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In an effort to understand precisely how this law impacts working families, I decided to speak with a local family here in Indiana that currently does not have health insurance. This family, contrary to conservative media hysteria, was quite able to access and sign up for an account at healthcare.gov.

Please see below for results...and a question so that I may help this family.

Here are the brief demographics of this family:

Adults: 2

Children under 18: 3

Children over 18: 0

AGI (total): $69,770/yearly

Insurance presently: no

Employer offers insurance: no

We placed their information into the premium generator provided by the Kaiser Foundation. Here is what was spit out for the silver plan:

Household income in 2014: 253% of poverty level

Unsubsidized annual health insurance premium in 2014: $12,577

Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy: 8.14%

Amount you pay for the premium: $5,678 per year (which equals 8.14% of your household income and covers 45% of the overall premium)

You could receive a government tax credit subsidy of up to: $6,899 (which covers 55% of the overall premium)

Now, the overall mathematics of the premium aren't all that horrible. It comes out to $473.17/month to cover a family of 5.

What is making them very, very nervous is the fact that the 55% assistance is listed as a "tax credit subsidy"...which is usually jargon for "Pay the whole premium up-front in 2014...then wait until 2015 to be reimbursed via a tax credit when you complete your 2014 tax return".

If that is truly how the subsidy works, this family will pay $1,048.08/month for the premium in 2014 and have to wait until 2015 to be reimbursed.

Are we understanding how this works? If not, someone please let me know because the family in question is in a bit of panic mode for 2014.

UPDATE

OK...so here is what I am understanding based on the multiple sources of feedback I received already:

The subsidy is 100% ALWAYS up-front unless the family CHOOSES to have it as a tax credit...meaning that such people buying the policies are only responsible for paying the premium AFTER the subsidy. The tax credit portion of the subsidy only comes into play if what has been reported as income is inconsistent with what is actually declared come tax season. At that time, differences are reconciled via the payment of additional premium (family made more than expected) or issuing of a credit (family made less than expected).

Thank you all for your feedback! I surely didn't mean to get people into a bunch. I just wanted to give these family friends clear, accurate and substantiated information to make informed choices.

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Comment Preferences

  •  Tip Jar (22+ / 0-)

    Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

    by Love Me Slender on Sun Oct 13, 2013 at 09:28:58 AM PDT

  •  No (9+ / 0-)

    The subsidies are paid directly to the insurance company. The actual monthly premium to be paid, is the premium minus the subsidy.

  •  I'm pretty sure it's their choice. (1+ / 0-)
    Recommended by:
    rebel ga

    They can have it either way the choose (is how I understand it). If not, then, yes, another cluster%$#@.

    What is so unnerving about the candidacy of Sarah Palin is the degree to which she represents—and her supporters celebrate—the joyful marriage of confidence and ignorance. SAM HARRIS

    by Cpqemp on Sun Oct 13, 2013 at 09:37:29 AM PDT

    •  I sure hope so...because a grand a month... (1+ / 0-)
      Recommended by:
      rebel ga

      ...will be prohibitively expensive for nearly all working families I know, tax credit to follow or not.

      Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

      by Love Me Slender on Sun Oct 13, 2013 at 09:42:01 AM PDT

      [ Parent ]

  •  You can take the subsidies up-front, (8+ / 0-)

    reducing your monthly premiums, or elect to take them as a tax credit in the following year. And the subsidies themselves are non-taxable. You really should edit this diary to make it clear that you were wrong and that this is the way it works, lest you spread misinformation about the program.

    •  doc, I have no intention of changing ANYTHING... (0+ / 0-)

      ...because something might "look bad" just yet when all I am doing is asking for clarification. If you don't like tough questions being asked by people who are concerned about the costs of a brand-new program, you should cease to involve yourself in the discussion.

      For many people, this isn't about perceptions of the program or carrying a narrative that is politically advantageous. It is about understanding the program and its costs BEFORE signing up...and I will not edit the diary based on one person's feedback...sorry.

      Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

      by Love Me Slender on Sun Oct 13, 2013 at 09:45:18 AM PDT

      [ Parent ]

    •  ..and for the record, I have heard it... (0+ / 0-)

      ...BOTH ways i.e. getting the subsidy up-front and as a tax credit to follow. My understanding is that it depends on how much you make (i.e. the more you make, the more it is distributed as a tax credit)...thus the reason for the confusion (and diary).

