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Obamacare: A Deception

By       Message Paul Craig Roberts     Permalink
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Ultimately, no matter which method is used -- prior year or partial current year -- this advance payment of the tax credit carries with it some heavy-duty consequences which are discussed in topic 4 of this lesson.

3. TAX CREDITS AND YOUR SHARE OF THE PREMIUM

The amount of your tax credit will be based on the second lowest-cost Silver plan in the area where you live and your MAGI. Here's how this works -- it's quite simple:

a)  First, the amount you will pay out of your pocket for that Silver plan -- copays and deductibles not included -- will be a specific percentage of your MAGI, and you will pay this to the insurer on a monthly basis. The way this percentage will be calculated is described a few lines down.

b)  Next, your share will be deducted from the cost of that Silver plan and the difference will be your tax credit which the government will pay directly to the insurer on a monthly basis when you purchase a plan.

The specific percentage you will have to pay for the second lowest-cost Silver plan will be based on your FPL using a well-greased sliding scale. As your FPL increases little by little, the percentage you will pay increases. The same percentage applies to an individual or a family. Here's how much of your MAGI you will pay for that Silver plan:

-- up to 138 % FPL: 2% for people legally present less than 5 full years and residents of states that do not expand Medicaid
-- 138-150% FPL: 3 to 4%
-- 150-200% FPL: 4 to 6.3%
-- 200-250% FPL: 6.3 to 8.05%
-- 250-300% FPL: 8.05 to 9.5%
-- 300-400% FPL: 9.5% -- there's no range, but the dollar amount of your share will change because 9.5% of a lower MAGI is less than 9.5% of a higher MAGI.

Here are two examples in dollars using 2012 FPL Guidelines and an estimate for a second lowest-cost Silver plan which will vary depending where you live -- actual costs are not yet available:

a)  You are 35 years old and the price of the second lowest-cost Silver plan for an individual in the area where you live is $4,750 with no tax credit. If your MAGI is $33,510 ($2,792.50 per month) putting you at 300 percent FPL, your share for that Silver plan, per the chart above, would be 9.5 percent of your MAGI which comes to $3,183 ($265.25 per month). Your tax credit would be $1,567 which is the difference between the unsubsidized cost of that Silver plan and your share.

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b)  You are 35 years old and your MAGI is $27,925 ($2,327 per month) putting you at 250 percent FPL, so, your share of that Silver plan would be 8.05 percent of your MAGI which comes to $2,247.96 ($187.33 per month) and your tax credit would be $2,502.

If the second lowest-cost Silver plan is too expensive, you can apply your tax credit to a Bronze plan which will be cheaper but less comprehensive. If you want a better plan than the Silver, you will have to pay the full difference in the premium.

Don't forget that your share of the monthly premium will be figured on your MAGI which is pre-tax income. So, after you deduct your income taxes and your share of an insurance plan, will you be able to cover your monthly basic living costs including paying off debt you may owe and still have some cash left to pay for medical care if you have to use your insurance? Check out topic 6 in this lesson for a rundown of plans and coverage you can expect to find at an Exchange. Hope you don't faint.

Once you purchase a plan, your share and your tax credit won't change until the next enrollment period unless, before that time, your income goes up or down enough to bump you into a different FPL or you get a job with insurance. You can let your Exchange know by phone or via your online account, or, your Exchange might notice while cruising the data services hub you learned about in topic 2 and notify you that you must "up" your coverage or that you've been tossed into Medicaid if your MAGI has decreased enough to make you eligible for that plan. Exchanges will be encouraged to use as many different avenues as possible including private databases to keep tabs on your income.

Thus, you could end up bouncing from Medicaid to a subsidized plan or vice versa. By the same token, you could take some extra work to help pay the bills or to save for a vacation, and, oops, you went over 400 percent FPL and are no longer eligible for a tax credit. The Exchange may not find out about this unless you spill the beans, but, no matter how it all plays out, income changes will catch up with you when you file your tax return.

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To be eligible for a tax credit you must file your tax return no later than April 15. Married taxpayers must file a joint return. Individuals who are listed as dependents on a return are ineligible for a tax credit.

If you are eligible for Medicaid, you will not be allowed to receive a tax credit or a cost-sharing credit although some states impose premium and cost-sharing charges on certain Medicaid enrollees per the Deficit Reduction Act of 2005 (DRA) and clarified in the Tax Relief and Health Care Act of 2006.

On January 22, 2013, the Centers for Medicare & Medicaid Services (CMS) proposed allowing states to further increase Medicaid premiums and out-of-pocket costs by 5 percent. The most egregious part of this proposed rule says that states may allow providers to deny services for failure to pay the required cost-sharing in certain circumstances. The Obama administration is behind this proposed rule hoping to persuade states to expand Medicaid since many have refused and others are still undecided -- the expansion of Medicaid is an integral part of the ACA. Allowing states to further increase premiums and cost-sharing for the poorest segment of the population underscores the existing political bias toward low-income Americans despite rhetoric which claims otherwise.

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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 books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)
 

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