of subsidy--they never considered the ramifications on their tax return beyond the income tax and early withdraw penalty. One person took out an extra $15K to have to repay $13K in subsidy.

While its too late to ease the subsidy repayments for these clients, they leave educated in how it works so they can avoid having to make these types of  repayments in the future--if they don't drop Marketplace.​