Beginning in 2014, millions of Americans will discover that they qualify for subsidies designed to help them purchase their own health insurance. The aid will come in the form of tax credits, and many will be surprised by how generous they are.
Not only low-income, but moderate-income families earning up to 400 percent of the federal poverty level (FPL) – currently $44,680 for a single person and $92,200 for a family of four – will make the cut.
Yesterday, I posted about subsidies on null.com. The post includes a calculator which tells you whether you would be eligible, and how much you would receive. Even if your employer offers health benefits, you might qualify for a tax credit if the plan too expensive, or too skimpy. (I explain how the government defines those terms.) I also explain how the government calculates subsidies, and what happens if you live a place where healthcare is particularly expensive.
Click here for the full post If you like, come back here to comment.
Here’s my question. How are self-employed people handled. My wife and I are a mom and pop business. We are in our 60’s and would be eligible for tax credits if we buy our policy on the exchanges based on our income. However, if we have our business policy and buy on the exchanges we are only eligible for tax credits for any employees we hire, not for ourselves. Can we cancel our policy and buy as individuals or are we in a catch 22 and not be eligible for a personal policy on the exchanges because we are currently insured through our business. Because of serious health problems we can’t be without insurance even for one day. We pay a little under $30,000 a year now and from the calculator will pay every bit of $24,000 a year on the exchanges. Why shouldn’t we be eligible for tax credits?
First–
Yes, you could cancel the policy you have bought for your business–and buy policies for yourselves as individuals in the Exchanges. (In fairness to your employees, it would make sense to give them raises equal to what you now pay toward their premiums (minus any tax credit you receive) to help them buy their own insurance in the Exchanges.
I am assuming that you are truly a “Mom & Pop” business with fewer than 50 full-time employees.
If you have more employees than that, and you cancel their insurance you will have to pay a penalty for each employee who goes to the Exchanges and receives a subsidy.
Whether you are eligible for tax credits depends on two factors: you income, and the number of people in your household.
The problem is that, because of your age, the premium could be as high as $24,000— insurers are permitted to charge an older couple 3 times as much as a 30-year-old couple– even if the older couple is very healthy.
(In some states, insurers can now charge older Americans 5 times as much as a 35-year old).
Why does Congress allow this?
Because younger Americans don’t want to help subsidize
insurance for older people. (As one of my readers once wrote to me: “I’d help pay for my mother, but not someone else’s mother.)
This attitude is uniquely American. I don’t know of any other developed country that asks people to pay more for insurance because they are old. Normally, how much you pay toward “universal coverage” is based on your income.
There are a couple of states that don’t let insurers charge older people more. New York is one of them.
But unless you are lucky enough to live in such a state,
some people in their early 60s may well discover that they earn too much to qualify for a subsidy–but too little to be able to afford $24,000 insurance premiums.
They may have to dip into retirement savings to cover those premiums for a year or two or three–until they reach 65 and qualify for Medicare. (This is one reason why I feel strongly that we shouldn’t raise the eligibility age for
Medicare.)
Finally, I’m confused on one point: you say your income is low enough that you are eligible for tax credits, but then say that according to the calculator, you would pay $24,000, and ask “Why shouldn’t we be eligible for tax credits?”
If you are eligible for a subsidy, it would rise in tandem with your premium, and you wouldn’t have to pay nearly that much.
Maggie:
I am back; but, boy is my chest sore. I can not use my arms for anything which makes it difficult to get up or down “sometimes.” Having good leg muscles certainly helps.
Another good post and something I have written on also to answer the naysayers amongst us. Thanks for adding to my knowledge base
run 75441–
I’m glad that you’re recovering–and that you have good legs!
Thinking of you.