Obamacare

[pb4uski]

Can you say: byzantine? ACA will be a full employment act for accountants. At this point, I have a headache just trying to figure out where I'll stand in 2014.

Get a grip. I think you overstate the complexity. Just remember, the subsidy is based on MAGI (before deductions) and the deduction will likely be based on insurance premiums and health care costs paid just like has been for years.

If you get a refund or have to repay under the subsidy you would reduce or increase next year's deduction - just like we do today for the state income tax deduction.

In principle, the subsidy true-up works just like actual and estimated taxes and taxes due or refunds work today and the deduction will work just like state income tax deductions work today. Easy.

 

[Mulligan]

Yes, deductible if over 10% of AGI so there would be a second order tax benefit that would partially mitigate the effect of the cliff on an after-tax basis.

If find it ironic, or maybe the word is tragic, that the one element in place to help mitigate somewhat, the high cost for people paying "the full freight "
was adjusted upward to 10% from 7.5 % right when they needed it the most. It appears to widen the disparity in "fairness" ( I hate that word) between people who receive it as a benefit from those who buy it. The company paid health benefit, I get, but the buying family members insurance with pretax dollars, while the individual who has to purchase his own policy, can't, escapes me.

 

[marko]

If find it ironic, or maybe the word is tragic, that the one element in place to help mitigate somewhat, the high cost for people paying "the full freight "
was adjusted upward to 10% from 7.5 % right when they needed it the most. It appears to widen the disparity in "fairness" ( I hate that word) between people who receive it as a benefit from those who buy it. The company paid health benefit, I get, but the buying family members insurance with pretax dollars, while the individual who has to purchase his own policy, can't, escapes me.

You're looking for logic but talking about equity.

 

[meierlde]

Can you say: byzantine? ACA will be a full employment act for accountants. At this point, I have a headache just trying to figure out where I'll stand in 2014.

As to the tax thing, if you get ahold of turbo tax or its brethern, you just enter the numbers and it decides if you can deduct medical expenses. So you would just need to know what you paid for medical insurance and treatment, type the numbers in and presto. Just like the amt is no sweat in terms of calculations under a tax program. Yes if you are still filling out the forms by hand, but for the low price of a tax program, or if eligible where the price for a simple return is $0, use the program.

 

[Mulligan]

You're looking for logic but talking about equity.

Marko, I like the word "equity", btw. I should have squeezed that word in somewhere and left "fairness" out. It makes me sound less like a
"crybaby".

 

[samclem]

I think that would be outright fraud and if you and your cousin want to take the risk of getting caught and the resulting jail time you are probably welcome to try. Risk management.

Yes, it would definitely be fraud. But folks risk going to jail for much less than this amount all the time. And, if Medicaid is any guide, the government has proven much less proficient in finding and prosecuting fraud than has the private sector. Prosecuting fraud just seems to be a very low priority when the goal of a particular agency is to push money out the door to providers, get people medical care, etc.

 

[MichaelB]

Yes, it would definitely be fraud. But folks risk going to jail for much less than this amount all the time. And, if Medicaid is any guide, the government has proven much less proficient in finding and prosecuting fraud than has the private sector. Prosecuting fraud just seems to be a very low priority when the goal of a particular agency is to push money out the door to providers, get people medical care, etc.

Well, in this case the implementation and enforcement of tax credits is carried out by the IRS, and they suffer no lack of enthusiasm rooting out such fraud.

 

[marko]

Seems to me that for something this big, this life-changing and only 8 months away, that we'd all be better informed as to what to expect and how it will all work.

Despite a very informed clientele that visits this site, all the threads on this subject remain full of speculation and suppositions. I can only imagine how un-informed the average person is.

I spent an entire career rolling out new products and services and can't believe the lack of definitive, clear information for something this huge, this late in the game. You need to be pro-active, and go out and engage the public if you want buy-in...

Gimme a pamphlet, a central website, some TV ads... something to help inform and sell this program.

Just my two cents.

 

[gerrym51]

Seems to me that for something this big, this life-changing and only 8 months away, that we'd all be better informed as to what to expect and how it will all work.

