Obamacare: What does it cost?

[Update 1/1/14: Affordable Care Act is now in effect, and "real", as you can see here.]

[Update 11/13/13: Courtesy of Jim, a reader, I am aware of www.thehealthsherpa.com, which can get you quotes for ACA compliant policies in your zip code, plus do a good rough estimate of the premium credit you may be eligible for. Remember to use MAGI income for income. I tested the site with my own policy and figures. It works! (Why couldn't the private government contractor do this in a week like these folks did?)]

[Update 11/4/13: I now have a policy through the Obamacare (ACA) website, but it did involve overcoming this one little glitch.]

[Update 9/22/13: On the link above, mentioned below (!), you can find yet another link to the Kaiser Family Foundation Affordable Care Act calculator, or use the one here. California has tailored theirs to the offerings in their state.]

[Update 6/16/13: One of the page links above, in the black band there where it starts "NEW", has its own link to "Covered California". California has its own nice Obamacare calculator. The gross prices are of course only for Cali, but the "net" price is net of the federal credit available on the Exchange. So people in practically every other state can use it!]

[Update 11/19/12: If your household is more than just a single person, the figures below need to be adjusted for your family size!]

[Update 11/22/12: I came up with a graph showing the estimated cost of an Exchange policy for single people with "adjusted gross income" (AGI) between 133% and 400% of the federal poverty level. This is a range from about $15,700 AGI to $47,000 AGI, in 2014. No one knows what the official numbers will be in 2014, but they will be based off AGI in 2012. There is a planning opportunity, then, to make your AGI under 400% of poverty level this year if you feel you will need to be in the Exchange (example: if you have an expensive individual policy right now.)

Back to the original post: ]

I have been running the numbers from a spreadsheet I made in 2010.

As it stands now, in states that adopt the “Medicaid Expansion”, people who have adjusted gross income (AGI) at [or below] 133% of the poverty level ($14,000 or so for a single individual) would be automatically picked up by the state’s Medicaid. (You might have to fill out the paperwork.)

The Supreme Court decision yesterday made this Medicaid Expansion voluntary, so if your state is dumb enough to say “no” to the feds, you wouldn’t get that coverage. To give away a 100% federal credit to cover the Expansion for the first several years, a state has got to really be run by some people who can’t do math. But maybe there are states like that, south of me . . . (And maybe the very one I’m sitting in, when you think about it.)

Obamacare also has a system of insurance exchanges. These are for people at 133% of poverty level, all the way up to 400%. For a single person, that’s an AGI of around $45,000. For a family of four, maybe $90,000.

Starting in January 2014, there will be an exchange in each state where you can buy a policy and receive a subsidy from the government — just like how people who get employer-paid insurance don’t have to pay taxes on theirs. (That is a subsidy, too, right?)

For a single individual, here are some maximum prices I estimated:

AGI of $20,000: $1,067 a year

$25,000: $1,783 a year

$30,000: $2,577 a year

$35,000: $3,325 a year

$40,000: $3,800 a year

As you can see, the more income you have, the higher the price. But the price is still pretty reasonable compared to trying to buy an individual policy on the private market. (It’s expected that that old business will dry up under the new program, because you’d just go to an exchange and get the policy there. That is one reason why the insurance companies have had their cronies screaming about Obamacare.)

Remember, that that AGI is after deductions for things like 401(k) and IRA. Many people will discover that it’s better to manage their income in a way that brings them to the 400% of poverty level cap. This way, they would be able to get the exchange subsidy.

A lot of the people who have been screaming about Obamacare don’t seem to realize that a low priced policy would be a great benefit to them. They are afraid of being dropped by the employer’s coverage, and “forced” into the exchanges. Except the law says the employer can’t do that. Plus, this thing about “forced”. Again. The insurance companies in the exchanges will be the same ones writing employer-based policies. So you are getting the same coverage from a different delivery channel. And that’s really only if you lose your job and your employer-based coverage.

In Japan, there is employer-based coverage. Occasionally, and frequently with foreigners, the employer tries to skirt the coverage. In any event, there is always municipal health insurance. The premiums are based on the Japanese version of adjusted gross income. (It’s like our own, because the Japanese tax system was set up after the war by a Columbia Professor, Carl Schoup. But it has its differences. I digress.) You pay less if you make less; more if you make more. There is a cap of about 690,000 yen, I think. At least, that’s what it was in the last full year I was there.

If you ever lived under another health system, you know how screwy the American one is. Obamacare starts to fix it. It’s not a complete fix. It’s like a jerry-rig of a fix on to another part they don’t want to change. But it is a fix.

It’s better than what was, for sure.

[Update: It isn't clear whether, in states that don't adopt Medicaid Expansion, whether their people under 133% of poverty level can go to the exchange and get the subsidy there. At $14,800, an exchange policy is $297. Why can't they just offer that price for people below $14,800?]

[Update 6/30/12: The 2012 U.S. federal poverty guidelines. 400% of poverty level for a family of four is $92,200.]

[Update #2 6/30/12: What is "household income" for purposes of the Affordable Care Act? I've seen a couple of different Powerpoints online that attempt to say, but I am going to rely on IRC 36B(d) as linked. It sounds like it's AGI off the tax return, plus the Foreign Earned Income Exclusion, plus any tax-exempt interest. I don't know if they ever fixed that loophole where the seniors who retire at 62 can collect social security and have it not count as income if it's off the tax return.]

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401 thoughts on “Obamacare: What does it cost?

  1. $40,000: $3,800 a year which is $316.66 dollars a month. for healthcare. A friend of mine showed me this, he currently pays $180.00 dollars a month for single healthcare.and makes $42,000 a year. So what your saying here is he will have to pay more for healthcare under Obama care. Because the company he works for can offer an exchange and pay out less. then the healthcare they offer now which they pay more for. so it figures it actually saves businesses money but the worker higher cost for health insurance.

    • The company cannot dump their plan and go to an exchange.

      If your friend is paying $1,800, it means that $1,800 is the competitive market price in your state. Therefore, it is highly unlikely that his insurance company could boost that to $3,600 without another company going in and picking up your friend’s business for much less. What the new plan does is guarantee that if your friend ever loses his coverage, he can pick up new coverage regardless.

      • Incorrect! The company can drop the coverage, but they have to pay a penalty. In many cases the company will still come out ahead by dropping coverage.

        • What I said is that the company cannot drop coverage AND go to the exchange. The employee can always go to the exchange if he/she is not covered. I read that the fine is big enough that companies would not drop coverage just to try and save money on it.

          • Companies will not just drop coverage but reduce worker hours to under 30 thus making them part-time. They are not obligated to pay health care then. This is what companies have already started doing.

            • You mean, they reduce worker hours under 30, so that the full-time equivalents (FTE) put them under 50 employees? A huge firm of part timers still has to pay the penalty in 2015 if they do not offer affordable insurance.

    • the problem is that if he is a single father with children, he will cost the company about 5,000 a year more in premiums or they will have to pay 2,000 in fines per year. single folks are going to be desirable hires.

      • No, that’s not true. Premiums are age-assessed, with children costing much less than the parents. So it’s not $5,000 and $2,000. That’s just scare tactics. People are added their adult children (under age 27 years) onto their policies for less than $1,000 a year, right now, due to early rule Obamacare changes.

    • Hi, I am 61 ,male ,and pay 900.00$ a month on healthcare, I am in good physical shape , Obama care seems like a very good change to me, [I make 40k a year]

      • thats almost 12 thousand a year in health care how do you manage rent utilites and food… your take home at the end of the year is close to 20 thousand… seems insaine

          • My premiums doubled in 2010 because of Obamacare (yes, my state got on the bandwagon early and insurance premiums jumped), and now they are increasing another 20% while the deductible for that plan also doubled in 2010 and will nearly double again! Thus, my annual health costs (premiums + family deductible) will increase from approx. $6,500/yr (2010) to well over $20,000 (2014). If they make my healthcare insurance any more AFFORDABLE, I’ll have to start foregoing some of the other luxuries to which I’ve become so accustomed, like food and shelter.

            Oh, and since I’m unemployed but trying to get re-employed, I now will get to play Russian Tax Roulette, the Home Game, if I decide to apply for those amazing Obamacare tax credits.

            Actually, if I enroll in the State Exchange, they’d put me and my family on Medicaid and I would likely loose all of our family doctors, as well. Bonus. I wonder if my barber has considered opening a sideline giving blood-lettings. He’s got state-of-the-art medical facilities — he got a new stereo system just last week.

            BTW, has anyone thought about what Experian and other credit rating companies will do to an unemployed person’s credit rating when they find out that they are long-term unemployed? Yes, Experian and others are doing ID checking and credit checking for the Obamacare system – did you know that? If they don’t know that you’re unemployed (and if you’re smart, they don’t) and you (unknowingly) give them your tax credit application by, uh, filing it with the State (yes, I got this info from a State representative in the State Exchange) – hmmmmmm… Oh, but credit reporting companies are famous for their consumer benevolence — I’m sure we can trust them. Or, take great credit rating built up over decades and FLUSH. What’s not to love?

            BUT WAIT, there’s more — I now get coverage for mental illness and alcohol/chemical dependencies. Never had either problem in the past, but the way this is tracking, I’ll probably need this coverage very soon.

            And, none of the folks in Employment Land have a clue because they don’t have to deal with it. So, for those of you who will now pay less…congratulations. You owe me and everyone in a similar situation. And, I may be dropping by for dinner or to pitch a tent in your yard, soon. Me and a lot of other people.

            The redistribution has begun. R U Ready?

            • I am not sure what to make of your rant. If I take it at face value, you don’t seem to know how the Affordable Care Act credits work, and who gets what information. You cannot afford to hire me, apparently, and I wouldn’t take you, because you sound really rude.

            • First off I want to say your comment was in no way rude as you were accused of being. You have every right to be angry at the Administration for shoving this down our throats.

              R2 you want to be very careful and try to avoid Medicaid, I’m unaware of your age but there is an estate recovery clause in the law for people over 55. This means that if anyone over the age of 55 is on Medicaid once that person dies the govt. will go after any and all monies they have provided for that person’s healthcare.

              I had an experience this past week where I called one of the 9 insurance companies on the MA exchange. When asked, I provided my name and projected 2014 income…….that’s all I provided to this sales rep. Within a minute she rattled off my home address and two other tidbits of my personal info. Now mind you I’ve never done business with this insurer but she had my info at her fingertips. I was livid to say the least. The following day I contacted our state exchange and the rep there told me that they only exchange info with the IRS, SS, and state dept of revenue. I argued that what she was saying is impossible because of what had transpired the day before with the insurance rep. She put me on hold to speak to a supervisor and when she came back she admitted to me that all the insurers also have access to my application. So my information is definitely not secure.

              I saw a clip on tv two days ago that showed Obama stating in February, one month before the law was signed, that people who had private plans would probably lose those plans. The law was signed the following month and in July of that yr. a regulation was added to the law. The regulation was for the grandfathered plans and narrowed down the insurers options for keeping them grandfathered. For instance if the insurer raised the cost of a co pay by only $5 the plan lost it’s grandfathered status. The administration knew full well that plans could not go on indefinitely without raising costs. They needed this pool of individuals moved to their pool of insured to subsidize the Medicaid recipients in order to work.

              All this mumbo jumbo about credits is bunk. Granted there are credits available depending on various factors, age, income, family size but it doesn’t offset the ridiculous increase in deductibles, co pays and out of pocket costs at all.

              We’ve experienced this in MA for years and even though everyone says it’s modeled after our plan it’s VERY different in many ways. One thing that happened here in MA that the media never covered is the individual policies purchased through the state that were ineligible for any subsidy. Those with subsidies got EXTREMELY generous benefits, extremely low premiums, no deductibles and it stayed like that for years because the country was watching. But they didn’t cover those that were over the income levels for any subsidy. Those rates skyrocketed year after year so that we could help subsidize the others. The same thing is happening now with ACA, however it’s also the people who are getting subsidies that will also get hit. So much for the average family seeing a $2500 savings. They will probably get a $2500 credit but when the plans are seeing double and even some triple increases the $2500 credit is meaningless.

              Now Obama is blaming the insurers for canceling the policies when he knew full well they would be cancelled to fully comply with the law. He blames everyone else for everything or claims he didn’t know anything. Fast and Furious, Benghazi, the AP scandal, the IRS scandal, the NSA scandal, the insurance companies……the list just goes on.

              I wish you luck in your endeavors and feel your pain.

            • You don’t seem to know how the ACA credits work. They are designed to keep the price of the “Second lowest-cost” Silver Plan to be no more than 9.5% of a tax filer’s MAGI (modified adjusted gross income). This is for filers under the four times federal poverty (400% FPL) level, which is most everyone in America. I read a stat where 400% and below is 90% of America, so nine in ten.

              The commenter used the handle “RU”, not “R2″. R2 was one of the robots in Star Wars.

            • I fully understand how the credits work & how the govt. will give credits to subsidize the premiums for whatever percentage category the applicant falls in. However premiums are only a small part of the healthcare costs and these premium credits do nothing to alleviate the potential onslaught of medical costs when it comes to the deductibles that have skyrocketed, the co pays and out of pocket costs. Sure it’s super if one is healthy and rarely if ever needs to see a doctor. However, they’ll be in shock if/when a health issue befalls them. Deductibles, co pays, co insurance all come into play before the out of pocket max of 6k+ is reached. Premiums and co pays don’t even count toward the deductible. So on top of the premium you have to basically start from square one with the deductibles and have to fulfill that amt. before the insurance kicks in 100%. Many people are talking of 10k or better deductibles. The UNAFFORDABLE CARE ACT is what it should have been called.

              And unlike our Dear Leader’s constant blame game, I will take full responsibility and apologize to RU for the mistake I made in typing R2 vs RU. However, unlike our Dear Leader my mistake was not intentional nor did it hurt millions of people across this country.

            • This is more nonsense. Out of pocket costs are capped for everyone making under the 400% FPL mark. They can be no more than 2/3rds of the max value that is allowed in an HSA. For 2014, this number is around $4550 for an individual. People who talk about $12,000 out of pockets are full of shit.

              You GOP sabotagers want it both ways. You cry about people getting “free insurance”, then you try to scare people that the new program won’t hardly cover anything at all. Get over it. Your side lost. Twice.

            • First of all I’m an Ind. not a Rep. I voted for Obama the first time around and then saw the light & how he has a Marxist agenda. One doesn’t get mentored by Frank Marshall Davis, have dealings with Bill Ayres, be taught by Said and not be immune to their radical ways.

              Secondly, I beg to differ with you. I’ve gone on the MA exchange, have not yet purchased insurance, will probably be eligible for a small subsidy according to the Kaiser calculator, and have shopped the 59 plans available to me. The plans start at $407 for a bronze, and deductibles must be paid first in the bronze plan for any medical service including doctors appts. before the 60/40 insurance kicks in. Moving right up to the top gold plan for me, alone with BC is $1103 a mo. premium albeit this plan does not have any deductible. ALL plans have $6250 out of pocket max , so I don’t know where you’re getting your 4k figure from unless states operate differently from one another.

              I am not trying to scare anyone. I’ve been honest and truthful with my figures. I’m in complete agreement with those individuals who have lost their insurance plans and are being forced into this system. How fair is it that members of Congress, our Dear Leader, or even people on employer sponsored plans are not being subjected to the same rigors that some of us are. I don’t want to be on the dole but looks like I may be forced into it. The small subsidy I think I may receive does not even come close to the difference in price for premiums I’ll be paying, never mind he deductibles, co pays and out of pocket max if I needed hospitalization.

              The deranged person we have running this country has ruined our economy, has disenfranchised our allies overseas, has lied through his teeth every chance he gets. Lie? What lies? Let me list a couple only to name a few……

              1- I will get rid of taxes for seniors with incomes up to 50k

              2- This will be the most transparent administration.

              3- I will not allow any pork in any bills.

              4- I will broadcast negotiations on CPAN for 5 days regarding the health care law.

              5- I will go over the budget line by line to cut waste.

              6- If you like your health care plan, you can keep your health care plan. PERIOD!

              There was a definite PERIOD there……not an asterisk…..a period.

              However, how could a person with an agenda to bring this country to it’s knees for past aggressions have won an election if he told the masses ……If you like your health care plan you might not be able to keep it and your cost could more than double. He wouldn’t be sitting in his leather chair in the Oval office eyeing those golf clubs for sure.

              For a person running this site, I would think you’d have some decorum about your online personality. Something for you to think about . Being thin skinned doesn’t suit you well and best be left from that guy in the WH.

            • Thanks for a having a place where the messages from those who have internalized the never-ending propaganda out there can be countered by facts. Must say that with all the head-shaking I’ve done over the past 4 years after being inundated with so much ‘through the looking glass’ reality, I’m in need of medical care to relieve the resultant pain. Thankfully I can finally get insurance to help pay for it.

              Here’s what I know to be reality. After I ran out COBRA which was a ‘silverish’ policy costing $450/mo., the only company that would issue me a policy quoted me an unaffordable $1200/mo +… the underwriting process having discovered my one pre-existing prescription (which ironically was what had kept me healthy and had kept me from filing any claims for many years). So I turned to my only other option – a $200/mo. catastrophic plan, which worked well unless I needed doctors or medicine. For those 2 years I paid 100% out-of-pocket.

              Since then with the discovery of another condition that will eventually cost me $100′s of thousands in treatment, I accepted the reality that without comprehensive coverage, I was destined to face a choice between imminent bankruptcy or imminent death. At the same time I’ve had to experience what feels like slow death as I witness half the country’s population so fervently fighting to ensure that I can maintain this freedom of choice (how patriotic!…”give you bankruptcy or give you death!”). So after 40 years of law abidance and full employment, thank you to all of you who are fighting so hard to keep the status quo of this private unregulated system that has helped me and millions of others feel like lepers.

              Back to ACA facts. I have now seen the individual plans available in Florida. There are 31 Silver tier plans ranging from $384/mo. to $537/mo., all fairly comparable to that $450 COBRA policy in cost and coverage. So my reality is that individuals in FL, even those at my ‘countdown-to- Medicare’ age and for those whether they’re at 400% of FPL or 4000% of FPL, can get a plan for less than $400/mo. -less than I paid 3 years ago for a nice comprehensive policy made available to all working for my school district (before I was laid off).

              And that’s without bringing up the incredible savings offered to those of us under 400% of FPL. For myself, with the premium tax credits, cost sharing, and out-of-pocket limits, the policy I will get will be AMAZINGLY affordable. As a matter of fact I can afford a lot more! So much so, I’m thinking that If I actually find that some people wil, in reality, be paying 2 or 3 times as much for a Marketplace policy over their current comparable comprehensive plan, I will do a reverse Robin Hood and help these folks. Although my income now is right at the poverty level, I vow to help these long suffering victims help defray some of their astronomical increases by redistributing some of my premium savings onto them.

              It seems only right that since those who have been suffering physically without having access to adequate health care are finally being helped, we can all turn our attention to these other poor souls… who buy into the propaganda they’ve been fed so believe their suffering is real (which just might be a eminently treatable condition listed in the DSM IV and therefore covered by Obamacare)

            • I’m a long time supporter of Obamacare, based on the compassionate side of the law. Pre existing conditions allowed, better quality health insurance etc. I became even more excited about Obamacare when I discovered that my personal situation would result in me obtaining huge subsidies. I am a 60 year old early retiree living mostly off post tax savings, therefore my magi is very low.

              However, I am becoming convinced that those without the benefit of the subsidies, are going to experience an extraordinary rate increase in January. I took my old plan which expires at the end of this year, and compared it to my my new silver plan. It was hard to do this because my old plan didn’t offer a prescription plan, like the new one does. Also, I am stepping into the 60-64 age group which would have seen me take a “hit” on my premiums anyway. Allowing for an annual 10% inflation bump on my premium, which I have experienced for years, and also adding in a 20% bump for jumping into an older bracket, my old individual plan should have gone from $292 per month to $400 per month. However, my new silver plan, which is very similar to my old plan, calls for $618 per month. I am staying with my old carrier by the way, Group Health Insurance. That means that in exchange for a prescription plan, I am incurring an extraordinary rate increase.Or I would if it wasn’t for those subsidies.

              Of course it’s hardly surprizing that people are experiencing these extraordinary increases. Effective Jan 1st. insurance carriers must now accept those with pre existing conditions. Someone has to pay for that. I think all the other ACA mandated provisions like maternity care and all the other stuff are already law, correct me if I am wrong.

              The question is will America be patient and wait a few years, and I believe it will take a few years, for health insurance premium increases to slow down, due to an influx of healthy previously uninsured Americans? Will americans wait even more than a few years, for all the cost savings that will come from a system that catches people before they become very sick costing us all millions of dollars in unpaid bills?

              I am hoping the same system that causes so much gridlock in D.C. buys the country enough time for this law to start paying dividends. i do believe that the invisible hand of capitalism will see the carriers pass on the savings they receive from having more healthy participants. And similarly, that the hospitals will start charging sensibly for their services, as they stop being inundated with the very sick uninsured.

              The first test will be next November!

            • It’s probably very wise for you to stay with your old plan. I see you did a cost comparison between your old plan and a silver plan but one thing stuck out in your post that gives me pause about your being able to even purchase a silver plan. The fact that you are living off previous savings, with interest rates so low and you stated you have a low MAGI leads me to believe you may even fall into the 138% FPL. Anyone falling into that lower income bracket is not allowed to purchase on the exchange to obtain a credit. [Note from Hoofin: "not allowed to purchase on the exchange to obtain a credit" means that anyone can purchase on the exchange, but if Medicaid was available to them, they won't be able to claim the ACA premium credit. It just means that if you're asset-rich with a 1040 MAGI below 138% of FPL, do some planning.] You must take the Medicaid option if it’s offered in your state. [Not true. You can refuse Medicaid, but you don't get the ACA premium credit.] I don’t know how they are handling this in states that opted out of Medicaid expansion. What scares me about this is people from the age of 55-65 [she means 64] that will be on Medicaid will be subject to estate recovery. What this means is any and all dollars provided to these people from the govt. for premiums, co pays, deductibles, hospitalizations, etc. etc. etc. is not really “free”. [This part isn't true, either. At worst, it is whatever the state paid on your behalf. There are no "premiums" for Medicaid.] Regardless of the fact that if that Medicaid patient has a will or trust in place it will be the govt. who gets first dibs to recoup what they paid out before heirs and beneficiaries inherit when that person dies. [Note: this, from the woman who was crying about people getting free stuff. She is a federal government hater, and so whatever argument works in the moment.] So “free” might sound nice between the ages of 55-65 [64] but if there is an estate of any kind they have to keep it in mind that the govt. will be there with their hand out when the Grimm Reaper comes a callin’. [Again, both sides of the coin. It's bad because it's a freebie supposedly. It's bad because unclosed loopholes may catch you in a tax-planning circumstance.]

            • Diane, my old plan terminates at the end of this year.I have already enrolled in the new Silver plan that becomes effective Jan 2014. I’m at 150% of the poverty level, so too much income for medicaid (thankfully), and qualified for huge subsidies.

            • Thanks so much for your support, DIane. Hoofin, forgive me, but I get a bit peeved when someone crows about how their health insurance costs are being dramatically lowered under Obamacare — even more so when they state or imply that this is the case for everyone. It is not. Someone is paying for it through higher premiums (and taxes) — and, I’m in that group.

              [Hoofin's note: you are not paying for it in higher taxes. Unless you have investment income above $250,000 a year. I also have my doubts about your "higher premium" schtick, too.]

              Ironically, I’ve been unemployed for much of the last four years, and yet I’ve been paying and will continue to pay for it. (My kids are going to pay for it, too. But, that’s another post.)

