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Obamacare: A Deception

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There's a lot to digest about how the ACA works, and much is buried in a complex, convoluted maze of regulations and procedures. A few websites contain explanations, but very important details have either been left out or glossed over. These details are well worth understanding so you will know what's at stake for you and your family. This lesson is not meant to convey a political opinion. This is how the ACA works, and under this law there are no sacred cows.

In today's lesson, you will learn why 2013 is an important year for many of you with regard to your income and the ACA. We will discuss 1) use of Modified Adjusted Gross Income, 2) tax credits (help paying for insurance), 3) your share of the premium, 4) paying back the tax credits to the IRS, 5) expansion of Medicaid and estate recovery which could affect you if you are put into that plan, 6) inadequate coverage in most subsidized plans, 7) penalties, 8) exemptions and 9) a few tidbits. We'll also take a look at the agenda of Enroll America and the Health Insurance Exchanges, and what you can expect to hear in the very near future.

Here we go. Fasten your seat belts...

1. HEALTH INSURANCE EXCHANGE BASICS

In 2014, each state will have an Affordable Insurance Exchange where qualified individuals and families with incomes between 138 and 400 percent of the Federal Poverty Level (FPL) can shop for commercial insurance policies. Most individuals and families with incomes at or below 138 percent FPL will be put into Medicaid. You may be eligible for help paying for your insurance in the form of a tax credit. In most states, the Children's Health Insurance Program (CHIP) will continue to cover children in families with incomes up to at least 200 percent FPL. Some states may offer a Basic Health Plan for those who earn up to 200 percent FPL and are not eligible for Medicaid. Under limited circumstances, you may also be eligible for a cost-sharing credit.

Eligibility to receive a tax credit, the amount of your tax credit and your out-of-pocket share for the insurance will be determined by your income and where you fall in the Federal Poverty Level Guidelines (FPL). This is easy to understand.

Your annual gross income determines which FPL you're in. For example, based on 2012 FPL Guidelines, an individual with an annual income of $33,510 is at 300 percent FPL; a family of 4 with an annual income of $69,150 is at 300 percent FPL. To see where you're at, try the handy calculator at this link. FPL Guidelines are revised every January, so the 2013 edition should be up soon.

The ACA requires use of MODIFIED ADJUSTED GROSS INCOME (MAGI) instead of Adjusted Gross Income for all determinations made by an Exchange including eligibility for Medicaid except in certain cases. So, in this lesson, we'll refer to annual income as MAGI.

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Modified Adjusted Gross Income (MAGI) is defined as Adjusted Gross Income PLUS...

a)  all tax exempt interest accrued or received in the taxable year;
b)  the non-taxable portion of Social Security benefits provided under Title II of the Social Security Act which includes old-age benefits, disability benefits, spousal benefits, child benefits, survivor benefits and parental benefits;

c)  tier 1 Railroad Retirement benefits that are not includible in gross income; and...

d)  the exclusion from gross income for citizens or residents living abroad.

The adoption of MAGI, created by the ACA, is defined in a new section of the IRS code.

2. DETERMINING ELIGIBILITY FOR A TAX CREDIT

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The tax credit is to help you pay for insurance. The ACA says it must be based on annual income for the tax year it's received, but since you will need help paying for your plan during that year, the ACA allows for advance payment of the tax credit.

Here's an example of what that means: Let's say you apply for insurance at an Exchange in 2014. Therefore, 2014 is the tax year you will receive your tax credit, and per the ACA, the amount you receive must be based on that year's MAGI. But, that year's MAGI won't be available until 2015 when you file your 2014 tax return and you need help paying for your insurance plan when you buy it in 2014. So, the amount of your tax credit has to be determined on information that is available such as your prior-year (2013) tax return. Thus, the tax credit morphs into an "advance payment of the tax credit" (also referred to as an advance premium assistance credit). Now you see why 2013 is an important year for many of you.

