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View Diary: Why is nobody talking about the OTHER Obamacare subsidy? (178 comments)

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  •  Does anyone know offhand (4+ / 0-)
    Recommended by:
    Julia Grey, Satya1, wader, catwho

    How it works for gross vs. net income?  My dad is an owner-operator truck driver and grosses over $100k but nets maybe $20k-$30k and his experience so far was that a plan would cost him around $600-$700 a month.

    He and my mom had been booted off of MN's state health insurance a few years ago because they apparently used to base eligibility on net income but switched to gross.

    Because of the high costs up until this point my mom and dad have been basically paying any health care costs out of pocket and going without insurance and they're trying to figure out how to make it work now that they need to pay for insurance (where $600 - $700 just isn't going to work for them)

    •  I believe (10+ / 0-)

      it's adjusted gross - your taxable income.

      "Mediocrity cannot know excellence." -- Sherlock Holmes

      by La Gitane on Fri Nov 22, 2013 at 09:46:04 AM PST

      [ Parent ]

      •  Closer to taxable than gross, but maybe a bit more (1+ / 0-)
        Recommended by:
        Julia Grey

        I'd love to see an explanation of "what income is" from one of the people on dKos who know a great deal more about ACA than I do.

        I saw some information that suggested that the income they're looking at is closer to taxable income than gross income, but perhaps a little higher than taxable income in some cases. As I recall, someone who got deductions for, say, education expenses might not have those count toward calculating income.

        •  The interest on son's student loans was (1+ / 0-)
          Recommended by:
          orrg1

          taken away from his income amount.

        •  NO. Gross is all the income that comes (0+ / 0-)

          to a person. If he is an independent contractor he should be filing a form C for a business and subtracting legitimate expenses for the income. Then you carry that net amount over to the 1040. You add inother sources of income on the 1040 side 1 and that total the adjusted gross income. That is the last line on the page 1.

          And it carries over to the top of page two. There you subtract the standard deduction (or you itemized deductions) and your personal exemptions.  That gives you your taxable income — which is irrelevant for the ACA.

          It is your adjustable gross income that is what you would report.

          I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

          by samddobermann on Sat Nov 23, 2013 at 06:27:14 AM PST

          [ Parent ]

          •  Actually it's modified AGI (0+ / 0-)

            one thing they do is include in benefits such as Social Security (my husband gets SSDI in addition to private disability insurance payments, so only part of the SSDI is included in AGI  but all of it is included in Modified AGI...there are some other differences like that I don't recall.

            This is one of the things that ticks me off...my husband, thank goodness, has Medicare. But on our combined income we make (a couple thousand) too much for a subsidy, so we're expected to pay upwards of 9% of our income to insure just me...and for a crappy high deductible plan at that. I'd gladly pay full freight (around $560/month) for Medicare--which would run the same cost as a "Silver" plan but with better than "Gold" benefits. But thanks to Lieberman et al, that's not an option.

            "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

            by Alice in Florida on Sat Nov 23, 2013 at 05:27:39 PM PST

            [ Parent ]

            •  Medicare jas a 20% deductible and (0+ / 0-)

              sharp limits on a lot of things — although it has been improved immensely by the ACA.

              The deductible for hospitalization is over $1000 but the rules make a lot of hospitalizations "not count" as such. It is separate from the regular Medicare deductible of about $130.

              But then you have to buy a separate private prescription plan.

              Have you actually looked at the exchange?

              I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

              by samddobermann on Mon Nov 25, 2013 at 12:36:15 AM PST

              [ Parent ]

              •  Yes. That's how I know (0+ / 0-)

                I'm not eligible for a subsidy, and the only plan that's less than $500 a month has a $6,350 deductible. There are plans for $5,000 deductible that cost over $500 a month, and of course once the deductible is met there's a 40% or 30% copay. for a deductible as low as $2,000, the premium starts hitting $800 a month or more--and this is for one person. Many plans don't include our doctor, many are HMOs with very limited networks and no payments for anything outside those networks. Of course, I do realize that it could be worse--given that insurers wanted a bigger multiplier for age, I suppose I should count myself lucky that the plan with the $6,350 deductible isn't $800 a month.