              [Hoofin's note: Another falsehood. Chances are, your kids now get a lifetime of not having to worry about health care coverage. They will not forego needed tests and checkups, which is one of the reasons our Medicare spends a lot to fix things that should have been taken care of before age 65 . . . ]

              How do I know I’ve been paying for it and will pay for it? I’ve received letters from my insurance company explicitly stating this fact (three years ago) – and, I’ve got the bills to prove it. I’ve paid over $15,000 EXTRA (on top of my 2010 insurance premium rate) in the past three years expressly because of Obamacare — and my insurance (formerly called “Catastrophic” because every time I went to the doctor it was a financial catastrophe, now called “Bronze”) is going up, another 20% in 2014 (and deductibles double, too). If you refuse to acknowledge this, then either you think I’m making stuff up, your are evil, or you are stupid. Please don’t take this the wrong way, but I’m not making stuff up.

              [Hoofin's note: Yes, under the old rules, you could be gouged. Not so under the NEW rules. Most horror stories being promoted by Fox News are really horror stories of the OLD rules.]

              As for how the credits work, there is a table that shows a consistent, intuitive, straight line progression of tax credit that decreases from 100% poverty level to 400% poverty level. (I think I saw this on KaiserHealth’s site and it appeared to be an extract from ACA regulations.) The less you make the greater your credit, and vice versa. I don’t agree with the fundamental concepts here, but at least this follows a certain logic.

              However, at least in my state, the actual amount of tax credit see-saws up and down across these levels – i.e., at 100% poverty level the tax credit is about $380/mo. for a family of four. It drops to $119 for that same family if they make $70,000, then bumps back up to $280 for the same family making $80,000, then dips again before abruptly dropping to $0 at about $94,000. My state has admitted to screwing up the tax credit calculations, and are sending letters to many enrollees telling them that their insurance will cost much more than they thought. At first, I thought this explained it. But after re-checking, the tax credits on the State Exchange site appeared to see-sawed even more, not less. This puzzled me greatly, until I came to the same conclusion that you explained – that they are trying to balance costs for a baseline Silver plan.

              [Hoofin's note: Since it's a federal credit, it does not "see saw" depending on the state. You made that up. It is a credit that sets the net price, for anyone in America, at a certain percentage of income. Most of America earns in that broad band between 100% and 400% of FPL. 90% -- Practically everybody.]

              This creates several inequities and potential problems because there are numerous plans available (not just one “Silver Plan”) and the State Exchange presents different plans with different deductibles and OOP caps depending upon your income level. This creates an incredibly complex and opaque system. Under this opaque system, in my state, I noticed, for example, that total premium costs (premium + tax credit) take a significant jump when the insured’s income reaches a certain level (around $55K). This increased premium is exacerbated by the fact that risk factors in healthcare actually decrease as income rises, not the converse. Therefore, the windfall for the insurance company (or State, or whichever entity actually receives this additional amount at the end of the day) is even more than the obvious delta.

              [Hoofin's note: You conveniently forget that insurance companies are now forbidden to keep any more than 20% of premiums to cover administrative, exec salaries, and profit to the shareholder. Why aren't you arguing for totally non-profit insurance companies, like what Blue Cross/Blue Shield used to be??]

              You don’t notice this unless you compare multiple income scenarios with the same base family. Since most people don’t have a highly variable income, or the potential of one, they don’t run this exercise. Also, our state website consistently has problems and boots you off – so, it takes a lot of time and patience to even get some of this data. And, our state is being congratulated as having one of the “best” state exchange websites and rollouts. Now there’s a high bar.

              [Hoofin's note: We all know that both the federal exchange, and the state exchanges, have their "glitches". Medicare rollout in 1966 also had "glitches": primarily, that any number of over-65 year olds didn't have birth certificates from the 19th century. That didn't stop the program.]

              Further, as to how credits work, if you are currently unemployed and have no income, you will either be placed on Medicaid or qualify for the highest subsidies. Correct? Here I admit that I do not yet know exactly how the system works because nobody in the system can tell me. I’ve asked several at the State Exchange and cannot obtain consistent or clear answers. Regardless, what is clear – if you qualify for and receive maximum monthly tax credits from, say, Jan. – May, then find employment and make more than 400% poverty level between June and Dec., come tax time, you will be forced to repay the tax credits that you received — even if you reported your income when received and stopped the tax credits in June. If you take an annual income view – you’re just paying back credits you didn’t qualify for, as viewed retroactively. However, that can be very painful for someone just getting back on their feet after prolonged unemployment.

              [Hoofin's note: If you are in a Medicaid Expansion state, you get Medicaid if your 2012 income is below 138% of FPL. Time to stop shame badging Medicaid then. If you get the ACA premimum credit (something you people are also trying to shame badge), you could be subject to clawback in 2015 IF your 2014 income is higher than 2012's.]

              What is very unclear to me because I have found no one who can answer the question – if you have to repay, will your repayment strictly be the tax credit? What else could it be? Interest. Penalty. It sounds as though these won’t apply – good. I hope that’s true. What about the fact that I received access to insurance plans that were much cheaper with better coverage? An insurance broker told me that under Medicaid, certain recipients will actually receive a Gold plan at no cost. Huh? First, that’s a ridiculously inappropriate use of tax payer money. Second, if I happened to land in that pool, what are my actual tax credits? If I purchase a Gold plan in my state, the cost is approx. $1,600/mo. for my family. Then, in the above scenario, I would have a 2014 tax bill of $9,600 + my usual taxes. Ouch!! I couldn’t pay that – so, now we can start adding interest and penalties and liens. Whoops.

              [Hoofin's note: Now you're trying to shame badge or health-scare people about the ACA credit? There is a clawback, which is defined in IRC Section 36B. Most all state sites, and the federal definitely, make it clear that it's an advance credit. You're just throwing out all the mud balls to see what sticks.]

              Regarding deductibles, if you don’t think that there is such a thing as an individual deductible of $5,000 or family $10,000 then either you haven’t looked or your state is very different than mine. The Bronze plans listed on my state’s exchange all include plans with $6,000/$10,000 deductibles. Our President boasted that “catastrophic coverage” is still available. Yeah – that’s a catastrophe.

              [Hoofin's note: Out of Pocket (OOP) is capped for anyone making under 400% of FPL MAGI on the tax return, at least if you choose Silver. Silver is often the much better choice than Bronze, if this kind of thing is a concern to you. People who play your game with this often leave out the fact that the ACA premium credit makes Silver cheaper than the gross price listed on the insurer's premium chart. Nice try.]

              My current insurance carrier will soon automatically shift me to an ACA-complant bronze plan with a $5K/$10 deductible — the cost for that plan is over $900/mo. for a family of four. That’s $10,800 in premiums + $5K/10K deductible = $15K/$20,800 (one trip to the emergency room will easily hit this for an individual, add one more than minor illness and you easily hit family deductibles). Further, the deductible applies to everything but preventative care and is accompanied by a 50% co-insurance. Yes, it’s all capped – $6,250 individual and $12,500 family. How does that change the above math? We had similar (albeit slightly higher OOP caps before.) Also, I’ve quoted “in-network” figures. If I go out-of-network, the deductibles and cap double. What part of that is hard to understand?

              [Hoofin's note: Stupid. You should have chosen Silver. You would have had your OOP capped.]

              Just for background — in the beginning of 2010 our current plan cost $400/mo. and had a deductible of $1500. In mid-2010 I received a note from my insurance provider stating that to cover the increased costs of Obamacare (again, my state jumped on the bandwagon early) my premiums would increase to $600/mo. with a $2500 individual/$5000 family deductible. Six months later, that jumped to $800/mo. – same plan. In the last three months, I have received at least four letters from my carrier stating that I will be switched to the Bronze plan – over $900/mo. and $5K/$10K deductibles. Do you honestly think that I’m making this up?

              [Hoofin's note: Yes. OLD rules. You use OLD rules to scare people about a NEW plan.]

              Now, it’s true that my pre-exisitng conditions are now covered. But wait — I’ve been paying for insurance for decades, even while unemployed, largely so that I would not have a pre-existing condition gap. Silly me, trying to be responsible again. You’d think I would have learned by now that such behavior is generally punished, not rewarded. I could have simply waited around for the tax payers to pay for it.

              [Hoofin's note: Your point is what? Silly you---unemployment insurance is insurance. You have "the taxpayers" picking up your unemployment check tab. Sorry Mitt Romney, insurance covers loss events to the insured. You have a loss event, you "win" or "take" if you prefer the 2012 campaign lingo. Is it really a "win"? Who wants to collect? NO ONE. That's what insurance is there for, though. It's if you HAVE to collect.]

              As to who gets what information, if you think I don’t understand it, then you are fighting with information provided by Experian themselves, the State Exchange, and Congress. BTW, it was the Republicans who pushed hard for more thorough income verification, so if you want to fodder for a liberal agenda, there you go — blame the Republicans (at least in part) for that one. These credit agencies have been tasked with accessing consumer data to verify income levels — do you think that the language of the Privacy Policies in place uses such restrictive language as to clearly and strictly prohibit these companies from using this data for credit assessment or something of that nature as part of this verification? I’d love to see that language. Or, perhaps you think that a credit reporting company would not lower a consumer’s credit score just because they are long-term unemployed? Really? it would probably constitute negligence on their part not to.

              [Hoofin's note: So now you go down the list to the next talking point you're sent(?) here to discuss: information. I have news for you: companies already have a lot of information in computer databases. This is why these private contractors can sell their services to the government. It has nothing to do with whether there should be coverage for all. If I give my name, and someone can find a credit report on me, I'm supposed to be alarmed? You, who are keeping your unemployment "secret", yet have time to mouth off at length on the internet?]

              Hoffin’s comment about “you can’t afford to hire me..and I wouldn’t take you” boggles my mind. Sorry, I just don’t get it. I don’t want to hire you, not for anything, and I wouldn’t want to work for you either — so, please don’t be concerned on either count. I wasn’t asking. Not sure where that came from, but I hope we’re clear.

              [Hoofin's note: it comes from obvious things that people like you try to obscure. You are totally uninformed about ACA, yet you come to my site to dissuade people who are looking for good information. It's more about your mouth going off, than getting real facts out. You'd take hours to straighten out, and every fact you got told would be challenged by another spun falsehood.]

              If I sound “rude” to you, it’s because I’ve been pushed so hard for so long that my typical reserve has worn thin – particularly when people crow about how Obamacare is providing super cheap insurance as though that’s for everyone – or, for everyone in need — and, seem to pretend that the money for all this cheaper insurance falls as manna from Heaven.

              [Hoofin's note: This is more Fox News talking points. On the one hand, it's "boo hoo free stuff is being given!" Then, on the other hand, it's "the deductibles are TOO HIGH!" Well, which is it? At least keep your lies straight.]

              As you said, 90% of America will qualify for tax credits. Where do you think all this money will come from? Do you think the Super Rich are paying for it? Yeah right – Bill Clinton and Al Gore have a ton of money – so does George Soros, Bill Gates, and young Mr. Zuckerberg – they are welcome to pay for my Obamacare insurance. I won’t hold my breadth. Do you think our Executive and Legislative branches are paying for it? The Obamas made it happen AND they have huge wealth and guaranteed wealth for life. Uh, no – they’re exempted. Evil corporations? Yes, they’ll foot some of the bill — but who makes up “evil” corporations? Employees – most of us. And where do “evil” corporations get most of their money? Consumers – most of us. So, maybe this part needs a rethink. So, who else? Self-employed and unemployed people with assets left to drain. Step right up folks, two lines, no waiting!

              [Hoofin's note: It's paid for out of long-overdue taxes on high income earners.]

              In my case, I worked 70, 80, and 100 hour weeks for decades to put away a small safety basket and very small retirement account. I’ve never taken a dime of public welfare. I won’t go into my details further, but now it’s being sucked away – plain and simple. Rather than being responsible for me and my family, I should have spent it all on a ridiculously overpriced house that I couldn’t afford, cars, and European cruises (didn’t do any of this, not once). Then, I’d have nothing now, but the U.S. taxpayers who work could repay my bad loans and give me free health insurance. If I stopped looking for work, I wouldn’t have to worry about repaying tax credits, either. Hold on — I’m starting to see a path forward here….

              [Hoofin's note: You poor martyr. As if no one else does this, works hard. You set up five or six strawmen, in Tea Party fashion, about the "undeserving" others. None of this has anything to do with ACA, though.]

              Dreams of sending my bright children to collage are also waning. The economy forced me to save for a rainy day rather than college. It’s been raining so long, that those funds are dwindling. So, now the great equalization ratchets up a notch. As a country, we do not have the resources or the intent to actually give everyone a college education, so we’ll go the other way. There are two ways to level the playing field – raise the water or lower it. Guess which one is coming…

              [Hoofin's note: Of course, if your kids are bright, any number of colleges will help to make college affordable, so this is more sidetrack from an anti-Obama nut.]

              Not everyone in TVLand is going to have a nice, tidy opinion for you. Not all the facts support the picture of daisies ACA supporters want to paint. There is a lot of pain out there in TVLand, and a good portion of it is being caused by Obamacare. Some will say, “you have to break a few eggs…” It’s easy to be altruistic when you’re not one of the eggs.

              [Hoofin's note: More unsupported scare tactics and shots. But this one just continues, as you see below.]

              If your opinion differs, it’s very easy to dismiss opinions like mine. There are a plethora of stereotype labels to do it. It’s funny how those with a liberal agenda scream like banshees when they feel that they’ve been labeled in any way, then they pass as many laws as possible to regulate everything from real estate ads to what people think. But, when an opposing opinion is raised, they pull out the labels faster than pork flies through Congress. I’m really digressing here – but, it’s almost comical. The EEOC recently got outted for blatantly using stereotypes to generate “evidence” (that was thrown out) in support of a disparate impact case. Now that’s funny. BTW, “disparate impact” – how is that not a quota? How is that not “thought legislation?” I don’t get it. (Sorry, that’s another post, too.)

              I’m sure I’ve overstayed my welcome with this tremendously long “rant” – “rant,” that’s another nice label. If I can make one request, it would be to ask that people stop pretending/saying/crowing that all this subsidized health insurance comes at no cost, or that only the people who can afford to pay, or who “should” pay are paying. That’s just wrong. For some people, it is nothing more than an unjust redistribution of wealth in which money is taken from people who worked very hard for it and, under Government force, given to people who did not.

              Oh, wait, that’s also our progressive tax structure and most of what our Legislative branch does for a living these days.

              Have you ever heard the phrase, “the road to Hell is paved with good intentions?”

              I will say “thank you” to Hoofin, for posting this blog and allowing the debate. At least we can still have the discussion. (For now.)

            • I thoroughly enjoyed your post RU it was extremely well written and thought provoking enough to give readers some food for thought in that not is all so rosy for a family buying on the exchanges in your situation. It gave me food for thought because the scenario you wrote about concerning a person possibly going on Medicaid and then finding employment hit home because I have a friend who may be facing that exact situation. Are the rules for this buried in the thousands of pages of legislation? Wouldn’t it be better to know ahead of time to be able to plan for it? She’s over 55. Would the state recovery rule come into play for her or would she be compelled to pay back every cent she received from the govt. if she found employment and therefore made her ineligible for the credit?

              [Response: the comment was crap. It was canned talking points, as if someone were sent to the site to say them.]

              I’ve been complaining for years about the MA system because my husband and I purchased through the Commonwealth system. My complaints about those not being subsidized paying for the subsidized fell on deaf ears. The media only published how “great” the system was working but failed to publish anything about the rates of those over the income limits and how the rates skyrocketed year after year. Charles Krauthammer nailed it the other day and echoed the complaints I had for so long. Thankfully, he has a large audience who listens. He said “The only way Obamacare could work, the only way Obama could say “it won’t add a penny to the deficit” is for some set of insured Americans to be subsidizing others; the only way to get that subsidy and it would be a hidden subsidy is to toss people out of their insurance, force them on to exchanges, force them to get stuff & pay for it they don’t need (10 essentials for Obamacare), get them to overpay and that excess is used to subsidize others. That was the scheme. It wasn’t a mistake, that was the intent. That is what is happening and Americans don’t like it.

              [Response: Again, this is a canned criticism. On the one hand, you people complain about the "free" and the "subsidized". In another, you're claiming that the "majority" is being forced to pay "more" through taxes. In reality, practically all pay less, and the over 50's get more "subsidy" than those under age 50. It's insurance that fixes people's problems before they hit Medicare age, when it costs way more to correct health problems.]

              The Federal “government” is not the be all and end all or the Holy Grail of Benevolence that Liberals make it out to be. The government is, for the most part, an ineffective and wasteful and incompetent conduit of wealth redistribution and social meddling and social re-engineering as we are seeing yet again as we witness a very predictable failure of the “Affordable Care Act”…founded and passed through willful, deliberate serial, multiple lies and deceit and now collapsing under its own weight and the innate incompetence of the Federal Government.

              [Response: So? You just don't like the federal government. Thanks for last month's shutdown, by the way . . . ]

              Like most Liberals, who apparently view “Federal Expense” as being a giant magic cookie jar filled with “magic money” …the supply of which is infinite and never ending, created by magic wands and pixie dust.

              [Response: This is just more claptrap.]

              Now, the Administration, with Congressional pressure, seems to be considering subsidizing those people that didn’t want more insurance in the first place who had their plans canceled. This is the reflexive response of a liberal in trouble. Spend more money, money the Government doesn’t have for getting corrective subsidies for insurance policies never wanted in the first place. Its quite insane. Where will these subsidies come from the “magic cookie jar”? We know that our Dear Leader promised it won’t add a cent to the debt so he’ll either have to once again break his promise or devise yet another scheme to fund these new subsidies.

              [Response: The act is paid for, mostly by putting taxes on high income earners who pay less than the secretary or janitor. Nice North Korean allusion, there, too. Makes you sound credible. (Yeah, right.)]

              Like you RU, I am appreciative of this blog to vent my frustrations. It’s difficult living in a “blue state” surrounded by progressives where my voice always falls on deaf ears. I’s not only the healthcare issue but that issue is certainly a big part of the problem that makes me believe it’s only a matter of time where our country will see an entire collapse making 2008 look like a walk in the park. I don’t envision anyone in Washington biting the bullet, doing the right thing for the good of the country and making us all “eat our peas” to turn things around.

              [Response: You appreciate a place to lay stink bombs, and maybe get paid for it, too.]

            • Why ObamaCare is a fantastic success

              By Wayne Allyn Root
              Published October 21, 2013

              [Deleted: My blog is not here to be a thing to piggyback chain e-mails or Washington Times articles on. Do you own work.]

          • BTW, Hoffin, I was going to ignore your personal, unsolicited jab at my earning power relative to yours (“you can’t afford to hire me”). On second thought, I’d like to respond:

            (1) As applied to my current status, your pejorative statement about my financial situation is a bit like laughing at a handicapped person who is wheelchair bound because that person cannot beat you at basketball. Does that make you feel better about yourself? Does that refute any of the facts?

            (2) As to my earning power prior to my job loss and what it will be after, you have no clue. You assume that they guy in the wheelchair wasn’t pro before he landed in that chair and you assume he’ll never get out of that chair again. Sorry. Wrong on both counts.

            • You are one jab after another. Frankly, I don’t believe you are any down-on-your-luck character. You sound like you DO have a job — as one of those people who is paid to visit popular websites blogging about health care issues, to lay your stink bombs.

            • Dude, you are really drinking the Kool-Aid. The facts are from direct and personal experience, except where expressly noted otherwise. So, you can tell the world that Obamacare turns the the sky green and the grass blue, but it’s simply not true. You can label me a labeler, but I’m just stating facts that I have personally encountered and, out of personal necessity, researched.

              For example, I pulled the credits directly from my state’s exchange for the same base family for multiple income scenarios running from $35K – $95K annual income. The credits do not calculate in the smooth line contemplated by the ACA. Rather they rise and fall along the way. It seems highly problematic to me, as it appears that my state’s exchange does not follow the ACA, but it is extremely clear. Others have noticed it, too. So, you can say “that can’t be.” You can say, ‘that makes no sense.” You can also go tell a bumble bee that it can’t fly. Yet, there it is.

              If I had a job, I wouldn’t be sweating this because like most of my friends who have jobs, my company would pony up some additional dollars, my monthly deduction for health insurance would go up by a hundred dollars or so, and my deduction and caps would go up or down, depending upon what was offered and what I and my company paid. Like them, I’d hardly notice.

              People who are in circumstances similar to mine, and there are many, are really feeling this.

              You call me “stupid” for not choosing a Silver plan to better cap my OOP. (I believe you also called me “silly” and a few other things — nice.) Would you like to pay the delta between Bronze and Silver for me? Or, if you’d like to make it more apples to apples, the delta between what I paid for my pre-ACA insurance (about 40% of post-ACA Bronze plan premiums with a deductible and OOP cap lower than most Silver Plan deductibles/caps), and a Silver plan?

              When you net out the total costs of a post-ACA Bronze plan and a post-ACA Silver plan, they are not very different. Either way, you’re exposed for ABOUT $20K/yr. in health expenses. If you opt for the Silver, you guarantee that you’ll pay closer to the $20K, but you get a few extra benefits that may or may not outweigh the assured cost. If you opt for Bronze, you forgo a few benefits, but you roll the dice that your costs will be closer to $10K (premiums only), if you don’t actually need healthcare. (The above round numbers are based on a family of four, middle-aged parents and school aged kids, all non-smokers. These numbers do not include the tax credit and will vary by location.)

              Some folks may think that’s peachy – either for themselves or as a sacrifice for the general population. Forgive me if I’m feeling like some of us were tossed under the bus on this one. (“We have to pass it (ACA), so then we can read and understand it…” WTF?) I may have to live with this hoohaa – but, don’t try to tell me it tastes like cherry cola.

              I’m not sure why I’m wasting my time talking to a wall here. You seem to think that I’m just a troll mucking up your board. Actually, I am trying to give a different view of the issues based on facts that I’ve seen and experienced. I have not and have no need to make anything up. No matter how much you tell me this is all peaches and cream for me and my family — it’s not. And, the same applies to many other people, as well. I hope a few other readers of your board have gotten something out of my responses – or, at least feel heard.

              As an aside, I am not a Tea Party person. I’m not even a Republican. (And, this is the only blog post I’ve ever commented on – ever.) Fox News does plenty of damage to the credibility of many of the underlying arguments it proposes to support. I’m not a fan of overstating the case, for those reasons. Unfortunately, when the tide comes in, most folks will grab whatever floats — and, unfortunately for many with a more conservative bent, Fox is it when it comes to mass media.

              If you don’t want a conversation, then maybe you shouldn’t have a blog. Or, maybe it should have a large warning, “Those with a different opinion or different circumstances should stay away!”

  2. HUH companies can drop health care, and pay the fine which is cheaper to pay for the individual, and you will be forced to buy what Ocommie care tells you you can afford dont like it cant afford it oh well the government tells you that now wether you like it or not, its called going to single payer, Obama said this in his own words to Union members, how do you like and hate those apples, Commies rule !!!!!!!!!!

    • Huh nothing. If the companies drop and pay the hefty fine, the employees can go directly to the Exchange. They can choose to buy a policy there—from the same insurance company that the employer was dealing with. (There is no Public Option, which many people here had wanted.) The insurance company cannot price gouge, because they must pay out 85% of the premium as benefit. Otherwise they have to refund the premium difference to the insured.

      The health insurance inside the Exchange is subsidized—but so is (tax-free) employer-provided insurance! Both have a subsidy from the government! So there’s no difference, except that people are now no longer naked and SOL if they lose their employer coverage.

