Health Care Health Care Reform and Your Taxes Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxLisa Published Sep 30, 2013 - [Updated Oct 4, 2013] 2 min read Lately you may be hearing buzz about health care reform, Affordable Care Act, or Obamacare on the news. These are the unofficial names for The Patient Protection and Affordable Care Act, a national health care plan signed into law by President Obama that aims to provide the majority of Americans with access to affordable health care. Not sure what this new health care law is or if it changes anything for you and your family? Don’t worry, TurboTax has you covered. Here are the facts straight from our experts. The Affordable Care Act requires that all Americans (with a few exceptions) have health insurance starting in 2014. If you have health insurance, you’re all set. 80% of Americans already have health insurance through their employer, Medicaid, Medicare, or individual insurance and are already in compliance with the new law. If you fall into this bucket, you don’t need to do anything. You’re all set. If you’re uninsured, you can shop for health insurance in the online Health Insurance Marketplace. The Marketplace, which opens October 1, 2013, helps you compare your health insurance coverage options and costs. You have until March 31, 2014 to purchase health insurance through the marketplace. If you choose not to, you could face a health care tax penalty on your 2014 tax return (the one you file in 2015). You may be eligible for financial assistance to help cover insurance cost. If you purchase your health insurance through the online health insurance marketplace or exchange, you may be eligible for a government subsidy in the form of a tax credit. Unlike most tax credits, you will not have to wait to receive the tax credit or subsidy; it will be applied to your insurance in 2014 when your coverage begins. When it comes to the new health care law, TurboTax has you covered. The requirement to purchase health insurance does NOT impact your 2013 tax return (the one you file in 2014). TurboTax is up to date with all the latest tax and health care laws so you can be confident that your taxes are done right with TurboTax. Still have questions about how the new health care law impacts you and your family? TurboTax AnswerXchange will give you answers to your personal healthcare questions. Just answer a few simple questions and it will tell you how the new law impacts you and whether you’re eligible for financial assistance, so that you can make the best choice for your health care needs and budget. To find out more about the Affordable Care Act, or Obamacare, you can also watch our video. Previous Post TurboTax AnswerXchange Gives You Personalized Answers to Your Affordable Care… Next Post Health Insurance Marketplace Opens Today! Written by Lisa Greene-Lewis Lisa has over 20 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. She has held positions as a public auditor, controller, and operations manager. Lisa has appeared on the Steve Harvey Show, the Ellen Show, and major news broadcast to break down tax laws and help taxpayers understand what tax laws mean to them. For Lisa, getting timely and accurate information out to taxpayers to help them keep more of their money is paramount. More from Lisa Greene-Lewis Follow Lisa Greene-Lewis on Twitter. 1,052 responses to “Health Care Reform and Your Taxes” « Older Comments Newer Comments » Hi, my wife and I are both covered under insurance by her employer. However her’s is free and mine is $100 per pay period. I’m retired and and should receive free medical, but why does the IRS require us to file married, when in fact we could file separately. When I ran my numbers through the Gov site, it said I was eligble for a $8000 a year credit. Our current insurance is 70/30 and $2500 out of pocket. This insurance is in case you get ill or something major, not for basic health, there is no copay allowed. Isn’t that just a little bit criminal. Why won’t the Government post the numbers on what people will be paying based on their estimated incomes so they can see whether to deny Insurance from their company when they can get a much better deal from the Afforadable Plans. Reply Can an employer cover medical insurance on an employees child every year if the employee is divorced and only gets to claim the child as a dependent every other year? Reply if an employee pays 50% of medical insurance of an employees child (dependent) and the employee is divorced and claims the child as a dependent every other year, can the employee still cover 50% of the childs medical insurance on the years the employee does not claim the child on their income tax as a deduction? Reply Hi Lena, Yes the fact that the employer covers 50% of a child’s medical expenses does not relate to the employee claiming their child on their taxes every other year. It is still their child and can qualify to be covered on the insurance plan. Thank you, Lisa Greene-Lewis Reply I have insurance under the Marketplace and pay $81.00 per month. I was informed by my tax person that my refund is being help up because the IRS will be taking some of my refund to offset the additional cost of the insurance., The total cost of the insurance I have is $160 a month but I only pay $81.00. Have you heard of anyone else going through this Reply My boss wants to reimburse me for the health insurance costs. I have gone to healthcare.gov and submitted the costs to him and he wants me to pay and he will reimburse. Wouldn’t this be considered income and be taxable to me? Reply Kim, As long as your employer has a Section 105 plan in place, the premium reimbursement will be deductible to him and not taxable to you. Setting up and maintaining any benefit plan can be complex and he may want to consult with his accountant or payroll service for the requirements. Mary Ellen Reply can therealkim still get premium tax credits from ACA? sounds like that would be too good of a deal? employer writes it off, not income to employee, and employee can get tax credit for health care premiums?? I posted a question on 3/10/14 but I do not see mine and any questions here after 2/28/14. Please advise when the answer will be available. Thank you Reply I am unemployed and cannot afford health insurance. If i am put onto my parents taxes, Will my penalty of not having health insurance come out of their income? Reply We claim my parents as dependents, they are 73 & 76, green card holders ( not citizens), no income at all or Medicaid. I am unemployed now and cannot afford to buy insurance for both of them and cannot push my husband to buy insurance for my pants ( he already supports them and me now, since I am not receiving unemployment benefits). I am covered by my husband’s company insurance. Will we get fine if parents do not have coverage? Is there any subsidy for them in our case? What if we will not claim them as dependents in 2015- any penalties for them for not to be insured? They have NO income! What is the solution??? Reply If they are claimed on your tax return as dependents, you are required to see that they have insurance or pay the penalty. The penalty for each uninsured individual will be $95 or 1% of income, whichever is greater. In determining if they qualify for a subsidy, they will have to use your husband’s income. If they are not your dependents, they may qualify for assistance in obtaining insurance. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply Can me and my husband file our taxes separately for 2013 or should it be filed jointly? Obamacare needs married couples to file jointly to receive the benefits. Does it include 2013 tax return ? Reply Megan, You can file jointly or separately, whichever is the right filing status for your personal situation. When it comes time to determine if you or your husband are entitled to a subsidy for health insurance premiums, you will need to use your household income, which will include both of your incomes, even if you choose to file separate returns. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply As Mary Ellen indicates, whichever way you and your husband file, you will be using your household income as long as you are married. Divorced and co-habitating, neither you nor your ex would have a spouse and so filing separately, you each would use your individual incomes. As long as you are under the 400% of the Fed Poverty Line, the latter course is the way to maximize your subsidies. Reply My employer recorded the amount we put into our healthcare savings account (HSA) on my W-2. They’ve never done that before. It used to only be reported but not as income. Now it is code W. It’s pre-tax dollars but now it’s being taxed. What changed in the way that my HSA is reported to the government? Reply Jeff, According to IRS Pub 969, “An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Contributions, other than employer contributions, are deductible on the eligible individual’s return whether or not the individual itemizes deductions. Employer contributions are not included in income. Distributions from an HSA that are used to pay qualified medical expenses are not taxed.” Even though you are seeing the amount of the contribution on your W-2, that does not mean it is being included in your taxable income. The amount is used to determine the amount of deduction you can receive for HSA contributions you make on your own behalf. It should be entered on Form 8889, Part 1, Line 9. TurboTax will take care of that for you. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply Reading several comments here, contrary to my belief, it seems that a married couple, that always filed as “Married Filing Jointly”, cant simply choose to file federal tax returns as “Married Filing Separately” starting from 2014 — just so that a low earning spouse can get maximum/or greater tax credits for health insurance premiums thru the new marketplace system. is that true ? Expert advice on this will be sincerely appreciated. Thanks. Specifically, retired husband, who has Medicare coverage, has 60,000 in income from social security, interest & mainly from IRA draw downs/distributions. Wife who has no health insurance coverage at present, has a small variable business income & interest income in her name — both collectively totalling say about $ 12,000. If wife files her tax returns separately, she can get the maximum/or much larger tax subsidy for health insurance coverage. Is that permissible ? Or for subsidy determination purposes the joint incomes of husband & wife will/must be considered in lieu of just the wife’s income since she filed as a single person ? Thanks agin for the wisdom. Reply Jeeti, For purposes of the subsidy for health care, your household income is used. That will be the income of you and your spouse, even if you use the Married, filing separately status when you file your return. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Thank you, Mary Ellen Reply With you on Medicare, your wife with your combined household income (as Mary Ellen has explained) would put you two over the 400% of the Fed Poverty Line and so allow your wife zero subsidy to pay for health insurance through your exchange. In applying, she would be obliged to use your combined household income because you are her “spouse.” Now, if you divorced and there was no longer a spousal relationship, she could apply on her own. But with only about $12K in income, she would be assigned to Medicaid. Now, Medicare is gradually becoming Medicaid Plus, and so the both of you could find yourselves in the same doctor’s office with essentially the same “healthcare” going forward. But if that is not desired, then after a divorce, you would need to get some of your income-producing assets into her name to raise her income above the 133% of the Fed Poverty Line so that she could get a subsidy to bring down the high cost of a healthcare plan better than Medicaid. Reply My son who will turn 19 mid march will lose insurance under my husband 3/31/14. He will not be claimed on our tax return for 2014 because he is not a full time student. Husbands employer wont allow us to pick him up on COBRA with the rest of the family when we start COBRA 4/1/14. He would have to purchase his own COBRA plan at the same price they are charging us (approx 16K for the year). I applied on marketplace for him and put he was filing his own return and couldnt be claimed as a dependent. It then asked if he lived with parents and other brother/sisters then proceeded to ask all the income for everyone. He is not working right now so he has no income. The results came back he was eligible to purchase through marketplace but was not eligible for subsidies. Total family income is below 50K. My question, should he have applied on his own or should i have applied and asked for coverage under my application? I’ve called the marketplace and they said they can’t give me how the income numbers were run just what the results are. Does anyone have any suggestions for this scenario or have similar situation? Why should he have to include our income if he isn’t our dependent? Reply Hi, I’m so confused, I can’t find a straight up answer to whether or not I will get my refund without being covered yet. I can’t afford to start paying for healthcare WITHOUT my refund, so it’s a catch22. So, without healthcare, I should be expecting my refund in my bank account soon still, correct? I have been tracking my refund for over a week, over half the people who filed on my same day have received theirs, and now there isn’t an option to track it which leads me to believe I should be receiving it, yet it’s not in my bank account right now, but there’s still a button for “get coverage.” Is choosing a healthplan required before receiving my refund. I’ll pay the fine if I have to, I just need my refund! Thank you. Reply Matt, There is no penalty to be paid for 2013. It starts with 2014. The IRS states that 90% of all refunds were received within 21 days last year, and they expect the same results this year. Your refund should be deposited to your bank account within about 3 weeks of filing your tax return. You need to be covered by March 31 of 2014 to avoid any penalties when you file your tax return in 2015. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply What is the penalty for not having insurance in the following case. 2 Adults and 3 Kids. Only Husband has insurance (thru company) Wife and kids does not (company provides but declined) Only Husband earns – 80k A friend said only penalty is $95 for wife. As per my reading, it is 1% of family income or $95 per adult plus 50% for kids whichever is greater. Here since wife does not have income does it matter. So the final penalty is 800 or 237.5 (95+47.5+47.5+47.5) ? Reply Just make sure you have no refund due when filing next year. The Unaffordable Uncaring Act provides no legal recourse for the IRS to collect any penalty from you except by withholding any refunds due. Reply Joseph, Your penalty could be as much as $2,000. 1% of 80K for spouse and .5% of 80K for each child, a total of 2.5% of your income. The insurance credits are based on the household income, not just the income of the uncovered individual. Mary Ellen Reply Now that the White House has effectively killed the individual mandate, just claim an unaffordability or hardship exemption and forget the penalties. Reply In the year 2013, I got health insurance through my job, and they stated they will give health insurance to the dependent (spouse) but it was delayed finally she covered in the month of Jan 2014. She had DNC (dilation and curettage.) due to miscarriage in the year 2013, the medical expenses around $15000 were paid by myself as she did not have insurance. Our Household income is $60,000. Are these Medical expenses Tax deductible? What will my penalty be (now she has Insurance)? Thanks in advance Reply Hi Chetan, The expenses you paid for your wife’s DNC are deductible medical expenses. You should include them in your itemized deductions. You should not have any penalties for not having insurance for you wife in 2013. The requirement started in 2014. