Obamacare and your 2012 tax return
Your adjusted gross income for 2012 could have a profound impact on how much you pay for health insurance next year if you don't get coverage through your workplace or a government program.
This post comes from Jonnelle Marte at partner site MarketWatch.
Starting next January, the Affordable Care Act mandates that every American have health coverage, and those who remain uninsured will pay a penalty. The extent to which one is eligible for federal subsidies to buy insurance, and the penalties for failing to comply with the mandate, will both be determined using one number: the adjusted income reported to the Internal Revenue Service this year.
"So much of the Affordable Care Act is being implemented through the tax code," says Kathy Pickering, the executive director of the Tax Institute at H&R Block. And for many taxpayers, "their tax situation will factor into health care decisions as well," she says.
The penalty, which was upheld as a tax by the U.S. Supreme Court in June, will vary per family based on their size and income. The fee starts at $95 per person next year, or 1% of household income above the minimum threshold for filing a tax return -- whichever is greater.
And the penalty is scheduled to increase each year to $695 per person in 2016, or 2.5% of income. (After that, the penalty will be adjusted each year for inflation.)
For a single person with $50,000 in taxable earnings, the charge would start at $400 next year, estimates H&R Block. And for a family of four with two children and a household income of $100,000, forgoing insurance would add another $800 to their tax bill -- a sum that would be deducted from any refunds. (The penalty is cut in half for children.)
The government will provide subsidies, which would cap how much families spend on insurance premiums to a portion of their income. The subsidies will be available to those earning incomes of up to 400% of the poverty rate, which works out to roughly $45,000 for an individual and $92,000 for a family of four. (See the H&R Block Health Care Estimator.)
To be sure, people who get health insurance through their employers or through a government program like Medicaid will not be impacted by the penalty. But those shopping for insurance on the individual market may still opt to pay the penalty, experts say. Annual health insurance premiums for people working at small firms averaged $5,600 for individuals and $15,200 for families in 2012, according to the Kaiser Family Foundation. (Of course, the decision to remain uninsured could end up being far more expensive if individuals face unexpected medical emergencies.)
In order to avoid the penalty, taxpayers will need to buy the minimum amount of health insurance required under the health care law. One way to meet that amount is to purchase a plan offered in the individual insurance exchanges being set up by health care reform, where individuals or small-business employees can shop for health coverage -- possibly with the help of federal subsidies.
Levels of coverage will vary, and some plans will have to offer essential benefits including hospital, emergency, pediatric benefits and other services. Dental-only plans, for example, won't be enough to avoid the penalty.
Tax preparers say clients are already asking questions about how health care reform will impact their tax bills -- and vice versa. At H&R Block, preparers are calculating what a taxpayer's insurance costs might be by using their returns to estimate the federal subsidy they might receive. They're also talking to families about what penalty they would have to pay over the years if they decide not to buy insurance.
Mark Steber, chief tax officer for Jackson Hewitt Tax Service, says they are fielding questions from taxpayers on the penalty and how insurance subsidies will work, and that the firm is evaluating if it will add a health care component to its tax prep services.
More on MarketWatch and MSN Money:
I'm going to post a quote. It has the "n" word. It is from Sammy Davis Jr.'s autobiography "Yes I Can." MSN will probably have to delete the post and I certainly understand and agree.
Anyway . . .
"Tomorrow morning, when you wake up, you'll still be a nig___er."
An uninsured family, means an uninsured child......God's child.
Most of the poor are democrats! Really! most of the ignorant racist white lower middle class people I know are Republican and are to dumb to know they are being boondoggled into supporting a pack of lying self indulgent money mongering rich ****s that keep them running around screaming about guns and abortion while they line there pockets with money!
A single payer system for all anyone? My wife and I are on medicare (individual coverage) our yearly deductible is $147.00 each. We paid $2376.00 out of our Social Security in 2012 for part A & B. We paid 20% of all medicare approved amounts for services and in 2012 we paid $2022. We have once a year wellness exams, physical therapy if needed, speech therapy if needed, blood tests, pnuemonia shot, shingles shot and flu shot covered for free. We each pay for part D monthly premium and out of pocket for prescriptions in 2012 together was $3667.00. Our total covered medical out of pocket for us in 2012 was $8359.00. The amount of our medical cost was 21% of our annual income. Some of our retired friends and relatives pay even more percentage wise than we do. Millions of seniors are covered by this plan and to be fair, medicare rates have to be raised to keep the system solvent. For those who fall into the poverty level there is government help to pay these expenses. Please understand, our health is the most important asset we have.
Fact: Most of the poor are democrats.
Fact: Most of the poor are too ignorant (not dumb) to realize what they have done.
Fact: Even with Obamacare, they still believe Obama is their savior
I have one question. If the poor people and people on Medicaid cannot afford insurance now. How will they afford
to carry insurance in 2014. The government employees can sit back and make all the rules for this plan, but don't
have to live by it. President Obama is this fair? Why does it fall on people who work hard for living and pay their
way have to compensate. And, don't you even think about forcing smokers to quit smoking. Sounds like
alot of dictatorship to me.
I sleep better at night knowing that the same bureaucrats (both parties) that write these rules for us, the great unwashed, are not subject to these rules themselves. I wouldn't want them inconvenienced.
The French may be cheese eating surrender monkeys, but they sure knew how to deal with their corrupt politicians in the 18th century. Anyone for a Bastille Day?
Copyright © 2014 Microsoft. All rights reserved.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Tying the knot doesn't mean your credit will follow suit. Take a look at these common credit myths about marriage.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'