All day, I've been wondering about this income verification tweak. I finally have been able to hunt down a draft of the deal, and if I interpret it right, I will no longer be eligible for a tax credit to buy my insurance on the exchanges, and I suspect a small percentage of others may no longer be eligible either.
Prior to today, all you had to do was estimate your income for 2014, and at the end of 2014, you payed the IRS if you underestimated your income. Now, it seems they will verify your income from LAST year to determine your tax credit. If this is true, anyone who lost a good job this year, probably won't be eligible for a credit.
Below the fold for the gory details.
This is the money quote from the draft of the deal I found on the net.
...are eligible for such credits and cost
ing reductions consistent with the requirements of section
1411 of such Act (42 U.S.G. 18081), and, prior to rnaking
such credits and reductions available, the Secretary shall
certify to the Congress that the Exchanges verify such eli--
gibility consistent with the requirements of such Act.
Section 1411 is the section the Obama administration waved, because it would be too difficult to implement.
Now here's the part of Section 1411 that bothers me:
INFORMATION REGARDING INCOME AND FAMILY
SIZE.—The information described in section 6103(l)(21) for
the taxable year ending with or within the second calendar
year preceding the calendar year in which the plan year
begins.
The second year prior to the plan beginning, would be last year. So the rules just changed from an estimate of next year's income, to proving last years income. I think that could be a problem for the recently unemployed, and for others like myself who had planned for next year.
It seems it's also going to add a pretty big delay and another burden to exchanges that already have plenty of problems.
So, if there are any lawyers out there who can interpret this change, or if anyone has come across something that discusses this change, could you please post a comment or a link. This could negatively effect thousands or even 10's of thousands of people.