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply I think that I am in a catch 22 situation. My wife and I have an income slightly above $50k but our MAGI will come in around -$500,000 carried forward from my past business losses. Does this mean that although I can apply though the market place I will not get a tax credit? It is a truly ridiculous situation as I can not afford $1100 per month that was quoted. Only other option that I can see is to get a divorce that way at least my wife will be covered. Thanks Reply These are presumably non-passive losses, and the carry forward and recognition provisions of the IRS Code may give you little leeway with the result you indicate for your 2013 MAGI. The divorce option, such that you and your wife could file separately, is one way to improve your situation. Staying married, with a negative MAGI, you both would presumably be placed within the Medicaid system. Divorced, with your wife declaring enough of the $50K income to get her above the 133% of Fed poverty line, she could presumably qualify for a subsidized health insurance plan, leaving you to find out how wonderful Medicaid is. Good luck to us all. Reply I had health insurance all the way up until the end of January 2014. I am getting estimates on new health insurance but don’t currently have any. If I do my taxes now, without having any health insurance, will there be a penalty or will it affect my refund? Reply Hi Dustin, There is no penalty calculation with your 2013 taxes. For 2014, you have the possibility of penalties if you are without insurance for more than three months of the year. That penalty will be calculated when you file your 2014 taxes in 2015. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply My question is for this year in filing your 2013 taxes, will you receive a credit for having insurance with your refund because I heard you would, but I did not see that on my taxes when I filed? Then, how is the government going to find out who has insurance and does not in order to penalize them? Reply Charay, There are no insurance premium credits for 2013. They will be in the 2014 tax filings. Insurance companies will be reporting who they covered to the IRS for assessing the penalties and calculating credits. Mary Ellen Reply I’ve had a pricey individual insur. policy for past few years (in CA) but am about to complete an ACA app. today. However I have yet to file my 2013 taxes but will next week – just after the ACA 3/31 deadline. When the online CoveredCA app asks if I filed taxes “last year” 1) does this mean 2013? Or do they mean ’12? 2) And since the technical answer is “no, but I will by 4/15” how should this be answered on the form before 3/31? Related question: I’m checking with a parent tomorrow, but I MAY have been claimed as a “dependent” in 2012 (no earned income, thus no tax return filed) – but will be filing in 2013 (though income was on the lower end). Given these last 2 years of varying tax status, will this in any way affect my eligibility for a Silver Enhanced (subsidized) plan? My thinking on the above is that the application is asking me if I filed taxes in 2013 (my intention is to say “yes” and get them within the week after the ACA deadline) AND my hope is that the past “dependent” status won’t affect my subsidy eligibility since I’m filing a 2013 tax return (and since by most “am I eligible” calculators I seem to qualify for some subsidy based on income). Am I right re: these 2 assumptions? Any considerations I should . . . consider . . . as I finish my app with these issues on my mind? Much obliged – I’d just like to be accurate while finishing the app. What is wrong with ur website for filing? I got finished doing my taxes and now it wont let me get past choosing a healthcare plan! Very angry!!!! No more turbotax for me. Reply Are the insurance premiums that I pay monthly (via payroll deduction) totally at my expense eligible for a deduction on schedule A under medical? My employer does not cover any of this cost at all. Reply Debbie, Insurance premiums you pay through a payroll deduction are eligible for deduction on Schedule A, provided they are not part of a pre-tax benefit plan. Mary Ellen Reply I qualify for a large subsidy since my income is not that high and I am 62. A recent letter to our local paper suggested that we will have to declare our ACA subsidy as income when filling out our 2014 tax forms next year. This would add 30% to 40% to our annual income and would double (at least) taxes owed. Is this true? Reply Tom, You will not have to declare your subsidy as income when you file your taxes. You will need to reconcile your actual 2014 income with the amount of projected income you reported when you signed up for your insurance. If your actual income is substantially higher than your projected income, you could have to repay part or all of the subsidy you received. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply I make less than 18000 a year and purchased insurance through obamacare. I file an ez form and get a refund every year. Will I no longer be receiving a refund. And also, my employer wants to reimburse me for my premiums that are about 70 a month. Any reason why I shouldn’t do this? Reply NO reason what so ever. Supposedly it’s not taxable and separate form anything that would normally be on a W2 at the end of the year. Read this: http://www.zanebenefits.com/blog/bid/315671/New-Guidance-on-Tax-Free-Reimbursement-of-Individual-Health-Insurance Reply Chelle, Your employer needs to be sure that his reimbursing your premium does not qualify as an employer provided health care plan. As long as it doesn’t qualify, you can qualify for subsidies. The reimbursement will never be taxable income to you under the current tax laws. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply Much of this discussion seems predicated on entering the government website to apply. But just yesterday there was further testimony that healthcare.gov lacks any reasonable security against hackers. So while you would be a fool to enter your personal information on this website, what other options are there to apply for health insurance on one of the exchanges (State, where the subsidies are eligible OK, and Federal, where the subsidies are … wait and see) ?? Reply My understanding is that THE ONLY WAY you can qualify for and get a subsidy or tax credit at the end of the year is if you purchase your insurance through the exchange. You can call them and deal with a person that will help you which is what I did because I wanted to eliminate the possibility of hacking my personal computer. When you do this — you need to give them your SS#. Not too thrilling but..pretty standard for insurance purposes. Since the functionality isn’t working at this time, they actually have you deal with the insurance company from that point on. In other words, you go through the market to pick your insurance company, they let you know if you are ‘entitled’ to a subsidy which you can take OR wait until the end of the year and reconcile via your 1040 to get credit. If you have any questions about your income passing muster, that would be the way to go. However, unless you go through the market place and get a ‘marketplace number’ you won’t get the subsidy at the end of the year. I just did this and I’m in NC. Once they were able to get my account set up, I called BCBS (took 2 days for them to get the information) and paid them directly. The insurance companies will bill you directly going forward as well. Short of the long, Yes the site IS vulnerable but there’s no medical information involved and….what you do give them is really out there anyway, I guess you have to have a little faith — and when I say that, I don’t mean in the government! Reply Thanks, Karen, for your detailed account. Given all that has been reported about the hack-ability of the gov’t website and gov’t information databases in general, you are a brave woman ! The “marketplace number” is an interesting new piece of info. I am wondering if TurboTax knows about this ? Actually, I found out from them that it’s really not ‘their’ reference number — it’s Blue’s Cross Blue Shield’s…maybe it’s their new id for me Also..I’m not really ‘brave’ — I was stressing out so much about this and really need insurance. I thought about taking advantage and skipping a few months to save money but..with my luck..I thought it wasn’t worth it. I thought I had it all figured out — was going to go around the market place, buy outside reconcile at year end. Once I found out that wasn’t an option…I wasn’t really left with any alternative. I may or may not be able to qualify for credit at the end of the year but if I do, I’m probably going to need it. Who couldn’t use a tax credit? In any case, once I finally got it out of the way, I felt better — it’s out of my hands and I’m going to let the chip’s fall and hope for the best. I have a lot of faith — and NOT in the government! Good morning, Karen, I wish you all the luck for this year ! Returning to the “marketplace number,” if this number is Blue Shield’s id for you, what did you get from talking with the exchange to verify that you had gone through the exchange to be eligible for the subsidy ? Or did BCBS, after you talked with them,then inquire about you with the exchange personnel ? When I called the marketplace and finally got someone who was really able to help me — he saw that my premium was high and wanted to see if he could get it down…I told him not to waste his time. Based upon the 2012 return and even last years earnings, I wouldn’t qualify. But I do expect a change in circumstance as far as income goes and I have no clue what my income will be. With that said, he just proceeded to get me entered into the marketplace under the policy I picked and told me I needed to call them back (even if I don’t want to take the subsidy at the time) when/if I have a change in circumstance. Once I was done with him and my application was complete — he gave me an application number and the customer service number to BCBS to make payment. I’m assuming the reason you need to call in the case of a change would be 1) if you are actually receiving a subsidy now and your situation improves thus you no longer qualify or 2) your situation deteriorates (which will be me) and for budgetary purposes (ha ha) they want to be aware. He also said, that in that case, I might qualify for cost sharing saving (something like that) — ie even though I may have a $3500 deductible now and a 30/70 cost share — I could get my deductible, copay and co share lowered — THAT money would not have to be paid back and would not be reflected on the 1040. However, someone is paying for that… Best wishes to for the New Year too Bruce! So it seems that one way to deal with the problem of our income exceeding the 400% of poverty level (with the resultant loss of our entire subsidy) is to file separately instead of jointly. Will the IRS ask to see our divorce papers since we have been filing jointly for years ? And does TurboTax make it easy to do a what-if analysis of this ? Reply I will be interested to see if Mary Ellen can provide you with an easy way to do this analysis within one tax return. My guess is you will have to do at least two or three separate tax returns and then compare the results TurboTax produces. Reply I’m not a turbo tax person and I don’t even want to know if you are actually going to get divorce over this but…that’s always a possibility on an audit and then…will you be able to provide them? again, I don’t really want to know. I also think Bruce was correct and that the only way you’ll be able to figure it out is to run separate returns — I’ve done that before and just name them different things. You can always open up a saved return and before changing any of the information to run another scenario, save it as something else and make changes to it so you don’t have to re-enter ALL the information again. With regard to the ‘divorce’ thing…depending upon where you live and their laws, I think some states allow you to file separately if you are legally separated — i.e if there are children involved, one could file as head of house maybe the other single? Although some states require a filed agreement, some states recognize an agreement drawn up between the parties and notarized — I believe the federal government recognizes state law…something to consider and/or look into — cheaper than divorce I would think…. I think I’d rather spend the legal fees on a discrimination case than on a divorce over this! Reply Thanks, Karen, for your input and I understand. It will be interesting to see if Mary Ellen of TurboTax has any further clarifying info. The “divorce thing” seems to be one avenue that this law left open to manage the subsidy nullification effect of making just a little too much money in a year. So we might as well understand the requirements, though I can see why a lot of people would just dismiss it out of hand. I hear you but…could you imagine if everyone got divorced over this! Then of course once everyone went through the expense, they’d just figure out a way to nail you for being single. Sort of like the benefits of having an electric car and solar panels. Now that people have gotten on board, they want to tax them as well. They want to tax you for using the sun to generate your own electricity! I suspect, they’ll figure out a way around this a lot quicker than the solar panels and electric cars! too many people impacted. also…for some reason I don’t think ‘Turbo Tax’ is going to weigh in on the filing as divorced thing…at least I wouldn’t hold my breath on that one. We’ll see. Well, Karen, Reno could be a happening place going forward ! 