Despite a very informed clientele that visits this site, all the threads on this subject remain full of speculation and suppositions. I can only imagine how un-informed the average person is.

I spent an entire career rolling out new products and services and can't believe the lack of definitive, clear information for something this huge, this late in the game. You need to be pro-active, and go out and engage the public if you want buy-in...

Gimme a pamphlet, a central website, some TV ads... something to help inform and sell this program.

Just my two cents.

Marko, since you live in mass

the mass health connector website has a full page of things to meet ACA.

you need to go to the subsidized plan page then click on the thing that says regarding federal isurance changes.

as far as i can tell other than adding 300-400 of poverty to eligibility i don't see any changes

 

[marko]

Marko, since you live in mass

the mass health connector website has a full page of things to meet ACA.

you need to go to the subsidized plan page then click on the thing that says regarding federal isurance changes.

as far as i can tell other than adding 300-400 of poverty to eligibility i don't see any changes

Thanks, I didn't know that; which more or less makes my point.

IIRC, when the MA law was passed there were all sorts of PSAs, TV/newspaper ads and mailers; explaining what everyone's responsibility was.

Now a similar plan is going nationwide, and .... crickets. I run into people who still think this plan is going to be free for everyone!

 

[Felix Mulier]

Gimme a pamphlet, a central website, some TV ads... something to help inform and sell this program.

Sometimes we need to be proactive (which is not a new concept to those of us here, right?) Try this link and sign up for their emails. Home | HealthCare.gov

 

[DallasGuy]

I'm not sure this has been covered here yet, but I found this article interesting...about how you could potentially end up with a higher tax bill in 2014 if you use your 2012 income when using government subsidies to buy health insurance and ultimately have a higher income in 2014.

Obamacare credits could trigger surprise tax bills

 

[samclem]

If Intuit or another company isn't seeing this whole ACA thing as a HUGE business opportunity, they are very foolish. Software allowing a person to optimize their choices is going to be very valuable, especially if it can integrate with the customer's tax return information. The ideal software will also get right down to the state level, allowing people to see and choose from the available options (by company, by "bronze," "silver," and "gold" level, etc) in each "exchange". The software could allow users to see/decide on SS withdrawal strategies, 401K withdrawal strategies, tIRA-to-Roth conversion strategies, etc, etc

Optimization software would easily be worth a couple hundred dollars to many folks. There's no way a few government web sites or info pamphlets will allow a user to cut through the morass of "what-if" scenarios presented by this program (and the other interdependent government programs--tax code, SS, etc).

 

[kmt1972]

AP came out with a story about Obamacare subsidies.

Health Subsidies: How Much Do You Qualify For?
By The Associated Press
(AP) -- Starting next year, President Barack Obama's new health care law will offer subsidies to help people buy private health insurance on state-based exchanges, if they don't already get coverage through their employers. The premiums paid by taxpayers will be tied to their income, with the government subsidies making up any shortfall.
___
Single adult
Age: 30
Income: $30,000
Annual cost of health insurance: $3,440
Government subsidy: $932
Annual premium paid by taxpayer: $2,509
___
Family of four
Age of policyholder: 30
Family income: $30,000
Annual cost of health insurance: Eligible for Medicaid, the government-run health insurance program for the poor.
___
Family of four
Age of policyholder: 40
Family income: $50,000
Annual cost of health insurance: $12,130
Government subsidy: $8,745
Annual premium paid by taxpayer: $3,385
___
Family of four
Age of policyholder: 50
Family income: $75,000
Annual cost of health insurance: $16,858
Government subsidy: $9,733
Annual premium paid by taxpayer: $7,125
___
Family of four
Age of policyholder: 60
Family income: $90,000
Annual cost of health insurance: $24,042
Government subsidy: $15,492
Annual premium paid by taxpayer: $8,550
___
Note: Premiums are estimates of average premiums for 2016, by the Congressional Budget Office.
Source: The Henry J. Kaiser Family Foundation.
Online: Health Reform Subsidy Calculator - Kaiser Health Reform

 

[bUU]

I need to apologize for my earlier error. I've messed around quite a bit with the Mass Health Connector and didn't see the kind of cliff thing that is indeed apparently an aspect of the ACA subsidies. I've now looked much more closely into how the subsidies work on the federal level. My assumption that ACA wouldn't have a big cliff was wrong.