      • the health insurance mandate is a direct cost to the tax payer the employee health insurance is not also you fail to show there will be different plans for health insurance and the cost will be based on the plan you choose and if your employer gives you a great plan you will pay a fine on having a health care plan the exceeds the government standard

        • If I let you make part of your income as TAX FREE, then there is a direct cost to the Treasury. You never pay on the medical insurance that’s provided by your employer. Up until last year, that number even got to stay secret, and was never reported on the W-2.

          You are right, there are more plans than just Silver level. There’s Bronze (60-40), Gold (80-20) and Platinum (90-10). The Silver level is the one that the federal credit is based off of. You can buy Gold Level on the exchange and use whatever credit you would have gotten for Silver to reduce the cost.

          You are right, that if you have a Cadillac plan from the employer, then in 2018 there will be a surtax on the value if that value is over some mid 5-figure number. But what does that mean? That means, more or less, you lose the TAX FREE benefit on part of that plan. I think that’s fair. If we are going to be stingy about “subsidies” from the government, then why should let there be TAX FREE treatment on someone’s $30,000 health insurance benny from their job?

  3. The price you list for a single person making 40k Is $3800 a year and the tax would be about 1/3 of that. So you for those young people who dont need the full coverage they still save by not being fully insured only now they get 3% of their income extorted to pay for the ever expanding entitlement people now covering over 50% of the US population.

    • Well, no, that’s just wrong. $3,800 is the maximum that they could be charged on a policy in the Silver tier. If they think they’ll never need health insurance, they can buy a Bronze policy (60-40 coverage with major med) and apply the premium credit to that policy.

      If the health care costs are low in that state, it may mean they are out of pocket 1% on premiums—maybe even nothing after the credit.

  4. I have a question…what if the husband/wife do not work voluntarily because their mortgage is paid and they have enough in the bank to live off of? Would they be considered low income even though they aren’t low net worth? Would they qualify for “free” coverage?

    • That’s right — no more Medicaid asset test. So they could be a 60-year-old couple, with $600,000 cash in the bank, and making $1,500 in interest a year. They get so-called “free” coverage while they burn down their assets (unless they live off the $1,500).

      Ironically, when the couple turns 65, they get Medicare, and no one will make snarky remarks about their assets.

      • the person pays Medicare premiums through the Medicare tax for their entire earning career until 65 Medicade they do not the rest of us pay that so snarky that

        • Not really true. The original receivers of Medicare, back around 1966 or ’68, never paid during their careers. They paid a $3/month premium. That was it! Three dollars.

          People retiring nowadays have paid the Medicare tax for longer. But did you know that 25% of Medicare’s budget comes out of the general revenue of the Treasury—not from the FICA payroll tax? This is why Mitt Romney wanted to cancel Medicare and turn it into voucher coupons. If you pay $1,000,000 in taxes, about 1/10th of that goes to support Medicare. That’s a hundred grand! The rich don’t want to pay the insurance bills of the old age middle class—that’s what that film about the 47% takers really meant.

          People who qualify for most of the MedicAID money are mostly the indigent old. They may have paid taxes all along the way, but now need assisted care—health related disabilities that put them in a day care or a home. That’s where 75% of the Medicaid money goes.

  5. I got some quotes for a single person with pre-existing/age group. The lowest quote was $550 a month with a $5,000 deductible and only pays 60% over that. If the cap for me is $277 a month with the deductible being at $5,000, I essentially cannot use the ‘insurance’ can I? So I have to pay the useless insurance AND pay for my doctor visits out of pocket, which I currently do. Wow, what a deal.

    • This obviously has nothing to do with Obamacare, since it is not fully effective until January 2014. What it sounds like you are talking about is a private plan that is NOT coming from the 2014 state exchange in Arizona.

      • And if there is no exchange set up by Arizona. They are under no obligation to do so. ACA has not provided funding for the federal govt to set up an exchange, and it is unlikely the GOP isn’t going to allow it to pass. Obamacare relies on state cooperation and if the states don’t as in medicaid expansion? Obamacare will flounder and the individual is stuck with huge new expenses/taxes and little benefit from insurance.

        • If Arizona does not set up an exchange, the federal government is REQUIRED to do it for them. If Arizona does not do a medicaid expansion, it’s your loss as a state. The taxes to support the expansion (from those making over $250,000) will still be collected; the money will just be spent elsewhere. As you know, the first three years of the expansion are paid by the feds, then at a rate afterwards of 95%. Arizona blew off Medicaid until 1981—it was all money lost that the Arizona hospitals had to collect by overcharging the people who did have insurance.

          • The federal govt may be required, but if they dont have the funds approved, it won’t happen. Whether it is our loss or not, obamacare is just a disaster waiting to happen and us little people will pay for it, not the rich. Thanks for nothing…..

            • A judge can compel the administration to implement the law. You keep skipping over the point, that if your state does not implement a health insurance exchange, you will get the federal exchange. The federal exchange is only made once, and then the states that didn’t follow the law are automatically put into it. Time for Arizona cry babies to grow up. If you don’t like America, give yourselves back to Mexico where the land came from.

            • no a judge cannot compel taxes, that is the sole constitutional role of congress, not the judiciary. So we won’t get an insurance exchange. No crybabies, that’s unprofessional of you. It is time for you socialists to find a country that has socialism or time for the states to go our separate ways. I am for that. You can live in your ‘worker’s paradise’ and totalitarian govt, the rest of us will go back to what the founding father’s designed.

            • Well, I think you need to tape your comments to a wall, and see how much of it won’t happen. Judges can rule if taxes are constitutional; the federal government will set up exchanges. Good luck next time.

    • I am very happy to find this site. Please forgive my lack of knowledge about Obamacare.
      I am turning 62 in Sept. 2013 and we live in California, my wife is < 65 but she will be on medicare in Dec. 2013. She is on retirement disability. She receives retirement pension $3500/mon taxable from CALSTRS, and $700/mon non-taxable from disability insurance. She was a teacher. I am on leave of absence for the rest of the year in order to take care of an elderly family member. This year I only made about 31K and won't make any more money for the rest of 2013. My COBRA from my employer is $1200/month for both of us and will reduce to 600/mos, just for me in Dec. 2013.
      1) What will be my AGI in 2013
      2) what will I have to pay under the Obamacare for my health care?
      4) Will it be better for me to not go to the Exchange and buy insurance from the private insurers?
      3) Under obamacare can one use 2013 AGI because the 2012 was much higher?
      I hope my questions are not too silly and obvious.
      Thanks in advance for your advise.
      Sincerely,
      Gary Shah

  6. What happens if your income comes from rentals say 35,000 family of 4 and you have 500,000 worth of equity on a million dollar worth of properties. Do i still qualify for Obamacare?

    • There is no asset test. There is no asset test for Medicare, either, is there? Is there an asset test to get the employer-paid exemption on health care for people who get the health insurance from their company? Good luck trying to convince people that they have to spend down to bankruptcy before they can get a subsidized insurance policy. I see you people a mile away.

  7. sorry buddy commies @ 25,000 a year 1,300, to 1,500 dollars out of pocket is too much for me to afford right now already live life at my means, no cable, no fine dining just live life already as minimal as i can, NOW pay a fine to help others get healthcare while i starve and dont hace health care myself, NO then prove me wrong god already live cheap as i can, low bills low rent i cannot as a poor actually working person afford this liberal untied states, i actually work for the love of god and communism is killing me and taking food from my table i will NOT get health insurance and WILL NOT be paying the fine, prison or death either way, the people will rise and take this country back are die trying i promise!

    • In other words, you still have the emergency room door open to you, and you have an honor promise of having to pay a “tax” of $95 to get that. The grapes are sour this morning, (again like 2008), it seems.

      • So I live in Nebraska I’m a single mom with 3 kids. My kids qualify for Medicaid and receive it because of my income. Right now my insurance through my employer is free to me. Will my kids still be able to get Medicaid with this new health care reform act? My family insurance at my work is $400 a month right now and I definitely can’t afford that.

        • You are set. You get federal tax credits to cover yourself. Your children get to stay in CHIP, unless your governor starts screwing with that out of spite for being a sore loser against Obama. If they cut back on CHIP, your kids will go on your employer policy for the same price as what you are covered for (i.e. net zero cost).

  8. Thank you for your in depth study and HW. I’m curious, as a NYC teacher, I’m pretty sure that my GHI- Emblem health plan is a Cadillac plan with Corinthian leather. So after let’s say after 18 years I resign or gloomy finds a way to get rid of me. Will GHI allow me to stay? Is it even worth it with the exchange? I’m fortunate to have a revenue steam of 60 k from investments and real estate. So, with a lower AGI, married no children, where do you think my wife and I stand out of pocket?

    • I don’t know how collective bargaining works for New York teachers, but generally, on retirement, you get continued coverage, right? Usually at some reduced, out-of-pocket cost, if not fully subsidized by the school district. My sense is that if your AGI is within that 400% of poverty level range (which is actually a HUGE range that covers most middle class people), then you could continue on GHI with some premium credits as well. If it’s a Cadillic plan, you know, it’s the insurer that bears the surtax. What happens in 2018 is way out enough that no one can make good calculations. My guess is that the plans will all work to keep their cost below the Cadillac surtax floor.

  9. I’m a single mother of 2 making around $32000 a year. My kids are on their dads insurance. I forgo insurance because my work offers incentive of more pay in exchange for no insurance. How will Obamacare affect me?

    • If your kids are claimed on your tax return, you are going to get a large premium credit for you to pick up your employer’s insurance. There is some chance that your net out-of-pocket will be zero. (You pay to be in, and the feds offer a credit to cover the cost.)

  10. First of all thanks for making the blog makes me understand more the Obama care. My question is the following will this be based on income you basically make? Say you own assets (rental income) and you make per year $30,000 gross and after deduction your left with $20,000 that will apply obviously on income tax. Now will there be a problem for the rental incomes you own? Reason I say is of what I heard when you get medicare if you own land and apply for medicare the government will take your home when deceased. I am just curious if its all based on income (I saw you answer an example someone having half a million dollars yet the $1,500 would be all that would be put into account). So assets will not disqualify you to get the Obamacare or make it an issue only how much you make per year?

    • That’s right. There is no asset test for Obamacare (the Affordable Care Act). There is, also, no asset test for Medicare (health insurance for seniors or the aged). There is a test, however, for people on MedicAID. Medicaid was only available to people without (that is, in or near poverty). The Medicaid rules will change in 2014 in states that adopt the “Medicaid expansion” part of Obamacare.

      • Thanks for the reply. Shifting to medicare isnt there an asset test (say you get medicare) where the government can take your homes after you go deceased? For medicaid we wont qualify since we make to much according to the government. So Obamacare is all based on the income you make? So by how you say Medicaid expansion that means it will be easier for people that make some income qualify for it? For example I am going to be independent next year I have 2 part time jobs and I believe I will make at the moment $12,000 an year. Will I qualify for medicaid (single man no kids will)? I one time I applied for medicaid (or something similar) to get my teeth check was making little income. I remember when applying they wanted to see my bank statements. Will savings in the bank affect it to get into medicaid or the expansion of medicaid set new standards of who can get it and how cant? Once gain really appreciate your reply and education myself more (like never heard of asset test).

        • In states that expand Medicaid, there will be a new formula to determine eligibility. It will be simplified, and it will be based off income. No asset test.

          It is not clear what happens in states that do NOT expand Medicaid. This was an issue the Supreme Court left open. Contact your state representatives and governor and tell them you want Medicaid expansion.

  11. We would all like to be insured at a low cost, but I’m concerned about the long term results of moving health care out of the private sector and making it a government entitlement. How will we pay for it over the long hall? The answer is simple, generate more government revenue by either increasing taxes (which is likely) or generate growth in the economy (which increases tax revenue by making the pie bigger). None of us want to pay more taxes so, how does one increase the revenue pie if we take a huge chunk of money from the private sector? I think Social Security and Medicare are excellent examples of what happens when the government runs social programs – down the road we run out of money.

    Why not try some private sector ideas like allowing people to purchase health insurance from insurance companies in any state? This will open up competition, which can’t hurt. I have also noticed a lower cost use of RVN’s for family medicine issues. For example, I personally use an RVN when I have a cold or flu – She runs a very nice clinic and charges $55 per visit. Why not move in this direction?

    Yes, free medical insurance sounds great but we all know the old saying, “nothing is free”.

    • The Affordable Care Act keeps the private sector in the medical insurance industry. It simply regulates them like a utility. This is long overdue.

      There is no “free”, except the extremely indigent. The emergency room was an unacceptable method of treating poor patients, and so now, in states with Medicaid expansion, there will be publicly paid care. I see no problem with this. These are people who have nothing, or relatively little. At least they will be able to keep their health. All other modern countries do it this way.

      For the general public, Obamacare, its nickname, sets up a health insurance on a sliding fee schedule. Up to 400% of the federal poverty level, there are premium credits available starting in 2014. What is the difference between premium credits, and the current (and continuing) policy of providing TAX FREE employer-paid health insurance? Tax free health insurance means that the person is not paying tax on that income. It is no different than the government handing a credit, at that person’s marginal tax rate, to help pay for insurance. Mathematically, there is no difference. The only difference otherwise is that the assistance is prorated for how much income the middle class resident has. Lower income, more premium credit.

      Pre-existing conditions get covered. People are, or should be, in an insurance program, so pre-existings should be no issue anyway.

      You mention cost. All the countries that have universal coverage already, have lower costs than us. How? Well, because they’re being taken care of all along the way. Metabolic disease (diabetes, heart disease, high blood pressure, etc.) is addressed and treated sooner, so costs don’t escalate. Metabolic diseases are 75% of global health care costs, weighted more heavily to America.

      Obviously, as you say, if costs continue out of hand, we will have to tax or regulate the foods in our diet that make us so sick. The evidence is pointing to sugar. I would favor a sugar tax if it turns out that health care costs are not brought under control.

  12. I think this topic is very important, and thank you so much for clearing some of my question. Although I know there will be many more as we begin to enter into this Obamacare phase.im not comfortable with Obamacare but I felt it was the best choice rather than the Romney plan what little we heard, didn’t not like his ideas so that’s why president Obama got my vote. However, my question is why do they call it a tax on the middle class when it was said that it wasn’t a tax. Is it because we are now going to have to pay a premium? What part of it is going to be a tax? Right now my job gives me 500.00 a month for insurance will Obamacare affect this?

    • It is not really a tax on the middle class the way income tax is. It is like a tax, though, because there will be a requirement that people obtain health insurance or pay a “shared responsibility fee”. It was this fee that the Supreme Court said was the equivalent of a tax (and so therefore Congress was well within its “taxing power” from the Constitution when they passed Obamacare).

      If you have employer-based insurance, nothing changes. Whatever your share of the payment is, you might be able to get premium credits (tax credits) to offset some of the cost. If you ever lose your job, a health insurance exchange in your state will provide you with the ability to continue to have health care coverage. Premium credits are also available on those exchanges.

      The controversial part is that people who don’t understand the premium credits think that this is an unusual, big giveaway of money. But the government has been giving money towards certain people’s health insurance (those who get it from their employer) for so many years now—since back to the World War Two era. All that changes is that more people can get help from the government, and they cannot be turned down for a policy. Both are good things.

  13. Lets say you are a factory worker and have insurance through your employer. And say your employer pays a portion of your insurance. If the employer drops coverage, takes the penalty instead, you, under the mandate, are required to maintain a policy or be taxed (penalized). Now, say you go over to the exchange. And say you are making a modest amount of money ($32,000) with a family of four. Say the annual cost of insurance under the exchange is $13,500. The subsidy is $10,742.00. Your monthly premiums such that the subsidy is $6000 per year. Say your premiums are now $1100.00. Granted, the government will subsidize the majority of that premium. However, am I incorrect in assuming that the subsidy will come after you file your tax return. So in other words, the person through their employer was paying maybe half the premium, but under the exchange, you would pay the full amount, an amount that is not affordable because you have to wait for the subsidy a whole year later. Am I missing something? I have not seen anyone discuss this practical issue.

    • You can direct that the subsidy go directly to the insurer, in which case, the insurer will collect the receivable, rather than you wait for it. By the way, it is highly unlikely that employers will start dropping coverage. But what is the case now? Employers often drop or push the cost onto the worker. If you can’t pay, you’re screwed. At least in 2014, if something happens with the coverage, there is the Exchange and there are the premium credits.

      • I have just found information that “some” will qualify for an advanced credit, so that does answer my question. Your contention that employers are unlikely to drop coverage is yet unknown. There are several different types of employers who are faced with this decision. The first is the one like myself who employs ten people. We provide 100% payment of insurance for employees and their families. I will drop the insurance and encourage the workers to go on the exchange or medicaid if they qualify. That will be a certainty. The second type of employer is the one who already provides insurance and is under the mandate to do so. They will have to calculate whether the penalty costs more than the insurance and then offset with whether dropping insurance is going to greatly impact their ability to draw workers. By my rough calculations, for a local factory it seemed that they would save a lot more by taking the penalties. Plus, even if they provide insurance and one person opts out and gets a subsidy on the exchanged they are penalized regardless. Are they penalized for each employee after the first 30 or just for each employee that gets on the exchange. I would assume it is the latter.

        • Well, it would make sense that some would not get the advanced credit, because they get it another way. Why? If you have a high income, and know that you will obtain the credit, you just adjust your federal tax withholding to ratchet down to the difference. Use that money in place of the credit, and then even it all out in April 2015.

          If an employer drops, then what happens? Yes, there’s a penalty. And yes, the workers get to go to the Exchange. The employer is still worse off for having dropped, because they’re stuck with the penalty. The workers can go to the Exchange and get the same coverage, probably for less money than the same insurer would charge the employer. (The insurance companies writing policies on the Exchange will be the same ones selling insurance on the group markets. In most states, two or three insurance companies have the bulk of all the health insurance business. So it’s not like the Exchange is some dark closet off unknown underwriters. This point amazes me, that people trust two or three huge businesses in place of state government, when state government could do the same thing for less money.)

          I am sure that some employers are going to work the math, and conclude the one thing, as you say. And it might work for one year. But, at some point, the penalty catches up with them.

          • We can talk about trust later but I have a question for you. What happens in the scenario where the employer does provide insurance, but for whatever reason an employee goes on to the exchange AND takes a subsidy. How is the employer penalized in that situation? I simply am not clear on the answer.

  14. I’m self employed and gross income is about $95000, AGI is $50000 so I would like to know how much it would cost me for family of four. Thanks Slaven

    • My guess is about $3,250 for an exchange policy, after the federal credit. $50,000 is a little over 200% of the poverty level for a family of four.

      There is also “cost sharing”, meaning that the feds will upgrade what you have to pay as co-payments on the policy. (You pay less if you use the policy.) I don’t discuss that above.

  15. My wife will be retireing at 62, I am already retired and over 65. My question is how much will it cost my wife for health insurance at 62 as she is considering working to 65 solely for medical benefits? Our income including social security is 75,000.

    • The question is, what is your adjusted gross income? As you can find out here, 400% of the poverty level for a family of two is just over $60,000. Regardless of where your income lies, though, you still get guaranteed issue on the Exchange, if the employer does not offer coverage.

      • I have read that no premium credits will be given if one of the spouses is getting medicare. Also married filing jointly is required. Therefore the entire cost will be on the insured with no credit which becomes very very expensive. Is this wrong I hope?

          • Thanks for the response. Following is what I read and hopefully this is not true as it claims if any member of family is covered by Medicare part A then premium assistance will not be allowed:

            Minimum Essential Coverage
            A taxpayer is allowed a premium assistance tax credit only for any month that one or more members of the applicable taxpayer’s family —
            i. Is enrolled in one or more qualified health plans through an exchange; and
            ii. Is not eligible for minimum essential coverage other than coverage in the individual market.
            “Minimum essential coverage” means and includes —
            • A government-sponsored program, including coverage under Medicare Part A, Medicaid, the Children’s Health Insurance Program, and TRICARE;
            • An eligible employer-sponsored plan;
            • A health plan offered in the individual market;
            • A grandfathered group health plan; or

            • Yes, the language is right, but you’re reading it wrong. The test goes to each individual. So a spouse on Medicare is not eligible for premium credits. But the other spouse would be entitled to premium credits if they [he or she] are covered in a Health Insurance Exchange plan.

            • If one spouse is >65 and thus on medicare and the other is<65 can they file as married filing separately if the younger spouse has almost no income to get insurance on that spouse on an exchange at a much lower cost?

            • Generally, no. Married filing separately bumps you out of the premium credit statute, because it would be a way for people to obtain a huge credit for the nonworking or very low income spouse.

              After all, in the one-spouse-on-Medicare situation, there is already a subsidy going to the Medicare recipient. Most Medicare enrollees (Part B enrollees) pay $105 a month. But the actual cost of coverage is something over $400 a month. So right there is a significant “credit” of over $3,600 a year.

              Plus the Medicare Part A is at no-cost if the enrollee has 40 credits in Social Security . . .

            • It looks to me that if a couple makes $50000 a year and one is on medicare >65 and the other is enrolled in an exchange <65 they will pay almost $12000 a year between the two for health care premiums…sounds a bit excessive don't you think?? Or do I have this wrong? Also for a family of 4 that makes just over the 400% will pay 3 times what a family of 4 at 400% will does not sound like a fair or a well thought out plan. Thoughts?? I guess people will be asking for pay cuts and divorces more as a result of this "plan"??

            • No. It sounds like the couple making $55,000 (MAGI) will pay 9.5% of that for a Health Exchange policy, net of the Premium Credit. So $5225 max for the one. The other on Medicare would normally pay the $104.90 a month, which, as I said elsewhere, is a heavily subsidized rate. (That is: “you didn’t build that. Somebody else [helps] to make that happen.”)

  16. I’m a single mom with one child. I get no child support, my adjusted gross is 34k a year but I’m still living paycheck to paycheck, my employer pays for my insurance but it would be $400 a month to add my son and I make too much for my son to qualify for CHIP anymore, am I really going to be paying almost $300 a month for him????

    • No, it would be nothing like that. Under estimated guidelines, the worst you’d ever end up paying (combined) is $200 a month. That’s like if your employer stopped covering you, etc.—a situation like that. Plus, you’d get shared cost credits, so your out-of-pocket if you used the insurance would be very low.

      Chances are, the insurance company will be required, under new rules, to offer the coverage for your son at competitive rates (not $400 a month). There are people who are getting their children covered under this “up to age 27″ transition rule for $70 a month, which is cheap.

      • By the way, do you know, that there is something new in the regulations. It’s the “CMS Proposed Standard Age Curve”—which is the Obama Administration’s guide for how much an insurance company will be able to charge based on age? A child’s coverage will cost no more than 63.5% of what it costs a 24 year old for coverage. So if you’re being told, “$400!”, that’s going to be nonsense soon—if it isn’t already.

      • You say her out of pocket will be “very low.” You just skipped.over the part that she is living paycheck to paycheck. This a perfect example of someone that won’t be able to afford coverage and will have the IRS deduct it from her tax return. She will have to pay the penalty and still won’t have the insurance. Quit being a mouthpiece and tell these people the truth instead of your idealistic scenarios.

        • The IRS will not deduct it from her paycheck. That was the whole point of the “shared responsibility payment”. It was ruled a tax, but with no enforcement mechanism (unless you are due a refund!)

          I am assuming that commenters here aren’t trolls, but there was one wild assumption in the story: that the child would cost an extra $400. That means her own coverages were at least $600, paid all by the employer. That just doesn’t jive. (How do I know, by the way? Because premiums will now be age-assessed. A child is always going to cost less, and often much less, than a parent.

          So the facts remain, that if there is any increase, it will be very small. And, in return, the worker gets this vast benefit. The deal would tend to be something you take as a gift horse, and see what other spending you have that’s the thing you really could do without. Not health insurance.

  17. so…if im doing all this right, for a family of 4, our AGI from this past year was 37000, the year before ( before i lost my job) was 61000. going off this past year we shouldnt pay more than $2100 a year? and based on my numbers from the year before (since i just got a new job) it would be???? still the same since we dont crack that 400% / or $110k a year correct?

    also, a big thank you from all the families that your helping plan out going forward.
    my hats off to you sir.

    • If you have AGI of $37000 for this year (2012), I am estimating $1650 for a policy. (This is your maximum cost, net of the federal credit. If you have a job with employer-paid insurance, then this is obviously moot.)

      There is also cost-sharing in that income band (150-200% of FPL).

      The health care credits available in 2014 will depend on the AGI for 2012. This is, in part, because enrollment is going to happen in Fall 2013 (next fall). So the only information the government will have available would come from the 2012 tax filing. Medicare has a lag like that, too.

      If your income goes up year-over-year, the federal credit would be adjusted down. I’m not sure if the federal credit for 2014 is impacted by whatever happens with AGI for 2013, but 2015′s definitely would.

  18. I am self employed with 61 years old with and average income of around $ 40,000. Currently I am paying around $ 6000.00 from Blue Cross. Is the new plan going to save my money?

    • Yes. It will cost no more than 9.5% of your adjusted gross income. If you are single, this means 40,000 times 9.5% = $3,800. Additionally, there are cost-sharing credits if you use the insurance.

  19. can you talk more about these ‘cost-sharing credits’ that you keep mentioning? even if all you can do is elaborate on the idea and not provide numbers…thanks…

    • Well, maybe I can do better than that with this link: http://www.cbpp.org/cms/index.cfm?fa=view&id=3190

      What is going on here is that people who are at less than 250% of federal poverty level are going to be given additional tax credits to cover part of the co-payment that their insurance requires. So if someone has the “silver plan”, which is 70-30 coverage (person pays 30%), they will be given additional credits if they are using the insurance and paying the 30%. The idea is to make the insurance affordable to use, not just affordable to have.

      • I’m on Medicare. My spouse is younger than age 65. We live in a community property state. Is the eligibility for a premium credit for my wife determined on 100% of our adjusted income or 50%?

  20. My wife and I both retired early and have a high deductible individual plan. We will be moving to one of the plans in the government exchanges in 2014. This year a I received a small inheritance from an IRA an Aunt left me. The amount was taxable and will be calculated as part of my AGI. This was a one time gift that will give an inaccurate account of my usual income in a year which is very meager. Is there any way I can have this amount adjusted for the purpose of receiving more in the form of tax credits to help me pay for my insurance? Even with the small inheritance I will still fall below the 400% threshold, but it will likely effect my subsidy by hundreds if not thousands of dollars.

  21. My brother in law and I have already paid the taxes on it, they were taken out before my portion was even sent to me. The IRA was divided among several people.

    • That’s a shame. Had you been named as a beneficiary in the IRA itself, you could have done a “trustee-to-trustee” transfer to an IRA separate from your brother-in-law, and just kept it as tax-deferred, taking RMD only. This would have avoided the income situation. The only other way I could see you reducing income is if you had earned income during the year (this year-either you or your wife), you could possibly make an IRA contribution of your own. Otherwise, the IRA distribution in 2012 affects the premium credit for 2014, even though it was, as you say, a one-time event.

      It may be possible, and I don’t know, that if 2013 turns out to be lower, you can somehow benefit from that in 2014. (For example, a sudden change in income down might affect what people can pay for an exchange policy.) But I have the strong feeling you have to wait until 2015 for it to affect premium credits. I would have to research the matter more.

  22. I think I was named as a beneficiary in the IRA and I was given a number of choices of how to receive the money, but transferring it into another IRA was not one of the choices. I think it seems a little unfair and I may call them once they start sending out the info on these plans, there may be some way that it can be adjusted. I am certain there will be others affected by this scenario! Thanks so much for your blog and your quick response!

    • Yes, it’s too late. The IRS will say it’s a distribution. People should always name beneficiaries on their IRAs, and the beneficiary should always take in a “trustee to trustee” transfer. If the IRA pays to estate as beneficiary, that’s no good. If the beneficiary turns around and takes a check in their name, thinking it’s a “rollover’, that’s no good either.

      If you or your wife had “earned income” this year (income from work), you could possibly do an IRA of your own, up to the max ($5,000 or $6,000 max for each.)

  23. OK, that is what I thought. A couple of last questions if you don’t mind. 1) Since we will get less tax credits in 2014 because of this IRA distribution, couldn’t we just get a lower cost plan (bronze) and then in 2015 when we will have more credits move up to a better plan, or will moving from plan to plan be more restrictive than that?

    2) If we chose not to get insurance in 2014 and pay the “tax” if we got sick during the year or had a heart attack, how long would it take for us to get insured? Would there be waiting periods, processing time, etc.

    Thanks!

    • Well, if you think you would need a health insurance policy in 2014, I wouldn’t go bare until the time you realize you need the policy. I would sign up in Fall 2013 like everyone else. (At least, everyone else who knows better!)

      About “metal levels”: if you have a HDHP now, then the Bronze Plan (60-40) might be the best choice. I know that the Exchanges only have to have a Silver (70-30) and a Gold (80-20), at minimum.

      The federal credits are based on the second lowest cost Silver Plan in an exchange. Also, keep in mind that there are cost-sharing credits, which are different than the one for the insurance itself. Cost-sharing credits go to assist in whatever co-pays are required. So a Bronze Plan co-payment (40%) may be subsidized down to a 30% by these credits—or more, on a sliding scale.

      What you hit on with the IRA distribution is, as I’ve said up in the main text, there is effectively a surtax, at marginal rates, for anyone eligible for federal credits. This is practically everyone who doesn’t have an employer-based plan.

  24. Pingback: Taking a rest from daily posting. | Hoofin

  25. Thanks again, but if we are able to go with a bronze plan to save money in 2014, would we have any trouble going to a better plan in 2015? Is there an open enrollment period each year that makes going to a better plan available and easy to do? If you can answer that I will leave you alone, sorry for all the questions but you seem very knowledgeable!

    • That’s the beauty of Obamacare, though. Once you have at least the Bronze Plan (60-40, with you as the 40%) Silver Plan, the cost-sharing federal credits raise anyone in certain “bands” (100% to 250% of federal poverty level) to be, net, in at least as good as better than a Silver Plan (70-30). UPDATE: You must be in the Silver Plan (at the minimum) to get the cost-sharing credits.

      I suppose you could switch in the future. (I’m not sure if it will be like open enrollment in Medicare C or D.) There is probably going to be a spreadsheet calculation needed, for whether it pays to pay it out as insurance premium, or wait until you actually have bills requiring a co-pay.

  26. Thanks for the update, that actually makes sense! People would be opting for the lower cost option in order to save money on their premiums, but then if they became ill or were injured they would have the funds necessary to cover their deductible. Better to get them into a more comprehensive plan from the beginning that will pay more of the costs for them.

    I am just going to have to pay more in 2014 because of that IRA inheritance, and then in 2015 I should get more credits as my AGI drops down to normal.

    • It’s unfortunate, but had you been told by the IRA trustee about the possibility to have your share put into a separate, inherited IRA account, then you wouldn’t have had the income leap all in 2012.

      It’s a point that I’m afraid was lost in all the b*tching and moaning by Republicans about Obamacare. What could have been going on in the meantime was telling people that their 2012 tax return is VERY important when it comes to the first year of this new program (2012), and for people to do the right tax planning. Your situation is one of the rarer ones, but how many people who are, say, right around the 400% of federal poverty level, know to try and make their adjusted gross income UNDER the 400%, if they can?

      I’m sure sites will start popping up with nice Java applets showing people what they need to do. But it will probably happen too late.

  27. It seems to me that you are missing a core point here. No matter how ‘good’ the price for the insurance may or may not turn out to be, it is the government forcing people to pay out MORE MONEY EVERY MONTH that they may not have. Just because some kooks in Washington sign a paper requiring folks to purchase insurance, their actions certainly do not increase the our income, and in fact decreases our incomes by the government stealing from us.

    • You’re right: my point is not your point. Your point ignores the fact that, when Congress passed the Affordable Care Act, it put enough subsidies into health care that it changed the relative prices between health care and everything else that people spend their income on.

      In effect, for the vast majority of Americans, health care will now be cheaper than it was before the act.

      No one is “forced” anything. You can always pay the shared responsibility payment and continue to go bare. It just makes a lot more sense, instead, to buy a policy and cut back on some other expense. (Soft drinks are probably the most obvious target. Cigarettes, etc.)

  28. THANK YOU SOoooo Much for sharing your knowlege about ACA
    you answered some ? my brain hadn’t thought of yet
    Yes, you’re right it wasn’t/not out there how important our 2012 taxes are for this ACA Thanks Again -Sunny

  29. Just wanted to add -As of right now Medicaid in Az. doesn’t have an asset test at least not for the childless adult but you can’t have over $5,000 in cash/checking/savings account

  30. Just want to see if i got this right or maybe it’s a ? really
    Single- under 60yrs- own your house – somewhere between $30k to $50k total combine accounts – pt self employed- AGI somewhere between $10k to $20k a year Will this person qualify for Medicaid or will they go with the new ACA in 2014- Thanks-

    • If the legislature does not do Medicaid Expansion in your state, you would have to be at about $11,800 MAGI (est. 100% of federal poverty level) to receive federal credits in the Health Insurance Exchange.

  31. (Am I right?)… From what I can gather, the Exchange will really only benefit the very poor, mostly poor, or those that “look” pretty poor on paper. Individuals/families (living in a major city like LA, CA, which generally equals higher costs for everything) making (barely) over 400% of FPL are pretty much screwed. I’m afraid we’ll be stuck in the private/individual market, continuing to struggle to keep up with the insanity of increasing premiums [interesting how they always seem to make their numbers fit the percentage of what needs to be spent on medical costs]. Got a whooping $8.26 Anthem refund on over $10,000 in premiums paid (for 1 adult and 2 kids) – and we are far from being on a “Cadillac plan.” Even Anthem says they consider 9.5% a reasonable sum to pay for healthcare (for what? a $14,000 OOP plan?). Such a joke. I was looking forward to Obamacare – but not so much after a buzillion googles. Seems it’s hardly worth it to try to better your situation by trying to make more money (to pay for college, retirement, a better rental to live in, etc…) because it will just shoot you over the 400% … which leaves us non-Medicare eligible limbo dancers stuck in a premium paying black hole… on or off the Exchange. Question for now is: go broker trying to stay on the plan I have right now — or switch and loose my “grandfathered” status? They are discontinuing my PPO plan (guessing because it has a lower OOP than most they are now trying to peddle), but they also are raising it to a brutal $1100 pr/mth to keep it. Still – some insurance blogs think that the Exchange rates could be 30-50% higher for comparable plans (mine currently has some Silver-ish characteristics, but likely a lower OOP). Without a crystal ball to predict future income and expenses, I feel stuck about what to do right now (have to decide by 1/31 to switch w/out underwriting). Sorry for the length, but you’ve been so kind to address everyone’s posts & no one seems to be addressing the “freelance/self-employed” who might sometimes/some years fall outside the shadow of the FPL.

    • I agree with you that, if you sit just north of 400% of the federal poverty level—with no way to bring your MAGI under the 400%—you are in a situation that sucks.

  32. If someone is on Medicaid in 2014 and then in 2015 makes too much money to be on Medicaid and gets kicks off Will they be able to buy an exchange policy or have to wait until filing taxes for 2015 ? Thx Sunny

    • Interesting question. I bet the kickoff happens on a delay, when MAGI makes the person not qualified for the (no charge) Medicaid. Presumably the Exchange kicks in.

      • So you don’t think you would be dropped off of Medicaid as soon as you made to much money
        But when would you be able to buy an exchange policy Do you have to wait until you file taxes that year ?
        Thx Again Sunny

  33. Yep, sucks… tough choice – 1. try to stay poor to access government “protections” within the (fairly high deductible/high OOPs) Exchange or 2. try to rise above being poor, but remain a premium slave in either market… fun times. I feel sorry for our kids. Thanks for the sympathy.

  34. Thanks. Is your firm in PA? One last question: What are your premium projections for the Bronze, Silver, Gold, and Platinum plans for singles and/or families – if over the 400% & paying out of pocket? Your graph was great, but I wasn’t sure which plan it involved.

    • Yes, it’s a Pennsylvania firm.

      If I had a good guess for the “Metal Levels” on the new health insurances, I’d be right in there with the insurance companies. It sounds like they themselves don’t know how they are going to price come October. My sense is they are going to base the Bronze on something close to their average quotes now (since the claim is that the overall pool of insured is only covered to 50% of actuarial value, not 60%, which is Bronze Level). Of course, individual policy rates will no longer be. So probably individual policies go down in price; group policies go up.

  35. I am a 50 year old, self employed, married man with a senior in high school. Right now I have in place a 5000.00 dollar deductable per family member (only 2 people in my family have to reach the deductable) with an out of pocket cost of 3000.00 per family member. I am paying about 5500.00 a year for this insurance.We chose not to get a prescription plan with this plan or maturnity care. It does cover wellness checks and all of the preventive testing at 100%. It also has no lifetime maximum dollar amount. It is a comprehensive plan. After the deductable the insurance pays 80%, I pay 20% up to 3000.00 then the insurance covers us at 100%. My concern is if i do not meet the 400% poverty level for the exchange then my insurance cost will have really skyrocketed for my family. Can i keep my current policy that I purchase on my own in 2014? I keep hearing about no more than a 2000.00 deductable per member. Does that include all policies that are sold off the exchange? I also keep hearing about household income. My senior in high school has an after school job that she made a little under 9000.00 in 2012. I can claim her as a dependent but she will file her own income tax. After we find out what our AGI is, are we required then to add her 9000.00 income on top of our AGI income to determine eligibilty for the subsidy? I know we would not add her income to ours for tax return but I am asking if her income is added to ours for eligibility of subsidy. I cannot find any place on the web that says if your dependent children that have a after school job, that are still in high school or college, if their AGI is added to yours in determing eligibilty for subsidy. You also mention that to get your AGI down you can deduct IRA. I deduct half of self employment tax as allowed, as well as my health insurance I buy for my family. Is that also included to bring AGI down for the exchange as well. What about a health saving deduction under adjusted gross income bracket on taxes. I am thinking that if i cannot get my AGI down enough then this affordable care act insurance will not be affordable to me. Thank you for any information that you can give me. I appreciate it.

    • Next year, insurance plans are going to have to meet actuarial equivalence tests. These are shorthanded as Metal Levels. A Bronze plan will have a 60% equivalence. That means the plan will have to cover a certain percentage of a defined set of essential health benefits, up to some point where everything is covered in full. However this mix is set up, the overall plan has to be meeting a 60% coverage test. (This does not mean you pay 40 and the insurance company 60, but that the overall coverage before the catastrophic coverage kicks in is like that.)

      Silver plans are set at 70%; Gold plans at 80%; and Platinum, at 90%. Presumably, the more coverage, the more it costs.

      Plans can offer different levels of deductibles. There is some maximum allowable deductible, though.

      It isn’t clear to me, from what you described about your current plan, what its actuarial equivalence is. It may not be 80%. I bet you can find out from the right person in your insurance company.

      As to AGI, nowhere in the act does it say that the childrens’ AGI is rolled up into the parents’. Proper retirement planning can help you to reduce AGI in any given year, and this may now be critical for some people who are close to the 400% FPL mark. We advise about that sort of thing in the firm I work for.

  36. Our state decided to let the Feds run our exchange. We are a family of 5, not married but we have two children together and one from a previous relationship. We live modestly on around $35,000 per year. I have wondered how the new health care act will affect us and what it will cost. The children are currently covered under Kids Connection, but neither me or their father has any health insurance and cannot afford the plan offered though the employer.

    • You will have to sign up for insurance by January 2014. If it’s your employer’s one, and it’s “unaffordable” by definition of Congress, then you get the Premium Credit. You may also get cost sharing credits depending on your AGI. If you do qualify for the Premium Credit, be careful that your income doesn’t jump too much year-to-year.

  37. Thanks for all the great info. My question: my husband and I will both turn 62 in 2014. He has had heart attack and not in best of health but works when he can but only earns up to $1300. I am the major breadwinner and we get health insurance thru my work costing me about $400 a month. My hope is to have us both retire at 62 to hopefully have some time together while healthy. Our only income will be the SS $1280 each per month. Will we be eligible for the medicaid plan in Pennsylvania under Obamacare? Since our income in 2012 was obviously much higher than it will be going forward at retirment? Due to his illness and our lack of income we also took about $20000 out of my IRA to get thru the years expenses (we hope to sell our house, pay off everything and buy a $90000 mobile home where our rent will only be about $600 a month).

    • 1) If your AGI is over 100% federal poverty level (FPL), you can get insurance on the Exchange, with a federal credit. (Feb. 2013 number for family size of two: $15,510).

      2) Our illustrious governor and his buddies in the Legislature haven’t said they will do Medicaid Expansion for Pennsylvania. This means you might be out of luck if you don’t have ENOUGH income to be at 100% FPL in years after 2014.

      3) The firm I am working for in Elizabethtown would be happy to do your taxes. DM me.

  38. I’m on disability from my company…..I’m considered a retiree. I have a 19 year old daughter on my policy. My employer reported the cost of my medical coverage at $28,000. I made $9000 last year from them as a vested employee….This makes no sense and the policy pays not ONE dime towards my medical care as its considered only a coordination of benefits for me……even after I meet my deductible. In this $28,000 that they reported…..I pay $257 a month as my premium….That comes to $3084 a year in premiums for me…Again this policy does not pay out one dime for my coverage. My total income per year is $16,000. Am I really suppose to believe that my employer is paying $26,000 for a policy that pays out nothing for me?????????

    • It’s hard to say if your policy costs $28,000; but, if you can’t really use it, how much coverage do you really have? When Obamacare kicks in in January, there will be “essential minimum benefits”, and an out-of-pocket cap on annual expenses. Certain preventive tests will be free.

      • Exaxctly….if its not paying anything towards my medical costs why would my company pay this much for this policy for me. One of their full time employees that I know and who’s plan has more coverage than mine…His total costs was reported at $5000. They reported $5000 on his W-2 for medical costs and $26,000 on mine for me…. a retiree that gets less coverage….I don’t understand.

  39. Seriously, I have paid approx. $300 for mediocre coverage now i’ll have to pay over $500 under ObamaCare for BARE MINIMUM coverage – not sure what your thinking…

  40. My Father has health insurance thru his employer but my mom is self employed and doesn’t have insurance at all. She is eligible to be on my Dad’s insurance but the cost is prohibitive to them to do so. Since combined they make roughly $55k gross how does this affect them. Will my Mom be forced onto my Father’s insurance?

    • Probably. Your mom has to be covered, and the only question will be if your dad’s employer policy is deemed “unaffordable” under the rules. I think, if he would have to shell out more than 8% of MAGI to cover your mom on his policy, it would be. An alternative may be that she gets an exchange policy. There might be a penalty to the employer, then, for not offering affordable coverage. This is why they never should have jerry-rigged a new plan on top of employer-based insurance. They should have given everyone the opportunity to go right to the Exchanges.

  41. Hello! Thank you for this wonderful site!
    I am 58 1/2 years of age and have an individual policy with Anthem that just went up to $479.00 a month, allowed 3 doctor visits a year where I may use a co pay, wellness visits covered, deductible is $5000.00. I am in the process of a divorce, no children, 8 year marriage to a doctor. I have been a homemaker for the eight year marriage. I believe you stated that for me to enter the exchange they would take my income from 2012 to assess my premium. At that time I was filing taxes jointly with my husband showing income at about $100,000. I am now unemployed and looking at retraining for 6 months and finding a job probably at about $10 to $12 an hour no health insurance. We will be splitting our assets and the best case situation for me will be $350,000 cash/IRA, no alimony or temporary maintenance.

    Will my AIG be calculated by what my husband made in 2012 or will my AIG be calculated by my homemaker status.
    Thank you for your help in understanding this.

  42. First Thx Again for your great site How much data sharing of information does the IRS and Medicaid do If someone on medicaid rec. $25,000 as a gift And being the giver has to report any amount over $13,000 on their taxes ( with the name of the person they gave that amount to)
    Also if someone is self employed and their income varies from year to year from being on medicaid and high enough to buy from the exchange from one year to the next Will they just keep going back and forth – Thx Again Sunny, Really Enjoy all the info and ?s on your site

    • My understanding is that, going forward, Medicaid will be purely income-based. NO asset test.

      For people with varied incomes, like many self-employed people, I could see a situation where they would have to move from the Exchange to Medicaid, and back (and forth). This is an administrative problem for a future Congress to unwind, since the law is written as it is to start. They never should have delayed implementation to 2014, but that was politics. All that would have been worked out already.

  43. Think we are probably just above the 400% FPL……..so is there anywhere where I can get some idea of how much a policy is going to run for my husband and I, both age 58…..so much talk of the subsides if you are UNDER the 400% FPL are scaring me……..then I saw this recently:

    Dated Jan. 31st , 2013. :
    http://cnsnews.com/news/article/irs-cheapest-obamacare-plan-will-be-20000-family
    “In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.”

    That is $1,666.00 a month! YIKES….that is scary! So if you are at 401%FPL……your really will pay $1,666.00 a month??? And can you estimate exactly how much of a subsidy you would get for this specific $1,666.00/month Bronze level if you were within the 300-400% FPL ? I am having problems figuring exactly how much, percentage wise, these subsides will be contributing to total premium cost. (Sorry, lots of questions there!)

    So , is there a chart somewhere to show what a husband/ wife (58 years old) would pay on that bronze plan…….??? I need some reference on what people in general who are OVER the 400% FPL will be paying for health insurance.

    Thanks so much, this is one of the best sites for explaining the ObamaCare specifics that I have come across!

    • What is critical is that, if you can, you stay under 400% of modified adjusted gross income (MAGI or “Maggie”). The Section 36B premium credits only apply when MAGI is between 100% and 400% of federal poverty level. For a family of four, this is about $94,000, using the new February 2013 HHS poverty guidline.

      • I really can’t believe a law was written that makes people do everything possible to get under the 400% level and if they can’t quite do it they will pay 3X as much for health care thru the exchange and end up making a lot less than the lucky one who just got under the 400%. No wonder the Republicans fought this.

        • The Republicans fought to keep the subsidies to just below 300%, not 400%. The Republicans did everything they could to set traps and sabotage Obamacare. And the whole structure of the program was really THEIR proposal in the 1990s, to begin with!

  44. I have read about a supposed glitch that was somehow overlooked when Obamacare was passed. From what I understand no more than 9.5% of AGI will be paid for premiums,but this is based on an individual premium,nt including a spouse or kids. I retired early and as a result pay a larger prorated amount. Also my former employer imposed a cap on premiums that was reached in 2005 and as a result my wife and I will pay any and all increases in premiums from that year forward. We both work part time now. For 2013 our portion of the premiums is about $11,200 for the two of us,about half for me and half for her. Our AGI for 2012 is about $50,000. Is that supposed glitch only going to allow credits based on individual coverage only and not include the spouse,the way I understand it? Thank you for any input.

    • If you did not have the policy, you would be required to buy on the Exchange, and pay—net of the Obamacare credit— no more than $4,750 (if we use $50,000 MAGI for 2012). Your policy costs much more than $4,750, so it is not “affordable” according to the Act.

      I am not aware of any section of the act (and I’ve read quite a bit of it) that requires you to hold on to an unaffordable policy, when an affordable one is available. It’s also not clear that your plan will be grandfathered for 2014.

      Not knowing all the facts, it sounds like you will be no worse off, and potentially better off if you can pick up an alternate policy with better coverage for less money.