                One thing I did get through signing up on healthcare.gov--a letter telling me I may be eligible for Medicaid, but since my state doesn't offer it, I'm exempt from the health insurance mandate. Obviously wrong, though who's to say I don't believe I'm exempt? It says so, on an official letter.

                At any rate, I have at least until March to sign up, and will probably wait. I'm not one of those young healthy individuals they want to sign up--but I'm not in need of healthcare services, so I'm not in a hurry.

                "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                by Alice in Florida on Mon Nov 25, 2013 at 08:00:45 PM PST

                [ Parent ]

              •  And I am aware of the (0+ / 0-)

                co-pays for Medicare, keeping in mind that Medicare limits what doctors and hospitals can charge, it's not that bad. $1,000 deductible for a hospital admission is not bad, especially if you don't need to go to the hospital very often. Actually, what's great about Medicare is that it's not limited to one state, and if I could get Medicare I could be assured of having access to care when I'm up north and wouldn't have to worry about having a medical emergency and not being covered because I'm away from the network.

                "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                by Alice in Florida on Mon Nov 25, 2013 at 08:10:41 PM PST

                [ Parent ]

      •  It's Modified Adjusted Gross Income. One thing you (11+ / 0-)

        will see online is that the media is desperate to find examples of people that will be harmed by ObamaCare. They will find someone or make up someone who makes just above the cutoff. Then out come the tiny violins. What they don't tell you us that these could qualify or maybe already do qualify because it is MAGI that matters. By contributing to their 401k, or other methods, they could possibly qualify by lowering their MAGI. MAGI = Form 1040: line 37 line plus line 20a plus line 7 plus line 8b.

        •  But the extra contribution (0+ / 0-)

          to the 401K would be more or less equal to the amount of subsidy, so it would kind of be a wash for anyone in that situation.

          The ACA is not going to benefit everyone in the individual market--that would be impossible without going over to single payer. It definitely benefits the overwhelming majority of people who do not have health insurance through their jobs. It makes health insurance cheaper for many self-employed by offering a subsidy.

          On the other hand, the ACA over promised big time--it is really an experimental system, and a lot of things are not working as they were supposed to (the fact that the GOP has kept up nonstop attacks at every level of government has created a very hostile environment, of course). The Health Insurance Companies have reacted to the requirements of coverage and preventive care by offering extremely limited networks and ridiculously high deductibles and premiums in many areas.

          "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

          by Alice in Florida on Sat Nov 23, 2013 at 05:36:24 PM PST

          [ Parent ]

          •  It would not be "a wash". The 401k (0+ / 0-)

            contribution would not have to be the same as subsidy. Do you understand what the purpose of the 401k would be, and what would happen to it?

            •  The subsidy for someone within (0+ / 0-)

              a few thousand of the cutoff is relatively small. There is also a cap on how much you can deduct for an IRA contribution.

              "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

              by Alice in Florida on Mon Nov 25, 2013 at 07:41:58 PM PST

              [ Parent ]

              •  you're changing the subject and moving (0+ / 0-)

                the goalposts. Who said anything about an IRA?

                •  If you have a 401K, it's very unlikely (0+ / 0-)

                  you would not have employer-provided health insurance, because a 401K is an employer-based plan that usually involves employer matching contributions. If you work someplace that doesn't provide health insurance, or if you're self-employed, you can have an IRA, which you set up at a bank. Both have limits on how much you can contribute in a year.

                  "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                  by Alice in Florida on Tue Nov 26, 2013 at 05:37:16 AM PST

                  [ Parent ]

                  •  You may not have heard of self-employed 401(k) (0+ / 0-)

                    plans. They are also called solo 401k or individual 401k plans. You can google them if you are interested.

                    Contribution limits in a one-participant 401(k) plan
                    The business owner wears two hats in a 401(k) plan: employee and employer. Contributions can be made to the plan in both capacities. The owner can contribute both:
                    Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit:
                    2013 and 2014: $17,500 or $23,000 if age 50 or over; and

                    Employer nonelective contributions up to
                    25% of compensation as defined by the plan, or
                    for self-employed individuals, see discussion below
                    Total contributions to a participant’s account, not counting catch-up contributions, cannot exceed $51,000 for 2013 and $52,000 for 2014.

