Tag Archives: Affordable Care Act

Health Care

5 Things To Know About The Affordable Care Act

Last October we did a quick piece on the new federal health insurance plan, known as the Affordable Care Act, and how it might affect taxes. This isn’t necessarily a follow up piece but it offers 5 things that could affect finances that maybe some folks haven’t considered before.

1. For many people there’s a negligible difference between what they were paying out of pocket for their health insurance and what they might have to pay now. Because of the wide range of discounts offered in many states some people might even end up paying less for their insurance. However, it also depends on where you live because if your area doesn’t have at least 4 competing offers you’ll see your costs go up.

2. It turns out that even with a deductible certain things are being paid, even if not at 100%. Diabetic supplies, lab tests, and even some doctor visits for specialists are receiving some kind of payment. While most insurances cover the same thing, the rate of payment is different so it’s worth checking with your insurance company to see what they might pony up for you (this has always been true by the way).

3. If you’ve never saved receipts for medical services this is the year you should do it. It looks like you can write off any payments you make for the year as long as it comes to at least 10% of your adjusted gross income.

If you have a high deductible plan because it’s what you could afford you’re probably going to fall into this category if you’ve had a few doctor visits or even prescriptions you’ve had to buy that you got minimal discounts for. If you got an adjusted fee owed based on income that will be taken into account, but you’ll need to see your accountant to figure out how it will all work out.

4. Even if you qualify for discounts on your insurance premiums, you should be cautious in accepting them if you feel your financial situation might improve. Those tax breaks you get will become payments you need to make back to the government if you end up not qualifying for those same discounts the next year; in essence it’s considered more of a loan. If you’re not getting at least 50% adjusted off, and you know you’re going to be going for a much better paying job, it might be smarter to not accept any assistance.

5. We haven’t talked about it here so it’s time to mention what happens if you decide not to get insurance. For 2014, the penalty starts at around $900 if you’re single, $3,800 if you’re a family. That’s considered “taxable income“, not how much you’ll actually pay.

Depending on your income it’ll start around $95 and go up from there for individuals and couples, and start around $383 for families. There’s a max limit the first year, which is helpful, but it goes up drastically for 2015 and eve higher for 2016.

The thing is, if you’re unemployed or under employed, and you don’t qualify for Medicaid, this is a great option because you could end up with little to no premiums coming out of your pocket and still have health care coverage until you get back on your feet. At the very least, it’s worth looking into, no matter what your finances look like. But hurry up, otherwise you’ll have to wait until November to start over.
 

Health Care

What To Know About Taxes & Health Insurance For 2014

The Affordable Care Act mandate that everyone needs to have health insurance or pay a penalty starts in 2014. The requirement is that individuals must be covered for at least 9 months of the year to avoid having to pay a penalty. In actual costs, if you’re single or married with spouse and no kids you’ll have to pay either $95 or 1% of your total income, whichever is higher, and if you’re a family of 3 or more the cost is around $380 or 1% once again. Those are the actual dollars; it’s not much but it’s still money out of your pocket, and it goes up in 2015.

Here are a few more things you should know about what’s going on, including what’s happening in New York:

1. New York state is broken into multiple coverage areas, and each area offers something different, although some insurance companies cover multiple areas. Without a discount, plan costs seem to be running between $400 and $1,800, with the major differences being deductible and pharmaceutical costs. The lowest level plans, known as bronze level, don’t offer anything for pharmaceuticals, while the costliest plans don’t have a deductible that you must reach. Start thinking of health insurance like car insurance if you have to purchase one of these plans.

2. The range for qualifying for a discount on health insurance is pretty vast. For single or self + spouse the dollar amount is around $49,000, for larger families it goes all the way up to around $94,000. It’s nice to qualify for a discount but it comes with a warning that most people don’t know about. If you get a discount but the next year your income takes you above that level by a certain percentage (which hasn’t been released yet), you not only lose the discount but you might be required to pay back whatever discount you received beforehand. That doesn’t seem quite fair but it’s in one of those pieces of paper that experts have read so be warned about it.

3. Experts have gone back and forth as to whether consumers or small businesses will be able to deduct the cost of premiums in 2014. Supposedly if you’re getting a discount you won’t be eligible but if you’re not… still a bone of contention. The recommendation is to keep all receipts for those services that are presently allowed to be deducted if their cost is high enough which includes physician visits, dental visits, medical equipment and vision care; sorry but no sunglasses unless they’re prescription.

Unfortunately even now there are lots of questions yet to be answered, but as with most other things it’s important to keep all your receipts and share them with your accountant. At some point we will have all the answers we need.