  45. Sorry, I will try again. I have a question about a glitch in Obamacare. From what I understand from what is deemed affordable is based only on individual coverage and does not include a spouse and/or kids. Therefore if an employer only covers an individual on health insurance the remainder to insure additional family members would not be eligible for any credits even if the total cost was well over 9.5% of AGI. Is this the case?

    • No, that’s not how Section 36B reads. Affordability is based on the taxpayer and spouse when the couple file as “married filed jointly”. Junior’s AGI is thrown in, if junior is included in household size to determine the federal credit.

  46. My son is married with 1 child. His Gross Annual Income is about $45K; his wife last year reported wage was under $10K; His employer offers a medical plan which would cost them about $750 per month. Based on the above this puts them at 281% over the proverty level for a family of 3. He has significant amount of debt (house payment, car payment) to the point in which he has nothing left. Where does this put him on the Obamacare chart does he go into an exchange? Is the employer required to pay the medical insurance or is that a pass through to the employee? What happens when the employer pays a portion and the employee is required to pay a portion of an employer plan.

    • I think he will have to pay up to 9.5% of his and her overall income, as measured by MAGI. If the employer pays part of it, he may still be on the hook up to 9.5%.

  47. I am self employed and posted a question earlier about if your teenagers or college students AGI would be added on to the parents AGI to determine eligibilty for a subsidy. You had responded that no where in the act does it say the childrens AGI are rolled into the parents AGI. I noticed a recent post (Feb 10) something about Juniors AGI will be added on as well.
    So if your teenager, college student, lives with you, has an after school job, and you claim them as a dependent, and if they are being included as part of the household number then their income is added on to the parents for determination of subsidy? Sorry, I am just a little confused and trying to get all the information I can. Thank you for answering questions from all of us. I look to your site often for answers, and I appreciate all that you do.

    • J. Baldwin, my understanding of the law is that if Junior isn’t being included to determine family size, then Junior’s income isn’t included. I stand corrected if I had implied that there weren’t situations where Junior’s income would get added into the family income.

      • The law states that a family’s household income includes the aggregate modified adjusted gross income of all family members who are required to file an income tax return. A child who is claimed as a dependent on parent’s return is required to file only if his/her income is greater than $5800. Therefore I assume if amount is less than $5800 it does not get added to household income. Do you think I am correct?

        • It seems to me that the dependent’s income is only included if the dependent is listed as such (that is, a $3900 deduction) on the main taxpayer’s return. I doubt Congress would have written the law in a way that confiscates Junior’s income, although for college financial aid purposes, there are some circumstances when it can take quite a hit.

  48. [Update #2 6/30/12: What is "household income" for purposes of the Affordable Care Act?...I don't know if they ever fixed that loophole where the seniors who retire at 62 can collect social security and have it not count as income if it's off the tax return.]

    1. If a senior starts collecting Social Security at age 62, is that counted as part of household income?
    2. Where can I see the loophole you mentioned?

    Thanks!

  49. Hi, thanks for this very informative site. I’m wondering: I am self-employed but my income varies each year and is hard to predict. The last few years have been under 200% poverty level, but in 2012 was much more than usual, unlikely to be that high again. I also had an additional part-time job that I no longer have, so that increases the AGI even more. Will there be an option to reflect that you no longer have a job that you had last year? And is there any way for a self-employed person to show that the previous year’s taxes are not reflective of typical income? Thanks for any information.

  50. You stated that the glitch in Obamacare with social security has been addressed. Can you elaborate on that for us? I have hunted high and low and can’t find a thing on this anywhere. Is social security income now counted only if it is taxable ? Husband is 66 collecting ss, I’m 61 and unemployed (lost job 2 yrs. ago), AGI is below the 138% FPL without social security (his ss is not taxable this yr. So do I add his untaxed social security or any part of it to the AGI to figure what my premiums may be?

  51. After surfing the net for hours on end, I finally found my answer. Social Security in it’s entirety will be counted in the MAGI. Here is the quote for the govt. website I discovered online:

    On November 21, 2011, President Obama signed into law P.L. 112-56, which will change the
    definition of income for these programs and include non-taxable Social Security in the definition
    of MAGI.

    It will now be simpler to get an approximate idea of what our premiums will cost.

    The government is doing an extremely poor job educating the public with facts. For instance in all the surfing I did on this subject I ran across two places where it states that a married couple filing separately will NOT be eligible for a subsidized plan. I know of two couples myself who normally file separately and I’ve already told them what I read today. Had they went ahead and filed that way again this year they’d be in a jam regarding insurance when they applied. Married people have to file jointly to qualify.

    I also heard on radio and saw on tv that the govt. has put a stop to admitting any new people into insurance programs that have pre existing conditions because they don’t have enough money to cover them through 2013. If they’ve already applied and were accepted ….no problem…..but no more newbies for the rest of the yr. Also heard 26 states have opted out now that the deadline has passed. How in the world is our govt. going to get exchanges up and running in those 26 states, who is going to pay for all the people needed to set up these govt. exchanges in the states.

    This is a mess! I don’t envision a smooth transition, it looks like it’s going to be much more costly than Obama promised when he said our premiums would be reduced by $2500 per family.

    Taxes are going to THE MOON ALICE!!!!!!

    • Glad I was able to point the way.

      No one knows what the exact prices for insurance will be in 2014. The benefit of the new law is that, for most of America, the Exchange price will be set (net of federal credit) at a certain percentage of income. “Modified adjusted gross income.”

      This is a real benefit; but, like most tax code benefits, people will only realize it when it’s explicitly pointed out as they file in 2015.

  52. This is THEE most exciting and informative site, I’ve encountered about something so vital to my future.
    My question: how will my 2012 income look as for qualification of AGI for the 2014 rollout?
    I am a 55 yo widow. My 56 yo husband died of pancreatic cancer last October 2012. He lived 7 horrid months from diagnosis on March 13. 2012. He was on California EDD(short term disability-non taxable) when he could no longer work 3 weeks after diagnosis in April. His total AGI from wages for 2012 was $22,000. I have not filed 2012 taxes yet, but I assume(?) it will be as married filing jointly as in the past.
    I have not worked since retiring with no pension to take care of him. I still have no income except to live off the investments we made over our 37 yr marriage. I currently draw $31,000/year from those investments to live on. I pay $516.00/mo for my health insurance (single coverage) through COBRA from my husband’s company. I have no dependents. I will not be eligible for SS Widows Benefits until, at the earliest, when I turn 60.
    What will the picture look like for me to get into one of the Fed’s exchanges next year and at what rate will my income be judged? My (new) permanent address is South Dakota, a Just Say No to anything resembling fairness state.

    • Hoofin’- I know you said that you cannot reply to every question, but if you have time, can you look at my question above and maybe point me to a post in which you have answered a similar question? thank you

      • Sorry I can’t answer every question left here in a timely matter. As I’ve been saying, I work in taxes and tax planning, and so I am, in some sense, competing against myself. When I wasn’t, it was more of a public service for whatever instructional value it add.

        To answer your question, it sounds like you will be considered a “single” person for exchange purposes, even if you file jointly for 2012. If this is so, you will want to look at your taxable income as a single person (that is, no asset test for the Health Insurance Exchange). If, for some reason, you are being told that the test is on joint income, then you should also be able to rely on federal poverty level numbers for a couple, not for a single person.

        You can easily find “federal poverty guidelines” on an internet search.

  53. I’m sorry I really don’t understand. My husband and I make less then 30,000 a year. We are retired and have medical insurance through my employer which is a police dept. we pay 1060.00 a month for health insurance. They pay 88.00a month for us. We are under 60. How much will we have to pay now for 2014.

    • If you are retired, then how do you have medical insurance through your employer? Do you mean your old employer?

      It will probably be that you can either keep your current policy, or (if it’s more than 9.5% of your MAGI income,) buy from the Health Insurance Exchange.

  54. If I no longer loose my insurance when my employer fires me , why wait? Why not quit right away and go surfing? The marginal difference between being a poorer partial freeloader and a sucker who works in a cubicle for those who will choose to freeload is getting quite a bit narrower.
    I mean what does the majority think? That people won’t notice the taxpayer money offered on a silver platter?

  55. Pingback: The republicans need a time out. - Page 2 (politics)

  56. I wrote a long comment 2 days ago about the “payback” clause in the law that nobody seems to be aware of. I’m disappointed that the owners of this blog have chosen not to post it for those who want to learn how this law may or may not affect them in the future. The “payback” clause is a major issue and will definitely affect many Americans who will be getting subsidies in 2014 but the effects of moving either up or down on the FPL scale won’t be realized until those taxes are filed a couple of yrs. down the road. Why would you choose not to make people aware of this by not posting my previous comment? I’m well aware that you are much in favor of ACA but let’s not candy coat everything here and bring some of these issues to light so that people may prepare themselves.

  57. What are states that will not institute Medicaid expansion going to do for those under 138% of FPL who are now ineligible for Medicaid ? It couldn’t be that those with incomes between 139% & 400% (or is it 100%-400%) of FPL will be eligible for premium subsidies for policies on the new exhange, while those without Medicaid and under 138% of FPL will be forced to buy a policy at full cost, could it? I’ve read through a lot of your site (how wonderful of you to give so much of time and expertise to others!) and I only found one comment that made it seem like you had a thought about what SHOULD happen,

    [Update: It isn't clear whether, in states that don't adopt Medicaid Expansion,
    whether their people under 133% of poverty level can go to the exchange and
    get the subsidy there. At $14,800, an exchange policy is $297. Why can't they
    just offer that price for people below $14,800?]

    But has any of these states or the federal gov’t addressed this situation or discussed possible plans? I’m from Florida and have a feeling the right wing legislature will differ with our governor’s recent change of heart (turns out he had one!)

  58. What are states that have decided against the Medicaid expansion doing for those under 138% of FPL who aren’t currently eligible for Medicaid ? Could it be that those with incomes between 138% (or is it 100%) & 400% of FPL will be eligible for premium subsidies for policies on the 2014 exhange, while those without Medicaid and under 138% of FPL will be forced to buy a policy at full cost, could it? I have searched through most of your blog (so wonderful of you to give so much of your time and expertise to help the ignorant and confused!) and found only one comment on this topic, but it was more what you think SHOULD be, than what has been instituted or discussed as a remedy:

    “[Update: It isn't clear whether, in states that don't adopt Medicaid Expansion, whether their people under 133% of poverty level can go to the exchange and
    get the subsidy there. At $14,800, an exchange policy is $297. Why can't they
    just offer that price for people below $14,800?]”

    Do you know of any states with a plan to address this? I live in Florida and fear the right wing legislature will disregard the governor’s recent change of heart (was shocked to find out he had one!) and vote against expansion.

    • That is the problem. There are no premium subsidies for those below 100% of poverty level, since the assumption in the law was that all the states would have to expand Medicaid or else lose all Medicaid funding.

      • None of the states have worked at all with the feds to have the Medicaid money used for subsidies instead? None of the states have committees who are working to address this issue? If it actually ends up that those at 4x the poverty line get subsidies while those at one fourth of the PL pay full price (or go without) than it is just ‘through the looking glass’!! Right now as a single 58 year old with a pre-existing conditions,having lost my job and employee health insurance and running thru COBRA, I was quoted something like $1300/mo for full coverage. I was forced to just go with a catastrophic policy for around $200 that covers everything but doctors & medicine (a donut hole plan as opposed to the whole donut plan) If Florida fails to vote for expansion and I remain in the Medicaid cracks, boy how I’d like to be able to buy a full coverage policy for the $297/mo. that, as you say, people right at and just above the poverty line will be able to. Instead here I am with two strategies: crossing my fingers and wait for the Florida legislature to act or look toward moving to a state that has more allegiance to the U.S. government of the 21st century than to the Confederacy of the 19th. Thanks again Hoofin for your time, effort and good works. Gene M.

        • I appreciate your comments and admire how you closed the comment: more allegiance to the U.S. government of the 21st century than to the Confederacy of the 19th!

  59. How are the premiums going to be collected for people on the exchange? Will it be through their employer paychecks?

    • No. It would not go through the employer. My guess is that there will be an automatic debit feature when people sign up. Otherwise, the classic bill in the mail. The Obamacare credit, though, will be applied against the balance due, and you only pay the difference.

  60. You are an intelligent fella, but your references to the South and the Confederacy to those opposed to Obama undermine your credibility. State’s rights are not a casual issue to be dismissed by tying those against Obama Care as some sort of racists. There is enough on the table with Obama Care to have a reasonable discussion. This is a very serious issue as it effects a large portion of the economy and puts the government in control of people’s health, not just health access. So, stick with your rebuttals without making those you disagree with into confederate flag waving no-nothings.

    Now, a question. There have been many discussions about the consequences in the event States do not take the medicaid expansion. I have not seen much on what happens if a State decides not to set up an exchange. My understanding, since the Feds will set up the exchange, all the mandates do not apply nor will subsidies be given resulting in an illusory system. Seems like it was an intended loophole designed to give States the incentive to set up their own exchanges. So, is this true and if so, how many states have stated their intent, at this time, not to set up exchanges?

  61. I have two more questions:

    1. Do the rules and regulations of Obama Care apply to policies sold outside the exchange? My reading so far seems to indicate that certain rules, like the contraception mandate and the 85% rule do apply to all policies, but that some rules might not. In other words, if one says they do not want to be on the exchange because they do not want to be subject to federal rules (e.g. fear of rationing) would that be a misplaced fear since the rules apply to all (disregard whether rationing is a legitimate fear)? Let me be more clear. If an advisory panel under Obama Care decrees that that those over the age of 70 will not be eligible for a kidney transplant (and please, I am not trying to argue that it will come to this) then does that apply to private insurance policies or do they continue to make their own rules as far as limits on coverage.

    2. I have a law practice in Missouri with 9 employees four of which are attorneys and of the four, three are partners. Obviously we are not under the mandate but look to take advantage of Obama Care to do away with insurance. We have provided health insurance under a group policy. We have, for various reasons, paid 100% of the premiums. Of the ten employees, 1 partner is on medicare, 3 partners are on the group health plan at the firm (although one of the partners can easily go on her husband’s insurance) and then we have three other employees who have family coverage and two other employees who might ask to enroll in the near future. Our annual cost is $65,000 which is a lot of money for a small town firm. And I imagine when there is a rate renewal in September we will see a 10-20 percent increase. Now, my goal is to do away with the insurance entirely even though we could lower our contribution. If we did that, it is like a pay cut to those who would now have to contribute since we have already created the precedent. Obama Care offers the opportunity to save the firm money and shift the cost to the taxpayer. Now, Missouri has failed to set up a State Exchange but I will assume that subsidies will be available under a Missouri federal exchange despite the law being written to the contrary.

    I believe based on their income and dependents, the non-lawyer employees would all qualify for some sort of subsidy. We could make up the difference with pay raises to make it worth their while, especially since our coverage has a $5,000.00 deductible and is a 70/30 plan. It could be a win/win situation for our employees and the employers. One attorney attorney will continue with Medicare, the other will go on her husband’s insurance. I, myself will go on the exchange as I qualify for subsidies due to the fact that I have a heck of a lot of children. The fourth attorney may qualify for some subsidies as well. For example, if I pay for my own insurance, my costs will be reduced in half for insurance. When you look at the savings from eliminating the group plan, I will net an extra ten thousand in profit after the cost of me paying my own insurance. For the attorneys who do not need to go on Obama Care like the attorney on Medicare, he will be reacher to the tune of $20,000 per year.

    So, several questions. I have no idea how to go about this. It is extremely complicated. Right now I am having my taxes done with an I towards reducing AGI. When do people enroll, how long is the enrollment window? Do we have to terminate our insurance before they get on the exchange to qualify for the exchange. Do you have any advice from a business perspective to avoid these exorbitant costs? Any help is appreciated.

  62. I live in Florida. My AGI for 2012 for $5373. I am unemployed and my unemployment ran out a year ago. I will turn 62 in February 2014. I do not qualify for Medicaid currently because my assets are to high. If Florida does not accept the Medicaid Expansion then I will not be able to file on the exchange in Oct 2013 ? I am currently paying $673/month $5000 deductible for health insurance. I will probably have to cancel the policy because my it is too costly. I plan to collect SSI in Feb. 2014. I take care of my elderly Mother (87) who suffered a stroke !4 years ago. We have spend the summer in Delaware (6 months) at her home. Should I give up my homestead in Florida for the health benefits. I could easily become a legal resident in Delaware. My property taxes would probably only go up $1000/year. I can not afford the premiums for health anymore. I have filed Delaware part year nonresident taxes for at over seven years?

  63. hoofin, thanks for all the great info, you should be congratulated on the effort and time you have spent on this issue. I have used a lot of your info to debate the right wingers fox news etc. Also its about time the usa went in the direction of every industrial country in the world and implement a national health care system, obamacare is moving in the right direction,

  64. I live in Ohio with my husband and two children. Our AGI is 30K. My kids are on medicaid and neither my husband nor I have health insurance. It’s really tough to find a provider here who takes medicaid. What will we have to pay for all 4 of us to have coverage and will it be the medicaid the kids have now?

    • You will most likely get a family policy through the federal exchange, and pay about $600/year if you are at $30,000 AGI in 2014 (130% of poverty level for family of four).

      • A second probability, since you are near the 138% AGI mark, is that your whole family will qualify for the new, enhanced Medicaid, which will likely be accepted by many more Ohio practitioners if they want to put food on their table.

  65. Hi Hoofin!
    Could it be when you say in your initial post that “At $14,800, an exchange policy is $297″ that you mean per year. Till now I’d assumed it was $297/mo. but looking at the graph from that post it seems that it would have to be $297/yr. That translates to under $25/mo.! Could that be right?

    This year I will likely be around 70% to 80% of FPL and in a state that now looks to have rejected the medicaid expansion, so I’m trying to guage what I might have to pay in 2014 if I receive a subsidy. I know I shouldn’t be looking at the subsidized costs since they’re not for folks between 138% and 400% of the FPL – that the new Medicaid was intended for us; yet although the expansion’s rejection defies common sense, I’m still optimistic that somehow the state and federal gov’ts will figure a way to make sure that those of us under the FPL, at the very least, will get the same subsidy that the folks making more will get.

    Currently, with a $200/mo. ‘catastrophic’ plan and its $10K deductible, I’ve been putting off getting needed surgeries since they would cost me close to my maximum of $13K out-of-pocket (hurts more than the physical pain to think of paying an amount in excess of my annual income to get things repaired) and instead, I along with my pre-existing conditions, have been waiting patiently till 2014 to finally be allowed back into the comprehensive health insurance market.

    So to doublecheck, if I wind up getting the biggest subsidy does that mean the policy will cost me $297/yr? And if it’s my worse case scenario where I have to pay a non-subsidized amount, what would an individual policy cost? Your chart ends with those at 400% of FPL having to pay $4500. Does the non-subsidized plan jump up considerably at that point or would it be fairly close to the $4500 cost?

    Thanks so much for your time and insight
    G.M.

    • It is $297/year.

      If you do not have at least AGI of 100% FPL in 2014, you would not be eligible for the Section 36B (health insurance) credit. That is one of the ironies of how the law is written: it assumes everyone under 100% FPL will be in Medicaid.

      From what I’ve read and seen, it looks like the administration is going to sign people up based on what the applicant believes he/she will make in 2014. That’s in addition to the current regs, which use the 2012 AGI. They are obviously trying to get around people being stuck with a clawback on the credit in 2015.

  66. Thank you for all the information re: Affordable Care Act. Very complicated info out there on the web. My husband is 63 and he retired at 62; His income in 2012 was ss. I retired in March of this year and benefits will not start until August 2013. I am carrying our insurance through COBRA at the rate of $1164.00 per month currently. We have lived frugally and planned for early retirement but never imagined the current insurance costs! Since assets are not counted in the insurance cost equation will our income from 2012 or 2013 determine where we fall on the scale/cost of coverage? Thank you again for your time and informative blog.

    • Based just off what you tell me here, yes. If you are only living on early social security (which is added back to AGI to determine “MAGI” or modified adjusted gross income for Obamacare), then you should qualify for a Health Exchange credit. At 65, of course, you would get Medicare if you have the credits. But between 62 and 65, not only would you need Obamacare, you would have to enroll in some kind of insurance.

      In January, it goes from “will an insurance company offer me affordable insurance?” to a statement: “I have to have affordable health insurance.”

      When the Health Insurance Exchange is up and running in your state, at the start of October, you should be able to price a policy, which, with the Health Exchange credit, would be substantially less than $1164 a month.

      Maybe Obamacare is coming in the nick of time for you?

  67. Thank you for the quick response. We reside in Tennessee and our state is relying on the Federal government program. We anxiously await the October date to enroll for the 2014 coverage and health credit. There are many others like us who have retired early only to be denied affordable coverage due to pre-existing conditions(controlled Diabetes!) We could get coverage but the premium we were quoted was almost the same as our COBRA plan which we can carry for eighteen months. Thanks to the Obamacare program now hopefully we can save some of the insurance costs difference to really enjoy our retirement instead of dreading the huge payment monthly for the COBRA plan. Like you stated, just in the nick of time! Again, thank you for answering questions and being an educated voice to those of us who need help understanding the new healthcare program.

  68. Wow, this is a popular topic.
    My wife and I have an HSA qualified plan right now, and being able to spend pre-tax dollars for our health care bills is helpful. Do you know if any of the provisions of the HSA program will apply to these exchange policies? If tax credits are used for partial payment it seems unlikely that we would be allowed to also fund HSA accounts to pay medical expenses, but I haven’t seen anything definitive on this topic yet. Do you know if this has been addressed yet?

    Thanks

    • For more information, you would want to do a Bing search on “HSA” and “Bronze Level”. My understanding is that most HSAs will be fitted to a Bronze Level (60-40 coverage) plan, and that the Affordable Care Act was written to anticipate this. You keep your high deductible, and most all of the “60″ goes to catastrophic coverage.

  69. Let’s say you make $75000 in income for a family of 4. If you need to cash in some ira money to buy a new car or something similar say $30000, you all of a sudden have $105000 in income and get no subsidy which will cost you an additional $12000 or so in health care premiums. Therefore you probably won’t buy the car….great boost for the economy!!! Not!

  70. I live in New Jersey and am a retired public employee. I retired at age 49 with 25 years of service. My employer provides health care with my contribution % based upon the actual cost of the plan I select. The plan I selected for a family, runs about $28k a year with me having to contribute about $5k of that on a sliding increasing scale that goes up every year. This was contained in a collective bargaining agreement in 2010. I’ve been told that under the Presidents new plan, the max I can be charged is 9% of the cost of the plan. Any thoughts or information on this? Thanks Jim

    • In order for the plan to be defined as “affordable”, you must not have to contribute more than 9.5% of your income. Certain plans will be grandfathered, though. The other issue I see with yours is that your plan may be subject to the Cadillac Tax in 2018.

  71. I am married. But the marriage is not well. Will I be allowed to purchase an individual policy or family policy which does not cover her. Forget the economics here, the point is I am willing to pay more for a policy that does not cover her. Will I be allowed this freedom? Please address the health insurance issues and not other obvious issues here.

  72. Hi Hoofin
    There is some confusing language in the ACA pertaining to who is eligible for the tax credits. Reference is made to grandfathered plans,( defined as any plan one was in prior to the day the Act passed). It makes me think that anyone who has an individual policy already is excluded from the tax credits regardless of their income. I’m willing to accept that I am misinterpreting the language, but it sure is misleading. here is a link:

    http://www.bricker.com/documents/publications/1922.pdf

    Anyway, here is my situation. Retired seven years ago and have held a catastrophic individual policy ,HSA 2000 thru Group Health in Seattle. Paying $292 a month. I’m 60 in September, and will spend the next five years in a higher bracket, so my premium will take quite a bump. My modified AGI is going to be $16,000 in 2014, and my assets are immaterial of course. by my reckoning I am in for a fantastic windfall. It’s just seems to good to be true. Can you comment on this confusing language that I linked.On an Ipad by the way, pain in the neck to link properly, sorry.

