Health insurance subsidy calculator

[JoeWras]

Ok, my MAGI for 2012 and 2013 will be high and I'll have DW's HI until the end of 2013, but if I have to withdraw an extra $15K in 2014 to pay for our HI it would put me over the $60K. If I had the subsidy to start with, I'd be under the $60K

Well, there's an interesting problem.

It is kind of like AMT today with state taxes. If you withhold too much, and it is returned as a refund, a whole set of complex calculations can be made to redo your AMT the following year.

I'm wondering if the same might happen with the tax code here? Don't count on it... If you have non-retirement funds set aside, hopefully you could use those to pay.

 

[pb4uski]

Ok, my MAGI for 2012 and 2013 will be high and I'll have DW's HI until the end of 2013, but if I have to withdraw an extra $15K in 2014 to pay for our HI it would put me over the $60K. If I had the subsidy to start with, I'd be under the $60K

You could squirrel away $15k from your high 2012-2013 high MAGI in taxable savings between now and 1/1/14 to avoid the problem of having to take additional withdrawals in 2014.

 

[MichaelB]

I haven't seen rules yet by HHS so there is still some speculation in this thread. The most recent tax return will be used, so in January 2014 that is 2012, and in June 2014 that is 2013.

 

[marko]

You could squirrel away $15k from your high 2012-2013 high MAGI in taxable savings between now and 1/1/14 to avoid the problem of having to take additional withdrawals in 2014.

Right! I've been burning up Turbo Tax all afternoon on this! Thanks for the insight.

 

[pb4uski]

I haven't seen rules yet by HHS so there is still some speculation in this thread. The most recent tax return will be used, so in January 2014 that is 2012, and in June 2014 that is 2013.

I guess that I don't understand Wouldn't the IRS regs published in the Federal Register back last May be authoritative at this point? I agree it is very hard to follow.

What role does HHS play?

https://www.federalregister.gov/articles/2012/05/23/2012-12421/health-insurance-premium-tax-credit

This document contains final regulations relating to the health insurance premium tax credit enacted by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended by the Medicare and Medicaid Extenders Act of 2010, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, the Department of Defense and Full-Year Continuing Appropriations Act, 2011, and the 3% Withholding Repeal and Job Creation Act. These final regulations provide guidance to individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and to Exchanges that make qualified health plans available to individuals and employers.

 

[fisherman]

The following may be of some use. It appears the tax year 2012 return is the likely one to be used unless other tax years are in place or you can prove a change in income by a method yet to be defined.

Income eligibility for advance tax credit payments may be determined using income as reported on the most recent tax return available. Under the law, individuals eligible for premium tax credits can apply for advance payments of the credits, which will be paid directly to their insurer. This is important for helping to make coverage affordable at the time it is needed. The ACA provides that income eligibility for advance payments may be determined using income as reported on the most recent tax return available, which for many people may reflect income for two years prior to the year for which assistance is being requested. The law also requires that procedures be in place to collect more current income information from people who experience a change in their financial situations or family circumstances since filing a return, or do not file a tax return.

The source of the above text is page two of this link: http://www.kff.org/healthreform/upload/8168.pdf

Very interesting and important subject to this ESR person.

 

[pb4uski]

Looks like this might help marko if he wants to take the chance of being at the mercy of gubmint bureaucrats.

 

[marko]

Thanks firsherman and pb4. I assumed something in the law would cover this as it should be a regular issue.

 

[MichaelB]

I guess that I don't understand Wouldn't the IRS regs published in the Federal Register back last May be authoritative at this point? I agree it is very hard to follow.

What role does HHS play?

The IRS final regs were helpful and cleared up some confusion. It isn't up to the IRS to calculate how much subsidy, the methodology to determine the amount, or how to apply a subsidy where there is no tax liability. That is noticeably absent from the IRS doc - all their examples begin with the subsidy already determined, and they deal with the reconciliation.

 

[gyropilot]

Hi everyone,

New forum member here!

Interesting topic.

I haven't seen anyone mention it on this thread yet, but the repayment of excess health insurance premium credits received on the exchanges is currently limited from $600 to $2500 for joint filers with a household income between 200% to 400% of the FPL (Federal Poverty Level). Above that level there's no cap and full repayment is required. This was passed in the "Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act of 2011" (P .L. 112-9).

There's been a more recent attempt to remove these repayment caps altogether which passed out of the House of Representatives, but it hasn't gone anywhere in the Senate.