😉 But I just ran some numbers for my family on the kff.org subsidy calculator, and if we filed separately and applied separately for health insurance, with me taking 2/3 of our joint income and our little one, and my husband taking 1/3 of joint income, net of the subsidies we each would then get, we would for a Silver Plan pay just a little more than HALF of what we would have to pay if we apply jointly which gets us NO subsidy. And that is several thousand dollars PER YEAR to be saved by divorcing. I would agree that it would be far better to fire the idiot politicians who put this law on the books and then wipe the books clean of it. But it looks like the ACA makes divorce a serious financial consideration. As for TurboTax weighing in, as you say, we’ll see. Reply No sign that TurboTax is going to reply, and I think I am with Karen … don’t hold your breath! But the marriage penalty has been known for some time. Here is an interesting quote from Mark Duggan, a health economist at the University of Pennsylvania’s Wharton School: “The ACA, like the tax code, is complicated, and it sometimes provides a marriage subsidy and a penalty. Will it encourage some weird stuff like some people getting divorced? Yeah,” Duggan said. “That was the challenge of this thing. Where do you draw the line?” So you may be right about Reno ! I am self employed, my spouse is W-2 employee. We file married, jointly. His employer offers him insurance at about $100 a month. (I suppose it will go up now with the health care reform) His employer also offers family insurance but the rate is an additional $500 a month. So I opt to stay on my own private insurance for about the same price. Can I deduct my insurance premiums on my business return (I make a profit) or can I only deduct co-pays. Or neither? This question is for both 2013 and 2014. Reply Or- as another option can I deduct my premiums from our joint return instead of my schedule C? Which is better? Reply I just went to the obamacarefacts.com site and it says: “ObamaCare gives states and the federal government the option of charging insurance companies a 3.5% fee, on the cost of the premium, to sell insurance on the exchange. States also have the option of using grants and other forms of assistance from the federal government; however, states that refuse setting up a state run exchange will not get the subsides, therefore their constituents will purchase insurance at what will most likely be a higher rate.” With all that said, I’m from a state that did not set up their own exchange – most states did not. If I read this correctly, it is stating that the subsidies won’t be available to those states. So…am I reading it correctly and if so, is that true — are most of us just spinning our wheels worrying about this credit and/or subsidy because we won’t get it anyway? The site is definitely a liberal bias site because it more or less slams the GOP for fighting this law but…it is suppose to contain the FACTS. Again, are we all entitled to the subsidy if we meet the financial guidelines or not? Reply Hi Karen, What you have is a federal-run state marketplace, and you can still qualify for the subsidies if you purchase your insurance through your marketplace. Mary Ellen Reply OK — Thanks. So basically what you are saying is that the obamacare facts site is politically fueled – not fact fueled. As long as you enroll through the marketplace and qualify financially, you are entitled to a subsidiary regardless of what your state government opted to do. Correct? Thanks! Karen, Yes, if you purchase insurance through the marketplace and qualify financially, you can get the subsidy. It does not matter if your state runs their marketplace or the federal government runs it. Mary Ellen Is there any way to block out Bruce and Karen’s constant blogging of their mutual “chicken-little” love affair? Now, now, Craig, you wouldn’t want TurboTax to sink to Obama silencing tactics, would you ? Caveat emptor when viewing any FACTS or fact-checking website, as they have no less political bias than any other. Mary Ellen’s response to you below may or may not be true. Just taking the language of the ACA, as it was written, it provides that tax credits are available for months in which an individual is enrolled in a qualified health plan “through an Exchange established by the State under 1311” of the ACA. There is no explicit recognition of the eligibility of the premium tax credits (subsidies) for an individual acquiring insurance through a Federal exchange. Now, yesterday, a Federal judge in the liberal D.C. Circuit ruled that it surely was the intent of the law to include everyone in this eligibility whether applying to a State or Federal exchange. This ruling is now under appeal, and there are several similar legal challenges in other jurisdictions. So we will have to wait and see whether the power of certain judicial interpretation and imperial edict from the Executive Branch and its agencies trumps the the law as it was written by the Congress. The Unaffordable Uncaring Act is one big mess to be sure, but we do live in interesting times, n’est-ce pas ! Reply I know we all have our own political preferences either way…However, it ceases to amaze me how Washington (both parties) continually appear to have their heads stuck in the sand as if the rest of the country out side of that belt way is a virtual experience and not the REAL world. Politicians shouldn’t be allowed to play Russian roulette with our lives for political gain or interest like that… particularly our healthcare. We should know what we can expect and exactly what it is going to cost. The rest of us can’t operate like DC does. Thank GOD most of us don’t! If my spouse has healthcare through his employer and it can also cover me, but is too expensive, will I still get a tax credt when I purchase healthcare through the marketplace? Reply I don’t understand why that would be my fault and she also told me ro call someone to make sure they’re taking enough this year but I don’t know who to call. Reply I made arou $ 14,000 last year and when I went to file my taxes the lady said I owe money because they didn’t take out enough from my checks in the federal. I’m a single person and I really don’t understand that because how was I suppose to kno where they should be taken more money from. All I see is that they were takin largw amounts from my checks every pay day. Reply I have health insurance through my employer which is a cafeteria plan so it is not taxed and my daughter is also on my plan. The premium is taken out of my check but then my ex-husband pays me for the premium. Can he deduct that on his taxes? Reply Are new questions being taken here ? Reply Cathy, We are still monitoring and answering questions on this post. Mary Ellen Reply Thanks, Mary Ellen. I have heard that income verification for receiving a subsidy has been delayed until 2015. Is this correct ? If so, it would seem to invite fraud this year since if the IRS somehow finds that an applicant has a higher income than he/she reported, it can only re-claim the amount of the subsidy fraudulently received from his or her tax refund. And if you use TurboTax wisely as a planning tool, you should not have a refund for them to snatch. Could you look at my question about documentation requirements for filing separately above – January 16, 2014 at 4:38 pm Thanks and good weekend ! Why is it that the subsidies offered for a household (say 2 adults and 2 children) are so much greater if the adults are divorced and apply separately (each with one of the children) than if they are married and apply jointly as a family ? CathyH, there was an interesting article in the Seattle Times about a Washington state couple who are on the flip side of the marriage problem you have asked about. They were unmarried, and each had low income which meant having to enter Medicaid. Not wanting to do that, they got married, and their then joint income was enough to avoid Medicaid and get a big subsidy on their exchange for OBummercare insurance. So both the exchanging and shredding of nuptial vows is a tool to consider under the “Unaffordable Uncaring Act” ! Good morning, Craig, By “shredding of nuptial vows” I meant divorce. In other words, the way this obamidable law was written, one’s marital status can have a very significant impact on what health insurance the government will allow you to have and at what price net of any subsidies. But in your comment you stated they “had to get married”. How is this shredding? you said quote”They were unmarried, and each had low income which meant having to enter Medicaid. Not wanting to do that, they got married, and their then joint income was enough ” You are such a defeatist and right-winger. The exact problem in this country. You believe mostly hear-say and never fully research anything in depth to support your old-fashioned live in the past views. Please do not respond to me, I have to deal with unread knuckleheads like you on a daily basis. The knuckle, dear Craig, would seem to be in your head. You can read the Seattle Times piece for yourself and you can perform the same analysis using the TurboTax, Kaiser Foundation or other subsidy calculators. The results are the results. Cathy, Verifying income is part of the Premium tax credit calculation that will be part of your 2014 tax return filed in 2015. The premium tax credit can be assessed and collected regardless of the refund on your tax return. It is only the penalty for not being covered that can only be recovered from your tax refund. Please read more here https://www.healthcare.gov/how-does-the-affordable-care-act-affect-me/ Also visit http://www.TurboTaxAnswerXchange.com for more answers to your specific health care questions. Mary Ellen Reply I have been using the TurboTax subsidy calculator to explore what somebody told me was a dramatic breakpoint after hearing the following on CNBC: a family of three in New York earning $78,120 will pay $7,421 in premiums for a mid-level “silver” health plan, after taking their subsidy into account. But if they make just one extra dollar, they’ll have to fork out $12,784 for insurance — an increase of $5,363. Unless people are very careful, they could experience a huge hike in their marginal tax rates ! Reply The ACA is largely a giant case of fraud, and so it would only be poetic justice if people played the system for all it is worth this year (presuming it lasts that long.) Another aspect to consider would be that if you are married, you might consider a divorce as the combined subsidy level of you and you spouse (then ex) would be appreciably larger than the subsidy you could get as a married couple. It’s just how this “law” was written ! Reply So, the government (as represented by the politicians who passed this law in 2009) wants to inflict a big penalty on me for making more than 400% of the poverty level and for being married. And what country is this ?!!!!!!! If Im under 26 married and filing my own taxes can i get under my parents family plan through obamacare? Reply RB, Anyone under the age of 27 can be covered by their parent’s plan. Your spouse or children cannot be covered on their plan. Mary Ellen Reply If I am under 26 married and filing my own taxes can i get onto the family plan of my parents through obamacare? Reply I have been looking at the subsidies using the TurboTax subsidy calculator, and there seems to be a huge breakpoint. I heard, for example, recently on CNBC that a family of three in New York earning about $78,000 will pay $7,421 in premiums for a mid-level “silver” health plan, after taking their subsidy into account. But if they make just one extra dollar, their premiums will rise to $12,784 for insurance — an increase of $5,363 — because they will have lost any subsidy at all. Can’t imagine what the implicit marginal tax rate is around these subsidy breakpoint levels ! Reply Do my parents have to claim me on their taxes for me to remain on their healthcare? Reply Rudy, You do not have to be a dependent on your parents’ tax return to be covered by their health insurance, as long as you are under the age of 27. Mary Ellen Reply Mary Ellen, I just spoke with someone off the federal healthcare website and they said the only way my wife (who is 22) will be covered is if she files her taxes with her parents and is listed as a dependent. From what you are saying, is this not true? I’m self employed and my income varies year to year. I’m on the cusp of being eligible for a subsidy, however if I make a little LESS it says I can’t get the subsidy. So, what happens if I apply using higher income criteria, get insurance through the marketplace and accept the subsidy, but then something happens (catastrophic illness?) and my income is below the threshold for qualifying for the subsidy? Will I have to pay that money back because I am too poor? Reply Kristina, If you receive a subsidy, you will need to calculate the actual premium tax credit when you file your 2014 tax return. If you received more credit than you are entitled to, you will need to repay it (with limits). If you received less, you will receive the credit on your return. It will increase your refund, or decrease your tax due. Mary Ellen Reply You probably thought I’m at the upper levels of income. That part is perfectly understandable, but what if income goes too LOW? People under the poverty level are NOT eligible for a subsidy. Will they really be required to pay subsidies back when income is so low? Or will the standard repayment caps apply requiring a partial repayment? We are in the same style boat (self-employed with income varying year to year), though from what you say your boat may be smaller than mine. You are worried about remaining above the 133% of the Federal poverty level (FPL) threshold, and I am worried about remaining below the 400% of the FPL threshold. First to your worry, I would think that if you are close to the 133% of FPL, you would want to over-estimate your 2014 income for the simple reason that if you report a lower level, you will be shunted into Medicaid which from most reports is the poorest quality healthcare in the country. Even though the healthcare networks available through the insurance company plans on the exchanges are often not very great, still they have to be better than what you would face in Medicaid. Then in 2015, when you file your tax return and do the reconciliation, if you find your 2014 income less than the 133% FPL, then as Mary Ellen says, you could be responsible for repaying at least some of the subsidies you received depending on your numbers (for households with income less than 200% FPL, the repayment is capped at $600/$300 individual.) Unlike the penalties for not having insurance, for which the IRS has no recourse against you except if you have a tax refund due, the IRS may have some legal teeth in any clawback of excess subsidies. So put aside that much money and stay out of Medicaid ! My boat may be bigger, but I risk losing much more if my income steps over the 400% FPL line. Because then there is no cap, I would lose all of the subsidy and have to repay it all. And I would have to make a boatload more income to make up the loss of the subsidy and to pay the higher income taxes to get back to where I was after-tax at 400% FPL. Reply Thanks Cathy. Ironically, I would settle for Medicaid, but I don’t qualify for that either. My state opted out of the expansion. I can live with having to pay back just $300 of the subsidy, but how stupid is it that I will have to spend more because I earn too little. I feel for you position as well. You would think they would do a better job of phasing things out. After all, that would make calculations even more complicated and it always seems like that’s what the like – turning something simple into something complex. If you live in a state that has opted out and are not required to go on the federal exchange, does that mean you will not be taxed if you opt out and do not get health care? Reply Roberta, If your state does not have its own exchange, you should use the federal exchange for health coverage if you are not covered by a personal or employer plan, or by Medicare or Medicaid. You must be covered by some plan in order to avoid the penalty. Mary Ellen Reply As for the penalty, ignoring for the moment the implications of the court challenges to the administrative interpretation by the DHS/IRS, avoiding it will also mean managing ones withheld or estimated taxes more carefully so that one is not left with a refund position at year’s end. Only then can the IRS pick your pocket via this penalty. Otherwise, they have under the law no recourse against you. Bruce I heard on one of the political news channels that if you owe the penalty and the IRS can’t retrieve it from the tax refund, they will mail you a bill. If you don’t pay it by their “due date”, they will charge interest for every month it’s not paid. They have thought of everything to hurt you one way or the other. Good