Update for 2014 filing season HERE
I wanted to do an update post on the Affordable Care Act now that the marketplaces are open. Since I'm a tax expert, and this is a tax blog, I am primarily focused on the tax implications of the law, but I will put in my 2 cents on any area I think I can help. This is not a political blog, so I don't intend to praise or criticize the law and if I seem critical or enthusiastic about something, it is not meant as an indictment or endorsement of the law, I am merely trying to pass on useful information. Please do not use the comments feature to voice your political opinion on the law.
Before going further, you should read my original piece I wrote after reading the law (yes, I am a glutton for punishment.) I am writing this post as an expansion to that one, so it won't make a ton of sense if you haven't read the first one. Here's a link: ACA 1
Right now, the health care marketplaces are open, though many of them have some glitches and delays as would be expected. California and Hawaii seem fluid and smooth, Alabama and South Carolina I was unable to get past the "There are a lot of people applying, please wait" screen. I didn't try every state.
The easiest way to access the marketplaces is via www.healthcare.gov. The big "Apply Now" button is hard to miss. Just below that is a "Want to Learn More" statement with a "Start Here" button. I highly recommend clicking it and reading the information. In addition, at the bottom of that page, you can put in your zip code to find local help centers (most are not up and running yet, but soon should be.)
If you don't have insurance, and can't get it through your job, this is the place to start. It will work you through the subsidy (called the Premium Tax Credit) available. You can get a subsidy if you are ineligible for insurance from another source (generally your employer or another government program), and your income is below 400% of the poverty level for your family size. You may also be eligible for Medicaid if you are below 133% of the poverty level. You can also use the marketplace if you have insurance available, but you won't get a subsidy - I'm not sure if you can get a better deal here than your current insurance, but you can try.
Here's an IRS FAQ on the subsidy: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-the-Premium-Tax-Credit
The biggest points I will make on it are:
- Keep the Marketplace notified about changes to your income or family status.
- You don't have to get a Silver Plan. You get the same subsidy no matter which plan you choose
The first point is the big one, though. The subsidy goes right to the marketplace, is estimated based on 2012 income, and gets reconciled on your 2014 tax return. Any changes that increase your subsidy between 2012 and 2014 get you a bigger refund, but, if your income goes up from 2012 to 2014, you have to pay back the difference in subsidy! This is the BIG pitfall that MUST be avoided.
I think I covered the tax penalty well enough in the first post. If you don't have insurance, you could face a penalty, which will go up dramatically in the next few years. Here is the IRS FAQ on the subject: http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
So here's my overall advice:
- If you don't have access to insurance, or are unhappy with your insurance, check out the marketplaces
- You might want to wait until November to give things a chance to calm down
- Don't wait much later than November and especially make sure you get there by Mar 1st
- Use the most accurate income information you have when applying for a subsidy
- Keep the Marketplace informed of changes in income and family size if getting a subsidy
- If you and your family expect minimal medical expenses, get a lower tier plan.
- If you expect to have higher expenses, get a higher tier plan
- If you have trouble with the marketplaces, use the "Want to Learn More" section and put in your zip code to find local help
- If you think you might not want to get insurance, talk to your tax guy about what the penalty amount might be
If this helps you, consider leaving a Tip!
You can download a pdf of this post combined with the original post HERE. If you download the pdf, I would really like a Tip!