The ACA allows for limited disclosure of tax return info in order for an Exchange employee to verify your citizenship status and MAGI, and, not only to let you know how much your advance tax credit will be, but also to see if you are eligible to receive this in the first place. An Exchange can also consider using your real-time income by looking at your state's most current quarterly wage database, or it may agree to accept paper verification (pay stubs, etc.) as a last resort or an attestation of your income with no verification. Creation of a federal "data services hub" is in the works so your income information will be more readily accessible. But, no matter how this plays out, you'll still receive an advance payment of the tax credit because your actual MAGI for 2014 will not be known by you nor can it be verified by an Exchange until you file your 2014 tax return in 2015.

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http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book,  How America Was Lost, has just been released and can be ordered here.

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Obamacare is the greatest gift given to the parasi... by 911TRUTH on Tuesday, Feb 5, 2013 at 9:27:51 PM
the economy will crash, most people will say eff t... by Mark Adams JD/MBA on Tuesday, Feb 5, 2013 at 10:01:23 PM
You have eyes to see and you use them. Thank you f... by Ron Brassfield on Thursday, Feb 7, 2013 at 6:42:05 PM
The neo Liberal fascists who support Obummer and h... by Davey Jones on Tuesday, Feb 5, 2013 at 10:46:27 PM
It's tough when you find out how blinkered what I ... by Ron Brassfield on Thursday, Feb 7, 2013 at 6:52:01 PM
In 1948 The United Nations adopted The Universal D... by E. J. N. on Wednesday, Feb 6, 2013 at 12:47:38 AM
"...in circumstances beyond his control."Difficul... by Doc McCoy on Wednesday, Feb 6, 2013 at 2:59:39 AM
"Everyone has the right to a standard of living ad... by E. J. N. on Wednesday, Feb 6, 2013 at 1:02:18 PM
It would be turn around Corporate Empire and the F... by Michael Dewey on Wednesday, Feb 6, 2013 at 4:58:06 PM
I also have a conviction that America would have h... by Ron Brassfield on Thursday, Feb 7, 2013 at 6:59:01 PM
I will never understand why it infuriates some peo... by David Smith on Wednesday, Feb 6, 2013 at 5:24:34 PM
... have an aversion to higher taxes. The European... by Ron Brassfield on Thursday, Feb 7, 2013 at 7:20:09 PM
Thank you.... by Ron Brassfield on Thursday, Feb 7, 2013 at 6:54:05 PM
I'm not buying a thing.  They can screw thems... by Lester Shepherd on Wednesday, Feb 6, 2013 at 6:28:09 AM
... don't give them the satisfaction.... by Ron Brassfield on Thursday, Feb 7, 2013 at 7:14:53 PM
If we don't fix Healthcare, the price will doubl... by Michael Dewey on Wednesday, Feb 6, 2013 at 7:14:06 AM
Every insurance worker knows that he larger the po... by Ron Brassfield on Friday, Feb 8, 2013 at 8:32:15 AM
Mitt Romney, or Sarah Palin?... by John Sanchez Jr. on Wednesday, Feb 6, 2013 at 7:23:16 AM
... won't it? Once I saw, back in 2010, that singl... by Ron Brassfield on Thursday, Feb 7, 2013 at 7:03:28 PM
Obama's To Do List Only A Magician Could Master&nb... by Lance Ciepiela on Wednesday, Feb 6, 2013 at 11:42:29 AM
"Obamacare has no cost controls. There is nothing ... by David Smith on Wednesday, Feb 6, 2013 at 5:19:02 PM
While I agree that the system of financing the cre... by David Smith on Wednesday, Feb 6, 2013 at 5:20:01 PM
... the most positive aspect of the development I ... by Ron Brassfield on Thursday, Feb 7, 2013 at 7:13:35 PM
Judging by your research...maybe we should have le... by Edward H. on Sunday, Feb 10, 2013 at 8:39:15 PM