8 Things Accountants need to tell their Clients about Health Reform
Individual Mandate: If they do not have “ compliant coverage “ in place - they may face a penalty for 2014 tax year. $ 95 for each adult filer, $47.50 per child ( maximum of $285) OR - 1 % of AGI - whichever is greater.
The “ Affordable “ of the Affordable Care Act ( aka Health Reform, Obamacare ) provides a “ premium discount “ paid directly to insurance companies to help middle income folks pay for the new plans. This is the role of Healthcare.Gov website - to apply for the tax credits and apply that to the insurance plans
Healthcare.gov or the Insurance Marketplace will ask for a ESTIMATE of income for 2014. This is the number used to calculate the premium discount. If this changes thru the year, we may contact the Marketplace to adjust the tax credit. This estimate will be reconciled with actual income reported for 2014 tax in 2015.
If a couple is married - they must file jointly to receive the subsidy, even if only one person is applying for coverage thru the Marketplace. And the entire household income must be used to calculate their AGI. For same-gender couples - who are married in a state with marriage equality, they also must file jointly. The subsidy will not apply to child only coverage.
The tax credit is calculated based on the maximum percentage of household income an eligible tax payer should pay for health insurance. This percentage is applied to the “ baseline Silver plan” which may vary by age and zip code. The resulting tax credit - a set dollar amount - may then be applied to any plan chosen.
In addition to premium discount, folks with incomes between 100 – 250% of FPL will quality for “ reduced cost sharing” on Silver plans. These plans have lower co-pays, deductibles and out of pocket limits.
Out Of Pocket Limits have supplanted “ Out of Pocket Maximums. " In the insurance plans previously, the OoPM referred only to " major medical"; you could continue to pay copays for expensive medications and physical therapy beyond the OoPM. Now the Out of Pocket Limit is an aggregate number - $ 6350 individual, $12,700 family. After this the insurance will pay 100 %
Coverage Available thru Group Insurance - If someone has group insurance thru their employer, they will NOT qualify for a premium tax credit if that coverage is BOTH 1. Compliant in plan design - offering the new Essential Health Benefits. AND 2. Affordable - under 9.5% of their salary. If only one or neither is met, they may qualify for a subsidy. For spouses and dependents, the coverage must be affordable in relationship to household size and income. Employers are required by law to supply employees with documentation OMB1210-0149
AND One More Point
Folks may find help thru Healthcare.gov, calling 800-318-2596 , navigators or agents / brokers. If they choose to work with an agent, their premiums are the same and there is no additional cost. They will benefit from the knowledge and expertise an agent who is certified by the Marketplace- -helping them choose a new insurance which meets their needs, goals, values and budget.
Dave Trout - Trout Insurance firstname.lastname@example.org Troutinsurance.Biz 828-658-1472