                    Example: Ben, age 51, earned $50,000 in W-2 wages from his S Corporation in 2013. He deferred $17,500 in regular elective deferrals plus $5,500 in catch-up contributions to the 401(k) plan. His business contributed 25% of his compensation to the plan, $12,500. Total contributions to the plan for 2013 were $35,500. This is the maximum that can be contributed to the plan for Ben for 2013.
                    A business owner who is also employed by a second company and participating in its 401(k) plan should bear in mind that the limits on elective deferrals are by person, not by plan.

                    Cut and paste URL www.irs.gov/Retirement-Plans/One-Participant-401(k)-Plans

                    Solo 401(k) a great tool for self-employed

                    The solo 401(k) -- also known as the individual 401(k) -- was created by the Economic Growth and Tax Relief Reconciliation Act of 2001. For the 2012 tax year, it allows businesses with only one full-time employee-owner to contribute up to $50,000 to the plan ($55,500 for those 50 and older).

                    The benefit is even greater for business owners who are married. Spouses on the payroll are the only exception to the "one worker" eligibility rule, and they are allowed to make contributions equal to those of the business owner. That means a married couple can sock away a whopping $100,000 annually.

                    http://www.bankrate.com/...

                    Small business - Individual 401(k) | Vanguard
                    https://investor.vanguard.com/...

                    Solo 401k Contribution Limits and Rules
                    http://www.goodfinancialcents.com/...

                    •  That would be one of Bush's (0+ / 0-)

                      tax cuts, one of the ones that primarily benefits what many here would call "rich" though others would say "affluent." It is one that I admit I was not familiar with because my knowledge of taxes comes mostly from doing my personal return and volunteering for VITA and Tax-Aide helping low/middle income families and retirees with their returns. I haven't worked full time since before the Bush administration.

                      If people who make well in excess of the income limits were able to use this to get ACA subsidies it would be (a) a reason they should STFU about increases in the cost of their individual plans and (b) very unfair to those of us who don't have the flexibility to move money around because we have don't that that much excess after paying mortgage, food, electric, etc. I guess we need to see the 2014 tax returns to see how all this is dealt with.

                      "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                      by Alice in Florida on Tue Nov 26, 2013 at 10:15:52 AM PST

                      [ Parent ]

                    •  Also, the adjustments (0+ / 0-)

                      on the tax form includes the self-employed health insurance deduction, which seems kind of recursive in terms of figuring your income to see if you can afford health insurance.

                      "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                      by Alice in Florida on Tue Nov 26, 2013 at 10:31:06 AM PST

                      [ Parent ]

                •  I should have noticed (0+ / 0-)

                  in your first comment that you mentioned 401K's--I was thinking IRAs even though I repeated 401K. I really should have caught that, the ACA exchanges are only for people who don't have an affordable plan at work…employers who don't provide health insurance don't provide 401Ks, at least I've never heard of one.

                  The ACA is designed to patch the holes in the existing system, not replace it; people who make above the subsidy limit are presumed to have employer-provided health plans because that is normally the case.

                  "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                  by Alice in Florida on Tue Nov 26, 2013 at 05:43:31 AM PST

                  [ Parent ]

      •  So whatever his business makes, NET, is (5+ / 0-)

        his business income, which is put on Line 3 or whatever it is, added to other sources of income, and all add up to the adjusted gross at the bottom of the INCOME portion of the tax return. That is what should be put down on the application.

        The business income figure should already have all the business expenses and business deductions taken out.

      •  No, it's modified gross (0+ / 0-)

        which is not the same as Adjusted Gross Income (AGI)..and AGI is not the same as taxable (remember that 47% of people do not have taxable income for federal income tax purposes).

        "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

        by Alice in Florida on Sat Nov 23, 2013 at 05:15:32 PM PST

        [ Parent ]

    •  However your dad reports income to the IRS (2+ / 0-)
      Recommended by:
      Catte Nappe, davidincleveland

      whether through schedule C or some other form, there are ample deductions for business expenses.

      The subsidy is based on the modified adjusted gross income (MAGI).

