Calculating insurance subsidies can be a complex matter if you are in a position where you only work part time or are studying. One of the most common questions is from students who are studying full time and not working – How do they calculate subsidies for purchasing insurance on the exchange?
In general terms the insurance subsidies are calculated as they would be for anyone. If your total income is between 100% and 400% of the poverty level, you will qualify for some premium tax credits to help pay for insurance. If it is within 100% to 250% you may also qualify for cost sharing assistance from the federal government.
The biggest distinction when determining how much of an insurance subsidy a full time student is able to claim is if they considered a part of their parents household or not.
If your parents claim you as a dependent on their federal tax return, that means you must use their household modified income when you are calculating your eligibility for insurance subsidies. The household income figure is your parents gross income and the income of anyone else in the household who earns enough to lodge federal tax returns.
When determining if you are a dependent, the tax department looks at your primary place of residence, your age, the money you contribute to supporting yourself and the type of tax returns you have been filing.
Basically, if you are supporting yourself you can not be considered a dependent and any calculations to determine insurance subsidies will be on your income alone. Hopefully this quick tip will help you understand how insurance subsidies are calculated!