    • I think you have it backwards. Someone with a grandfathered individual plan can always drop it and go to the Exchange. You are not forced to go to the Exchange if you have a grandfathered plan. It’s something like that.

  73. Oh Dear

    Looks like my huge post go lost. There is some language in The ACA that makes me think we will not receive a tax credit is we held a health care insurance policy before the act passed in March 2010. The act specifically defines the term ” grandfathered” as follows :
    What is a Grandfathered Plan?
    A grandfathered plan is any group health plan, including both insured and self-funded plans, and any health insurance coverage (including coverage from the individual health insurance market) in which an individual was enrolled on March 23, 2010.

    http://www.bricker.com/documents/publications/1922.pdf

    The Act goes onto say that:

    “Health insurance exchanges are established, and subsides for insurance premiums are given to individuals who buy a plan from an exchange and have a household income between 133% and 400% of the poverty line. To qualify for the subsidy, the beneficiaries cannot be eligible for other acceptable coverage.[111][113][114][115] ”

    http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act

    Note [113] elaborates on “other acceptable coverage”:

    Not Eligible for Other Acceptable Coverage
    To be eligible for credits, an individual cannot be eligible for other acceptable coverage—that is, “minimum essential coverage,” defined as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), coverage related to military service, an employer-sponsored plan, a GRANDFATHERED PLAN, and other coverage recognized by the Secretary. An individual eligible for, but not enrolled in, an employer-sponsored plan may still be eligible for premium credits if the employee’s contribution to premiums exceeded 9.5% of household income8 or if the plan’s payments cover less than 60% of total allowed costs.

    http://liberalarts.iupui.edu/economics/uploads/docs/jeanabrahamcrscredits.pdf

    Why is this language so misleading.It unequivocally states that a taxpayer who is eligible for a grandfathered plans, defined as any plan in existence prior to the day the act passed, is not eligible for credits.

    I am willing to concede that I am misinterpreting this language, but it sure is confusing.

    As for my situation I retired seven years ago and have held an individual catastrophic care policy for seven years.The HSA 2000 from group health in Seattle. it’s only $292 per month, but I turn 60 in September, and will spend the next five years in a more expensive bracket.The 60 to 64 age group. Now my MAGI will be $16,000 in 2014. It would appear I am in for a huge windfall. my premium will be about $45 a month and cost sharing reduces my annual out of pocket from 6k to 2k

    Just seems too good to be true. Aren’t all these credits for people who have no insurance, not existing policy holders, regardless of how poor existing policy holders may be?

    • I have to approve messages. Again, as I say, I don’t think an individual plan that you are already enrolled in prohibits you from dropping, and buying on the Exchange.

  74. Thank you for such a quick reply. You must be right, even the answer man at the Washington State Health Exchange agrees with you. I will stop trying to digest the legalize and celebrate the awesome news.

      • Ha

        I used to have an ” I Like Obama care” bumper sticker. I had no idea this would affect me personally.I am not poor, just live off post tax income, so little agi to report. These credits will save me a fortune over the next five years. Even the max annual out of pocket will be slashed from 6k to 2k in my scenario.

        Tom

        Sent from my iPad

          • Thank you, I get it at last. They are saying if you stay in a grandfathered plan, no subsidies for you. But…. You don’t have to stay in the plan.

            • My confusion stemmed from a misinterpretation of “eligible”. I thought it meant ” to be in a position to obtain a healthcare policy”. the ACA are using the healthcare industry’s definition of “eligible”, which means “to actually already possess a healthcare policy”, ergo you are eligible for treatment etc.

              To qualify for the subsidies, one simply has to terminate their policy, not until 11.59 p.m. On December 31st of course.

            • Apologies for my post regarding what “eligible” means. It was incorrect. Please delete it if you can, and thanks again for a great blog..

  75. I’m 61 being laid off and probably going on unemployment. According to everything I hear I qualify for medicaid BUT I also heard that you have to have less than $5000 in the bank to qualify for Medicaid. Anyone know what the deal is?

    • Well yes, they do means test people for medicaid.But they will abandon means testing for the affordable health care application. If your AGI falls below approximately 15k you will lose the tax credits, but qualify for medicaid.

      I would somehow find a way to show about 15k, as I don’t think medicaid is a very desirable healthcare plan. I’m willing to stand corrected, as I am simply assuming it’s an unpleasant experience, being on medicaid.

      Of course if you have no financial resources whatsoever, hurrah for medicaid.

      • It is hard to show $15,000 in income, if you do not have that income. The IRS also realizes that fraud goes the other way (people declaring income for which there is absolutely no support) already, for things like Earned Income Credit.

        • I plan to do a small roth conversion to legitimately elevate my AGI, if necessary. As I say, I have no idea if medicaid is so bad anyway.

          • The issue some people have with Medicaid is that some states have a “clawback” on Medicaid expenditures. (They go after assets under a 1995 law.) It’s not clear how this will go with Obamacare, and so some pre-seniors want to avoid Medicaid in that instance. The other alternative is buy an Exchange policy and pay full price, if the person is below 100% of FPL on MAGI.

  76. We are 62,retired and living on SS and savings. Our combined income from SS will fall below $15,000 each which will place us on the medicaid level. We have CD’s and Ira’s which we were not planning on taking from til age 65. We do not want Medicaid coverage. Can we legally take income from these resources this year to add to our taxable income to avoid that happening? Thank you for your help.

    • Your social security is included in modified adjusted gross income (“MAGI” pronounced “Maggie”).

      You can always convert an IRA to a Roth IRA to reach an income you plan for 2013. The only limit is how much is in the IRA.

        • Sylvia, you should contact your financial planner or tax adviser. If you have a traditional (untaxed) IRA, you can “convert” an amount to a Roth IRA, which would put your 2013 and/or 2014 income above the amount where you are put into Medicaid. It’s a bit complicated, and beyond what I can do for you on a blog.

          • Thank you for all your help and interest in those like myself who need guidance with the affordable care act. We truly appreciate you and your wonderful blog which covers so many important areas of finances.

            • Yesterday I spoke to people at a two of the exchanges. They explained to me that when they open for business in October 2013, they will use our 2012 tax return to establish our magi.However, if we tell them that our 2014 magi will be higher or lower than our 2012 magi, they will accept our estimate provided we keep them informed of any changes in our income after enrollment.

              Then, in 2015 when the IRS sees our actual magi for 2014, a reconciliation will take place, and we will be credited money if we underestimated our 2014 magi. Of course we will owe the IRS money if we overstated our income.

              I should add that I called a third exchange, and the person I spoke to there told me they will only use our 2012 magi, no estimating allowed. October should be fun!

            • Tom,

              Yes, you will see this. Every bureaucrat or administrator will have his/her own rules on the points where the HHS hasn’t been clear. I can already tell you that the model enrollment form suggests that if you offer 2013 income, or even a higher 2014 estimate, the form will let you put that on, and the exchange credit will likely be based on that.

          • After reading through he June entries I wanted to double check a few of my conclusions. First I keep seeing the $15K income figure and am confused as to why I thought it was around $11,700 (100% FPL, not the133%,138% or whatever) to qualify for an individual exchange policy with premium credits. Or perhaps is this just true for states without the Medicaid expansion?

            And shouldn’t all the planning for income be for 2014 instead of 2013 that seems to be indicated in the posts? If true this likely would also mean that the $11,700 for FPL I just used would have to be higher by the amount of cost of living increases since I think the $11,700 is for 2012. So now I’m thinking I need to have a MAGI of around $12K in 2014 and also that if I need to raise my income to that level by taking funds from my IRA, that transaction should be in 2014 not 2013.

            One other clarification: can’t you just take an IRA distribution rather than a Roth conversion if over 59 1/2 when you do so? From my understanding, after 59 1/2 you can take a distribution from a traditional IRA without penalty and as well are free to take any amount from your Roth IRA tax and penalty free, no matter what year you funded it, making conversions unnecessary.

            However, forgetting whether Medicaid yields good healthcare results, I am really upset that the ACA, while making healthcare incredibly affordable for some, has not been able to change the situation for millions of people without the means to use IRA funds to ‘play’ with their income in order to qualify for a comprehensive policy at prices they can afford. My circumstances allowed me to have built up an IRA so I can work around the fact my state will not expand Medicaid. But I am incensed by the Supreme Court and Republican state governments who by their decisions will leave the most unfortunate among us in the same uninsured, unhealthy mess they were in before.

            How can it be that a government uses an individual’s financial and/or health failings as criteria to keep them a separate class of people allowed to continue to suffer without adequate healthcare. Talk about failings! Shame on them and shame on us!

            If you’re under 65 with health issues and don’t qualify for disability, have used up all your savings, and unable to find work that can provide insurance, (usually due to your age or your health) and you live in one of these 19 (??) truly cruel and misguided states that will not accept Medicaid expansion money, then you continue to be left out in the cold to fend for yourself searching out charities or local programs to give you some minimal healthcare. Or of course you can get all your care through the emergency rooms which the citizenry will wind up paying for in one way or another ( though I believe federal tax money will no longer be available through grants now given to hospitals to subsidize such visits – precisely because the Medicaid expansion was to end the need for that).

            • First I would like to make a correction to the IRS reconciliation part of my previous post. One would of course owe the IRS money in 2015 if one had underestimated their 2014 magi when applying for coverage in October 2013. And one would receive money from the IRS had one overestimated their 2014 magi.

              To the previous poster, I am not a tax professional but in my opinion you could take an IRA distribution to increase your Magi. And yes, it is our 2014 tax return that will be looked at in 2015 to see if there is a credit or a debit due.

              With regard to estimating what ones income should be in 2014 to strike a “sweet spot” and receive the most tax credits, I am using the numerous healthcare exchange calculators that are out there. I do not know what happens in states that have not accepted the expanded Medicaid allowance.

            • It’s obvious what’s going to happen is that some people will highball the 2014 number if they need to get above 100% or 138% of FPL. When this estimate doesn’t pan out in 2015, the clawback (payback) is capped by statute.

              Alternatively, if people lowball the number for 2013 or 2014, they will similarly be able to limit the amount of clawback, as long as they stay under 400% of FPL for 2014. Expect to see a lot of traditional IRAs opened in April 2015 . . .

            • Gene,

              You have a lot there. Some points:

              Floor to get in the Exchange.

              In NON MEDICAID EXPANSION states, the key figure is 100% of FPL. At that level, you can get subsidies in the Exchange.

              In MEDICAID EXPANSION states, the key figure is 138%. Below that, the state is supposed to enroll you in Medicaid (that is, make Medicaid available to you).

              FPL depends on family size. So a family of two has a higher figure than of one.

              I assume non-expansion states may let people in who have less than 100% FPL for income. But the way the law is written, they won’t be eligible for the advance on the federal credit.

              Tax planning and strategy:

              This has gone on, from the time of Caesar. There is no perfect tax system that avoids the ability to plan and minimize taxes. So people should do what they need to.

              IRAs and Roths:

              Taking from an (no basis, traditional) IRA or converting to a Roth both create taxable income. The problem with just taking, is that you can’t undo it if you need to. Additionally, any interest/gain that the withdrawal later makes is part of your taxable income—which you may not need or want to have.

  77. Easy…husband lost his job…we lost our health insurance..Cobra wants $1,700.00 per month! What! 2014 can’t come soon enough!

  78. I pay $100 a month for insurance at work, I pay $75 a month for crap insurance for my 22 year old daughter,,, my 7 year old daughter is on FAMIS virginia medicaid for kids,,, my wife has no insurance,,,,, it would cost me $575 a month to add her to my plan at work.. can’t afford that,,,,,, What can we do?,,,, I make about $35,000 a year

    • It sounds like your wife is going to get health insurance through the exchange ( http://www.healthcare.gov ), by picking a plan after October 1, 2013. She does not have the option of an affordable policy through your work.

      If your daughter files her own tax return in 2014, she should be able to have her own policy, too, depending on income. Otherwise, she is on your plan.

  79. can you tell me if your sick, and you need to go to the exchange (I will need to) and my income is 300K annual, what is my premium likely to be on silver plan, or a gold plan.

  80. Okay, I have read all that i can, but i have a situation where I cant figure out what will happen.

    My mother in law is 66 years old, a legal permanent resident, and still working. She has only worked in the US for 5 years. She does not qualify for free Medicare (not enough credits). She can enroll, but cannot afford the $440 +$105 (part A & B) per month premiums. Her income is only about $13000 per year and she has no insurance through work.

    We live in Texas, so we dont have the Medicaid expansion, so what happens to her? Medicare assistance? Or does she go on the exchange and get a big subsidy?

    • If she is a permanent resident, single, and makes over 100% of FPL (including social security SSI), she can go on the federal exchange from Texas and get the credit–what you call the “big subsidy”. She would probably have to pay $20 a month, by my estimation.

      (After she has 40 credits in social security, she can, of course, get Medicare instead.)

      • so to be clear, it doesnt matter that she is over 65? they wont force her into Medicare? I know that there are programs to subsidize medicare for very low income folks (QMB,SLMB, etc.)

        she has been here more than five years, so she should not be banned from any assitance on that basis.

        thanks! this site is so informative.

        • To my understanding, you cannot get MEDICARE unless you have contributed for 40 credits (about 10 years). There may be very old people (like 110 years old or something), who got Medicare in 1968 without the 10 years. Recipients in the contemporary era—the last 30 or 40 years—have had to meet the eligibility test.

          No one “forces” you into Medicare. Usually, the problem is that people don’t have those 40 credits.

          Don’t confuse Medicare with Medicaid.

  81. Do you get a subsidy if your household income is exactly at 400%? Or must the income be below 400% to get the subsidy?

  82. I gift my (adult) daughter $10,000 a year, will this be counted as income and affect any subsidy she might get for the ACA
    Her income is about $17,000 not including my yearly gift
    Thank You

  83. Hi and thanks for all the great info on your site. I have a confusing situation that I can’t seem to find an answer anywhere, so hopefully you might be able to enlighten me.
    First, but less important is that I am a legal resident of California, but reside in NC temporarily for family health reasons. ( am looking after my mother and her dementia care) This temporary situation is going on two years now, but I still maintain a residence, car registration and driver’s license in CA as well as file taxes there. I assume I would apply for health insurance with a CA exchange. BTW, I am unemployed with little to no income (at least that is shown on any tax statement), but do receive a non-taxable gift amount from a relative.
    The real question I have is that my AGI or MAGI for 2012 was around $47,000.( I am assuming MAGI does not include itemized deductions.) I was laid off at the end of March that year and received unemployment for the rest of the year and for 3 months in 2013. My income this year will amount to about $8,000 or so which would qualify me for medi-cal. I am not sure if Medi-Cal would allow me to use doctors in NC, which I have retained, due to my continued stay there. But I guess my question is based more on how do you charge someone an insurance rate based on 2012′s income, when 2013 was way below poverty level and will be less in 2014 when I am actually paying the premiums (or not) with Medi-Cal. And even if I applied for NC insurance, which is not cooperating with the gov’t and is forcing them to provide an exchange, how can they base it on my 2012 income when it has so drastically changed in 2013? Sorry if this is confusing and of course ask me follow up questions if needed.
    THanks,
    Scott

    • California resident —-> insure in California

      Affordable Care, to start, can be based off either 2012 MAGI or expected 2013 income. The final tally will be off 2014 MAGI, reconciled when you file the 2014 tax return in early 2015.

      Contact me via e-mail for any further assistance. I practice tax in Elizabethtown PA.

  84. Obamma care sounds great for me. I’m 62 years old with a prior condition. My health care insurance premium is going to drop from $1054/month to approx $200/month when I drop my ex-employer’s coverage and switch to exchange provided insurance coverage based on my $20K annual pension income. I believe I can switch to an exhange because I pay 100% of the coverage provided by my ex-employer’s group plan for retirees.

  85. Thanks for all of the info! I had been thinking that the ACA was going to lower premiums, now I am worried we won’t be able to afford insurance at all! My situation is that my husband gets insurance paid (for himself only)by his employer. I am unemployed. My daughter and I have private insurance which costs about $300 monthly. We chose private insurance because my husbands employer plan would cost an additional $800 a month to cover me and my daughter. Does the ACA force my daughter and I to get insurance through my husbands policy? If not, can my daughter and I purchase insurance on the exchange and qualify for a subsidy which can be paid directly to the insurer? We have a total household income of 65,000. If we must be added to my husband’s employer policy does the law compel the insurance company to reduce the cost of the premium based on my daughters age? She is 2. I am so worried about this. We can’t afford to pay higher premiums. Any information is greatly appreciated!

    • Just keep your policy then, if you like it. Your husband’s policy would be designated “unaffordable” to you because it’s more than 9.5% of your combined MAGI income.

      • No. It is incorrect to say the husband’s policy is unaffordable. You can’t tell from these facts.

        The 9.5% affordability test only compares the premium cost of the employee (not the $800 premium for the spouse and child) against household income. She did not say how much her husband pays for his self-only coverage. So we don’t know if his policy is unaffordable (i.e., more than $6,175 per year which 9.5% of $65,000).

        If it is affordable and the employer plan offers coverage to the wife and child (it does), they would not be eligible for a subsidy on the exchange. They would have to pay for an Obamacare policy all out of pocket with no subsidy.

  86. Thank you for your patience in educating us on all of this. I should be able to figure this out , but it is just complicated. My husband is retired, getting social security, and in a couple months will be on Medicare. We have a seasonal part time business. Last year for household made a little over 32,000. I have diabetes, and other health problems. So based on all of this, what will I be paying for insurance?

    • I don’t know. Here is what you should know:

      If you are a couple, making under $60,000 including the social security, you would get the Affordable Care Act premium credit. You would pay no more than 9.5% of your combined income. This number could be higher if you smoke.

      Your health issues are “pre-existing conditions” today, but on January 1, 2014, will not be a factor in insurance coverage.

      If you want to guess at a premium, I recommend visiting California’s website: http://www.coveredca.com . They have a handy calculator there. Kaiser also has one at http://kff.org/interactive/subsidy-calculator/

  87. Am I correct that 2012 Maji from 2012 tax return is the initial key for qualyifying for Obamacare? Am I correct in assuming that actual 2014 numbers (for 2014 tax yr) will be used as the ultimate arbiter for 2014 when filed in early 2015? If these assumptions are correct does 2013 matter at all? The reason I ask is that it could be difficult and costly for me to have my 2013 Maji below the level I need to, but I qualified via 2012 and will have no problem managing 2014. Therefore can I go significantly above 400% Maji level for me in 2013 and have it not matter at all?

    Thx in advance

    • MAGI for 2012 is relevant income amount as the regulations are written. As the application is set out, however, it looks like the government is seeking 2013 expected income AND 2014 expected income, if the applicant believes there will be a change.

      One of the government contracting companies (Serco?) has a charge to use other consumer information to “verify” whether the applicant is providing a good number. If you ask me, go figure how they can do that. (Rather, it’s scary if they can do that. But we live in the era of NSA spying, so . . . )

      I am just giving you an opinion, so don’t weigh it too heavily, but 2012 MAGI should be good for October 1st. That is the MAGI in the regulation. These other initiatives seem more to be designed to “help” people who might be subject to the Section 36B clawback on 2014 credits (in April 2015).

      • The Washington state exchange has told me that I may “self assess” my 2014 income when I apply in October 2013. That makes sense to me since it is my 2014 MAGI that the IRS will use to reconcile my estimated 2014 income , as divulged by me to the exchange in October 2013.

        I would however expect raised eyebrows, and demands for an explanation, if in October 2013 you give your estimated 2014 income as way lower than your recorded 2012 MAGI.

        I certainly know of no power granted to the exchanges to disregard your assessment of what your 2014 MAGI will be.

        • I bet, to get this program started, they are going to be instructed to take the number as the participant gives it to them—as long as it seems reasonable. The “check figure” is built into the 2014 tax return, filed in early 2015. If the participant pays too much into Obamacare in 2014, there will be a nice refund. If the participant pays too little . . . (clawback or full recovery of the premium, depending.)

        • Thx Tom, if Oregon bothers to ask I’ll just tell them I retired in later 2013 and will have much higher income in 2013 then I will in 2014, which is the truth. I met the qualification guidelines for 2012 Maji levels.

          • I’d be surprized if they question you at all.All they can look at is your 2012 return, which supports your estimated 2014 income.

            You can call 503 922 2903 ctc Doug Ellsworth at Oregon exchange, if you want to set your mind at ease.

      • so the bottom line in all this is that 2014 income is what REALLY matters? I just retired last week so my income will be higher this year and close to or perhaps a little above the 400% guideline but next year (2014) will be well below.

        • In the end, 2014 income is what is going to be reconciled against the Section 36B credit (“Refundable credit for coverage under a qualified health plan”). If more was given out than should have been, there is a clawback provision in the same section. So 2014′s MAGI income is going to be one that determines costs to the participant in the end.

  88. I am so worried about this now. After several calls to the HHS where I got information that I felt was wrong, I called for the 4th time today. For the past 8 mos since my husband’s death, I’ve lived off his life insurance policy. That money is not considered taxable income. I have no job and pay no income tax. Per my financial adviser, my AGI for 2014 should be approximately $7000.00 derived from my retirement accounts.. I am 56 so cannot take anything out for 4 more years. My question to the ACA people at the HHS website was, do I have to get a job to earn income so that I am eligible for buying a policy on the federal exchange? They didn’t know. They also didn’t know how much minimum income I would have to earn to be eligible for the exchange. I live in a non expansion state.
    I am currently on COBRA for $516/mo for single coverage, much more than the 9.5% affordability threshold. I have no dependents. COBRA will end next spring so I need to get answers now.
    Do you know how to find out what the minimum amount one needs to earn to qualify to buy on the exchange?
    The guy at HHS today said they will check and call me back. hmmmm I still have no confidence in their answers.

    • OldeDutch, the question is not what is the minimum to buy on the Exchange. Anyone can buy a policy on the new Health Insurance Exchange. It’s a question of whether you will be eligible for premium credits. In a NON-expansion state, premium credits start at 100% of federal poverty level (FPL). If your MAGI is between 100% and 400% of FPL, and you don’t have an affordable employer’s policy, Medicaid, Medicare, Tricare, etc., then you should qualify for credits.

      If your financial advisor can’t this right for you for 2014, I am not sure what to tell you. Contact me by e-mail.

      • I am in a similar situation, i.e., in a non-expansion state not earning enough to be at or above 100% FPL. The difference is that I’ll be 591/2 in 2014 and will be able to take penalty free IRA distribution in order to get my income up above the poverty line.

        So let’s say the FPL in 2014 is $12K and you had to take the whole $12K as a distribution to get your MAGI up to it so you qualify for premium subsidies. Then at your age you would incur a 10% penalty or $1200. And If as an individual with MAGI/AGI @ $12K, using the std deduction and 1 personal exemption of about $10K in 2014, you’d have taxable income of $2000, which at the 10% rate would be $200 in federal tax.

        Now for 100% or slightly above FPL, I’ve been using figures of $8000 for an individual Silver policy, and $7700 for the subsidy with $300 for the unsubsidized cost. If these are the numbers then it’s clear that you should incur the $1200 in penalties to get the $7700 subsidy.