Having said that, I think that that is something that needs to be fixed. I know it would cost more, and so it might be hard to fix it for at least the next few years, but once stuff like sequestration is in the rear-view mirror, ACA should be updated to provide subsidies much closer to a smooth curve rather than the rather untoward step function it is today. That remedy explicitly shouldn't adversely impact those who cannot readily afford to pay for insurance themselves.

 

[marko]

...., ACA should be updated to provide subsidies much closer to a smooth curve rather than the rather untoward step function it is today....

A smooth curve would be the fair thing. That extra "one dollar" in income will cost a working family $10K or more in extra cost!

The all-or-nothing cliff will surely discourage folks to move up the career ladder; the cost of success will be too high unless it's more than an intermediate step. "Thanks for the promotion boss, but...no thanks"

 

[pb4uski]

A smooth curve would be the fair thing. That extra "one dollar" in income will cost a working family $10K or more in extra cost!

The all-or-nothing cliff will surely discourage folks to move up the career ladder; the cost of success will be too high unless it's more than an intermediate step. "Thanks for the promotion boss, but...no thanks"

I agree with the thought - but one could accept the promotion and make/increase 401k, deductible IRA or HSA contributions (if eligible) to stay under the 400% FPL. An unintended consequence is that it might encourage middle-class retirement savings.

 

[marko]

I agree with the thought - but one could accept the promotion and make/increase 401k, deductible IRA or HSA contributions (if eligible) to stay under the 400% FPL. An unintended consequence is that it might encourage middle-class retirement savings.

True, but I think we need to double check that IRA contribution keeping the MAGI low. IIRC, the O-MAGI includes any IRA/401k contributions as an exception to the usual MAGI calculation.

 

[kmt1972]

A smooth curve would be the fair thing. That extra "one dollar" in income will cost a working family $10K or more in extra cost!

The all-or-nothing cliff will surely discourage folks to move up the career ladder; the cost of success will be too high unless it's more than an intermediate step. "Thanks for the promotion boss, but...no thanks"

Smooth curve is obviously better. I suspect it was done this way because there is just not the money to make if affordable for those with very low incomes and low incomes and still smooth at the same time. Also I believe the tax credits will grow by the rate of inflation and not premium growth which is expected to be higher. So even this level of tax credits I suspect are not really sustainable. Hopefully the solution to that will be a smoother cuts at the top end of 400% FPL and not another cliff.

 

[pb4uski]

True, but I think we need to double check that IRA contribution keeping the MAGI low. IIRC, the O-MAGI includes any IRA/401k contributions as an exception to the usual MAGI calculation.

See posts #39 and #45 of Who's going to try to get ACA subsidies by staying under the threshold?

Since the start of the O-MAGI calculation is tax return AGI (which is reduced by 401k and deductible IRA contributions) and there is no specified add-back for either of those items, it appears to me that the have the effect of reducing O-MAGI.

Do you have a cite for the exception you are thinking of?

 

[bUU]

I believe the definition is found in 26 USC § 36B(d)(2)(B)

Modified adjusted gross income
The term “modified adjusted gross income” means adjusted gross income increased by—
(i) any amount excluded from gross income under section 911,
(ii) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and
(iii) an amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86 (d)) which is not included in gross income under section 86 for the taxable year.

The exclusion in item (i), above, refers to 26 USC § 911 Citizens or residents of the United States living abroad (a):

Exclusion from gross income
At the election of a qualified individual (made separately with respect to paragraphs (1) and (2)), there shall be excluded from the gross income of such individual, and exempt from taxation under this subtitle, for any taxable year—
(1) the foreign earned income of such individual, and
(2) the housing cost amount of such individual.

So if I read this right, deductible contributions to IRAs aren't added back into MAGI.

Smooth curve is obviously better. I suspect it was done this way because there is just not the money to make if affordable for those with very low incomes and low incomes and still smooth at the same time.

