ACA subsidies, rebates and tax forms

[Free_at_49]

I read both ACA threads and I’m very confused. I grew up in Canada and have lived in 3 EU countries for 16 years. All these countries have universal health care, there are no forms, no applications, no billing, and your coverage is as guaranteed as your right to vote.

The big picture: I have an $800/month Blue-Cross health insurance for which I’m only paying $200. So that gives the impression that the Fed is throwing in the extra $600, thereby subsidizing insurance companies with taxpayer money. Is this what ACA is doing?!

Also, since I first signed up last year, I started receiving a series of threatening letters. First, ACA wanted me to prove that I’m a US citizen, or they would cancel my health coverage. Next they wanted me to prove my income because there was some deviation from my original estimate, again with a threat of cancellation. They make you feel like you have to prove that you’re poor, so that you can qualify for some charity.

Also, health care and taxation are unrelated matters in other countries, but here they’ve managed to connect them. What exactly are the tax forms I got from the federal exchange? Do they add the “subsidy” to you taxable income, effectively taking back some of it?

Please explain.

 

[pb4uski]

You can look at the $600/month advance premium credit you are receiving as the feds helping you out with your health insurance costs because your income is low. While in a sense it helps the health insurers some, on the other side of ACA they limit the amount of profit that a health insurer can earn by requiring that a certain percentage of premiums be paid in benefits so there is an element of offset.

The letters and documentation are annoying and there is another thread that documents our frustration with the administration of ACA and ineptitude of healthcare.gov.

The subsidy is not part of your taxable income. The forms are more related to documenting that you have insurance so you are not subject to the penalty for not having health insurance (also known as the shared responsibility payment).

I can see Porky's shadow once others pile on, so I'll stop here.

 

[gauss]

Hi Free_at_49,

I share the concern's of pb4uski that the political overtones may lead to an early closure of this thread, so I will get this in quickly.

You will receive a 1095-A from from the marketplace (aka healthcare exchange) if you purchased insurance there. The information from 1095-A will be used to prepare your tax return -- in particular form 8962 where your actual total premium tax credit for the year is calculated.

Depending on the value calculated on 8962, you will need to either repay excess advance premium tax credits (ie if your income was higher than forecast) or receive additional premium tax credits on your tax return if the advance credits were lower than they should have been.

You may also need to fill out form 8965 if you did not have coverage for all 12 months in order to calculate any penalty that may be due, or claim an exemption from the penalty in months where an exemption would apply.

-gauss

 

[Free_at_49]

Thank you. So who's paying the extra $600/month to BlueCross? The $800/mo seems artificially high, does anybody actually pay that much for health care?

 

[pb4uski]

The federal government is paying the $600/month to BCBS. $800 a month is not artificially high depending on where you live and what kind of plan you have though I will say that at that monthly rate I suspect that you probably have a pretty low deductible and co-pays
.

 

[Texas Proud]

Are you the only person on the plan What metal level is it

I can see it being that high with a gold or platinum plan... I have a family of 4 and pay over $800 per month and it is only bronze. Gold would cost twice as much or more...

BTW, the subsidy and taxes are very much connected.. when you file your tax return it will determine how much subsidy you should have received and you will either have to pay back some of what you got or get more sent to you...

Other countries have a different plan... but thinking that taxes and healthcare are not connected in those countries is wrong... the people pay taxes into their gvmt for them to pay for the healthcare... just sayin...

 

[MRG]

Thank you. ......Snip......

The $800/mo seems artificially high, does anybody actually pay that much for health care?

My silver plan for 1 is almost $800 a month prior to subsidies. It a wide network with relatively low deductible and max oop. Yes without subsidies I'll be paying that.

 

[pb4uski]

You mean subsidies, right? or has your spell-checker gone wild!

 

[MRG]

You mean subsidies, right? or has your spell-checker gone wild!

No idea what I did, thanks I think I got it.

 

[photoguy]

Thank you. So who's paying the extra $600/month to BlueCross? The $800/mo seems artificially high, does anybody actually pay that much for health care?

Depends on your age. The table below is from Cheapest Obamacare Plan Depends on Age & Healthcare Use ? Healthpocket

On CoveredCA I have BS PPO plan and it's about $300 (@42) and hits $800 around age 60.

 

[Free_at_49]

The federal government is paying the $600/month to BCBS. $800 a month is not artificially high depending on where you live and what kind of plan you have though I will say that at that monthly rate I suspect that you probably have a pretty low deductible and co-pays
.

Thank you, that’s intersting. I googled this, and I haven’t seen anything official stating that the Feds throw-in several hundred bucks a month for each one of us.