      And again, if you don't like questions about this program, TOUGH. When people are forced into the provate insurance system and there are significant costs involved, tough questions will be asked and ultimately answered. For the record, I hope what you are telling me is correct.

      Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

      by Love Me Slender on Sun Oct 13, 2013 at 09:47:53 AM PDT

      [ Parent ]

      •  Direct people to the actual plan administrators (2+ / 0-)
        Recommended by:
        Esjaydee, rebel ga

        or exchange -- rather than each of us trying to act as experts in advising other people.

        It's a fine line between helping other people out, and setting yourself up as an expert in something you're not trained in.

        If the family called the state exchange, or the federal 800# if they're in one of those states, this question would be easily answered.

        However: the right wing / Fox News are pumping out a lot of misinformation, AND have spent years teaching people "you can't trust what the government says." So people don't trust the IRS interpretation of the IRS's own rules, and don't trust the exchange advisors' interpretation of the exchange rules. Instead, they'd rather trust me or you? No, they're just confused and vulnerable -- and are likely to deal with that confusion and cognitive dissonance by avoidance rather than engagement. We all do that, avoid confrontation or issues if we can.

      •  What's the matter with you? (1+ / 0-)
        Recommended by:
        rebel ga

        You ask for advice on a blog (instead of looking it up yourself). And then you "hope" the information people give you is correct, because again it is too much trouble for you to look it up and verify it for yourself!

        •  LMS is a relatively new user. (1+ / 0-)
          Recommended by:
          doc2

          Dec 2012, 2 diaries. Not that everyone writes diaries, etc.

          But this user is new and doesn't know how smart Kossacks are, apparently.

          You're right doc2. They asked for advice. Now, rudely say they know it all.

          Disregard them doc. Next time ignore them. That's what I do to those who do not treat me nice.

          Brought To You By That Crazed Sociologist/Media Fanatic rebel ga Be The Change You Want To See In The World! Gandhi

          by rebel ga on Sun Oct 13, 2013 at 03:51:44 PM PDT

          [ Parent ]

  •  Here's how it works (7+ / 0-)

    "The Affordable Care Act provides a new tax credit to help you afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. If the amount of advance credit payments you get for the year is less than the tax credit you're due, you’ll get the difference as a refundable credit when you file your federal income tax return. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return."

    https://www.healthcare.gov/...

    •  OK...so the subsidy is 100% always up-front... (1+ / 0-)
      Recommended by:
      worldlotus

      ...and any differences based on income are reconciled when the tax season follows.

      Am I correct in that understanding?

      Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

      by Love Me Slender on Sun Oct 13, 2013 at 09:51:06 AM PDT

      [ Parent ]

        •  Yes, except (1+ / 0-)
          Recommended by:
          worldlotus

          As stated in the quote, "...If you qualify, you may choose how much advance credit payments to apply to your premiums each month..."  I do not know if you can pay yourself and get a big subsidy credit check with your tax refund.  It sounds that way.

          How would it be if we changed the name of "health care" to "health protection" and considered it the same way we consider police protection and fire protection?  We all pay according to our wealth and (pretty much) receive protection according to our need.  Hmmm.....

      •  No. (1+ / 0-)
        Recommended by:
        kalihikane

        You can choose to take the subsidy up front and reconcile the next year when you file taxes, OR you can choose to get the subsidy as a tax credit on when you file your tax return.

        Here's a Q/A.

        http://www.irs.gov/...

        •  So someone COULD choose to take it... (0+ / 0-)

          ...on the tail end...though I have no idea what the motivation for that would be :)

          Adequate health care should be a LEGAL RIGHT in the U.S without begging or bankruptcy. Until it is, we should not dare call our society civilized.

          by Love Me Slender on Sun Oct 13, 2013 at 09:56:47 AM PDT

          [ Parent ]

          •  Because situations can change. (3+ / 0-)
            Recommended by:
            sewaneepat, amsterdam, ybruti

            Not everyone knows exactly what their yearly income is going to be in 2014. If they can afford the unsubsidized premiums why not just pay them?

            My self employed son is going to do this. Based on his income this year, he gets a credit. But if his business increases he wouldn't. So, he'd rather pay the unsubsidized premiums he can afford and maybe get a tax credit in 2015, rather than wondering if he'll end up paying back the subsidy.

            FORWARD! Obama/Biden 2012

            by Esjaydee on Sun Oct 13, 2013 at 10:44:47 AM PDT

            [ Parent ]

            •  seems smart enough (0+ / 0-)

              in his situation. But many people don't have the kind of cash flow to be able to do that -- if they have to pay $500-1500 a month up front, they can't sign up.

