In an effort to understand precisely how this law impacts working families, I decided to speak with a local family here in Indiana that currently does not have health insurance. This family, contrary to conservative media hysteria, was quite able to access and sign up for an account at healthcare.gov.
Please see below for results...and a question so that I may help this family.
Here are the brief demographics of this family:
Children under 18: 3
Children over 18: 0
AGI (total): $69,770/yearly
Insurance presently: no
Employer offers insurance: no
We placed their information into the premium generator provided by the Kaiser Foundation. Here is what was spit out for the silver plan:
Household income in 2014: 253% of poverty level
Unsubsidized annual health insurance premium in 2014: $12,577
Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy: 8.14%
Amount you pay for the premium: $5,678 per year (which equals 8.14% of your household income and covers 45% of the overall premium)
You could receive a government tax credit subsidy of up to: $6,899 (which covers 55% of the overall premium)
Now, the overall mathematics of the premium aren't all that horrible. It comes out to $473.17/month to cover a family of 5.
What is making them very, very nervous is the fact that the 55% assistance is listed as a "tax credit subsidy"...which is usually jargon for "Pay the whole premium up-front in 2014...then wait until 2015 to be reimbursed via a tax credit when you complete your 2014 tax return".
If that is truly how the subsidy works, this family will pay $1,048.08/month for the premium in 2014 and have to wait until 2015 to be reimbursed.
Are we understanding how this works? If not, someone please let me know because the family in question is in a bit of panic mode for 2014.
OK...so here is what I am understanding based on the multiple sources of feedback I received already:
The subsidy is 100% ALWAYS up-front unless the family CHOOSES to have it as a tax credit...meaning that such people buying the policies are only responsible for paying the premium AFTER the subsidy. The tax credit portion of the subsidy only comes into play if what has been reported as income is inconsistent with what is actually declared come tax season. At that time, differences are reconciled via the payment of additional premium (family made more than expected) or issuing of a credit (family made less than expected).
Thank you all for your feedback! I surely didn't mean to get people into a bunch. I just wanted to give these family friends clear, accurate and substantiated information to make informed choices.