Small Group Stays

[somarco]

so I know that a refundable tax credit is rare, and an advanceable refundable tax credit is even rarer.

EIC is one that any low income individual will know, and there is a way to get an advance with a simply form filed through your employer.

Cash for clunkers operated much like a refundable tax credit. Car dealers that participated complained about the massive paper work, claims denied, and delayed payments.

And this was a temporary program that lasted 5 weeks.

I fail to see how a much more massive program (subsidies) will work any smoother and with less hassle.

 

[ABC]

Ann,
Thanks for the document.

I had no idea about the tax credits being applied that way.

IF this becomes the case then we are back at 80% of the population taking out an exchange plan.
- - - - - - - - - - - - - - - - - -
I spoke with my accountant about the advance able tax credit.

The Federal government would not give you money on this but the insured would reduce their taxable income.

So the insured still has to pay the full premium but then would have there tax rates adjusted on their payroll.

Some people will take advantage of this. People with means. Other people will have a hard time paying that large premium would they could put that payment towards a new truck and boat.

 

[Ann H]

I agree with you that the "advanceable" and "refundable" issues are very important because lower to middle income families cannot afford to up-front the money.

Direct from hhs.gov is confirmation that the advanceable rule means the subsidy is paid monthly rather than waiting for tax-time each year:

Makes Care More Affordable
Effective January 1, 2014

Tax credits to help the middle class afford insurance will become available for those with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage. (In 2010, 400% of the poverty line comes out to about $43,000 for an individual or $88,000 for a family of four.) The tax credit is advanceable, so it can lower your premium payments each month, rather than making you wait for tax time. It's also refundable, so even moderate income families can receive the full benefit of the credit. These individuals may also qualify for reduced cost-sharing (copayments, co-insurance, and deductibles).​

Timeline of the Affordable Care Act | HealthCare.gov

Now, that paragraph from HHS doesn't tell HOW they are going to do it. I had ASSUMED the govt would pay the insurance companies directly. Are you telling me that your accountant says there will be some kind of payroll tax credit type of arrangement? If so, that would mean that businesses would up-front the subsidy kind of like they did with the COBRA subsidy a year or so ago. That would crush businesses.

 

[ABC]

Re: Small Group Stays?

Ann,

Yes, per the accounts explanation on advance able tax credit.

If we break it down and the total premium is $20,000 a year in the exchange. The house hold income is $80,000. They would have to pay $7,200 a year in premium. Giving them a $12,800 advanced tax credit. Then the employee would reduce their taxable income by $1066 a month.

I could be way wrong on this but this is how it was explained to me.

So for this family to buy an policy outside of the exchange it would need to cost less than $7,200 a year or have better benefits with a larger network.

I think I am back to the view that we are not compensated fairly selling the exchange we may be out of business.

At $92k to qualify for advanced tax credit this is the majority of the population.

If this turns out to be the case and rates sky rocket then 85% of my small group block will drop within 2 years after 2014.

 

[toddoxley]

Ann, If the subsidie one receives is treated as a advanceable tax credit . What happens to the $$ due a taxpayer in the form of a refund if the subsidy received exceeds the amount of taxes owed ?

 

[Ann H]

All of these are very good questions. I'll see if I can find some definitive answers.

 

[Yagents]

Wow, where to begin? I'll try to be short with my answer, as the health reform forum has many of these answers already.

First, Ann is right.
Second, ABC you need to find a new accountant

The client will never see the cost sharing or premium sharing subsidy. The client will log into the HHS website, disclose their income, and be told how much of a subsidy they will be receiving based on the silver plan cost. Both subsidies will be sent directly to the insurance company, and the client will be billed the difference. There is nothing the client needs to front. There is nothing the client will need to do on their taxes. There is no "credit" to claim, or refund coming to them from the government.......ever.

The only time money will flow between the gov't and the client, is when the client makes more money than they projected, and the gov't will "clawback" the over paid premium/cost sharing subsidy, either by reducing any tax refund available, or by the client owing additional taxes.

With regards to paying the penalty, they will only reduce the amount of refund owed the taxpayer. They will not chase anyone who ends up owing the gov't money due to the penalty.

With regards to group plans, with the news that HRA's are still allowed to pay for individual policies (for companies under 50 FTE's), and families are NOT eligible for subsidies if the employee only coverage is "affordable" at 9.5%; I believe it will be in the employers and employees best interest to drop the group plan, provide a HRA defined contribution amount, and let the families go get highly subsidized private insurance. (my comments are mostly for under 50 FTE's)

2013 FPL levels recently released are even higher

 

[ABC]

Yagent
You are saying that the people in 250%-400% income level, will receive the advance able tax credit directly to the carrier?

What is the difference between the premium subsidy and the tax credit?

You are saying the tax credit works the same as the premium subsidy?

My research was based on the definition and treatment of a advance able tax credit.

 

[Yagents]

Yagent
You are saying that the people in 250%-400% income level, will receive the advance able tax credit directly to the carrier?

What is the difference between the premium subsidy and the tax credit?

You are saying the tax credit works the same as the premium subsidy?

My research was based on the definition and treatment of a advance able tax credit.

It's a mincing of words. The "tax credit" is in the form of a premium subsidy, which will be paid directly to the carrier.

 

[ABC]

"Those that meet the income level, can get a
tax credit that may be applied to any level
exchange plan (bronze, silver, gold or platinum)."


"The cost-sharing subsidy is available to those
who earn up to 250% of federal poverty level
and enroll in a silver exchange plan only."


These are quotes from Wellpoint.