        The thing I’m unclear about is the form of this subsidy. It is called a tax subsidy, so does that mean when it comes to the 2014 1040 form. when you arrive at your $2000 taxable income you then subtract the $7700 as a credit from it and end up with (-$5700) in income? If so, you would then have no tax liability, yet at that point you might weigh the possibility of taking another $5700 in IRA distributions since it incurs no further tax liability.

        If all this is correct then deciding the amount to take as a distribution seems to call out for some sort of excel spreadsheet, since the more in distributions, the higher the MAGI and hence the higher the unsubsidized insurance cost. leading to the need to find a MAGI that minimizes the amount of insurance cost plus tax liability (plus any IRA penalties).

        Hoofin’, can you explain how this premium subsidy is handled? Will it be a tax credit that finds its way onto the ‘Tax and Credits’ section of the 1040 form? I know you covered this previously when mentioning “reconciling” and “36B” and “clawbacks” but I couldn’t quite grasp the nuts and bolts of it all.

        Thanks as always

        • I wish they’d stop calling it “subsidy”. It’s a credit — an advance credit, technically. So it will be sent to the Exchange insurer throughout 2014. Then, in 2015, when people go to file 2014, they have to look at what was credited versus what their 2014 MAGI income actually turned out to be. That’s when the “fun” will start for tax preparers such as myself. We will be the bearers of bad news to whoever had a good 2014.

  89. I am a 59 year old man disabled on the job. I draw social security disability and workers comp. The workers comp is in an annuity and I get a check weekly. I have not had to file taxes in several years. My wife is a 51 year old uninsured housewife. When calculating my income, will both of my sources be counted even though they are not taxable?

      • I have read ss would be a addback,but would the workers comp payment be also. I have not seen it specifically mentioned anywhere.

        • Obamacare is based on MAGI (modified adjusted gross income). Since your worker’s comp payment isn’t taxed, it’s not in MAGI. This is why you can’t find it. The internet is only good if you know what it is, that you are searching for. Otherwise, it’s a vortex. This is why people still hire tax professionals . . .

  90. I a 58 yr. old woman. The company I work for has dropped insurance coverage on everyone because we are a very small company with few employees. I have tried for 3 yrs. to find affordable coverage and it is impossible with the income I make. I earn about $40.000.00 and with the cost of living, paying bills, gas, very little food because I can’t afford much after the bills, insurance will cost be $500.00 a month. I can’t afford more than about $150.00 a month. I have medical bills that I am paying out of pocket as it is from prior incidents. Just trying to stay above water I suppose. Seems like I won’t qualify for anything and Obama wants to fine me. I hate our GOVERNMENT!!!!!! Any ideas?

    • You will be able to find a policy at Bronze Level, and it won’t cost $500/month if you don’t smoke. Alternatively, there will probably be a catastrophic policy (50% coverage). I don’t think it’s as bad as what you are worried about.

  91. For early retirees with low income (below the FPL) but high networth (retirement accounts for the most part), what do you suggest if they want to purchase insurance on their state exchange but don’t want Medicaid? Obviously they can bump their income with an IRA distribution (or better, a conversion to a Roth). But if they just claimed their 2014 income would be above 138% of FPL and it wasn’t, what will happen? We only have catastrophic coverage so would like to purchase a plan on the exchange and are willing to pay.

    • Well, two things:

      Anyone can buy on the Exchange. The question will be whether people can qualify for the credit (what’s being called “the subsidy”) that is attached to an Exchange policy.

      What happens when someone is in a non-expansion state for MedicAID, or otherwise wants to avoid Medicaid, and so predicts a higher 2014 income when they enroll (starting next month)? Good question. I am not sure the IRS has a policy figured out yet. I have my guesses, but I want to keep them close to the vest.

  92. you, are awesome. This is the only sensible article and QnA that I have ever seen when searching. I live in Australia, but I have lived in the USA and could never afford insurance. I got sick over there and hospital bill was over $100,000 -I sort of ran away from the hospital. My best friend over there (pre-existing condition) was paying $2500 per month for insurance which is mind boggling to me. I don’t know why Americans think socialism is a bad thing (the only difference I notice is the side of the road you drive on and maybe you get find $20 if you don’t vote) . I think it’s HIGH time someone, anyone, did something to see that everybody gets healthcare there.

  93. My husband and my AGI is round $8000. He is on medicare and social security. I am 61. When I do the calculators for the subsidy it states that my income is so low that I can’t get a subsidy but can get on Medicaid. We have savings and assets that disqualify me from Medicaid. Can I get the subsidy then or am I out of luck? Thanks

  94. To add to the above I am in Florida and can’t find if they will have Medicaid expansion. If they do not have it would I be eligible for subsidy thru the excnanges? Thanks

    • The Best ObamaCare Guide by Don Silver, a great new e-book, covers this and a lot more. Until a friend told me, I was surprised to find out that I can read an Amazon e-book on my computer. I don’t need a Kindle.

      The book tells how the rules are different for Medicaid expanded states and nonexpanded states. In nonexpanded states, there are different rules for U.S. citizens and legal residents. To make it more complicated, there are different rules in nonexpanded states depending on how long a legal resident has been in the U.S.! The book also says that even untaxed Social Security income is counted for Obamacare purposes to calculate a premium subsidy.

      The good news for you may be that the Social Security income will boost your income high enough to qualify for a subsidy to help pay for insurance. The bad news is that you may not qualify for any benefit in a nonexpanded state if your income isn’t high enough.

      Your best bet is to read the book and also call the federal government health care help number (800-318-2596).

      Hope this helps.

      • What’s wonderful is that a lot of new explanatory material is coming out. It’s a shame that people held back to late summer 2013, though. Had this stuff been fleshed out in 2011 and 2012, it would have cleared up a lot of people’s concerns.

        In non-expansion Medicaid states like Florida, people are basically screwed if they cannot show MAGI income of at least 100% of the federal poverty level for a family of their size. The key adjustment to MAGI, the one that impacts the most people, is the addback of any social security benefits being paid. So maybe the poster is OK.

        I have my own idea how the 100% FPL might be worked around in the initial year, but I want to see more commentary in the overall community about it.

        We also do taxes in (one of) my employment relationships here in Pennsylvania. So people can contact me at the e-mail above, and we can arrange a consultation.

  95. Thanks guys. I will check on the book. That is good to know that we can add my husband’s nontaxable social security income. I was reading an article that was saying this is going to make folks inflate their income (that’s a switch!) so that they can qualify.

    • This is different than phantom income, which is obviously an illegal move. The addback of social security is done, because at higher levels (near 400% of FPL), excluding the social security gives a income level that might create a credit. The original enactment of ACA in 2010 actually always EXCLUDED the non-taxed portion of social security. But Republicans raised hell about that (as everything else involving ACA, even though the basics are from their own 1990s era proposal.) So it is ironic that, in MAGI, the social security addback helps people who would be shut out in Medicaid non-expansion states.

      • (Not including social security benefits would, of course, also create a greater credit within the 100%-400% FPL range — it’s not simply a matter of whether there would be a credit or not.)

  96. Thanks for all this generous info! Spouse & I run a business & file as an S-Corp. In ’08 we had a storm of bad debts and bad luck & the resulting ’08 loss is STILL being carried over so that our 2012 (& more years to come!) AGI is 0. When we add back SS, tax-free interest, 2012 MAGI is $42,300. We are older (51 & 62) but have 3 kids<13. I owned stock in a co. that was recently bought & have a surprise $40K 2013 capital gain as a result. We have VERY few spendable funds & the premium subsidies we will get with ACA will be beyond meaningful to us :/. Should I sell a loser stock in '13 to offset that gain & keep '13 return looking consistent w/ surrounding yrs in case the ACA def. of MAGI gets tweaked? Or is that unlikely?? Thanks!

  97. I just downloaded Don Silver’s book to read. Got the answer to my above question( yes it counts). Next one is what happens when you over/under state your income for the year? When you file your 2014 taxes and they see your actual income will they then charge you if they have paid too much subsidies on your behalf or refund you the money if they did not allow you enough subsidies? Thanks

  98. Hi Hoofin. I’m currently employed full-time with full health coverage through employer. I want to quit and become fully self-employed but am not sure if, or how, I would enroll before January 1st in my current situation since I already have coverage. Do I have to quit before January 1st? Can you lend me some guidance?

    Thanks,

    BWS

    • My best guess is that you can go on the Exchange in a couple weeks and buy a policy that is effective January 1, 2014. That is, if you know you will be off your company’s policy by January 1. Otherwise, Open Enrollment for this season goes until March 31, 2014. You have until then to get a policy for the 2014 year. Otherwise, you have to wait until late 2014, and I’m not sure that that wouldn’t be effective until January 2015.

        • The PDF of an application I saw this summer asked for information about 2012 income, 2013 income and projected 2014 income. I know that the regulation references last reported MAGI, which would be 2012. I suspect it goes like Medicare above $170,000 (couple): if your income changes adversely, there is a process to let them know.

          • Great. I suspect, in the beginning at least, my income will drop in 2014. Thanks or all the info. Nice to have someone with an interest in helping out in this time of confusion.

            • Thanks for the compliment, also. Bart, please be aware that an income drop may not result in an increased credit on reconciliation. The law isn’t clear about that point—at least not what I can find.

        • According to The Best ObamaCare Guide book, your eligiblity for subsidies and Medicaid will be tentatively based on your 2012 income.

          However, what really counts is your 2014 income.

          If 2014 income is higher than 2012 income, you may need to repay any subsidies paid on your behalf even though they were paid to an insurance company!

          As part of your 2014 income tax return that’s filed in 2015, you will need to reconcile any differences between the 2012 income and 2014 income amounts in calculating any payback of overpaid subsidies.

          • Yes, this is my understanding. My shorthand for the 2014 reconciliation is the “clawback”. The clawback ranges and figures are defined in Section 36B of the IRS Code. Remember: if you go over 400% of FPL, the clawback becomes the entire amount of whatever credit had been advanced on your behalf at the start of the program.

            I am happy that there are more of these explanatory books and booklets out there, so long as you trust that what the people are saying is consistent with what legal scholars, those without a clear bias, have said about the law. The best commenters online seem to me to be with Kaiser’s family foundation, and the Robert Wood Johnson foundation back in my home state of New Jersey.

            The 2015 reconciliation of the Affordable Care Act credit is going to be a nightmare for those of us doing individual taxes. We are going to be the bearers of bad news, when it turns out that people had a “good” 2014, as far as earning income goes, but did not do any Obamacare planning.

            • The Best ObamaCare Guide was just selected by Washington Post personal finance columnist Michelle Singletary for her book club. She wrote that the book is not political at all.

        • This has become a tricky question. The Washington State healthcare exchange person that I called last week, after putting me on hold, came back and said only my 2012 income would be considered when I sign up.There would be no self assessing ones projected 2014 income at sign up. At a later date, yet to be announced, one could call in and adjust the 2012 income number based on what they were not sure.I don’t think they are sure what to do,as my contact didn’t really understand my circumstances, and didn’t sound confident. I think you should talk this over with the exchange in your state of residence, and be prepared for the policy to change!

          • This sounds about right. I am not sure if the people who have populated these “helper” roles has actually read through the lines of regulations involved. The basis is 2012 MAGI income. The application asks about 2013 income, and, as I recall 2014 income. Which income will they use?

            Because the Health Insurance Exchange (rebranded Health Insurance Marketplace) has no way to verify any of this as of right now, people can in theory offer ANY income amount to start. The catching up will probably only happen when the 2014 tax return is filed.

            I can see that if people low-ball their income, they may be forced to pay back a health insurance credit that should not have been approved. I wonder (have my own theories) about what will happen if people overstate their income to get into the Marketplace, and receive a credit, in those states where Medicaid Expansion isn’t happening.

  99. Hi Hoofin,
    I have read the most recent comments from others regarding the MAGI and from those who will fall below the MAGI required levels to qualify for a government subsidy. We are early retirees who are living on savings and social security. I have anxiously awaited the October
    open enrollment date for the Federal insurance marketplace since we are paying for coverage through Cobra. I have completed a sample form for ACA coverage and discovered we fall below the MAGI level ourselves by using the projected 2014 income and as a result cannot qualify for a subsidy. Can we add to our income by withdrawing from our IRA ?
    This has been an expensive insurance year for us and we are ready for a change. Thank you for your blog and wealth of information about the ACA. Sylvia

    • An IRA withdrawal, from a traditional account (i.e. non-Roth), becomes taxable income in the year of the withdrawal and MUST be reported on the tax return. Thus, it increases your gross income, your adjusted gross income, and your modified adjusted gross income (MAGI) for Obamacare purposes.

      Likewise, and IRA contribution lowers both gross income and MAGI for Obamacare.

      A social security benefit is an “addback” to MAGI, if you are not already paying federal tax on the amount excluded.

  100. Great site: I am in a “discussion” with a 62 year old North Carolina male that says he has had a catastrophic coverage costing $200.06 per month through BCBS and claims he has been notified that his policy will be different and will bear a 400% increase. Says he carries a catastrophic coverage policy because he has plenty of assets to cover anything up to the coverage level. I do not know the coverage level. Believe him to be healthy and a nonsmoker. I think he is just opposed to anything to do with the current administration and is full of it. What say you? Thanks

    • This can be. Some insurers are actually pulling whole insurance lines, like Highmark here in Southcentral Pennsylvania. The reason for this, obviously, is that they are going to offer a remarkably similar policy on the Marketplace (a/k/a the Exchange) next Tuesday.

      It may be that he won’t be able to get less than 60-40 coverage, so-called Bronze Level. But that’s the law now. Only under-30′s can have the catastrophic (50-50) policy. He probably doesn’t know, that as a 62-year-old, his premiums are capped at 3 times (300%) what a 20-year-old in North Carolina can be charged. So he’s getting a significantly better policy, probably, for relatively LITTLE extra premium.

      • According to The Best ObamaCare Guide, it isn’t only persons under age 30 who can get a catastrophic plan under Obamacare.

        The book says a catastrophic plan is also available to persons suffering a hardship or an inability to afford minimum essential coverage. Both of those situations are defined either in the law or the regulations.

        • Yes, you are right. However, I need to point out to you that people under a hardship are usually entitled to the federal credit, which requires a Silver Plan purchase. Affordability for minimum essential coverage does not seem to be in the fact pattern here.

    • If I had a choice between a BCBS catastrophic plan covering 0% of essential healthcare costs while costing $12,000/yr. ($200 per month premium increased by 400%) or a comprehensive plan from the Obamacare Marketplace covering 70% of essential care for about $3000/yr. (using Kaiser calculator with any income more than 4x the FPL) I, myself, would tend to favor the latter. Then again I’m not from North Carolina where opposing anything to do with Obama might be worth paying $9000 more to get 70% less .

      I do have to say that I have a big problem with Obamacare myself. I too have a catastrophic plan and it costs $190/mo. – up $50 from when I got it 2 years ago (after I lost my $450/mo. comprehensive policy while finding out a replacement would cost me closer to $1450/mo). Since then I’ve had about 2 dozen doctor visits and filled about 4 dozen prescriptions, all of which have been totally out-of-pocket (only pay-outs have been due to Obamacare forcing the company to 1) refund customers the amount over 80% of premiums received but not paid out and 2) to pay for my preventive care visits) . Now with Obamacare I find I will not only afford to get comprehensive insurance again, but with a projected income of $15K the tax credits would make my premium $300… not per month – PER YEAR! And that’s why I am really upset since I could afford to pay much more than that! I’d be happier if I could get that amount increased by 400%, at least!

      For your friend, he should be able to see that even without a rate increase, an unsubsidized comprehensive plan under the ACA in comparison to a catastrophic plan would cost only about $600 more than what he’s presently paying which is an incredible deal.

      Sometimes it seems that those on the right want so much to be right about Obamacare being wrong, they feel it gives them the right to say things that are not right, and the right, when it comes to Medicaid expansion, to wrong others… which is, of course, not right. That’s why I think it should be alright not to call the right ‘the right’ but ‘the not-right’ or ‘the righteous’ instead.

  101. Okay my 23 year old son living in Nevada, has Lupus right now he has a UnitedHealthCare plan at 155.00 per month plus 20% out of pocket and his only subsid is from ME. He works a part-time job making 9.00 an hour at roughly 30 hours per week for a rough total of 12k – 13k per year. From what I’ve seen under the ACA his cost will go through the roof with any plan GOLD is too expensive and the other plans out of pocket cost will be outrageous I could not find where he would get any subsidy from the government…did I missi something?

  102. I have a question for you, I hope you can help me with. I retired at 62, because the job situation was nil and I needed to have some sort of income to live on. I live in AZ, make $800 a month from SS. I do not qualify for medicaid at the time,Do you know what my premium will be? Thank you for having this informative site !

    • If you can get your income above 100% of poverty, you would qualify for a tax credit in the new Marketplace/Exchange. This is about $11,500 or $12,000 for a single individual. If you are in a state WITHOUT Medicaid expansion, you do not get ANY subsidy if you don’t make at least that level. (Sounds cruel, but blame the Tea Party.)

      At the $11,500-$12,000 level, your premium share would be about $20/month.

      You need a part time job to generate the extra $2000 or so of income for 2014. Otherwise, hope Jan Brewer takes the Medicaid Expansion.

      [See also https://www.healthcare.gov/will-i-qualify-to-save-on-monthly-premiums/ ]

  103. Through a program called In Home Supportive Services(IHSS), I care for my 25 year old disabled son in our home. He is on SSI and has Medi-Cal in California. I have health insurance through our union Long Term Care Workers Health Trust Fund, but just received a letter stating they were canceling our health benefits as of 12/31/2013. They claim that because of the Affordable Health Care Act (Obama Care), there will now be the opportunity to help ensure all members have access to the affordable healthcare they need-healthcare that exceeds the current coverage being offered by the Trust. Basically they are forcing us to get insurance ourselves or be fined. Is this legal? So much for the union protecting us!

  104. So many choices, Wow!!! How about this MAGI stuff. My wife and I have a MAGI of 31K. Sounds like we fall into the poverty stricken. So, how do we figure our subsidy thru the exchange. I am 56 and my wife is 47.

    • You are within the 100% to 400% poverty level band (along with 90% of America, believe it or not). Go to the Kaiser calculator I linked to, and figure out what your net cost will be.

      “Federal poverty level” should really be called “federal support level”, since people hear the word “poverty” and it’s such a loaded term. Plus, few can live at 100% of poverty anyhow.

  105. I am a nys retired teacher.My retirement is about 45,000 a year..I am single.I will collect my social security at 62.I am currently 61. I do have health insurance through my past employment from the school district..I do pay the same premium that current employees pay and that cost rises each year as the contract changes..I am wondering at some point if I will be able to enroll in Obamacare.It sounds like it would be less costly.Also when I turn 65 and get medicare ,will that have a impact that may change my premium?

    • Anyone can enroll in a Marketplace plan. The only question is whether you would be eligible for the related credit to lower the overall cost of the policy.

      If you are single, and have MAGI above $45,000 or so, you are near, or maybe just over, the credit range. Certainly, if you added social security to that, you would be well over.

      I don’t know if a policy in New York will be less than what you receive under your collective bargaining agreement. Good question. I wish I had a good answer.

  106. I have read most of the comments, but am still a little confused. My husband makes about $45,000 a year and I make $5,000. We are currently on insurance through his employer. The cost is $830/mo for the whole family. The cost of insurance for just my husband is $291. I know that coverage for just my husband is considered “affordable” since it is less than 9.5% of our household income. But the cost for our whole family is crippling our budge. Would we leave my husband on his employer’s insurance and the kids and I would go to the exchange?

    • I think you can’t get the credit on the Marketplace/Exchange, because your husband’s company offers you a policy—even if it is a lot of money. This is one of the flaws of Obamacare that the current standoff in Congress won’t let the membership fix.

  107. Hi, I know you’ve covered this issue before, but many of the replies were from a year or so back and a lot has changed since then, or at least the waters have been muddied by numerous States trying to opt out of the exchanges, etc.
    I’m a 60 year old, self-employed investor, and have been since the late 1990′s. I’ve purchased my own private policies through Anthem all those years, with no gaps in coverage. (And, have watched my premiums triple while my 80/20 coverage and $1000 deductible has risin to $5000 and the copay dropped to 70/30).
    Due to my age and some health considerations, I’ve reallocated my stock and bond and rental property holdings to where 90% of my income is realized through dividend and interest checks, and some rental income. I currently have assets of around $xxx which generate an adjusted gross income of around $20K per year (house paid off, virtually no expenses other than utilities and groceries, no kids, so it stretches further than one might expect. My LARGEST monthly expense is actually my $500 Anthem premium).
    So, once again, has anything changed in terms of means testing to qualify for exchange subsidies? Frankly, I don’t feel ‘right’ taking a subsidy I can afford myself, and in particular, don’t want to take one for several years and then get a letter from Unca Sam telling me I owe them back-subsidy money if I do accept it by dropping my current Anthem policy and going on the exchange. Again, your argument that Medicare and other insurance options don’t means-test seems solid, but just want to drive you insane by once more asking a question which you’ve answered 20 times alreday ;) Thanks in advance

    • Willian:

      Here is the rule. The credit available to people who buy in the Marketplace (a/k/a Exchange) is based on MAGI. “Modified Adjusted Gross Income”. It’s basically AGI (“Adjusted Gross Income”) from the tax return, modified by three things:

      1) social security benefits that weren’t taxed;
      2) tax-free bond interest (not Roth account);
      3) foreign earned income excluded.

      There has never been an asset test for Medicare. There HAS been an asset test for Medicaid, but this goes away, with one proviso: MedicAID has had a clawback on people over age 55, since about 1995. If someone is over 55, with assets, they need to do further research.

      When you say “subsidy”, you really mean “credit”, right? All employer-provided health insurance is subsidized, and people who deduct the mortgage interest live in subsidized housing, then.

      The Affordable Care Act clawback is something to watch out for. It will be based on the difference of 2014 MAGI, which people will finalize with their 2014 return (in 2015), and whatever advance credit they receive. My company here in Lancaster County PA can work with people to do this sort of planning.

    • I have a similar financial picture and age to you. I also thought it was too good to be true, but you will be paying about $50 a month in premiums for a silver plan, with max out of pocket per year of about $2k. I base this on your 20k magi. Congratulations.

  108. My spouse and I are in a unique situation. I am 60 and have been on Social Security Disability for many years. I am not required to file with the IRS, but I have been claimed as a dependent for many years by my now spouse (same sex spouse) on her taxes. Since we will be filing jointly as married this year for the first time, it is complicating how to figure the MAGI. My spouse is self-employed (AGI $8,193) plus she is now collecting Social Security retirement benefits as of this April 2013 ($9,000 annually / $750 monthly). I collect $1,626 in SS disability monthly / $19152 annually. My spouse will be applying for insurance through the exchange. I will not since I am Medicare. I know Social Security benefits are added back onto AGI for purposes of ACA MAGI, but would my disability income also be included, even though I am on Medicare and will not be applying for insurance through the exchange? I’ve been looking for the answer for 6 weeks and find conflicting information. Help! I’m so confused and the New York State exchange site is crashed. ;)

    • Wendy, I can give you my guess. The social security disability income would be included as part of MAGI, as a federal couple.

      Anyone can buy on the Exchange (or the Marketplace, as it’s been rebranded). The policies are guaranteed issue as of January 1, 2014. The question is simply whether people can benefit from the federal credit.

      If the IRS does–as required–treat your return properly, then your spouse’s eligibility for the credit is based on both incomes. New York state would have no say about whether she, or you both, since you’d have to file jointly, get a federal credit. You’d have to have under $60,000 MAGI or so to be eligible.

      You might think, well, that’s unfair if you already buy Medicare, that the policy for your spouse is based on joint income. But that is the price of progress, maybe. It is what is happening with pre-equality couples, and maybe one of the flaws in the program. It’s not perfect, but the Congressional tea party gang can’t seem to agree to keep the government open, much less fix things.

