OBAMACARE and YOUR TAXES
OBAMACARE and YOUR TAXES: Beginning in 2014, most Americans are required to have health insurance under the Affordable Care Act, also known as “Obamacare” . There are aspects of the law that effect your taxes. Specifically, if you fall below certain income guidelines, you can qualify for a premium subsidy – a tax credit. In other words, if your income is low enough, your taxes will be reduced (tax credit) so that your money will be freed up to pay for some of the premiums (premium subsidy).
Insurance will be available through ”exchanges”, which are state published websites that show what is available to you. Medicaid may also be available for some, whereas before, it was not an option. Medicaid is a program that has been around for many years and provides health insurance for the very low income (depending on your state, you may be eligible for Medicaid under higher income limits, now).
If you decide that you do not want to have insurance then you will be penalized– in the form of higher taxes. This aspect of the law is called the “Individual Mandate”. This is the part of the law that went to the Supreme Court and the part that is most subject to debate.
Enrollment under the new health care exchanges began on October 1 and continues to be available until March 31, 2014, If you do not purchase insurance during this period, then you will be closed out until the next open enrollment period in October , 2014, unless you qualify as having a “life event” (certain changes in circumstances).
More on Tax Penalty:
For 2014, and depending on your income, the annual one-time tax penalty will be $95 per adult, or one percent of your total income. For uninsured children in your family, the penalty is $47.50 per child, with a family maximum of $285 for the year. Note that the Supreme Court ruled that this penalty is effectively a tax (since the government has the power to tax you, but not necessarily to tell you what to buy). The 2014 penalty will be imposed when you file your taxes, in 2015. This is the part of the law that some members of Congress were trying to delay. However, without the individual mandate penalty in force, the law is likely to fail.
The annual penalty will increase each year. For 2015, the annual penalty will increase to $325 per adult and $162.50 per child, with a maximum penalty of $975 per family (or roughly two percent of total income depending on family income). In 2016, the annual penalty will be $695 per adult and $347.50 per child, with a max of $2,085 per family, or about two and a half percent of total income depending on family income.
The most US citizens will be subject to the subsidy and penalty provisions of Obamacare. However certain people may be avoid penalties due to income levels or because they are insured through their employer, Medicaid, Medicare, or a private provider.
More on the Tax Subsidy to Pay for Insurance:
People purchasing coverage on their own will be eligible for government subsidies (through a tax credit) towards their health insurance premiums based on income. Subsidies will be based on a percentage of the “poverty level” from 100% (at which level their insurance will cost no more than 2% of income) and 400% (at which level their insurance will cost no more than 9.5% of income)of the federal poverty level. Subsidies will only be available to those purchasing coverage through the exchanges, which includes people who do not have access to alternative insurance (such as Medicaid and affordable employer coverage). We found a great calculator for you to estimate what your subsidy could be: http://kff.org/interactive/subsidy-calculator/
Why Are Employer’s So Upset About Obamacare:
Some large employers who don’t offer insurance that meets certain minimum standards will be subject to another effective tax called: “Employer Shared Responsibility Payment” The payment is scheduled to begin in 2015. It applies to employers with 50 or more full-time equivalent (FTE) employees. In short they will be required to pay the following penalties, for failing to meet certain insurance coverages:
- If they don’t offer insurance, the annual payment is $2000 per full-time employee (excluding the first 30 employees)
- If they do offer insurance, but the insurance doesn’t meet the minimum requirements, the annual payment is $3000 per full-time employee who qualifies for premium savings in the Marketplace
HAVEN’T HAD ENOUGH?
Here is a cool video that talks about the basics of the new law:
Here is the Official Governement Website for the Affordable Care Act: