<p>thumper, apparently your son’s grandfathered plan will not automatically change to cover his excluded pre-existing condition, but you should research new plans after Oct 1 that may be comparable in cost and will cover the pre-existing condition.</p>
<p>from healthcare.gov
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<p>Electronblue, </p>
<p>[FAQ:</a> What You Need To Know About The New Online Marketplaces - Kaiser Health News](<a href=“http://www.kaiserhealthnews.org/Stories/2013/September/17/marketplace-FAQ-insurance-exchange-obamacare-aca.aspx]FAQ:”>FAQ: What You Need To Know About The New Online Marketplaces | KFF Health News)</p>
<p>From the link:</p>
<p>If my employer offers me insurance, can I shop on the exchange to get a better deal?</p>
<p>Even if your employer offers coverage, you can opt to buy a plan on the exchange. However, you may not be eligible for a subsidy unless you make less than 400 percent of the federal poverty level and your employer’s plan covered less than 60 percent of allowed medical expenses or cost more than 9.5 percent of your household income.</p>
<p>^^but don’t forget that you may end up paying that Exchange with after-tax dollars (depending on your filing status and Schedule A deductions), where most employer plans are pre-tax.</p>
<p>"I’m entering late to this discussion and from a point of admitted lack of knowledge. I cover my family through my employer with a $500/month contribution. It’s a decent plan but has some issues I’m not thrilled with. Should I look around at other options under the ACA? Is it possible that there might be a family plan for $6K/yr or will it be a lot more? I’ve always just gone with what my employer offers, and yes we have some significant pre-existing conditions. "</p>
<p>You should definitely look into it, but it’s probably unlikely that it’s worth it, unless you are going to get a significant subsidy under the exchange (or if you really hate something about your plan). For people who are paying for these plans themselves, it may be a fairly crummy deal when compared to an employer paying most of the cost for a decent plan.</p>
<p>Thanks for the link emilybee. We are just under the 400% mark but my coverage exceeds the other parameters so I guess we will be sticking with my employer’s plan. It could be worse, but out of pocket costs keep going up to the point we put off stuff. And the employee contribution goes up every year.</p>
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<p>True that the same insurers will be involved, and also true that even in the private exchange, all policies will have to carry the mandated essential benefits. The difference, though, between the private exchange and the state exchange will be the number of insureds. It doesn’t make sense from an insurance standpoint to push people into a smaller risk pool, so I’m guessing you’re correct that there’s financial benefit to the employers to do it this way. I’m just wondering what that is, and how it will affect employees in the end.</p>
<p>Thanks for sharing the details of your situation and what you’ve found on CoveredCalifornia. I think once this thing gets underway, a lot of people are going to be surprised to discover that it’s not such a terrible thing to have some security about their healthcare.</p>
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<p>Exactly! I have never in my life had a healthcare safety net; very few Americans under 65 have. I will sleep better at night, knowing that if DH or I lose our jobs, or one of us becomes really sick, we may actually be able to avoid complete financial ruin.</p>
<p>Here’s a link to a very useful chart for calculating MAGI:
<a href=“http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf[/url]”>http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf</a></p>
<p>*I’m starting to think that the ACA should also be called, “tax preparers full employment act” – I think that there is for those on the cusp of subsidy eligibility, close to the 400%/poverty mark – a choice such as whether to fund an IRA in a given year could make a a pretty big difference overall.</p>
<p>^ or maybe even borrowing to fully fund a SEP</p>
<p>So one unintended consequence of ACA could be that some people are prompted to up their retirement savings. :)</p>
<p>Well, I’ve just spent the last couple of hours making absolutely sure I understand this MAGI thing and I created a simple worksheet to predict my MAGI for 2014. I think I will be subsidy eligible, but I definitely have to go with the one HSA-eligible Bronze plan available to me on the exchange, so I have the benefit of the $4300 HSA deduction in 2014. ($3300 for an individual + $1000 catchup for over 55). </p>