      • Thank you!! Finally, a clear answer. Yes, the price of progress! I understand that sometimes it’s a one-step-forward, two-steps-back type of situation … and don’t feel unfairly treated. Once the NYS marketplace site is fixed I can see for sure. But based on your answer, our MAGI will be around $36,711, which at first glance looks like buying from the marketplace for my spouse is a better deal by far than what we were paying for her health insurance until now.

  109. Hi! I’m an individual 6 years from Medicare who is now at 80% FPL in a Medicaid-non-expanding state, but should be at 100%-125% FPL in 2014. Basically I am unsure what someone like me, who will receive gov’t assistance and will incur many medical costs next year and am destined for a lot more out into the future, must take into account to make the most intelligent decision when choosing a policy on the Marketplace.

    I’ve been without insurance for years and today, being unable to reach the long awaited promised land (healthcare.gov webpage), I was able to stop and think that perhaps it might be wise to wait just a little bit more before I proceed in order to seek advice about what to keep in mind in order to choose the best possible policy. With all the complexity of purchasing healthcare insurance in general (i.e., the co-pays, co-insurance, deductibles, premiums, networks, coverage exclusions) along with all the new complexities of the ACA (i.e., 4 levels of coverage each with a number of plans, premium credits, cost-sharing reductions, annual out-of-pocket caps, etc.) I decided, that like Obamacare, I might not be quite ready for ‘primetime’.

    My main concern for myself is whether a Platinum plan with 90% coverage is ultimately my best choice or if it will wind up costing me more than going with a lesser plan. For example, let’s say I incur $10K in medical costs in 2014, $20K in 2015, and $100K in 2016, what policy will keep my out of pocket at the lowest level?

    Do you have some thoughts or do you know anyone like a professional healthcare consultant (is there such a profession?) that looks out for an individual’s best interest and will analyze someone’s circumstance in order to make a good policy decision. I know there are government ‘navigators’ to navigate you through the process but having dealt with a few representatives at Healthcare.gov I am not confident that they will be equipped with the info or expertise to accurately guide one in choosing a plan that maximizes benefits and minimizes costs.

    As always, thanks for the public service that your site provides; a site that almost always provides more pertinent facts and info with more clarity than any governmental or non-profit healthcare site I have stumbled upon given my vast googling experience.

  110. Hoofin long time no see I think its been over an year since I last messaged about the whole Obamacare thing and it ended up getting approved my questions are the following. First of all to to confirm my parents have some assets (there own home and rental propertys) with the whole medical expansion they seem to qualify for it. Now my question is the following if they qualify for medical (since once again its expanded) is it safe to apply? A little past background my mom had health insurance she was paying around $300 since her job relocated she didn’t move and we have no health insurance can my parents (once again if they qualify) get medical and be ok? The biggest concern were there assets and savings, but that now doesnt have anything into play right? The only thing that comes into play is how much you make per year right? My parents don’t want to be binded to lose that just to get medical. Example since you qualify for medical and you decease are all your assets now the governments (hope I am making sense). Another question is me I don’t qualify to be with my parents anymore I am working I made less than 10 grand 2012 do I qualify for medical? I also have some savings will this come to affect me? Another words I have been reading online that assets dont affect Obama care just the income you made yearly in your tax returns.

    • There is no asset test for Obamacare. For the federal credit, it is based on MAGI. In states without Medicaid Expansion, you need to show at least 100% of federal poverty level as MAGI in order to be eligible for the credit. Folks with more than 400% FPL income can’t get the credit.

      ANYONE can buy a policy on the Marketplace/Exchange. The only question is whether you also get the credit.

      • Thanks Hoofin always get the best easiest answer from you. So as you mentioned if your below the poverty level say 100 percent with the medical expansion you can qualify? Also its going to be based on your taxes from 2012 right? Also you said no asset test so asset dont matter here at all? Thanks once again I havent looked into it I just wanted to hear an update from you since you always seem to be update thanks Hoofin.

        • If you live in a non-Expansion state, you need a MAGI of at least 100% of federal poverty level. If you live in an Expansion state, you will get MedicAID up to 138% of federal poverty level, and not the Exchange w/ credit unless you are over 138% and no more than 400%.

          Be careful there, and know which kind of state you live in.

          • Hey again I live in California medical expands my concern is my parents owning assets will this affect them? My parents one time said that they can be at risk if they applied for medical. There income is low, but live very conserved don’t spend a lot and thats why we are ok we dont go and spend like crazy. When you say be careful what do you mean? I just want to get the right care my parents also don’t mind paying for something cheap as well.

          • According to The Best Obamacare Guide book, subsidies are really based on your 2014 household income, not your 2012 income. The 2012 income is just used by a Marketplace exchange to see whether you’re telling the truth about your future income.

            • The federal credit of Section 36B is an advance credit. It is based on the MAGI income reported in your last filed income tax return.

              There is a reconciliation in 2015, based on 2014 income. But the credit is not necessarily based on the 2014 MAGI. Read IRC section 36B, especially the section describing the reconciliation. Your book threw a ball over the plate that time.

              [P.S. you aren't just posting here to pitch that book on my website?]

            • No. I’ve read several books and many articles. It is my understanding that the allowed credit is based on 2014 income.

            • It is reconciled to 2014 income. It is an advance credit, though. If you choose not to take it as an advance credit, then it will by default be based on 2014 income.

            • Thats interesting I don’t get it if I have to apply right now for Obamacare how can I know my total income for 2014 if were still in 2013 I don’t get it.

            • I was able to log in earlier this evening, and, yes, they ask if your total income will be about what the 2012 income is—even though it’s the future and no one really knows. They are doing this to prevent people from being surprised about the clawback if 2014 is a much better year than 2012.

            • Just wanted to share my experience on The Washington state exchange on line application form that I just completed. The form asked me what I currently make with no mention of my 2012 tax return, and no questions about what I think I’ll make in 2014, it simply requested details of current income. Also there is a place on my account where I can notify the exchange of changes “greater than $150 per month” to my income that may occur at a later date. The exchange did ask for permission to look at my last five years 1040′s which I agreed to. So anyway, I got approved for a new plan with advance subsidies and signed up. It could be they will look at my 2012 tax return and reduce my subsidy, as I made more money in 2012 than I will this year or next year. But that’s fine, as I will simply go into the “notify exchange of changes in monthly income page” and get my good subsidy back.

              I don’t know whether every state will have the same application questionnaire as Washington, but if they do, watch out for two schoolboy errors on the questionnaire.

              “Do you currently have healthcare insurance” should read ” do you intend to have health insurance after January 1st. In addition to a plan thru this exchange?”

              Do not tick that box if you are currently insured, and planning to leave your plan on december 31st 2013. It will deem you ineligible if you tick that box.

              Also, if you collect rental income, they will ask you to declare your gross rental income, do not input that number, they mean to say what is your net rental income? Crazy no one saw those errors before roll out.

            • I completed the MA application yesterday and it is different than the one you filled out. It was unclear when they asked for yearly income for exactly what yr. they were asking for. I filled it in with what I expected the total to be for 2013. On the next page a question was asked that led me to believe it wasn’t 2013 but rather 2014 so I backspaced. MA still has glitches in their system because when backspacing it brings you back to page 1 and the application has to be restarted all over again. The application did not ask if anyone in the household was self employed however it did ask if an S1 or partnership form is filed with the IRS. Also if I understand you right, you were able to apply for the insurance after you filled out your application. Not the case in MA, we have to fill out the application and wait 2-3 weeks for an answer from them. At that point we will then be able to select from the insurance options. There was absolutely no place to view the plans on the MA site that I was aware of.

  111. My wife and I are both on Social Security income. I also receive a monthly payment for service connected disability from the VA. Does the VA disability income, also tax free, have to be included in our total annual income when figuring our poverty level qualifications for Obamacare?

  112. Hi ~ finding your site is very helpful to me; thanks! Unfortunately, my topic didn’t come up and I can’t seem to find the answer anywhere and hoping you can clarify for me. I will be 62 next month, have applied for SS and will receive my first check in January ~ yay! I was laid off in 2010, after 30 years with the same small company, therefore I am taking my SS early. Back in 1970 my father set up a trust with AIER (American Institute of Economic Research) and he received income from this trust until his death in 2006. He named my sister and me beneficiaries upon his death and we each have been receiving anywhere from $8,000. to $11,000. yearly until our deaths and then AIER keeps the principal. My question to you; is this trust considered income or is it exempt because it’s an inheritance? Thanks again for your helpful site!

  113. I have a question regarding Obamacare and an individual I personally know who has been frauding the MA healthcare system and getting way with it at least that’s the way I see it. This individual is self employed and has his business incorporated. He makes over 300k per yr. and his wife a mere 25k. Because he files his taxes separately for this business that is incorporated he files a 1040 for himself showing a minimal amt. of bank interest and tacking on his wife’s 25k. When applying for the MA insurance they pay the mimimum amt. of $78 each per mo. because supposedly they are poor and they fall into the 200-250% FPL, (remember he makes over 300k). Now I’ m sure he’ll do the same thing with Obamacare to avoid paying the full amt. of the insurance policies for both he and his wife. Is there a provision in Obamacare to avoid this type of fraud for people who have incorporated businesses? What’s to stop anyone from doing this themselves to avoid paying the full price without any subsidy for family insurance? It’s downright irritating to see them driving high end vehicles, traveling to the Pacific islands, ordering Dom Perignon, etc. etc. all the while claiming to be ripping off the taxpayer. So I’m hoping you’ll enlighten me and tell me individuals who have incorporated businesses will not be able to do this with the Fed program as he has done with our state program for years.

    • I just completed the process on the Washington State Healthcare exchange. The line of questioning on the online application included “are you self employed”, and other questions that your “friends” would have to perjure themselves in order to hide their true income. When the IRS reviews their 1040 in 2015, i suppose it’s possible that corporate returns could be overlooked.

      However, I would say they are taking the same risk as someone who cheats on their taxes, and faces getting audited. The IRS will find these illegal loop holes in due course in my opinion.

  114. I’m so glad I found you because I looked on CaliforniaCare and no answer. I have an API of appox. $40K yearly, and have 2 adult kids living at home ages 21 & 24. Girl works full time about $10 per hour and started filing her own tax return last year. I’m still Head of Household because the boy has no job/income so I claim him. My work covers my health insurance but for covering them it’s over $400 a month, its becoming impossible to afford. Both never need to see a doctor. What would be best? Can I take son off my medical even if I claim him and he can get ObamaCare by himself? Would I be penalized by the IRS if I claim him but don’t cover his health insurance? If I take my girl off, it would reduce my premium by some. She has no expenses as she lives here for free. At work open enrollment closes Oct 31 so I’m stressing. I’ve heard different stories so I’m beyond confused.

    • If you are in California, either one or both of your adult children may be eligible for Medicaid — especially your son. You call this “MediCal” there, right? If it means you don’t take his deduction on your return, then that’s the cheaper way to go.

      Your daughter files her own return, so she can apply for Affordable Care Act (Obamacare) coverage on her own earnings. I assume she claims herself.

  115. Hi, I am hoping you may be able to offer some insight as I have been very concerned over the last month and the stress is killing me! I am receiving SSDI of about $1708.00 per month after they have deducted my Medicare premium (unsure of how much). I am married and have 3 children who collect $302.00 each in benefits from my disability. My husband doesn’t work as I cannot care for my kids independently any longer. I received a letter (general type) saying I am over the limited and will receive more info in December. I have Medicaid now and Medicare. Medicaid pays for my home health care of 5 hours per day and I am scared to death what happens if I am kicked off Medicaid. I did the income test and it says I am at 114% of the poverty level when I counted my income plus the kids. My state did not accept the extra help so now what? I also get supportive home care from a program called IRIS but they don’t cover home health costs I fought for 2 years to get disability due to a brain tumor and other medical issues and was homeless on several occasions with my kids. I am scared of ending up in a nursing home. I live in Wisconsin, any insight?

    • It sounds like this is more an issue about what Medicaid in Wisconsin is going to cover. I don’t have a lot of expertise about particular state’s Medicaid policies, but it sounds like Scott Walker didn’t expand Medicaid, and there may be some changes as a result.

      The Affordable Care Act is supposed to expand Medicaid benefits. See this page at HHS. It’s not clear what the general letter was meant to tell you, and I am afraid to say that you probably have to wait until December to find out what changes (if any) are happening. It could simply be that certain coverages you receive through Medicaid would now be provided under a policy through the Marketplace at http://www.healthcare.gov .

      I wish I had a better answer for you.

  116. My question: I am 27 and have a wife, uninsured, and a 3 month covered under TN Coverkids. Total income around $50-$55k a year. I have an individual health plan through BCBS. It’s a $1000 deductible, costs about $155 a month. Fairly good plan, not a basic one. My question is since what I can gather we are at about the 300% level of poverty level, would we save money switching and actually having us all on it? A family plan for all of us with same plan covering us all raises to almost $500 a month. What I’m already paying is as far as I can stretch. What kind of premiums and payment would we be looking at?

    • It is all on that kff.org link that I have under the banner “Obamacare: What does it cost”, above. You go there and type in your info and they give you an estimate. Maybe at $50,000 MAGI you would have to contribute $350 to cover your whole family — but that’s for the second-cheapest “Silver” level (70-30) plan in your county in Tennessee. If you got a Bronze Plan (60-40 coverage), you might save significantly. I think the Kaiser site I mention goes into that. Plus smoker or non-smoker can be critical.

  117. Listen buddy. I am done with this socialist BS! I am a single mom who has worked her ass off to get where I am. What is the incentive for me to earn more than 92K, if I have to pay $20,000 in insurance and a $4,000 deductible for my family. I don’t get a subsidy. I have two kids in college. I did NOT sign up for this nonsense.This is the largest money grab by our government in the history of our Country. Wake up! You are sleep walking.

    • Well, I am sick of trolls and trolling, but I’ll bite: Your incentive to make $500,000 is still there, because $20,000 of that is a drop in the bucket (same drop as taxes going up that much, which they will once people figure out how the wealthy get around things in this country).

      So my advice is to get off wasting time on the internet, and start making that $500,000.

      If you have two kids in college, chances are you’re getting your “subsidies” in other ways.

      This is by no means a “large money grab”, nor the largest in history. It just opens that “subsidized” insurance beyond the people who get it tax-free from their employers.

      [P.S. People who enroll in an ACA plan still have to pay their share of the premium, plus meet a deductible, which can be high depending on the plan.]

  118. I just got off the phone with the Arizona Department of Economic Securtity, and according to them, this would be an incorrect statement: “As it stands now, in states that adopt the “Medicaid Expansion”, people who have adjusted gross income (AGI) at [or below] 133% of the poverty level ($14,000 or so for a single individual) would be automatically picked up by the state’s Medicaid. (You might have to fill out the paperwork.)”

    Arizona has expanded Medicaid, but they claim they can figure your income however they want according to AZ law. For a self-employed person they do NOT use the adjusted gross income. Instead, they look at your gross income (total revenue before any deductions, including employee pay and property lease payments) and if it falls above their guidelines they do not count anything in your schedule C, not even rent and utilities that you pay to run the business. Instead, they take 40% off and give you a profit margin of 60% (which is a total sham because a profit margin of 60% would be every small business owners dream). So, if your business brought in 45K gross and you paid 30K to your landlord and 5K to electric, they will use 27K (60% of 45K) as your income, even though you are living off of 10K before taxes. The Affordable Care Act application would use your AGI and send you to AZ’s medicaid program, but then the state would turn around and say you make 27K and reject you. It is happening to me right now. I don’t even know if I can buy into the exchanges, and even if I can, without a subsidy I will be paying more than people who make more money than I do. To top it off I currently have health coverage under Healthcare Group of AZ, a program for small business and the self-employed, but because they “cannot compete” with the new policies they are terminating everyone December 31st, 2013. There are going to be a lot of us who once had insurance and are now in limbo.

    • Here is the information for your state, from Medicaid.gov, the federal Center for Medicare and Medicaid Services (CMS):
      http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-State/arizona.html

      Effective 1/1/2014, the definition of income for Medicaid purposes is ACA MAGI. The same as the MAGI that is being used to determine Exchange / Marketplace eligibility. You are either eligible for Arizona (with MAGI below 138% of FPL), or for the Marketplace (with possible ACA credit) with MAGI between 138% to 400% FPL.

      It is also possible to buy on the Exchange WITHOUT the ACA credit, and then receive a credit in your 2014 tax return, filed normally by April 15, 2015.

      I believe that any “falling through the cracks” is the result of bureaucracy ignorance as to what the new income rules for Medicaid are.

      I would be interested to know what is missing in my analysis, because CMS is saying something different than what you were told.

        • Thank you for your response and those VERY helpful links. The information you provided clearly states: “By using one set of income eligibility rules across all insurance affordability programs, the new law makes it easier for people to apply for health coverage through one application and enroll in the appropriate program. MAGI will replace the current process for calculating Medicaid eligibility that is in place today, which uses income deductions (known as “disregards”) that are different in each state and often differ by eligibility group.” This basically solves the problem, and I don’t know why the Arizona Department of Economic Security would not tell me this, unless they have not informed their caseworkers yet, or for some nonsense reason they are going to treat the self-employed differently. Just to prove I am not pulling this out of the air, the number I called for information was 480-373-2192.

          You write that “it is also possible to buy on the Exchange WITHOUT the ACA credit, and then receive a credit in your 2014 tax return,” but I don’t understand this. According to healthcare.gov, if you make below the minimum amount (say, $23,550 for a family of 4) and don’t qualify for Medicaid, “you can’t get lower costs on Marketplace coverage based on your income. You’d have to pay the entire cost of a Marketplace insurance plan.” It also says: “These lower costs are handled with a tax credit called the Advance Premium Tax Credit. But these tax credits can be applied directly to your monthly premiums, so you get the lower costs immediately.” If you can’t get the credit immediately, I am skeptical that you could get it applied to your taxes.

          I talked to someone at Healthcare.gov and he told me that there were no minimum income requirements to participate in the exchanges, and if this is correct that is great. Still, according to healthcare.gov there are those minimum income requirements to get the credit. Or is there something that I am not understanding?

  119. I am about to enroll in a plan on the exchange. I want to make sure I am correct regarding the -clawback provision. I am self-employed . The numbers below do not reflect my actual circumstances.

    Here is what I know. You are asked by the federal government to project your income for the 2014 tax year. Thus, you are free to speculate on your income all you want. There is no rule on what you project your income to be. I can be pessimistic and say my income is going to be $30K. Ah, but the government is not stupid. When you file your 2014 tax return this time next year and your income shows higher than $30k, lets say 85k, they will ask for reimbursement based on the difference between what your subsidy was on 30k versus what it should have been on 85K. So lets say at 30k my subsidy is $1000.00 but at 85K it should have been $400.00. They will want the difference of $600.00 x 12= $7,200. However, this is subject to a little manipulation because the clawback is capped. Here is the cap:

    “If the household income (expressed as a percent of poverty line) is: The applicable dollar amount is:
    Less than 200%……………………………………… $600
    At least 200% but less than 250%……………………… $1,000
    At least 250% but less than 300%……………………… $1,500
    At least 300% but less than 350%……………………… $2,000
    At least 350% but less than 400%……………………… $2,500
    At least 400% but less than 450%……………………… $3,000
    At least 450% but less than 500%……………………… $3,500”.

    So in the above example, if your application income is 30k with a household of 4, then you received a subsidy based on the 133% poverty line. Then you do your tax return and discover the you made 85k which bumps you into the 300%. You are capped on repayment at $1500.00. But your subsidy was $7200.00. In other words you gained $5700 in subsidies.

    And I know it is a little more complicated. All income numbers above are based on the adjusted gross income. Regardless, how you initially project your income has enormous impact on your subsidy when comparing it to your exposure on the clawback chart. Am I correct in these assumptions? I would really like your input. Thank you.

    • You are right, except the schedule you presented is wrong, because the early Tea Party Republicans forced Congress to put a less generous clawback schedule in, which caps at 400% of federal poverty level. You are using an earlier version, which was more generous.

      The Advance Premium Tax Credit (APTC) is supposed to be based off the 2012 tax return (42 USC Section 18081 if you are curious.) It’s not clear why the government is asking about 2014 projected incomes, except to minimize the potential shock of the clawback (by having people not use as much of the APTC now).

      • Sorry, I am confused here. The schedule I used is incorrect. Where would I find the new schedule. Now, on the application it asks you about 2014 income. So I assume the subsidy you get is based on projected 2014 income. Are you saying that the clawback in 2015 is based on 2012 tax returns? I am not understanding.

      • I found this:

        If the household income (expressed as a percent of poverty line) is: The applicable dollar amount is:
        Less than 200% $600
        At least 200% but less than 300% $1,500
        At least 300% but less than 400% $2,500.

        Is this the most recent version. Also, I am assuming this is for a family as opposed to an individual. Is it halved for an individual still? Also, what if it is just a husband and wife. Is it still halved?

        • Yes, you went and found the right schedule. As it is in the statutes, they only give the “joint” or married table. You have to know the legal jargon. When they mentioned section 1(c), it means single filers. So it’s halved like you correctly concluded.

  120. I have a secretary who makes 33k per year. She is married and her husband is unemployed and will be for all of 2014. When I helped her with applying, it turned out they would receive a $950.00 tax credit towards their premium which was great. However, she got to thinking about it. Last year, her husband cashed out his 401k and put it in certain investments which they have been drawing off of through the year. If they draw 30k, it will put them above 400% of the FPL. At present, she doesnt know how much he has drawn or what kind of accounts these are. Is there any way around this as far as that income. I assume most investment income is going to be included in the MAGI. Your quick reply would be appreciated as we are drawing near the extension deadline.

    • Last year is 2013 in this scenario? 2013 does not matter, because 2014′s income will be less. The 401(k) was taxable income in 2013. Whatever the investments have as a value in 2014 is not relevant, only the income and gains that would be generated. Just sell things that didn’t go up.

  121. I assume the clawback cap is an annual cap and not monthly. So if the cap is $600, that means if you received $300 too much in tax credit towards your premium, you only pay back a total of $600 on your tax return. Also, another question, regarding refunds, if your premium tax credit is $1050, and your plan costs $950, you dont get refunded $1200 ($100 x 12) on your tax return do you, assuming your income projection was correct?

    • It is annual. If you received $300 too much, it means you pay back the $300. For any other scenario, please contact me via e-mail. We do this for a living.

      • Hoofin, sorry, I could not find an email. I just wanted to know whether if you buy a plan at 850.00 per month and your subsidy is 1050.00 per month, do you get the difference back of $200 x 12 on your tax refund. Thanks for all your fine work on here.

      • If your dependent child, who you have covered under the aca as part of a family plan graduates from college mid year and gets a job that provides health care benefits, and no longer is your dependent, what happens to the premium and what do you claim for household income when you make out your 2014 income tax return? Is this a qualifying event?

  122. I would like to thank who every take time out. Of their day to help me to get health care who understand a lot more Than. I do Thank you Willis Holloman

  123. Mr. Holloman, please try the Health Sherpa site, which I link below. The example is set for a “Silver” plan, and an example income of $18,000 a year. You can change the number there. With Silver Plans, the government will also do cost sharing on the deductible and other bills. This is in addition to giving an advance tax credit to help with the premium.

    Once you find a plan you want, then go to http://www.healthcare.gov and set up your account.

    http://www.healthsherpa.com/insurance_plans?zip_code=29010#c45061/msilver/pg1/ppl59/hhs1/hhi18000

    http://www.healthsherpa.com/insurance_plans?zip_code=29010#c45061/msilver/pg1/ppl59/hhs1/hhi18000

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