Health Insurance Subsidies: Open for Business

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.
 
Related articles:

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.