<p>It will probably be like walking a tightrope for me to stay on the subsidy-eligible side of things – I am very close in any case, but it means that I will really need to stay on top of tracking my self-employment income & expenses during the last quarter of each year. Obviously the other tax maneuver that we self-employed people can do is to defer income or accelerate expenses toward the end of the year. I’m looking at roughly $5000 in a subsidy/tax credit for 2014, so that sets the range I have to keep an eye on. (In other words, once real income starts to significantly exceed the possible subsidy benefit, it’s more profitable to forego the subsidy and take the money – it wouldn’t make economic sense to turn down new business that would generate $15K in order to save $5K, but that’s not the typical decision I face in my line of work)</p>
<p>Calmom, I’m glad you’re getting a subsidy but the 400% of poverty thing needs to be fixed. They should just let the subsidy continue to slide down slowly at that income level. The cliff is a distortionary error. Unfortunately, it looks difficult to make this kind of obvious fix.</p>
<p>^^ most definitely, it makes the subsidy too complicated and unpredictable. Can’t imagine how the average person is going to figure this out.</p>
<p>CF, I think the problem is budgetary – because the subsidies are tied the percentage of income, but there is no real cap on insurance premium rate, it means that without a cutoff you’d get to a point where 80% of the population was subsidy-eligible and the government was on the hook for greater and greater amounts as the insurance premiums continued to climb. </p>
<p>Maybe a better approach would be to that at a certain income level, the subsidy stops, but there’s an “excess premium” tax deduction that kicks in – that is, anyone whose AGI is above 400% of the poverty level would have an extra tax deduction they could take, but it wouldn’t operate like a tax credit. But there would be some benefit. </p>
<p>But I think a lot of this is just an artifact of the fact that a tax credit is distributed in the form of a subsidy. As earnings and income increase, people lose the benefit of some tax credits and deductions and their marginal tax rates go up anyway. So there’s a line that I cross where I lose the ACA subsidy, but there’s also a line that is crossed where tax on capital gains shifts from 0 to 15%, or where the AMT is triggered and the tax picture can shift dramatically. </p>
<p>The tax system isn’t fair. It never has been. It’s a set of rules that are sometimes policy-driven, sometimes rather arbitrary, but there will always be quirks. This is just one more quirk. </p>
<p>That’s why I said that the ACA will benefit those in the tax-planning business. It’s just one more wrinkle on an already convoluted system.</p>
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<p>There’s not much for the “average” person to figure out. For people who don’t want to do much figuring, my advice might be to look at their 2012 AGI, add a little bit of a cushion to that when estimating for 2014, and proceed accordingly. Most people know whether they are earning more this year than last. It gets more complex as people’s fiances become more complex, but those with more complex finances are also more likely to be working with a tax advisor or used to the ins and outs of the system. </p>
<p>A lot of us are collateral beneficiaries of the ACA system – by collateral it means that we may or may not get a benefit from the law, but we were never the intended target of the law. I had insurance, it was easy for me to get, and I had preferred rates. The law is intended to benefit the people who could not get insurance because their income was too low to allow them to buy even moderately priced policies, or because they were being quoted extraordinarily high premium rates or denied insurance altogether due to health problems or pre-existing conditions. Those people are going to be rushing to sign up on the exchanges on day 1, subsidy or not.</p>
<p>If someone is employed, they can put around 15k into 401k.</p>
<p>I have heard the 95k number used here. Is that the number one pays taxes on after all the deductions?</p>
<p>No, I think that is the 400% poverty line mark for a 4-person household – see [Federal</a> Poverty Guidelines](<a href=“http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html]Federal”>http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html)</p>
<p>I’d note that three additional options for “edgers” to get those premium subsidies system would be:</p>
<ol>
<li><p>Move to Hawaii, or</p></li>
<li><p>Move to Alaska, or </p></li>
<li><p>Adopt a kid. (or a grandkid, or take in granny, or whatever is needed to increase the size of your household.)</p></li>
</ol>
<p>Sorry, my question was framed wrong.</p>
<p>If 94,200 is the 400% of poverty line for a 4 person household, is 94,200 the final taxable amount on a tax return after deductions or is it a W-2 number for income?</p>
<p>The reason I ask is because one can remove 20,000+ in standard deductions and exemptions and remove another 15k to tax deferred 401k from that final taxable number.</p>
<p>^ it’s MAGI…which most is simply their AGI</p>
<p>I’m sure I could get below this ridiculous threshold if I really wanted to…but at this time I do not plan to even though the ACA is costing me a 50% increase in premiums next year.</p>