              And there is a fear -- not unreasonable given the current craziness -- that if the government ends up owing you say $10,000 in back subsidies, and the crazies shut down the government again, you may not see that money for a very long time. That actually has happened over the past few years in a number of states, so it's not totally nuts. I would much rather bank a bit extra and risk owing the government money in 2015, than have them owe me $1000s and wonder whether I'll ever see it.

  •  Someone making almost $70,000 a month (4+ / 0-)

    and still qualifies for subsidies tell me that the ACA is the best thing ever to wake up republican voters.

    I make $27,000, my husband is on disability.  Any income over $50,000- I think you are rich.

    But that's just me.

    Growing old is inevitable...Growing up is purely optional

    by grannycarol on Sun Oct 13, 2013 at 09:47:28 AM PDT

  •  It's my understanding that the IRS sends the (3+ / 0-)
    Recommended by:
    nosleep4u, worldlotus, gmats

    subsidy to the insurance company, while the family pays the monthly premium. If the estimate turns out not to have been correct and the annual gross income turns out to be much higher, they may owe a repayment when they do their taxes.

    The reason congress critters are upset, IMHO, is that, if this works as designed, then it will be like the earned income tax credit (actually a refund of dollars not paid in) and will be handled by the IRS automatically -- i.e. a mandatory program -- over which Congress will have no input and no opportunity to garner votes as a consequence of their munificence with OUR MONEY.

    When I enumerated the other programs that distribute dollars directly from the federal Treasury into individual accounts (Social Security, Supplemental Security, Medicare/Medicaid, Unemployment comp., Nutrition supplements, higher education loans) I forgot about the EIC. What all these programs have in common is that dollars, instead of being funneled through a financial institution to take a cut, are being distributed to citizens and service providers directly. Congress is precluded from playing either Santa Claus or Scrooge.
    The ACA is triply offensive because the banks lost the student loan program as a component, insurance companies are going to have their profits limited, if they want to participate, AND the subsidy for the privileged (Medicare Advantage) has been taken away.

  •  So a family of 5 in Indiana (8+ / 0-)

    making $70k a year, has no health insurance?

    And Republicans think the NEW PPACA is bad?

    This family of five was and is living on the razor edge of irreversible abject poverty.

    Good grief.

  •  69k a year? (1+ / 0-)
    Recommended by:
    skillet

    WTF are they whining about?

    It is the families trying to make it on minimum wage that suddenly have access to health care.

  •  what you are describing the edge of poverty (4+ / 0-)

    poverty line for a family of 4 is $25,000. For a Single person it's around $10,000 a year. A family making $75,000 a year ARE within 400% of that poverty line...as is around $40,000 for a single person. Everyone under the 400% of poverty ARE eligible for health insurance subsidies...

    MOST American family's are not living in poverty. But MOST do fall within 400% of it....

    Now for you to be upset because families making more than yours qualify for assistance is uncalled for. It is that very fact that families making more than you qualify....IS what is going to make this work....thus protecting your own benefits!

  •  I pay about the same premium (4+ / 0-)
    Recommended by:
    MRA NY, amsterdam, worldlotus, cheerio2

    for me as that family will pay for 5.
    I asked the same question about how the subsidy was paid.  If it had been a refund at tax time, I would not have been able to get insurance.
    I have made 6 tries at enrolling.  I have not been able to get thru the process yet.
    I am glad the family you discuss have as much financial stability as they do, and that they will easily be able to afford health insurance.
    Good for them.

  •  One more thing to note... (5+ / 0-)
    Recommended by:
    amsterdam, worldlotus, cheerio2, gmats, ybruti

    although your depicted family comes in at 253% FPL, those who come in at or below 250% ALSO may qualify for
    Cost Sharing Reduction. This helps pay or reduce the cost of co pays, deductibles and raises the actuary value of the policy.

    In order to qualify for this, you MUST obtain your coverage through the exchange and the plan must be a Silver Plan.
    These savings are not part of the quoted premium costs listed on the exchange (at least not on Oregon's). I spoke with a navigator and he told me the actual savings can only be determined once a plan is picked- because each plan is a bit different.

    http://www.healthpocket.com/...

    FORWARD! Obama/Biden 2012

    by Esjaydee on Sun Oct 13, 2013 at 10:20:13 AM PDT

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