afternoon, Cindie, What you say I believe is correct. But as long as you avoid having a refund due at the end of each year, they can exercise their calculators ’til the cows come home, and the law gives them no power to collect from you. But you are also right in that the government (in particular this Executive Branch and its agencies) will do everything they can to make your life worse. Will the payments that I make to Medicare now be a paid tax on 2015 income tax rather than a medical deduction? Reply Roberta, No, Medicare premiums will remain a medical expense and not a tax. Mary Ellen Reply I only made $10,000 last year but I still want to file for my income tax. Does this mean that I still have to purchase a health insurance plan? Reply While the White House is keeping under raps the demographic composition of those who have supposedly signed up for OBummercare, the evidence from the state exchanges which have been reporting some of their data suggests that the pool of young applicants is well below the percentage targets. It remains to be seen whether the resulting death spiral will beat out the various court challenges to the Unaffordable Uncaring Act (aka ACA) before the November election. Reply It looks like we have found someone who really believes that “if you like your plan (doctor), you can keep your plan (doctor) … period” ! The Unaffordable Uncaring Act “fixes” nothing, as it essentially confuses and conflates two important elements of this world – insurance and welfare – destroying the private market for the former while attempting to boost the latter. The notion that “insurance companies can no longer drop you or jack your rates up on your individual policy for insurance that you buy through the exchanges” lacks only the word “period” at the end to punctuate this childish fantasy. No insurance company is bound by law or police/military force to remain a party to any exchange. And the insurance company bail-out provision in the Unaffordable Uncaring Act only goes so far without Congressional action (fat chance !) But even if the government could enslave the insurance companies, holding them on the gov’t plantation to do its bidding, there are all those “real crappy doctors” and hospitals which have and will opt out of OBummercare. And while we can say to ourselves that they never really cared about helping people anyway and good riddance, the pool of the “insured” will balloon and the pool of caregivers will shrink. And more and more people will find out that having health insurance is not quite the same as having access to health care. Reply IMy husband & I both work. We both have our separate insurance companies and our employers pay a portion of our Primary insurance premiums & we have the remaining portion of premium due deducted from our checks every payroll. I itemize & would like to know if I could claim the total premiums deducted from our paychecks as a Medical Expense. Reply Rosetta, If your employers reduce your taxable income through a Section 125 benefit plan, you cannot deduct the premiums you pay. Most employers utilize these plans so your taxable income is already reduced by the premium. If your employer does not have a Section 125 benefit plan, then you can claim a medical deduction for the premiums you pay. Mary Ellen Reply How do I find this information. For 2013 , I am paying after tax money for my medical coverage, which offered to me by my employer where i was laid off from. Will I be able to deduct this premiums from my tax return. Yes as long as your total medical expenses, (premiums, copays, meds. etc ) exceed 10% of your Adjusted Income for 2013 Go to this link: http://www.irs.gov/publications/p502/ar02.html Just to add to Mary Ellen’s answer, provided you can deduct the premiums, the medical deduction threshold has been increased by the Unaffordable Uncaring Act from 7.5% to 10% of AGI. So your premiums plus other medical expenses will have to be that much higher to enable you to itemize anything. But with the premiums being double and triple for many people whose insurance was canceled, that may not be a problem. Now wasn’t that nice of the Unaffordable Uncaring Act to make that so ! Reply I had planned to purchase my insurance directly from BCBS and avoid the govt market place. I’m not sure what my income for the year will be and I had PLANNED not to take a subsidy and if it turns out I’d be entitled,have it reconciled via my 1040 at the beginning of next year. HOWEVER, I just spoke to a Farm Bureau sales person that sells BCBS and he said that if you want a subsidy either directly applied to your premium as you go OR reconciled at the end of the year via a 1040 THE ONLY way you can get it is if you purchase your insurance via the govt the market place. He said BCBS policies can be purchased through the market place and if you think you might be entiltled to a subsidy, that’s they only way you will get VIA your 1040 in 2015. Is that right? i.e. People that purchase insurance outside of the market place and then wind up earning less money than expected won’t be able to have subsidies applied to their premiums for 2014 in 2015 if they didn’t go through the market place to purchase their insurance? Reply It is even more complicated than what you have been told. “Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange.” (Wall Street Journal piece) This is what the Unaffordable Uncaring Act actually says. Now the White House, through the IRS, is trying to make this apply to all the states. But various court challenges to that sort of unconstitutional re-writing of the law will probably succeed and could collapse this whole nonsense (we hope!) But for now, it depends on which state you live in. Good luck to America ! Reply I actually live in NC and if I’m not mistaken, NC did not set up their own exchange they allowed the feds to doit for them. and again, I was told by a NC broker the only way you can get the credit is if you go through the government market place — IE they are attempting to force people into the system. However, if BCBS and the like offer the same polices outside of the market and the pricing is the same….then I think that is unfair ESPECIALLY since the government can not and will not guarantee safety in using the site! If the IRS can calculate the credit on a tax return for people in who purchased through the market place, then they can calculate for people outside the market place as well. You are correct that the lack of security and disregard for it on the part of those executing the Unaffordable Uncaring Act is disturbing and a scandal unto itself. The “subsidies” as you again rightly point out could be calculated in the same way for people wherever they live and through whatever source they buy their health insurance. But the Act (the current law) is very specific. And only those people who source their insurance through the appropriate exchange (which many states do not have) are eligible to get these “subsidies.” We can hope that the Unaffordable Uncaring Act will die a natural death this year. In the meantime, good luck to us all. Although I do think something needed to be done about health care costs, (ACTUALLY INSURANCE COSTS – Insurance companies are such a scam, you purchase for protection and if you actually need it, they drop you or jack your rates up!) I never agreed with this bill… how can you agree to terms you didn’t read???? As a result HEALTHCARE has not improved, in fact quite the opposite! What they should have done was gone to a direct payer instead of one payer — get rid of the insurance companies…let us pay the doctors etc. I don’t know, maybe that’s not the answer. For the time being, it is what it is and even if this bill dies over the coming year the damage has been done. Too many changes have been implemented over the past 4 years, doctors left, and no one is going to turn around and lower their rates. Healthcare as we knew it is gone. You can’t turn back the clock. It seems ironic to me that you complain about this: “Insurance companies are such a scam, you purchase for protection and if you actually need it, they drop you or jack your rates up!)” and yet you seem unaware that this is one of the things the ACA FIXED – insurance companies can no longer drop you or jack your rates up on your individual policy for insurance that you buy through the exchanges. Coverage is mandated issued to anyone at the group rates contracted by the govt through the exchanges. And they cannot drop you when you get sick or for a pre-existing condition. They cannot set an annual or lifetime maximum on your benefits. These was some of the major flaws in the old system that the ACA set out to correct – and did. I understand that health care and insurance is a very frustrating topic/situation, I just wish people would take a little more effort to understand what they’re complaining about. If you take what I said out of context, yes it would appear Ironic. However, I did preface that statement by saying “Although I do think something needed to be done about health care costs, (ACTUALLY INSURANCE COSTS… And you are correct, that is the one thing they did fix….Insurance companies must take you and can’t kick you off. However the actual cost of this has not yet been addressed ( we WILL see a huge jump after the 2014 elections) and in the process they actually destroyed the actual HEALTH CARE system. An insurance agent — or more to the point, an IRS agent isn’t qualified to make medical determinations… Actually the health care system was destroying itself which is why the new law was needed. I am glad it forces congress to pay for health insurance. And I am glad that I can keep my kids on my insurance until they are 26 giving them enough time to get into a stable job with good benefits after college. As for doctors quitting? That’s their problem as a great percentage of them were only doing it for the money anyways and it’s obvious that the quitters never truly cared about helping people. Then again, there are some real crappy doctors out there whom somehow lost all logic of their field and just say a bunch of garbage and prescribe a bunch of bull ’cause they know nothing. You are again right that not just something but much needs to be done about the cost of health care and health care insurance. For the former, the need for tort reform to bring down the huge cost of medical liability insurance for doctors/hospitals, and for the latter, the need to repeal the insane prohibition of selling health insurance across state lines (to name two of the more significant somethings that need to be done) have been/are in legislation passed by the House in recent years but still lie under Harry Reid’s derriere in the Senate at the command of King Hussein in the White House. Only when these political clowns are gone will it be possible to bring about some common sense reforms to address cost in this sector of the economy. One would have thought that ‘change’ would have occurred in 2012… Hopefully, now that a CLEAR majority seems unhappy maybe 2014 and 2016 will bring better results and new residents to Washington. Let’s just hope it’s not too late and in the mean time, not too many undeserving people get hurt as a result of all this. You have my sympathies here. It is more than just a shame that the country must experience this level of policy disaster before it develops a “CLEAR majority” (and I say this as an Independent deeply embarassed that so many Independents hadn’t figured this out by 2012.) Though there is little way to erase the cost to this country of what these politicians have done, it is never too late to start over and make this world a better place. So, buck up and let Ray Stevens cheer you and all: Hi, my husband and I make about $55, 000. I make about $20,000. My husband gets coverage from his employer. I and my daughter got insurance through the Obama Care and I am paying $406 per month on premiums. How can I claim this when filing taxes. My daughter and I are in college. Kindly help me understand the procedure. Reply My husband has private health insurance and his employer writes a check each month to the carrier to cover half of the premium. Will he be taxed for any of this? Does his employer have to add this to his W-2. They are not sure which is why I am checking into it. Thanks! Reply Angie, Payment of health insurance premiums is not taxable, even if it is for an individual policy. Employers are required to report the amount of health insurance premiums they pay for an individual on their W-2, in box 12, Code DD. Mary Ellen Reply Hi, My husband is self-employed and I am currently unemployed. We want to purchase health insurance through Covered CA, but wonder if it matters whether or not I submit the application as head of household, or should my husband submit it instead (to qualify for the self-employed health insurance tax deduction). Reply My husband’s employer said he is not allowed to claim any dependents, which would be myself and our son. He has always claimed us on his paycheck. Why is he being told that he cannot do this anymore? hehis employer correct? Is this a new law, as they are suggesting? Also, what ifvwe file taxes at the end of January, but do not buy insurance until February? Will we be penalized in January when we file for not having it at that time? Reply Elizabeth, I’m not sure if you are talking about being able to cover dependents and spouse on his health insurance or claim an exemption for income tax withholding. The employer can control health insurance, but the form W-4 controls the tax withholding. For the penalty, you are allowed up to three months to be without coverage. So if you are covered by February and remain covered for the remainder of the year, you will not be penalized for not being covered in January. Mary Ellen Reply I qualify for a $171 Subsidy and am responsible for $94 a month. Am I able to write the amount I’m responsible for since I’m paying it post tax when I file in 2015? Reply Michelle, If you pay out of pocket for coverage, co-pays, etc, the costs can be included in your medical expenses for a tax deduction. You will need to meet the other requirements for itemizing deductions, such as medical expenses exceeded 10% of your income (7.5% if you or your spouse are 65 or older), and enough total deductions to exceed the standard deduction for your filing status. Mary Ellen Reply Marketplace told me I would be eligible for $195 per month subsidy, and I would be paying an additional $43 per month for insurance.Will this mean I will owe money at tax time? Reply Hi Chelsea, No, it doesn’t mean you will owe. Your eligibility and amount of subsidy is based on your household income and size. The only way someone may owe is if their actual income ends up being higher than the income that the Marketplace was given when they calculated your subsidy. This will all be reconciled when you file your 2014 taxes in 2015. Thank you, Lisa Greene-Lewis Reply « Older Comments Newer Comments » Leave a ReplyCancel reply Browse Related Articles Crypto Understanding Crypto and Capital Gains Work 7 Things You Need to Know About the New Business Report… Work Using Form 8829 to Write-Off Business Use of Your Home Tax Tips Roth 403(b) vs. Roth IRA: Which Should You Invest In? Life Interest Rates, Inflation, and Your Taxes Investments Essential Tax Tips for Maximizing Investment Gains Uncategorized TurboTax is Partnering with Saweetie to Elevate Hoop Dr… Business Small Business Owners: Optimize Your Taxes with a Mid-Y… Small Business The Benefits of Employing Your Children and the Tax Bre… Income and Investments Are Olympics Winnings Taxed?
