Tuesday, November 21, 2017
Health

Reader questions on Obamacare, Part 2: Outwitting fines and more

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Second in a series

The Obamacare marketplaces open for business Oct. 1 to start selling health insurance to people who don't have coverage through their work, Medicare or Medicaid. Last week, we answered eight of the most common questions from readers about the marketplace; you can find them at tampabay.com/obamacare.

Today, we dig into more issues, from outwitting fines to figuring out subsidies. Please keep sending your questions to [email protected]

Isn't it going to make more sense for young, healthy people to pay the penalty than to buy high-priced, full-coverage insurance? Especially since if they should develop a major health problem, they could not be denied coverage.

That may depend on the size of your income and the quality of your crystal ball. Consider:

1. The fine: Unless you qualify for an exemption, you will face a fine if you don't have insurance. It is low in 2014: $95 for an individual or 1 percent of income, whichever is greater. By 2016, the fines reach the greater of $695 per year (up to $2,085 for a family) or 2.5 percent of income.

2. The cost of insurance: Whether the fine or the insurance will cost more depends on the rates in Florida, which have not been announced, and whether you qualify for tax credits that could substantially lower insurance costs. You'll know your costs after Oct. 1. But the savings you might realize by choosing the fine would have to outweigh the cost of your medical care to be worthwhile.

3. The cost of care. Even healthy people have accidents that can outstrip savings quickly. You can't be denied for a pre-existing condition — but neither can you get insurance at the moment you need it. Coverage you buy starting Oct. 1 takes effect Jan. 1. If you don't sign up by March 31, 2014, you can't sign up again until Oct. 15, 2014, and it won't take effect until Jan. 1, 2015. The exception: If you lose insurance due to a "qualifying event'' such as getting laid off or moving to another state. Even then, coverage doesn't take effect until the month after you buy it.

I'm trying to help a friend who wants to enroll, but he doesn't have access to a computer, let alone know how to use one. What can he do?

You can call the National Marketplace Toll-Free Call Center at 1-800-318-2596 (TTY 1-855-889-4325), 24 hours a day, seven days a week, for assistance in both English and Spanish. Also, local advisers, called navigators, are being trained and soon will be able to help. We'll announce how to contact them when we know.

I've heard some people qualify for subsidies to help pay for insurance on the marketplace. Are the subsidies taxable?

Subsidies are based on your estimated income and household size. They're not taxable — and they really are tax credits. Healthcare.gov calls the subsidy an "Advance Premium Tax Credit,'' which can be applied monthly to a policy you buy through an approved marketplace.

How will the tax credits work? Will I pay full premiums and wait for a credit?

If you qualify for credits, your monthly premiums can be lowered immediately. You'll learn the amount of the credit when you fill out an application for insurance at healthcare.gov, but you can get an estimate using the Kaiser Family Foundation calculator at kff.org.

Which year's tax return will be used to determine income for 2014 health insurance? What line of my tax form is considered total income?

Credits are based on household income and household size. The marketplace at healthcare.gov will ask you to estimate your 2014 household income to determine if you qualify. You'll want to add up wages, tips, net income from self-employment or a business, unemployment compensation and Social Security payments. This information will be compared with your most recent tax return, allowing for reasonable changes you're expecting. If your income turns out to be higher than you expected, you may have to pay back some of the credit later.

More technically, you'll take your adjusted gross income (AGI) from your tax return. If it applies to you, add to that any income from Social Security and tax-exempt interest.

I'm on Medicare but my wife is under 65 and needs health insurance. Will my Social Security income be included in calculating her tax credit for insurance?

You have to report all household income and how many people are in your family, even if just one person is seeking coverage. And yes, Social Security income counts. Assets, such as homes, are not counted to qualify for subsidies.

I'm single and I make about $12,000 a year. I heard that I can get free insurance on the marketplace. Is that true?

The Affordable Care Act intended to cover low-income people by expanding the Medicaid program. But some states, like Florida, refused to do so. This has created a "coverage gap'' that excludes many poor people from getting help.

Generally, individuals with incomes between $11,490 and $45,960 should qualify for insurance assistance; the less you make, the more aid you get.

The tax credits are tied to the second lowest cost "silver'' plan (plans are rated from "bronze'' to "platinum'' depending on how much they cover.) Florida rates haven't yet been announced, but if a low-income person applied their credit to a lower-cost bronze plan, they could end up paying no premium, explained Larry Levitt, a senior vice president with the Kaiser Family Foundation.

But bronze plans carry higher costs such as copays and deductibles. There are subsidies for cost-sharing — but they're for using a silver plan.

A person near the bottom of the subsidized income range ''could likely pay zero premium for a bronze plan with very high cost sharing. Or, they could pay a modest premium (2 percent of income) for a silver plan with cost-sharing subsidies and very modest copays,'' Levitt said in an email.

On the bright side, people in your income range (below 139 percent of poverty) will not face a penalty if they decide they can't afford subsidized insurance

Sources: Healthcare.gov, U.S. Department of Health and Human Services, Kaiser Family Foundation, the Internal Revenue Service.

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