BTW, I have Blue Advantage silver, I picked it out at random online. I didn’t read all the co-pay, co-insurance BS. I just need to have some insurance in case of emergency, but there’s no way I’d pay $800/mo. I sympathize with those of you that have no other alternatives.

I spend several months in EU every year, supposedly Blue-cross covers me there too, but I don’t use it. I can walk into any public hospital and get better care for free.

 

[MichaelB]

I spend several months in EU every year, supposedly Blue-cross covers me there too, but I don’t use it. I can walk into any public hospital and get better care for free.

All care is paid for in one way or another, everywhere in the world. It is never free. It's also not clear what health care you are referring to when you write that "any public hospital' in the EU is better. It would seem that your posts in this thread are trying to provoke a response, and the reasoned responses are not taking the bait. Good for them.

 

[S103462]

Interesting thread…..

Actually, if you were to go out on the open market, and purchase a comprehensive health insurance policy (not catastrophic) for yourself and your spouse (here in Ohio), you would pay premiums in excess of $12K/year. Prior to the ACA, my wife and I had a comprehensive policy that was subsidized through our previous employer’s retirement plan that cost us $900/month. (She and I both retired early and are not yet Medicare-eligible.)

One might ask “Why pay that much for a policy? Why not just risk it?” In 2012, I had a herniated disk/sciatica – final amount for surgery: $103K; in 2014, my wife had surgery: $43K. You pay for it because you can’t risk being without it.

So, when the ACA came around, we dropped our previous coverage (since it was considered by the ACA to be “unaffordable”) and obtained an ACA Silver plan coverage for $299/mo in 2014; now paying $317/mo in 2015. It was a no-brainer decision.

 

[Free_at_49]

Interesting thread…..

Actually, if you were to go out on the open market, and purchase a comprehensive health insurance policy (not catastrophic) for yourself and your spouse (here in Ohio), you would pay premiums in excess of $12K/year. Prior to the ACA, my wife and I had a comprehensive policy that was subsidized through our previous employer’s retirement plan that cost us $900/month. (She and I both retired early and are not yet Medicare-eligible.)

One might ask “Why pay that much for a policy? Why not just risk it?” In 2012, I had a herniated disk/sciatica – final amount for surgery: $103K; in 2014, my wife had surgery: $43K. You pay for it because you can’t risk being without it.

So, when the ACA came around, we dropped our previous coverage (since it was considered by the ACA to be “unaffordable”) and obtained an ACA Silver plan coverage for $299/mo in 2014; now paying $317/mo in 2015. It was a no-brainer decision.

Ouch, that's a lot of money. People have to buy overpriced insurance to protect their life's savings. But $800/month mocks the word "affordable".

US Medicare kicks-in at 65 but still costs ~$100/mo -- Is that about right?

 

[MRG]

Ouch, that's a lot of money. People have to buy overpriced insurance to protect their life's savings. But $800/month mocks the word "affordable".

US Medicare kicks-in at 65 but still costs ~$100/mo -- Is that about right?

$100 for Medicare is about the least one can pay, depending on income it ca be higher and either way you need a supplemental plan.

While $800 may sound like alot consider the alternative. Prior to '14 I could possibly, no guarantee, insure part of my body, major parts/conditions excluded. That was after a 6 month period of no insurance coverage at all. It's all relative. To me $800 is very affordable compared to partial insurance.

 

[S103462]

In ACA terms, “affordable” is defined as premiums being less than 9.5% of annual household income.

Medicare Part B, has been means-tested since 2007 for beneficiaries with incomes above $85K for an individual, and above $170K for a couple. In 2015, higher-income beneficiaries pay premiums ranging from $146.90 to $335.70 per month, depending on their level of income, compared with the standard premium of $104.90.

My wife and I still have 5-years to go before we're Medicare-eligible so, IF this ACA survives the upcoming SCOTUS decision, we'll stay on ACA until age 65 and then switch to Medicare. (It's always about the money......)

 

[sengsational]

Just a follow-up on my experience with the process where the PPACA applicant is asked to provide documentation. Not worth a separate thread, so I thought I'd tag it onto this thread. Here's my post from the http://www.early-retirement.org/for...oked-then-reinstated-76545-2.html#post1574727 thread, which happened to get off-topic. Thankfully this is just an informational post about the mechanics/operations that I actually experienced (as a service to those that might encounter a similar situation).

I got a letter (not an email) that finally flattened this issue (I hope):

You're getting this message because you recently submitted one or more documents that we requested in your eligibility determination notice. We received your yearly household income documents, and we've verified your information. Your eligibility as described in your eligibility determination notice will continue unchanged. You don't need to take any further action at this time.

So even though you might get an email saying you're still supposed to submit documentation, it might be that the documentation that you have submitted just hasn't been processed yet.