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

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  •  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

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      •  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

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          •  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

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              •  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

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                •  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

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            •  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

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