@calmom
I assume you comment about being poor was directed at me.
This kiddo isnt exactly rolling in money. With the cost sharing subsidy, his RXs were about $20 each a month (because they are name brand). Without the subsidy, they are $135 per month each and he has two.
His cash flow was affected by not having the coat sharong subsides.
But he didn’t quit his jobs…he is happier having that additional income. Even if a chunk of it goes towards health care costs.
He is the one with a policy that gives him an annual physical…and just this year picked up some of his eye doc costs. It’s nit a terrific policy. But he is happy to have coverage!
The subsidies for 2018, in the end, are based on your actual modified adjusted gross income for 2018. The reconciliation takes place at tax time, April of 2019 in this case.
Let’s say your son thinks he will earn $50K in 2018, above the subsidy cliff*. He can take up to $5500 and put it in an IRA to shelter it from counting as taxable income, to drop himself into subsidy range. This is perfectly legal and aboveboard.
It’s important to note that even if a person makes below 400% of FPL, they still might not be eligible for a subsidy if they are lucky enough that their Second-lowest Silver plan is already affordable. As Silver prices go up each year, fewer people are in this situation.
*I’m not defending the subsidy cliff here. I hate it. But the law is what it is.
^^^^^ I read that article. Very good info, but who knew healthcare was so complicated? It really is somewhat convoluted, and bizarre that cutting off cost sharing reduction payments would be more than offset by increases in premium subsidies, and the net result could actually be greater subsidies and more choices for some people.
For the past 2 years my wife and I have opted for a high deductible bronze plan that costs less than our generous subsidy. This means we pay for doctors visits and procedures (up to the deductible) but our monthly premium is zero. One big advantage of having health insurance (which I now appreciate because I see it in my statements) is that we pay the “allowed amount” negotiated by the insurance company, so I see my doctor billed $205 for a visit I eventually paid $155. I even paid a negotiated allowed amount for my dermatologist who is out of network. We have had some medical expenses this year - several $thousands, but we still come out way ahead and are protected from financial disaster by the out of pocket max. The main reason we felt comfortable going with this type of plan was there was an out of pocket maximum similar to higher level plans (I think @calmom mentioned this). Your monthly premium does not count towards the out of pocket max.
My income also unexpectedly went up knocking me out of cost sharing, but it happened after my health crisis. They don’t make you pay back what you received in cost sharing, but only decrease your benefits going forward provided you report the change within 30 days. You do have to pay back all of your subsidies if your income goes over the ceiling for any subsidies. Otherwise, the subsidies only decrease going forward after your change in income. So complicated if you are in this situation, but the phone support has been great. So the only impact on me is that my premium, deductible and cost sharing went up for the last 3 months of this year. I should be able to go back on cost sharing next year since I don’t expect any extra income.
“The main reason we felt comfortable going with this type of plan was there was an out of pocket maximum similar to higher level plans. Your monthly premium does not count towards the out of pocket max.”
ACA sets the out of pocket maximum yearly for all plans.
"he U.S. Department of Health and Human Services (HHS)… has finalized the 2018 out-of-pocket (OOP) maximums for health care coverage. The 2018 limits will be $7,350 for self-only coverage (up from the 2017 cap of $7,150) and $14,700 for family/other than self-only coverage (up from $14,300).
The Affordable Care Act (ACA) imposes annual OOP maximums on the amounts that enrollees in nongrandfathered health plans—whether fully insured or self-funded, in the small- or large-group markets—can be required to pay for covered essential health benefits through cost-sharing." https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2018-oop-caps.aspx
So, yes, that is the most one would pay out of pocket and it can make sense to go for bronze.
@NJres before my son’s not so,terrific insurance was taken by his eye doctor, he asked what the cost would be if he paid at the time of service. It was very significantly less than the billed costs he would have gotten.