Hi, my wife and I are both covered under insurance by her employer. However her’s is free and mine is $100 per pay period. I’m retired and and should receive free medical, but why does the IRS require us to file married, when in fact we could file separately. When I ran my numbers through the Gov site, it said I was eligble for a $8000 a year credit. Our current insurance is 70/30 and $2500 out of pocket. This insurance is in case you get ill or something major, not for basic health, there is no copay allowed. Isn’t that just a little bit criminal. Why won’t the Government post the numbers on what people will be paying based on their estimated incomes so they can see whether to deny Insurance from their company when they can get a much better deal from the Afforadable Plans. Reply
Can an employer cover medical insurance on an employees child every year if the employee is divorced and only gets to claim the child as a dependent every other year? Reply
if an employee pays 50% of medical insurance of an employees child (dependent) and the employee is divorced and claims the child as a dependent every other year, can the employee still cover 50% of the childs medical insurance on the years the employee does not claim the child on their income tax as a deduction? Reply
Hi Lena, Yes the fact that the employer covers 50% of a child’s medical expenses does not relate to the employee claiming their child on their taxes every other year. It is still their child and can qualify to be covered on the insurance plan. Thank you, Lisa Greene-Lewis Reply
I have insurance under the Marketplace and pay $81.00 per month. I was informed by my tax person that my refund is being help up because the IRS will be taking some of my refund to offset the additional cost of the insurance., The total cost of the insurance I have is $160 a month but I only pay $81.00. Have you heard of anyone else going through this Reply
My boss wants to reimburse me for the health insurance costs. I have gone to healthcare.gov and submitted the costs to him and he wants me to pay and he will reimburse. Wouldn’t this be considered income and be taxable to me? Reply
Kim, As long as your employer has a Section 105 plan in place, the premium reimbursement will be deductible to him and not taxable to you. Setting up and maintaining any benefit plan can be complex and he may want to consult with his accountant or payroll service for the requirements. Mary Ellen Reply
can therealkim still get premium tax credits from ACA? sounds like that would be too good of a deal? employer writes it off, not income to employee, and employee can get tax credit for health care premiums??
I posted a question on 3/10/14 but I do not see mine and any questions here after 2/28/14. Please advise when the answer will be available. Thank you Reply
I am unemployed and cannot afford health insurance. If i am put onto my parents taxes, Will my penalty of not having health insurance come out of their income? Reply
We claim my parents as dependents, they are 73 & 76, green card holders ( not citizens), no income at all or Medicaid. I am unemployed now and cannot afford to buy insurance for both of them and cannot push my husband to buy insurance for my pants ( he already supports them and me now, since I am not receiving unemployment benefits). I am covered by my husband’s company insurance. Will we get fine if parents do not have coverage? Is there any subsidy for them in our case? What if we will not claim them as dependents in 2015- any penalties for them for not to be insured? They have NO income! What is the solution??? Reply
If they are claimed on your tax return as dependents, you are required to see that they have insurance or pay the penalty. The penalty for each uninsured individual will be $95 or 1% of income, whichever is greater. In determining if they qualify for a subsidy, they will have to use your husband’s income. If they are not your dependents, they may qualify for assistance in obtaining insurance. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply
Can me and my husband file our taxes separately for 2013 or should it be filed jointly? Obamacare needs married couples to file jointly to receive the benefits. Does it include 2013 tax return ? Reply
Megan, You can file jointly or separately, whichever is the right filing status for your personal situation. When it comes time to determine if you or your husband are entitled to a subsidy for health insurance premiums, you will need to use your household income, which will include both of your incomes, even if you choose to file separate returns. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply
As Mary Ellen indicates, whichever way you and your husband file, you will be using your household income as long as you are married. Divorced and co-habitating, neither you nor your ex would have a spouse and so filing separately, you each would use your individual incomes. As long as you are under the 400% of the Fed Poverty Line, the latter course is the way to maximize your subsidies. Reply
My employer recorded the amount we put into our healthcare savings account (HSA) on my W-2. They’ve never done that before. It used to only be reported but not as income. Now it is code W. It’s pre-tax dollars but now it’s being taxed. What changed in the way that my HSA is reported to the government? Reply
Jeff, According to IRS Pub 969, “An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Contributions, other than employer contributions, are deductible on the eligible individual’s return whether or not the individual itemizes deductions. Employer contributions are not included in income. Distributions from an HSA that are used to pay qualified medical expenses are not taxed.” Even though you are seeing the amount of the contribution on your W-2, that does not mean it is being included in your taxable income. The amount is used to determine the amount of deduction you can receive for HSA contributions you make on your own behalf. It should be entered on Form 8889, Part 1, Line 9. TurboTax will take care of that for you. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Mary Ellen Reply
Reading several comments here, contrary to my belief, it seems that a married couple, that always filed as “Married Filing Jointly”, cant simply choose to file federal tax returns as “Married Filing Separately” starting from 2014 — just so that a low earning spouse can get maximum/or greater tax credits for health insurance premiums thru the new marketplace system. is that true ? Expert advice on this will be sincerely appreciated. Thanks. Specifically, retired husband, who has Medicare coverage, has 60,000 in income from social security, interest & mainly from IRA draw downs/distributions. Wife who has no health insurance coverage at present, has a small variable business income & interest income in her name — both collectively totalling say about $ 12,000. If wife files her tax returns separately, she can get the maximum/or much larger tax subsidy for health insurance coverage. Is that permissible ? Or for subsidy determination purposes the joint incomes of husband & wife will/must be considered in lieu of just the wife’s income since she filed as a single person ? Thanks agin for the wisdom. Reply
Jeeti, For purposes of the subsidy for health care, your household income is used. That will be the income of you and your spouse, even if you use the Married, filing separately status when you file your return. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com. Thank you, Mary Ellen Reply
With you on Medicare, your wife with your combined household income (as Mary Ellen has explained) would put you two over the 400% of the Fed Poverty Line and so allow your wife zero subsidy to pay for health insurance through your exchange. In applying, she would be obliged to use your combined household income because you are her “spouse.” Now, if you divorced and there was no longer a spousal relationship, she could apply on her own. But with only about $12K in income, she would be assigned to Medicaid. Now, Medicare is gradually becoming Medicaid Plus, and so the both of you could find yourselves in the same doctor’s office with essentially the same “healthcare” going forward. But if that is not desired, then after a divorce, you would need to get some of your income-producing assets into her name to raise her income above the 133% of the Fed Poverty Line so that she could get a subsidy to bring down the high cost of a healthcare plan better than Medicaid. Reply
My son who will turn 19 mid march will lose insurance under my husband 3/31/14. He will not be claimed on our tax return for 2014 because he is not a full time student. Husbands employer wont allow us to pick him up on COBRA with the rest of the family when we start COBRA 4/1/14. He would have to purchase his own COBRA plan at the same price they are charging us (approx 16K for the year). I applied on marketplace for him and put he was filing his own return and couldnt be claimed as a dependent. It then asked if he lived with parents and other brother/sisters then proceeded to ask all the income for everyone. He is not working right now so he has no income. The results came back he was eligible to purchase through marketplace but was not eligible for subsidies. Total family income is below 50K. My question, should he have applied on his own or should i have applied and asked for coverage under my application? I’ve called the marketplace and they said they can’t give me how the income numbers were run just what the results are. Does anyone have any suggestions for this scenario or have similar situation? Why should he have to include our income if he isn’t our dependent? Reply
Hi, I’m so confused, I can’t find a straight up answer to whether or not I will get my refund without being covered yet. I can’t afford to start paying for healthcare WITHOUT my refund, so it’s a catch22. So, without healthcare, I should be expecting my refund in my bank account soon still, correct? I have been tracking my refund for over a week, over half the people who filed on my same day have received theirs, and now there isn’t an option to track it which leads me to believe I should be receiving it, yet it’s not in my bank account right now, but there’s still a button for “get coverage.” Is choosing a healthplan required before receiving my refund. I’ll pay the fine if I have to, I just need my refund! Thank you. Reply
Matt, There is no penalty to be paid for 2013. It starts with 2014. The IRS states that 90% of all refunds were received within 21 days last year, and they expect the same results this year. Your refund should be deposited to your bank account within about 3 weeks of filing your tax return. You need to be covered by March 31 of 2014 to avoid any penalties when you file your tax return in 2015. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply
What is the penalty for not having insurance in the following case. 2 Adults and 3 Kids. Only Husband has insurance (thru company) Wife and kids does not (company provides but declined) Only Husband earns – 80k A friend said only penalty is $95 for wife. As per my reading, it is 1% of family income or $95 per adult plus 50% for kids whichever is greater. Here since wife does not have income does it matter. So the final penalty is 800 or 237.5 (95+47.5+47.5+47.5) ? Reply
Just make sure you have no refund due when filing next year. The Unaffordable Uncaring Act provides no legal recourse for the IRS to collect any penalty from you except by withholding any refunds due. Reply
Joseph, Your penalty could be as much as $2,000. 1% of 80K for spouse and .5% of 80K for each child, a total of 2.5% of your income. The insurance credits are based on the household income, not just the income of the uncovered individual. Mary Ellen Reply
Now that the White House has effectively killed the individual mandate, just claim an unaffordability or hardship exemption and forget the penalties. Reply
In the year 2013, I got health insurance through my job, and they stated they will give health insurance to the dependent (spouse) but it was delayed finally she covered in the month of Jan 2014. She had DNC (dilation and curettage.) due to miscarriage in the year 2013, the medical expenses around $15000 were paid by myself as she did not have insurance. Our Household income is $60,000. Are these Medical expenses Tax deductible? What will my penalty be (now she has Insurance)? Thanks in advance Reply
Hi Chetan, The expenses you paid for your wife’s DNC are deductible medical expenses. You should include them in your itemized deductions. You should not have any penalties for not having insurance for you wife in 2013. The requirement started in 2014. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply
I think that I am in a catch 22 situation. My wife and I have an income slightly above $50k but our MAGI will come in around -$500,000 carried forward from my past business losses. Does this mean that although I can apply though the market place I will not get a tax credit? It is a truly ridiculous situation as I can not afford $1100 per month that was quoted. Only other option that I can see is to get a divorce that way at least my wife will be covered. Thanks Reply
These are presumably non-passive losses, and the carry forward and recognition provisions of the IRS Code may give you little leeway with the result you indicate for your 2013 MAGI. The divorce option, such that you and your wife could file separately, is one way to improve your situation. Staying married, with a negative MAGI, you both would presumably be placed within the Medicaid system. Divorced, with your wife declaring enough of the $50K income to get her above the 133% of Fed poverty line, she could presumably qualify for a subsidized health insurance plan, leaving you to find out how wonderful Medicaid is. Good luck to us all. Reply
I had health insurance all the way up until the end of January 2014. I am getting estimates on new health insurance but don’t currently have any. If I do my taxes now, without having any health insurance, will there be a penalty or will it affect my refund? Reply
Hi Dustin, There is no penalty calculation with your 2013 taxes. For 2014, you have the possibility of penalties if you are without insurance for more than three months of the year. That penalty will be calculated when you file your 2014 taxes in 2015. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply
My question is for this year in filing your 2013 taxes, will you receive a credit for having insurance with your refund because I heard you would, but I did not see that on my taxes when I filed? Then, how is the government going to find out who has insurance and does not in order to penalize them? Reply
Charay, There are no insurance premium credits for 2013. They will be in the 2014 tax filings. Insurance companies will be reporting who they covered to the IRS for assessing the penalties and calculating credits. Mary Ellen Reply
I’ve had a pricey individual insur. policy for past few years (in CA) but am about to complete an ACA app. today. However I have yet to file my 2013 taxes but will next week – just after the ACA 3/31 deadline. When the online CoveredCA app asks if I filed taxes “last year” 1) does this mean 2013? Or do they mean ’12? 2) And since the technical answer is “no, but I will by 4/15” how should this be answered on the form before 3/31? Related question: I’m checking with a parent tomorrow, but I MAY have been claimed as a “dependent” in 2012 (no earned income, thus no tax return filed) – but will be filing in 2013 (though income was on the lower end). Given these last 2 years of varying tax status, will this in any way affect my eligibility for a Silver Enhanced (subsidized) plan? My thinking on the above is that the application is asking me if I filed taxes in 2013 (my intention is to say “yes” and get them within the week after the ACA deadline) AND my hope is that the past “dependent” status won’t affect my subsidy eligibility since I’m filing a 2013 tax return (and since by most “am I eligible” calculators I seem to qualify for some subsidy based on income). Am I right re: these 2 assumptions? Any considerations I should . . . consider . . . as I finish my app with these issues on my mind? Much obliged – I’d just like to be accurate while finishing the app.
