Health Insurance Subsidies: Open for Business
by Terri Eyden on
By Ken Berry
It's not exactly like a new Walmart is moving in down the street, but the state-operated health insurance marketplaces will have their "grand opening" October 1. The long-awaited launch was mandated by the Affordable Care Act (ACA) – commonly referred to as "Obamacare" – which is designed to help provide affordable coverage to low-to-moderate income families.
Although some confusion among consumers is expected the first few months, early returns seem to indicate that the cost of insurance sold through most exchanges should be less expensive than initially anticipated. What's more, some taxpayers may benefit from a special government subsidy in the form of a tax credit. It's like getting a gift card to buy health insurance.
Here's the offer: The government will pay for part or all of the insurance premiums for individuals earning between 100 percent of 400 percent of the federal poverty level, or between about $23,550 and $94,200 per year for a family of four. Consumers won't have to pay more than a certain percentage of their income, ranging from 2 percent for those with incomes of up to 133 percent of the poverty level, or about $31,322 for a family of four, to 9.5 percent for those with an income between 300 to 400 percent of the poverty level. The dollar amounts of credits are based on the costs of mid-level insurance plans.
For More Information
The health insurance marketplace can provide affordable health insurance coverage for millions of Americans. With one application, someone can find out if he or she qualifies for lower costs based on income, compare coverage options side by side, and enroll in a state-run exchange.
Consumers should visit https://www.healthcare.gov/what-is-the-health-insurance-marketplace. To see the details for a particular state, click on "Get State Information."
Individuals who earn less than 250 percent of the poverty level, approximately $58,875 a year for a family of four, may also benefit from cost-sharing reductions for deductibles, co-payments, and coinsurance costs. These subsidies, allocated on a sliding scale, are also based on the cost of mid-level plans offered through the state exchanges. As a result, it's possible that some people who choose a "bare bones" policy won't have to pay much, if anything, out of their own pockets on a monthly basis.
The income levels for subsidies and cost sharing are actually based on modified adjusted gross income (MAGI) for 2014. The government is advising taxpayers to get a handle on their MAGI before they go shopping in the state-run exchanges. When appropriate, you can provide assistance to clients.
Only individuals without affordable employer-based insurance can avail themselves of the state-run exchanges. Government officials estimate that 3 percent of the population, roughly 7 million people, will buy health insurance through a state exchange in 2014. Despite this relatively low percentage, the new state exchanges represent an opportunity for uninsured Americans to obtain affordable health insurance at a tax discount.
The open enrollment period runs from October 1, 2013, through March 31, 2014. Any policy obtained via an exchange during this period will take effect January 1, 2014.
You may like these other stories...
There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...
Did you know that the tax code allows you to claim tax deductions for household damage caused by thefts, vandalism, fires, floods, hurricanes, and others kinds of casualties? But the law imposes several restrictions.Relief...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
FRF for SMEs Series--Measurement and Disclosure Principles for various Consolidations and Business Combinations, Part 4B
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
In this session we'll review best practices for how to generate interest in your firm’s services.
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.