      As Minnesota has one of the leading programs in the country in terms of getting federal money to people and adding state services besides, I'm thinking they should be in good shape for ACA.  Get them to a navigator if they have a lot of questions to sort out.

      I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

      by Satya1 on Fri Nov 22, 2013 at 11:36:24 AM PST

      [ Parent ]

      •  Sorry Th3Drizzle to not give more (0+ / 0-)

        MAGI is not some easy number to come up with all the time and I should have added more.

        For many people  MAGI is the same as AGI, which is the total at the bottom of the first page (just the first side) of the 1040.  It is all income.  If one had business income with many expenses that would have been done on sched C probably so the net shows up on line 12 of the 1040.

        I think it is likely though that for your father a modification to his AGI is needed to come up with the MAGI.  Here is one place to go for more info on MAGI - not sure it is the best but it may be some help:

        http://obamacarefacts.com/...

        I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

        by Satya1 on Fri Nov 22, 2013 at 11:53:20 AM PST

        [ Parent ]

        •  Whoa, the info here is a lot different... (1+ / 0-)
          Recommended by:
          doinaheckuvanutjob

          …for calculating MAGI than the info from UC Berkeley's Labor Center, which is what I've been using and telling friends and family to use.

          Underestimating MAGI will result in taxpayers' owing several thousand dollars when filing that year's taxes, so it's sort of crucial to know if IRA contributions have to be added back to AGI.

          Is that an official government site, or from a third party?

          •  It's a really simple concept, your reported income (0+ / 0-)

            AFTER taxes, deductions etc. In other words, your income on the line on the tax form after all your deductions. It can be zero. It's not your gross income which a lot of people are confused about.

            •  No, you are wrong doina..., (1+ / 0-)
              Recommended by:
              Willa Rogers

              adjusted gross income refers to before taxes, deductions etc are taking out.

              There is a difference between gross business income (from which you take necessary business deductions to get the net to carry to the 1040) and adjusted gross income which is the bottom line on the 1040 page 1.

              You are talking about something that does not even have a term name.

              It may be "a really simple concept" but you have the wrong one.

              I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

              by samddobermann on Sat Nov 23, 2013 at 04:02:18 PM PST

              [ Parent ]

    •  It's not gross income (2+ / 0-)

      It's after his business costs are subtracted to yield his business income.

      His business income is what his personal income is (plus any other surces of income he may have), and that (after some things are subtracted) becomes his adjusted gross income (AGI).

      But subsidies are based on his Modified AGI, or MAGI, which is the AGI with some of those subtracted-thing above added back in.

      It's a smiple calculation that can be easily done, probably for free on the basic Turbo-tax type program. Or you can Google MAGI to learn more about it.

      Araguato

    •  It is adjusted gross. Find that line on his 1040. (2+ / 0-)

      For example, if your AGI is just a bit too high last year, you can lower it by making charitable contributions, or making larger contributions to a retirement plan.

      •  No, charitable contributions are (0+ / 0-)

        not going to reduce adjusted gross income and IRA contributions are one of the things that increase the MAGI.

        That sucks because pension and 401k contributions don't get added back in. Lower income people are more likely to have IRAs than the above so it is discriminatory.

        I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

        by samddobermann on Sat Nov 23, 2013 at 04:06:36 PM PST

        [ Parent ]

        •  Anyone with pension and 401K contributions (0+ / 0-)

          is going to have an employer-paid health insurance benefit, so the ACA exchange plans are irrelevant.

          It should be noted that contributions to an IRA or SEP (self employed 401K equivalent) would be added back in, so it's the same for affluent persons in the individual market.

          "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

          by Alice in Florida on Sat Nov 23, 2013 at 05:43:38 PM PST

          [ Parent ]

    •  If his gross is reduced by his deductible (0+ / 0-)

      expenditures — as on his tax return — then you use his net income. It is what he would take home if he were an employee and the employer paid his work related expenses.

      I take it he is an independent contractor, yes?

      does he file a form 1040 C for a business?

      Kos mail me. Maybe I could help if I knew more details. I used to practice tax law.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Sat Nov 23, 2013 at 06:19:59 AM PST

      [ Parent ]

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