Best regards,

John L.

 

[JoeWras]

gyro: welcome to the forum! I think we'll be seeing a lot of new members come here when they search on the PPACA.

I'm learning too, so I'm can't add much to your discussion except to say there are a lot of fine folks here studying and learning too.

Have you seen the discussion about "cliffs" in PPACA? Lots of other discussions about the 400% cut off and how the law seems to not have enough of a sliding scale when doing all the calculations.

 

[marko]

Hi everyone,

New forum member here!

Interesting topic.

I haven't seen anyone mention it on this thread yet, but the repayment of excess health insurance premium credits received on the exchanges is currently limited from $600 to $2500 for joint filers with a household income between 200% to 400% of the FPL (Federal Poverty Level). Above that level there's no cap and full repayment is required.

.

Can you clarify this comment? Do you mean if you pay $15K for HI and find that you are below 400% at tax time, that the most you can get back is $2500? Or are you saying that the most you can pay if <400% is $2500?

 

[pb4uski]

Can you clarify this comment? Do you mean if you pay $15K for HI and find that you are below 400% at tax time, that the most you can get back is $2500? Or are you saying that the most you can pay if <400% is $2500?

I think he is talking about if you owe because your premium credits received exceed what you are entitled to - not the other way around.

 

[pb4uski]

....There's been a more recent attempt to remove these repayment caps altogether which passed out of the House of Representatives, but it hasn't gone anywhere in the Senate.....

Full repayment would make sense IMO - perhaps over a few years or under an IRS approved payment plan - similar to the way other significant tax arrearages are collected.

 

[marko]

Sounds to me like there is only a broad concept but no deep details on putting any of this intoactual practice.

With only 13 months before implementation (a blink of an eye in DC time) it sure doesn't look like the practical nuts and bolts of such an enormous event have even begun to be considered.

Who, what , when, where? Crickets.

 

[MichaelB]

I think he is talking about if you owe because your premium credits received exceed what you are entitled to - not the other way around.

+1

Sounds to me like there is only a broad concept but no deep details on putting any of this intoactual practice.

With only 13 months before implementation (a blink of an eye in DC time) it sure doesn't look like the practical nuts and bolts of such an enormous event have even begun to be considered.

Who, what , when, where? Crickets.

The instructions were published in May and linked earlier in this thread by Pb4uski, here https://www.federalregister.gov/articles/2012/05/23/2012-12421/health-insurance-premium-tax-credit

 

[dgoldenz]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

 

[JoeWras]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

And then you have the tax issues.

 

[marko]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

Maybe we need to get the government involved!


Oh.


Wait.


Forget it.

 

[Animorph]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

So maybe HI brokers and sales guys will still have plenty to do...

 

[dgoldenz]

So maybe HI brokers and sales guys will still have plenty to do...

If commissions are not paid on subsidized policies through the exchange, then agents will not sell policies since that will be the majority of the business and it will be a waste of time. Many agents have already stopped selling health insurance after commissions were cut in half following passage of the legislation.

Know of any agents that sell health insurance in Massachusetts, Main, New York, or New Jersey? Neither do I...wonder why that could be? Hmm....

 

[fisherman]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

This has been a very good and helpful thread. I really appreciate all the info provided. I probably just missed the useful info in the post above.

 

[BLS53]

I foresee a whole cottage industry of accountants, attorneys, and insurance agents, sprouting up in relation to this law. Not to mention the growth in government bureaucracy that will be required to administer it.

 

[meierlde]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

But is that not the trend of all of our society, you need to be a rocket scientist to understand things, such as real estate closing statements insurance policies of whatever kind etc. The whole point is to give more jobs to unemployed law school graduates. Consider the thick documents with credit cards...

I fear in general the model of a citizen being able to understand much of what is around him may be obsolete, so the individual responsibility model breaks down when you don't understand what the rules are.

 

[pb4uski]

Just read this whole thread and the linked articles/documents. As someone who sells health insurance, I will just say...what a mess. If a message board full of highly-educated people can't understand it, how does anyone expect your average American to understand it?

Part of the sales process is the "explain it to me like I'm 5 years old" method so that your average person can understand what they are buying. There is no way to explain this to a 5 year old....none. I can't wait to have these fun conversations with my clients over the course of the next few years.

No worries - I'm sure that the exchanges will spell out everything crystal clear