Collect unemployment? You could be in this financial shock


Millions of Americans have lost their jobs as a result of COVID-19, and for some it means loss of health insurance, as well as a paycheck. But not everyone has occupational health insurance. Some people get their insurance through the health care exchange, and under the Affordable Care Act, many are eligible for grants to help defray their premium costs.

If you are eligible for a health insurance subsidy, you may know that it is based on your adjusted adjusted gross income for your year of coverage. But what if you are unemployed and your income increases? Thanks to the CARES law, this is the situation in which many people find themselves, and even if it is a good thing in theory, it could cause problems from the point of view of subsidies.

Has your income changed for the better in the event of unemployment?

Many workers who perceive unemployment now earn more money than they did at work. The reason? The CARES law, which was passed in late March, allowed a weekly increase in unemployment benefits by $ 600 until the end of July.

Image source: Getty Images.

Unemployment benefits are normally based on your previous earnings coupled with your state formula for the calculation of benefits, and they generally only replace part of your previous earnings. But when we add $ 600 more a week, it looks very different. And to be clear, this $ 600 supplement is something that all unemployed workers are entitled to, even if it results in an increase.

What is the impact on your health insurance subsidy? Those eligible for this grant are allowed to estimate their total income for the year and to claim this money in advance based on their projected income. If you choose this route, your grant will be sent to your health insurance on your behalf. If your income estimate is correct, there is no problem. But if you underestimate your income, you may have to repay this subsidy when you file your income tax return the following year.

Let’s say you normally earn $ 600 a week, only you are unemployed. Also imagine that under normal circumstances your weekly unemployment benefit would be $ 360, only now you will receive $ 360 per week plus $ 600 for a total of $ 960.

If you receive $ 960 per week for 16 weeks and are then rehired at your old rate of $ 600 per week, your income for the year will be $ 36,960 (36 weeks x $ 600 per week = 21,600 $ + 960 x 16 = $ 15,360, for a total of $ 36,960). But in the meantime, $ 600 per week multiplied by 52 weeks is only $ 31,200. If you estimate $ 31,200 as annual income to determine your grant, but your total income for the year ends up being $ 5,760 more, you could end up with some money. And it is an expense that you will need to plan for.

Crunch those numbers

The weekly increase in unemployment of $ 600 is due to expire at the end of July and, despite the current recession, we do not yet know whether it will continue. But even if it doesn’t, be careful if your income has increased significantly for a while during the year. The last thing you need is a huge debt on your hands for a grant that you have to partially repay, but can’t.


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