How Do You Report Your Income To Covered California When It Fluctuates?

by Wendy Barnett

Time is money When you apply through Covered California for your health insurance, you must indicate what your income will be for the benefit year since the premium assistance that you may receive is based on your annual income.  For many people, especially for those who are self-employed or who are paid by commissions, annual income fluctuates greatly.  So how do you report your income to Covered California when it varies? This is one of the top question our insurance agency receives from clients. 


First of all it is important to know how the system is going to work.  The premium assistance that is only offered through Covered California is going to be “reconciled” at the end of each year when you file your IRS tax return. In other words, the amount of assistance you received is going to be compared to the income that you actually made in that benefit year, and depending on whether your income matches up to what you reported on your Covered California application, you may either owe money back to the IRS or receive a refund. So the important thing to keep in mind is that you want to report your annual income as accurately as possible or estimate on the higher end so that you don’t owe any money to the IRS at the end of the year.

If your annual income fluctuates greatly, it is helpful to know that you have the option to receive your premium assistance either in advance as a monthly tax credit to lower your health insurance bill or as a lump sum at the end of the year when you file your tax return.  You can even choose to receive a portion of your tax credit throughout the year.  Using these options helps you to control how much assistance you receive during the year.  This way you can ensure there won’t be any unexpected money owed when you file your tax return. Check Covered California income limits to see income requirements.

How to Report Your Income To Covered California When It Fluctuates

For people whose income varies from month to month but it averages out about the same annually, you can take your expected annual income and divide it by 12 to report your average monthly income.  Then, if during the year your income deviates from your average, you can always “report a change.”
A good rule of thumb is to examine your income quarterly, and check to see if your monthly average is similar to what you reported.Four pink piggy banks showing profits and gains on white backgro

For people whose income varies so much that they have no idea what their income will be for the year, then it is suggested that you report your most accurate income on a monthly basis.  On your application you will report what you made last month or last year, whichever is most accurate.  Then you will “report a change” monthly to keep your income updated. We also suggest that you give us a call at 877-752-4737to discuss your income reporting options.  As an experienced health insurance agency we are here to assist you so you can make the best informed decisions about your health insurance.

Important Things to Remember

You are required to report a change to Covered California within 30 days if your income changes enough to impact your assistance.

If you are uncertain about your income figures, it is suggested you contact your CPA or tax preparer to receive advice on how to report your most accurate income.

Posted: September 3rd, 2014 under Obamacare Website for California