How will the Affordable Care Act affect your taxes?
In just a about a day we’ll be able to start shopping for affordable heath care options. Thanks to the Affordable Care Act, aka — Obama Care or Health Reform. Whatever you choose to call it, beginning October 1st — millions of Americans will have access to a better tomorrow.
On Tuesday – October 1st Americans who need or want health insurance will be able to be able to go to healthcare.gov. They’ll be able to compare plans based on their needs, and they’ll be able to sign up for quality, affordable health coverage.
With this change, comes many questions about what this law means for Americans.
Starting in 2014, almost everyone will be required to have health insurance.
In 2014, most U.S. citizens must have health insurance or pay a penalty tax, with some exemptions, like financial hardship. Those who choose to go without insurance may face a tax penalty. Beginning next year the penalty is $95 per adult and $47.50 per child (up to $285 for a family) or 1% of household income, whichever is more. This gradually increases to $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5% of family income in 2016 and beyond.
New programs have been created for those in certain income ranges to help them shop for and pay for their health insurance, including Advance Tax Credits, subsidies, Medicaid expansion, and Health Insurance Marketplaces.
What is a Health Insurance Marketplace and how will it work?
Starting in October, all Americans will have access to a Health Insurance Marketplace, where they can shop for and compare different private health insurance plans.
Each state can set up a state or regional Marketplace, or they can use or partner with the federally-run Marketplace. For example the State of Louisiana will be operating under the federally-ran Marketplace. The Marketplace offers a variety of options from private health insurance companies. Plans will be available in several levels of coverage: bronze, silver, gold, platinum, and a special “catastrophic plan” option for young adults and those encountering financial hardship.
If the single premium you pay for your company-based plan to cover your family is more than 9.5 percent of your family’s income, you may buy a health plan from the Marketplace.
You may be able to get help paying for your family’s health plan.
Advance Tax Credits and subsidies will be available to some families when they purchase individual insurance through the Marketplace. It’s based on family size and income.
How can you save money on healthcare?
Buying a health plan that covers you and your family can stretch your budget. But an unexpected or serious illness or injury can wipe out your savings and put you at financial risk. In the long-run, buying health insurance not only can protect your health – it can protect your family’s lifestyle.
Here are a few tips to help you choose a health plan wisely:
- Review how much you spend on medical expenses. A plan with the lowest cost might not be a bargain if you wind up spending hundreds of dollars out of your own pocket. Consider the medical needs of your family and yourself as you evaluate plans. In an average year, does one or more family member require frequent doctor’s visits and treatments? If so, you’ll want to be sure to choose a plan that provides the coverage you need.
- Choose minimum coverage. If money is tight and you’re in good health, you may want to think about a basic health plan. This type of coverage will protect you from financial disaster if you experience a major illness or injury, although you will have to pay out-of-pocket for routine care and minor medical procedures.
- Boost your health. This isn’t a quick fix, but doing things like losing weight and quitting smoking will likely mean fewer doctor’s visits and health problems in the future. Under healthcare reform, insurers can’t raise your premiums because of your health status, but they can charge you up to 1.5 times what a non-tobacco user is charged. Another good reason to kick the habit!
“Consumer Expenditures – 2012” Bureau of Labor Statistics
Cut cost with Tax Credits.
Called an Advance Tax Credit, these special tax credits will be available beginning in January 2014 to reduce the cost of health insurance premiums for people who qualify.
How do I apply?
In order to receive the tax credit you will need to complete your health insurance application through the online Health Insurance Marketplace. The enrollment period for 2014 coverage begins October 1, 2013 and runs through March 31, 2014.
Health Insurance Marketplace – Register Here
You can select the health insurance company and level of benefits that is right for you and your family. As long as it is a qualified health plan, you may qualify for the tax credit. You’ll find a variety of plans from which to choose on the new Marketplace. It’s easy to use, and the enrollment process is quick and simple. To find out more, visit the Health Insurance Marketplace in your state.