What is Connect for Health Colorado?
Connect for Health Colorado is our state Marketplace, or Exchange. Similar to healthcare.gov, our marketplace gives you a place to shop for insurance from most of the carriers that are available in your area.
One of the benefits to using the Exchange is that if your income falls within a certain range, you may qualify for a tax credit (also called a subsidy). You can apply for the tax credit in advance, which applies it towards your premium every month, or you can recapture your tax credit in the form of a refund on your tax return when you file for that tax year. Connect for Health Colorado is the only place you can shop to receive those tax credits.
- Think of Connect for Health like Amazon – you can shop for lots of things, which you could get directly from the company, or you can get through Amazon for the same price. The benefit to using Amazon is that you get Amazon Prime (subsidy). You can only use Amazon Prime if you order through Amazon. If you go directly to the company, you can’t get that extra benefit.
- The same way, if you want to have the benefit of a tax credit/subsidy, you must purchase your insurance through Connect for Health. You can purchase directly through the carrier, but you won’t have any chance of getting a tax credit, either monthly or when you file your taxes.
A tax credit is essentially money off your premium. You can choose either to take it each month, or elect to take it in the form of a tax refund. There are 3 main qualifications to receive a tax credit:
- Your income must fall within a certain range
- If you’re married, you must file a joint tax return
- You are not offered any group insurance, even if you’re not enrolled in it (there are a few exceptions to this rule)
The income that the system looks at is based on your Modified Adjusted Gross Income (MAGI) that is projected for the coming tax year. For some, this is simple, as your income is the same every month. However, if your income is variable or you are self-employed, it might be slightly more difficult to project that number going forward.
|Household Size (taxable household)||Minimum Yearly MAGI (projected for 2020)||Maximum Yearly MAGI* (projected for 2020)|
*Please note that there are some situations where income below this maximum still would not qualify for tax credit. Contact us for more information.
What is MAGI and how is it calculated?
If your only income is a normal paycheck from your employer, it will be your gross income on that check, multiplied out for the whole year. If you have income from other sources, such as alimony, rental income, or retirement income, that is also included. If your income is stable from year to year, the easiest way to calculate your MAGI is by using your most recent tax return.
Modified Adjusted Gross Income is basically your income before taxes are taken out, but after most Income included in MAGI (not an exhaustive list):
- Adjusted gross income from job or self-employment
- Rental income
- Dividends, IRA distributions, Pensions, Social Security income
- Unemployment, Alimony
- Some items that are deducted from your AGI (line 37) must be added back in to get your MAGI:
- Tax exempt interest (line 8b)
- Non-taxable social security (line 20a)
- Untaxed foreign income
If your income is less than the minimum listed in our income chart, you will probably qualify for Health First Colorado, which is Colorado’s Medicaid program. The financial application is the same for Medicaid and for the Tax credit. You cannot qualify for both Medicaid and a Tax credit at the same time. Medicaid eligibility is calculated on a monthly basis, so if you recently lost your job and currently have no income, you could qualify for Medicaid until your situation changes.
Qualifying for Medicaid does not mean you can’t get traditional health insurance. Really, it just means you can’t get a tax credit. If you don’t qualify for a tax credit/subsidy, you can still apply for a regular plan during Open Enrollment or a Special Enrollment Period.