What is wrong with ur website for filing? I got finished doing my taxes and now it wont let me get past choosing a healthcare plan! Very angry!!!! No more turbotax for me. Reply
Are the insurance premiums that I pay monthly (via payroll deduction) totally at my expense eligible for a deduction on schedule A under medical? My employer does not cover any of this cost at all. Reply
Debbie, Insurance premiums you pay through a payroll deduction are eligible for deduction on Schedule A, provided they are not part of a pre-tax benefit plan. Mary Ellen Reply
I qualify for a large subsidy since my income is not that high and I am 62. A recent letter to our local paper suggested that we will have to declare our ACA subsidy as income when filling out our 2014 tax forms next year. This would add 30% to 40% to our annual income and would double (at least) taxes owed. Is this true? Reply
Tom, You will not have to declare your subsidy as income when you file your taxes. You will need to reconcile your actual 2014 income with the amount of projected income you reported when you signed up for your insurance. If your actual income is substantially higher than your projected income, you could have to repay part or all of the subsidy you received. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply
I make less than 18000 a year and purchased insurance through obamacare. I file an ez form and get a refund every year. Will I no longer be receiving a refund. And also, my employer wants to reimburse me for my premiums that are about 70 a month. Any reason why I shouldn’t do this? Reply
NO reason what so ever. Supposedly it’s not taxable and separate form anything that would normally be on a W2 at the end of the year. Read this: http://www.zanebenefits.com/blog/bid/315671/New-Guidance-on-Tax-Free-Reimbursement-of-Individual-Health-Insurance Reply
Chelle, Your employer needs to be sure that his reimbursing your premium does not qualify as an employer provided health care plan. As long as it doesn’t qualify, you can qualify for subsidies. The reimbursement will never be taxable income to you under the current tax laws. For additional answers to your specific health insurance questions, please visit http://www.TurboTaxAnswerXchange.com Mary Ellen Reply
Much of this discussion seems predicated on entering the government website to apply. But just yesterday there was further testimony that healthcare.gov lacks any reasonable security against hackers. So while you would be a fool to enter your personal information on this website, what other options are there to apply for health insurance on one of the exchanges (State, where the subsidies are eligible OK, and Federal, where the subsidies are … wait and see) ?? Reply
My understanding is that THE ONLY WAY you can qualify for and get a subsidy or tax credit at the end of the year is if you purchase your insurance through the exchange. You can call them and deal with a person that will help you which is what I did because I wanted to eliminate the possibility of hacking my personal computer. When you do this — you need to give them your SS#. Not too thrilling but..pretty standard for insurance purposes. Since the functionality isn’t working at this time, they actually have you deal with the insurance company from that point on. In other words, you go through the market to pick your insurance company, they let you know if you are ‘entitled’ to a subsidy which you can take OR wait until the end of the year and reconcile via your 1040 to get credit. If you have any questions about your income passing muster, that would be the way to go. However, unless you go through the market place and get a ‘marketplace number’ you won’t get the subsidy at the end of the year. I just did this and I’m in NC. Once they were able to get my account set up, I called BCBS (took 2 days for them to get the information) and paid them directly. The insurance companies will bill you directly going forward as well. Short of the long, Yes the site IS vulnerable but there’s no medical information involved and….what you do give them is really out there anyway, I guess you have to have a little faith — and when I say that, I don’t mean in the government! Reply
Thanks, Karen, for your detailed account. Given all that has been reported about the hack-ability of the gov’t website and gov’t information databases in general, you are a brave woman ! The “marketplace number” is an interesting new piece of info. I am wondering if TurboTax knows about this ?
Actually, I found out from them that it’s really not ‘their’ reference number — it’s Blue’s Cross Blue Shield’s…maybe it’s their new id for me
Also..I’m not really ‘brave’ — I was stressing out so much about this and really need insurance. I thought about taking advantage and skipping a few months to save money but..with my luck..I thought it wasn’t worth it. I thought I had it all figured out — was going to go around the market place, buy outside reconcile at year end. Once I found out that wasn’t an option…I wasn’t really left with any alternative. I may or may not be able to qualify for credit at the end of the year but if I do, I’m probably going to need it. Who couldn’t use a tax credit? In any case, once I finally got it out of the way, I felt better — it’s out of my hands and I’m going to let the chip’s fall and hope for the best. I have a lot of faith — and NOT in the government!
Good morning, Karen, I wish you all the luck for this year ! Returning to the “marketplace number,” if this number is Blue Shield’s id for you, what did you get from talking with the exchange to verify that you had gone through the exchange to be eligible for the subsidy ? Or did BCBS, after you talked with them,then inquire about you with the exchange personnel ?
When I called the marketplace and finally got someone who was really able to help me — he saw that my premium was high and wanted to see if he could get it down…I told him not to waste his time. Based upon the 2012 return and even last years earnings, I wouldn’t qualify. But I do expect a change in circumstance as far as income goes and I have no clue what my income will be. With that said, he just proceeded to get me entered into the marketplace under the policy I picked and told me I needed to call them back (even if I don’t want to take the subsidy at the time) when/if I have a change in circumstance. Once I was done with him and my application was complete — he gave me an application number and the customer service number to BCBS to make payment. I’m assuming the reason you need to call in the case of a change would be 1) if you are actually receiving a subsidy now and your situation improves thus you no longer qualify or 2) your situation deteriorates (which will be me) and for budgetary purposes (ha ha) they want to be aware. He also said, that in that case, I might qualify for cost sharing saving (something like that) — ie even though I may have a $3500 deductible now and a 30/70 cost share — I could get my deductible, copay and co share lowered — THAT money would not have to be paid back and would not be reflected on the 1040. However, someone is paying for that… Best wishes to for the New Year too Bruce!
So it seems that one way to deal with the problem of our income exceeding the 400% of poverty level (with the resultant loss of our entire subsidy) is to file separately instead of jointly. Will the IRS ask to see our divorce papers since we have been filing jointly for years ? And does TurboTax make it easy to do a what-if analysis of this ? Reply
I will be interested to see if Mary Ellen can provide you with an easy way to do this analysis within one tax return. My guess is you will have to do at least two or three separate tax returns and then compare the results TurboTax produces. Reply
I’m not a turbo tax person and I don’t even want to know if you are actually going to get divorce over this but…that’s always a possibility on an audit and then…will you be able to provide them? again, I don’t really want to know. I also think Bruce was correct and that the only way you’ll be able to figure it out is to run separate returns — I’ve done that before and just name them different things. You can always open up a saved return and before changing any of the information to run another scenario, save it as something else and make changes to it so you don’t have to re-enter ALL the information again. With regard to the ‘divorce’ thing…depending upon where you live and their laws, I think some states allow you to file separately if you are legally separated — i.e if there are children involved, one could file as head of house maybe the other single? Although some states require a filed agreement, some states recognize an agreement drawn up between the parties and notarized — I believe the federal government recognizes state law…something to consider and/or look into — cheaper than divorce I would think…. I think I’d rather spend the legal fees on a discrimination case than on a divorce over this! Reply
Thanks, Karen, for your input and I understand. It will be interesting to see if Mary Ellen of TurboTax has any further clarifying info. The “divorce thing” seems to be one avenue that this law left open to manage the subsidy nullification effect of making just a little too much money in a year. So we might as well understand the requirements, though I can see why a lot of people would just dismiss it out of hand.
I hear you but…could you imagine if everyone got divorced over this! Then of course once everyone went through the expense, they’d just figure out a way to nail you for being single. Sort of like the benefits of having an electric car and solar panels. Now that people have gotten on board, they want to tax them as well. They want to tax you for using the sun to generate your own electricity! I suspect, they’ll figure out a way around this a lot quicker than the solar panels and electric cars! too many people impacted. also…for some reason I don’t think ‘Turbo Tax’ is going to weigh in on the filing as divorced thing…at least I wouldn’t hold my breath on that one. We’ll see.
Well, Karen, Reno could be a happening place going forward ! 😉 But I just ran some numbers for my family on the kff.org subsidy calculator, and if we filed separately and applied separately for health insurance, with me taking 2/3 of our joint income and our little one, and my husband taking 1/3 of joint income, net of the subsidies we each would then get, we would for a Silver Plan pay just a little more than HALF of what we would have to pay if we apply jointly which gets us NO subsidy. And that is several thousand dollars PER YEAR to be saved by divorcing. I would agree that it would be far better to fire the idiot politicians who put this law on the books and then wipe the books clean of it. But it looks like the ACA makes divorce a serious financial consideration. As for TurboTax weighing in, as you say, we’ll see. Reply
No sign that TurboTax is going to reply, and I think I am with Karen … don’t hold your breath! But the marriage penalty has been known for some time. Here is an interesting quote from Mark Duggan, a health economist at the University of Pennsylvania’s Wharton School: “The ACA, like the tax code, is complicated, and it sometimes provides a marriage subsidy and a penalty. Will it encourage some weird stuff like some people getting divorced? Yeah,” Duggan said. “That was the challenge of this thing. Where do you draw the line?” So you may be right about Reno !
