Wednesday, August 07, 2013

Obama Care's Impact, financially speaking

5 Ways Health Care Reform Will Impact Your Finances and Taxes

You may be confused about how the law impacts you, your finances and taxes. Whether you already have health insurance or not, here are some things you should know.

1. The uninsured will have affordable options. Beginning Oct. 1, 2013, uninsured Americans can start shopping for affordable health insurance using online health insurance marketplaces. Most uninsured United States citizens and legal residents will be required to purchase health insurance by 3/31/14.  If you can't add another bill to your budget, the federal government might assist!  See #3. below.

2. Insurance coverage will be expanded. If you have pre-existing medical conditions, you cannot be denied coverage. The law also extends coverage to young adults who can stay on their parents' plan until they are 27. Medicaid will now be offered if you're under age 65 with a yearly income less than about $15,300, or $31,155 for a family of four.

3. You may be eligible for a government subsidy to help cover insurance costs. If you purchase health insurance through an online health insurance marketplace or exchange and have yearly income no greater than $45,960, or $94,200 for a family of four, you may be eligible for a government subsidy to help pay for health insurance. Again, the income levels only potentially qualifies you for the credit, you must purchase the health insurance through an exchange (or marketplace). The subsidy will be in the form of a tax credit. Unlike most tax credits, you will not have to wait to receive the credit or subsidy; it will be applied to your insurance premium when you purchase in 2014.

4. You may receive a penalty if not insured by March 31, 2014. If you are required to purchase health insurance and have not done so by March 31, 2014, you will receive a penalty on your 2014 tax return (filed in 2015). The penalty in 2014 is $95 per adult and $47.50 per child, and the fee is capped at $285 or 1 percent of household income. Each year the penalty increases; in 2016, the fine rises to $695 per adult and will be capped at $2,085 or 2.5 percent of income. There is no penalty for a gap in coverage for less than three months.  Interestingly enough, the IRS is not able to make you liable this penalty.  They can send you harsh, intimidating, letters but they can not treat it as tax due if you owe nothing else than the penalty.  The IRS can take it from your tax refund, if you have one. 

5. If you have health insurance, you are already covered under the law. Not everyone will need to purchase health insurance through the online marketplaces. If you already have health insurance through your employer, Medicare or Medicaid, you are all set.