Sorry, but I don't buy that. You can change the slope at an inflection point and still have a smooth-enough curve so that $1 of income doesn't cause such a big difference in the subsidy. It just requires straightforward algebra.

 

[pb4uski]

...So if I read this right, deductible contributions to IRAs aren't added back into MAGI. ...

+1, ditto with 401k contributions and HSA contributions. Only add-backs are excluded foreign income, non-taxable interest and non-taxable SS.

 

[Felix Mulier]

I'm not sure this has been covered here yet, but I found this article interesting...about how you could potentially end up with a higher tax bill in 2014 if you use your 2012 income when using government subsidies to buy health insurance and ultimately have a higher income in 2014.

Obamacare credits could trigger surprise tax bills

I checked out the link in this article to Enroll America. Which seems to be a legitimate effort to get the word out and help people sign up for health care.

This from their mission:

Enroll America is a nonpartisan 501(c)(3) organization whose mission is to ensure that all Americans are enrolled in and retain health coverage. Enroll America is a collaborative organization, working with partners that span the gamut of health coverage stakeholders—health insurers, hospitals, doctors, pharmaceutical companies, employers, consumer groups, faith-based organizations, civic organizations, and philanthropies—to engage many different voices in support of an easy, accessible, and widely available enrollment process.

And from their description of How We Work:

• We track the latest information on “best practices” for optimizing enrollment and share that information widely

• We provide guidance and assistance to help states and the federal government adopt streamlined and user-friendly enrollment policies, procedures, and practices.
• We work to raise awareness of enrollment options among the uninsured and to broaden the range of channels through which uninsured individuals can enroll.

But, I've gotta say, they lost me here. Guess I'm not in the target demographic for this video. Gave me a good chuckle, though!



Open Enrollment Style - Gangnam Style Parody - YouTube

 

[Texas Proud]

AP came out with a story about Obamacare subsidies.

Health Subsidies: How Much Do You Qualify For?
By The Associated Press
(AP) -- Starting next year, President Barack Obama's new health care law will offer subsidies to help people buy private health insurance on state-based exchanges, if they don't already get coverage through their employers. The premiums paid by taxpayers will be tied to their income, with the government subsidies making up any shortfall.
___
Single adult
Age: 30
Income: $30,000
Annual cost of health insurance: $3,440
Government subsidy: $932
Annual premium paid by taxpayer: $2,509
___
Family of four
Age of policyholder: 30
Family income: $30,000
Annual cost of health insurance: Eligible for Medicaid, the government-run health insurance program for the poor.
___
Family of four
Age of policyholder: 40
Family income: $50,000
Annual cost of health insurance: $12,130
Government subsidy: $8,745
Annual premium paid by taxpayer: $3,385
___
Family of four
Age of policyholder: 50
Family income: $75,000
Annual cost of health insurance: $16,858
Government subsidy: $9,733
Annual premium paid by taxpayer: $7,125
___
Family of four
Age of policyholder: 60
Family income: $90,000
Annual cost of health insurance: $24,042
Government subsidy: $15,492
Annual premium paid by taxpayer: $8,550
___
Note: Premiums are estimates of average premiums for 2016, by the Congressional Budget Office.
Source: The Henry J. Kaiser Family Foundation.
Online: Health Reform Subsidy Calculator - Kaiser Health Reform

I am using this as an example.... not directed at you...


So my question is WHY would the cost of insurance for a family of 4 be so different in the above examples Yes, I can see an age difference, but is it that much?

Our company policy is the same for everybody.... young and old... and the two biggest users of health care in our company are on the young side... one guy has a young girl who just hurts herself all the time... another has a wife who had breast cancer...

 

[JoeWras]

AP came out with a story about Obamacare subsidies.

Health Subsidies: How Much Do You Qualify For?
By The Associated Press
<content omitted>...
Family of four
Age of policyholder: 60
Family income: $90,000
Annual cost of health insurance: $24,042
Government subsidy: $15,492
Annual premium paid by taxpayer: $8,550http://healthreform.kff.org/subsidycalculator.aspx

How convenient! They omitted the cliff example. All they had to do was boost the income here to 95k, or make it a family of 3, and the subsidy is ZERO.