I am self employed, my spouse is W-2 employee. We file married, jointly. His employer offers him insurance at about $100 a month. (I suppose it will go up now with the health care reform) His employer also offers family insurance but the rate is an additional $500 a month. So I opt to stay on my own private insurance for about the same price. Can I deduct my insurance premiums on my business return (I make a profit) or can I only deduct co-pays. Or neither? This question is for both 2013 and 2014. Reply
Or- as another option can I deduct my premiums from our joint return instead of my schedule C? Which is better? Reply
I just went to the obamacarefacts.com site and it says: “ObamaCare gives states and the federal government the option of charging insurance companies a 3.5% fee, on the cost of the premium, to sell insurance on the exchange. States also have the option of using grants and other forms of assistance from the federal government; however, states that refuse setting up a state run exchange will not get the subsides, therefore their constituents will purchase insurance at what will most likely be a higher rate.” With all that said, I’m from a state that did not set up their own exchange – most states did not. If I read this correctly, it is stating that the subsidies won’t be available to those states. So…am I reading it correctly and if so, is that true — are most of us just spinning our wheels worrying about this credit and/or subsidy because we won’t get it anyway? The site is definitely a liberal bias site because it more or less slams the GOP for fighting this law but…it is suppose to contain the FACTS. Again, are we all entitled to the subsidy if we meet the financial guidelines or not? Reply
Hi Karen, What you have is a federal-run state marketplace, and you can still qualify for the subsidies if you purchase your insurance through your marketplace. Mary Ellen Reply
OK — Thanks. So basically what you are saying is that the obamacare facts site is politically fueled – not fact fueled. As long as you enroll through the marketplace and qualify financially, you are entitled to a subsidiary regardless of what your state government opted to do. Correct? Thanks!
Karen, Yes, if you purchase insurance through the marketplace and qualify financially, you can get the subsidy. It does not matter if your state runs their marketplace or the federal government runs it. Mary Ellen
Is there any way to block out Bruce and Karen’s constant blogging of their mutual “chicken-little” love affair?
Caveat emptor when viewing any FACTS or fact-checking website, as they have no less political bias than any other. Mary Ellen’s response to you below may or may not be true. Just taking the language of the ACA, as it was written, it provides that tax credits are available for months in which an individual is enrolled in a qualified health plan “through an Exchange established by the State under 1311” of the ACA. There is no explicit recognition of the eligibility of the premium tax credits (subsidies) for an individual acquiring insurance through a Federal exchange. Now, yesterday, a Federal judge in the liberal D.C. Circuit ruled that it surely was the intent of the law to include everyone in this eligibility whether applying to a State or Federal exchange. This ruling is now under appeal, and there are several similar legal challenges in other jurisdictions. So we will have to wait and see whether the power of certain judicial interpretation and imperial edict from the Executive Branch and its agencies trumps the the law as it was written by the Congress. The Unaffordable Uncaring Act is one big mess to be sure, but we do live in interesting times, n’est-ce pas ! Reply
I know we all have our own political preferences either way…However, it ceases to amaze me how Washington (both parties) continually appear to have their heads stuck in the sand as if the rest of the country out side of that belt way is a virtual experience and not the REAL world. Politicians shouldn’t be allowed to play Russian roulette with our lives for political gain or interest like that… particularly our healthcare. We should know what we can expect and exactly what it is going to cost. The rest of us can’t operate like DC does. Thank GOD most of us don’t!
If my spouse has healthcare through his employer and it can also cover me, but is too expensive, will I still get a tax credt when I purchase healthcare through the marketplace? Reply
I don’t understand why that would be my fault and she also told me ro call someone to make sure they’re taking enough this year but I don’t know who to call. Reply
I made arou $ 14,000 last year and when I went to file my taxes the lady said I owe money because they didn’t take out enough from my checks in the federal. I’m a single person and I really don’t understand that because how was I suppose to kno where they should be taken more money from. All I see is that they were takin largw amounts from my checks every pay day. Reply
I have health insurance through my employer which is a cafeteria plan so it is not taxed and my daughter is also on my plan. The premium is taken out of my check but then my ex-husband pays me for the premium. Can he deduct that on his taxes? Reply
Thanks, Mary Ellen. I have heard that income verification for receiving a subsidy has been delayed until 2015. Is this correct ? If so, it would seem to invite fraud this year since if the IRS somehow finds that an applicant has a higher income than he/she reported, it can only re-claim the amount of the subsidy fraudulently received from his or her tax refund. And if you use TurboTax wisely as a planning tool, you should not have a refund for them to snatch.
Could you look at my question about documentation requirements for filing separately above – January 16, 2014 at 4:38 pm Thanks and good weekend !
Why is it that the subsidies offered for a household (say 2 adults and 2 children) are so much greater if the adults are divorced and apply separately (each with one of the children) than if they are married and apply jointly as a family ?
CathyH, there was an interesting article in the Seattle Times about a Washington state couple who are on the flip side of the marriage problem you have asked about. They were unmarried, and each had low income which meant having to enter Medicaid. Not wanting to do that, they got married, and their then joint income was enough to avoid Medicaid and get a big subsidy on their exchange for OBummercare insurance. So both the exchanging and shredding of nuptial vows is a tool to consider under the “Unaffordable Uncaring Act” !
Good morning, Craig, By “shredding of nuptial vows” I meant divorce. In other words, the way this obamidable law was written, one’s marital status can have a very significant impact on what health insurance the government will allow you to have and at what price net of any subsidies.
you said quote”They were unmarried, and each had low income which meant having to enter Medicaid. Not wanting to do that, they got married, and their then joint income was enough ” You are such a defeatist and right-winger. The exact problem in this country. You believe mostly hear-say and never fully research anything in depth to support your old-fashioned live in the past views. Please do not respond to me, I have to deal with unread knuckleheads like you on a daily basis.
The knuckle, dear Craig, would seem to be in your head. You can read the Seattle Times piece for yourself and you can perform the same analysis using the TurboTax, Kaiser Foundation or other subsidy calculators. The results are the results.
Cathy, Verifying income is part of the Premium tax credit calculation that will be part of your 2014 tax return filed in 2015. The premium tax credit can be assessed and collected regardless of the refund on your tax return. It is only the penalty for not being covered that can only be recovered from your tax refund. Please read more here https://www.healthcare.gov/how-does-the-affordable-care-act-affect-me/ Also visit http://www.TurboTaxAnswerXchange.com for more answers to your specific health care questions. Mary Ellen Reply
I have been using the TurboTax subsidy calculator to explore what somebody told me was a dramatic breakpoint after hearing the following on CNBC: a family of three in New York earning $78,120 will pay $7,421 in premiums for a mid-level “silver” health plan, after taking their subsidy into account. But if they make just one extra dollar, they’ll have to fork out $12,784 for insurance — an increase of $5,363. Unless people are very careful, they could experience a huge hike in their marginal tax rates ! Reply
The ACA is largely a giant case of fraud, and so it would only be poetic justice if people played the system for all it is worth this year (presuming it lasts that long.) Another aspect to consider would be that if you are married, you might consider a divorce as the combined subsidy level of you and you spouse (then ex) would be appreciably larger than the subsidy you could get as a married couple. It’s just how this “law” was written ! Reply
So, the government (as represented by the politicians who passed this law in 2009) wants to inflict a big penalty on me for making more than 400% of the poverty level and for being married. And what country is this ?!!!!!!!
If Im under 26 married and filing my own taxes can i get under my parents family plan through obamacare? Reply
RB, Anyone under the age of 27 can be covered by their parent’s plan. Your spouse or children cannot be covered on their plan. Mary Ellen Reply
If I am under 26 married and filing my own taxes can i get onto the family plan of my parents through obamacare? Reply
I have been looking at the subsidies using the TurboTax subsidy calculator, and there seems to be a huge breakpoint. I heard, for example, recently on CNBC that a family of three in New York earning about $78,000 will pay $7,421 in premiums for a mid-level “silver” health plan, after taking their subsidy into account. But if they make just one extra dollar, their premiums will rise to $12,784 for insurance — an increase of $5,363 — because they will have lost any subsidy at all. Can’t imagine what the implicit marginal tax rate is around these subsidy breakpoint levels ! Reply
Rudy, You do not have to be a dependent on your parents’ tax return to be covered by their health insurance, as long as you are under the age of 27. Mary Ellen Reply
Mary Ellen, I just spoke with someone off the federal healthcare website and they said the only way my wife (who is 22) will be covered is if she files her taxes with her parents and is listed as a dependent. From what you are saying, is this not true?
I’m self employed and my income varies year to year. I’m on the cusp of being eligible for a subsidy, however if I make a little LESS it says I can’t get the subsidy. So, what happens if I apply using higher income criteria, get insurance through the marketplace and accept the subsidy, but then something happens (catastrophic illness?) and my income is below the threshold for qualifying for the subsidy? Will I have to pay that money back because I am too poor? Reply
Kristina, If you receive a subsidy, you will need to calculate the actual premium tax credit when you file your 2014 tax return. If you received more credit than you are entitled to, you will need to repay it (with limits). If you received less, you will receive the credit on your return. It will increase your refund, or decrease your tax due. Mary Ellen Reply
You probably thought I’m at the upper levels of income. That part is perfectly understandable, but what if income goes too LOW? People under the poverty level are NOT eligible for a subsidy. Will they really be required to pay subsidies back when income is so low? Or will the standard repayment caps apply requiring a partial repayment?
We are in the same style boat (self-employed with income varying year to year), though from what you say your boat may be smaller than mine. You are worried about remaining above the 133% of the Federal poverty level (FPL) threshold, and I am worried about remaining below the 400% of the FPL threshold. First to your worry, I would think that if you are close to the 133% of FPL, you would want to over-estimate your 2014 income for the simple reason that if you report a lower level, you will be shunted into Medicaid which from most reports is the poorest quality healthcare in the country. Even though the healthcare networks available through the insurance company plans on the exchanges are often not very great, still they have to be better than what you would face in Medicaid. Then in 2015, when you file your tax return and do the reconciliation, if you find your 2014 income less than the 133% FPL, then as Mary Ellen says, you could be responsible for repaying at least some of the subsidies you received depending on your numbers (for households with income less than 200% FPL, the repayment is capped at $600/$300 individual.) Unlike the penalties for not having insurance, for which the IRS has no recourse against you except if you have a tax refund due, the IRS may have some legal teeth in any clawback of excess subsidies. So put aside that much money and stay out of Medicaid ! My boat may be bigger, but I risk losing much more if my income steps over the 400% FPL line. Because then there is no cap, I would lose all of the subsidy and have to repay it all. And I would have to make a boatload more income to make up the loss of the subsidy and to pay the higher income taxes to get back to where I was after-tax at 400% FPL. Reply
Thanks Cathy. Ironically, I would settle for Medicaid, but I don’t qualify for that either. My state opted out of the expansion. I can live with having to pay back just $300 of the subsidy, but how stupid is it that I will have to spend more because I earn too little. I feel for you position as well. You would think they would do a better job of phasing things out. After all, that would make calculations even more complicated and it always seems like that’s what the like – turning something simple into something complex.
If you live in a state that has opted out and are not required to go on the federal exchange, does that mean you will not be taxed if you opt out and do not get health care? Reply
Roberta, If your state does not have its own exchange, you should use the federal exchange for health coverage if you are not covered by a personal or employer plan, or by Medicare or Medicaid. You must be covered by some plan in order to avoid the penalty. Mary Ellen Reply
As for the penalty, ignoring for the moment the implications of the court challenges to the administrative interpretation by the DHS/IRS, avoiding it will also mean managing ones withheld or estimated taxes more carefully so that one is not left with a refund position at year’s end. Only then can the IRS pick your pocket via this penalty. Otherwise, they have under the law no recourse against you.