My DD had a medical issue that required PT. She was fine until January 1when the deductible reset. I told her to ask what the cost would be if she paid at the time of service. Ready? Her PT sessions were billed to insurance at $250 a visit. Of course the allowable cost was about half that…$140, I think. BUT if DD paid at the time of service…her cost was $75 a visit. So that is what she did! Even at $250 a visit, she never would have met her deductible…and would have been paying anyway. But paying when she was there…reduced the cost significantly.
The weirdest thing about the federal government not paying the CSRs is that it costs the federal government (ie us) more not to pay. You’d think, well, we’ll save money because we’re not paying the CSRs, which cost billions of dollars a year. But no-- it costs even more not to pay them.
Well, because that’s the way insurance works. Costs are built into premiums and spread out among everyone. Coupled with the subsidy which is tied to income and indexed to the price of a silver plan, that “everyone” becomes the federal government because most exchange buyers qualify for subsidies.
I just got my info from my provider (Blue Shield) about next year’s plans. In their PPO, they are now having one out-of-pocket max for in-network care and a different, separate out of pocket max for out of network care. In-network is $6800 to $7000 per person depending on the plan; no surprise there. Out-of-pocket max is $9800 to $12600 per person, and those are completely separate dollars from the 7000 in-network dollars. Total out-of-pocket, then, is something around $20,000 per person!
I have no idea how this is legal. But read the fine print in your contract if you’ve got a PPO.
What is the best way to handle the situation where your student graduates in May? I currently get a subsidy. If she finds a job, her income will be added to the household income (assuming I declare her as a dependent) resulting in us losing the subsidies. Her job could mean losing 20K+ in subsidies which could be more than her 2018 income.
I am wondering if I can not declare her as a dependent and have her buy her own plan. Not sure if this is allowed since I will not know when she will get a job until spring if that. What happens if she doesn’t find a job until say September.
She needs good insurance due to her heath issues.
I am currently self employed. She will likely be employed by a company offering benefits.
As I read this thread, I am envy those that only pay 15% of there income for insurance. Without the subsidies, my current plan (next year’s cost ~ 30K+) would be well over 50% of my pre tax income for a plan with a 6K deducible and a good but slightly restricted network. There is only one provider on the exchange so options are limited.
@noname87 Funding an IRA to the maximum allowed deduction would reduce any income for subsidy purposes by $5,500 as mentioned previously. Contributing to a 401K and/or health savings account at work would be other ways to reduce modified adjusted gross income (MAGI). Perhaps she could ask for a delayed start once she gets offers, thereby reducing income received in 2018. Some industries often do that for recent grads.
I guess it depends on how close to the cliff you are on qualifying for subsidies.
@noname87, you have to figure out whether the tax savings from having her as a dependent on your tax return is worth the extra insurance cost. She can file her own tax return. Note that if she is quite low in income, <100% of the Federal Poverty Line or <138% of the FPL depending on her state, she won’t be eligible for subsidies and she will be eligible for Medicaid if your state expanded Medicaid.
Most likely buying her insurance on her own or putting her on Medicaid will prove cheaper than forgoing subsidies for all.
Note that the subsidy level for three people is bigger than the subsidy level for two. For two, 400% of the federal poverty line is $64080. For three people, it’s $80640.
Several pages back I said increasingly clients were taking the penalty. Mid-way through 2016 filing season, we were allowed to e-file without checking the health insurance box.
Just rec’d this:
IRS will enforce health-coverage reporting on 2017 returns
The IRS will no longer accept electronically filed individual income tax returns unless the taxpayer indicates that they had health care coverage, qualify for an exemption or will make a shared-responsibility payment. Learn more in this Journal of Accountancy article.
Reminder: the individual mandate penalty is 2.5% of the person’s income, with a minimum of $695/person or $2095 / family and a maximum of $13100. [Min and max are 2017 numbers, which will probably go up in 2018.] People who can’t find insurance for less than 8% of income are exempt from the penalty.