Bruce I heard on one of the political news channels that if you owe the penalty and the IRS can’t retrieve it from the tax refund, they will mail you a bill. If you don’t pay it by their “due date”, they will charge interest for every month it’s not paid. They have thought of everything to hurt you one way or the other.
Good afternoon, Cindie, What you say I believe is correct. But as long as you avoid having a refund due at the end of each year, they can exercise their calculators ’til the cows come home, and the law gives them no power to collect from you. But you are also right in that the government (in particular this Executive Branch and its agencies) will do everything they can to make your life worse.
Will the payments that I make to Medicare now be a paid tax on 2015 income tax rather than a medical deduction? Reply
I only made $10,000 last year but I still want to file for my income tax. Does this mean that I still have to purchase a health insurance plan? Reply
While the White House is keeping under raps the demographic composition of those who have supposedly signed up for OBummercare, the evidence from the state exchanges which have been reporting some of their data suggests that the pool of young applicants is well below the percentage targets. It remains to be seen whether the resulting death spiral will beat out the various court challenges to the Unaffordable Uncaring Act (aka ACA) before the November election. Reply
It looks like we have found someone who really believes that “if you like your plan (doctor), you can keep your plan (doctor) … period” ! The Unaffordable Uncaring Act “fixes” nothing, as it essentially confuses and conflates two important elements of this world – insurance and welfare – destroying the private market for the former while attempting to boost the latter. The notion that “insurance companies can no longer drop you or jack your rates up on your individual policy for insurance that you buy through the exchanges” lacks only the word “period” at the end to punctuate this childish fantasy. No insurance company is bound by law or police/military force to remain a party to any exchange. And the insurance company bail-out provision in the Unaffordable Uncaring Act only goes so far without Congressional action (fat chance !) But even if the government could enslave the insurance companies, holding them on the gov’t plantation to do its bidding, there are all those “real crappy doctors” and hospitals which have and will opt out of OBummercare. And while we can say to ourselves that they never really cared about helping people anyway and good riddance, the pool of the “insured” will balloon and the pool of caregivers will shrink. And more and more people will find out that having health insurance is not quite the same as having access to health care. Reply
IMy husband & I both work. We both have our separate insurance companies and our employers pay a portion of our Primary insurance premiums & we have the remaining portion of premium due deducted from our checks every payroll. I itemize & would like to know if I could claim the total premiums deducted from our paychecks as a Medical Expense. Reply
Rosetta, If your employers reduce your taxable income through a Section 125 benefit plan, you cannot deduct the premiums you pay. Most employers utilize these plans so your taxable income is already reduced by the premium. If your employer does not have a Section 125 benefit plan, then you can claim a medical deduction for the premiums you pay. Mary Ellen Reply
How do I find this information. For 2013 , I am paying after tax money for my medical coverage, which offered to me by my employer where i was laid off from. Will I be able to deduct this premiums from my tax return.
Yes as long as your total medical expenses, (premiums, copays, meds. etc ) exceed 10% of your Adjusted Income for 2013
Just to add to Mary Ellen’s answer, provided you can deduct the premiums, the medical deduction threshold has been increased by the Unaffordable Uncaring Act from 7.5% to 10% of AGI. So your premiums plus other medical expenses will have to be that much higher to enable you to itemize anything. But with the premiums being double and triple for many people whose insurance was canceled, that may not be a problem. Now wasn’t that nice of the Unaffordable Uncaring Act to make that so ! Reply
I had planned to purchase my insurance directly from BCBS and avoid the govt market place. I’m not sure what my income for the year will be and I had PLANNED not to take a subsidy and if it turns out I’d be entitled,have it reconciled via my 1040 at the beginning of next year. HOWEVER, I just spoke to a Farm Bureau sales person that sells BCBS and he said that if you want a subsidy either directly applied to your premium as you go OR reconciled at the end of the year via a 1040 THE ONLY way you can get it is if you purchase your insurance via the govt the market place. He said BCBS policies can be purchased through the market place and if you think you might be entiltled to a subsidy, that’s they only way you will get VIA your 1040 in 2015. Is that right? i.e. People that purchase insurance outside of the market place and then wind up earning less money than expected won’t be able to have subsidies applied to their premiums for 2014 in 2015 if they didn’t go through the market place to purchase their insurance? Reply
It is even more complicated than what you have been told. “Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange.” (Wall Street Journal piece) This is what the Unaffordable Uncaring Act actually says. Now the White House, through the IRS, is trying to make this apply to all the states. But various court challenges to that sort of unconstitutional re-writing of the law will probably succeed and could collapse this whole nonsense (we hope!) But for now, it depends on which state you live in. Good luck to America ! Reply
I actually live in NC and if I’m not mistaken, NC did not set up their own exchange they allowed the feds to doit for them. and again, I was told by a NC broker the only way you can get the credit is if you go through the government market place — IE they are attempting to force people into the system. However, if BCBS and the like offer the same polices outside of the market and the pricing is the same….then I think that is unfair ESPECIALLY since the government can not and will not guarantee safety in using the site! If the IRS can calculate the credit on a tax return for people in who purchased through the market place, then they can calculate for people outside the market place as well.
You are correct that the lack of security and disregard for it on the part of those executing the Unaffordable Uncaring Act is disturbing and a scandal unto itself. The “subsidies” as you again rightly point out could be calculated in the same way for people wherever they live and through whatever source they buy their health insurance. But the Act (the current law) is very specific. And only those people who source their insurance through the appropriate exchange (which many states do not have) are eligible to get these “subsidies.” We can hope that the Unaffordable Uncaring Act will die a natural death this year. In the meantime, good luck to us all.
Although I do think something needed to be done about health care costs, (ACTUALLY INSURANCE COSTS – Insurance companies are such a scam, you purchase for protection and if you actually need it, they drop you or jack your rates up!) I never agreed with this bill… how can you agree to terms you didn’t read???? As a result HEALTHCARE has not improved, in fact quite the opposite! What they should have done was gone to a direct payer instead of one payer — get rid of the insurance companies…let us pay the doctors etc. I don’t know, maybe that’s not the answer. For the time being, it is what it is and even if this bill dies over the coming year the damage has been done. Too many changes have been implemented over the past 4 years, doctors left, and no one is going to turn around and lower their rates. Healthcare as we knew it is gone. You can’t turn back the clock.
It seems ironic to me that you complain about this: “Insurance companies are such a scam, you purchase for protection and if you actually need it, they drop you or jack your rates up!)” and yet you seem unaware that this is one of the things the ACA FIXED – insurance companies can no longer drop you or jack your rates up on your individual policy for insurance that you buy through the exchanges. Coverage is mandated issued to anyone at the group rates contracted by the govt through the exchanges. And they cannot drop you when you get sick or for a pre-existing condition. They cannot set an annual or lifetime maximum on your benefits. These was some of the major flaws in the old system that the ACA set out to correct – and did. I understand that health care and insurance is a very frustrating topic/situation, I just wish people would take a little more effort to understand what they’re complaining about.
If you take what I said out of context, yes it would appear Ironic. However, I did preface that statement by saying “Although I do think something needed to be done about health care costs, (ACTUALLY INSURANCE COSTS… And you are correct, that is the one thing they did fix….Insurance companies must take you and can’t kick you off. However the actual cost of this has not yet been addressed ( we WILL see a huge jump after the 2014 elections) and in the process they actually destroyed the actual HEALTH CARE system. An insurance agent — or more to the point, an IRS agent isn’t qualified to make medical determinations…
Actually the health care system was destroying itself which is why the new law was needed. I am glad it forces congress to pay for health insurance. And I am glad that I can keep my kids on my insurance until they are 26 giving them enough time to get into a stable job with good benefits after college. As for doctors quitting? That’s their problem as a great percentage of them were only doing it for the money anyways and it’s obvious that the quitters never truly cared about helping people. Then again, there are some real crappy doctors out there whom somehow lost all logic of their field and just say a bunch of garbage and prescribe a bunch of bull ’cause they know nothing.
You are again right that not just something but much needs to be done about the cost of health care and health care insurance. For the former, the need for tort reform to bring down the huge cost of medical liability insurance for doctors/hospitals, and for the latter, the need to repeal the insane prohibition of selling health insurance across state lines (to name two of the more significant somethings that need to be done) have been/are in legislation passed by the House in recent years but still lie under Harry Reid’s derriere in the Senate at the command of King Hussein in the White House. Only when these political clowns are gone will it be possible to bring about some common sense reforms to address cost in this sector of the economy.
One would have thought that ‘change’ would have occurred in 2012… Hopefully, now that a CLEAR majority seems unhappy maybe 2014 and 2016 will bring better results and new residents to Washington. Let’s just hope it’s not too late and in the mean time, not too many undeserving people get hurt as a result of all this.
You have my sympathies here. It is more than just a shame that the country must experience this level of policy disaster before it develops a “CLEAR majority” (and I say this as an Independent deeply embarassed that so many Independents hadn’t figured this out by 2012.) Though there is little way to erase the cost to this country of what these politicians have done, it is never too late to start over and make this world a better place. So, buck up and let Ray Stevens cheer you and all:
Hi, my husband and I make about $55, 000. I make about $20,000. My husband gets coverage from his employer. I and my daughter got insurance through the Obama Care and I am paying $406 per month on premiums. How can I claim this when filing taxes. My daughter and I are in college. Kindly help me understand the procedure. Reply
My husband has private health insurance and his employer writes a check each month to the carrier to cover half of the premium. Will he be taxed for any of this? Does his employer have to add this to his W-2. They are not sure which is why I am checking into it. Thanks! Reply
Angie, Payment of health insurance premiums is not taxable, even if it is for an individual policy. Employers are required to report the amount of health insurance premiums they pay for an individual on their W-2, in box 12, Code DD. Mary Ellen Reply
Hi, My husband is self-employed and I am currently unemployed. We want to purchase health insurance through Covered CA, but wonder if it matters whether or not I submit the application as head of household, or should my husband submit it instead (to qualify for the self-employed health insurance tax deduction). Reply
My husband’s employer said he is not allowed to claim any dependents, which would be myself and our son. He has always claimed us on his paycheck. Why is he being told that he cannot do this anymore? hehis employer correct? Is this a new law, as they are suggesting? Also, what ifvwe file taxes at the end of January, but do not buy insurance until February? Will we be penalized in January when we file for not having it at that time? Reply
Elizabeth, I’m not sure if you are talking about being able to cover dependents and spouse on his health insurance or claim an exemption for income tax withholding. The employer can control health insurance, but the form W-4 controls the tax withholding. For the penalty, you are allowed up to three months to be without coverage. So if you are covered by February and remain covered for the remainder of the year, you will not be penalized for not being covered in January. Mary Ellen Reply
I qualify for a $171 Subsidy and am responsible for $94 a month. Am I able to write the amount I’m responsible for since I’m paying it post tax when I file in 2015? Reply
Michelle, If you pay out of pocket for coverage, co-pays, etc, the costs can be included in your medical expenses for a tax deduction. You will need to meet the other requirements for itemizing deductions, such as medical expenses exceeded 10% of your income (7.5% if you or your spouse are 65 or older), and enough total deductions to exceed the standard deduction for your filing status. Mary Ellen Reply
Marketplace told me I would be eligible for $195 per month subsidy, and I would be paying an additional $43 per month for insurance.Will this mean I will owe money at tax time? Reply
Hi Chelsea, No, it doesn’t mean you will owe. Your eligibility and amount of subsidy is based on your household income and size. The only way someone may owe is if their actual income ends up being higher than the income that the Marketplace was given when they calculated your subsidy. This will all be reconciled when you file your 2014 taxes in 2015. Thank you, Lisa Greene-Lewis Reply