<p>Can you find a company where there are people making 60k where no insurance is offered?</p>
<p>I agree with you Texaspg, a self-employed person would not be able to afford health insurance if they are in the 400% to 450% group. They probably would not be able to contribute to a retirement plan because they don’t have the discretionary dollars.</p>
<p>I am suggesting a tradeoff if they really need the insurance. </p>
<p>Bank some of that into retirement to bring income down to 380% or something or even take a paycut. If you don’t want insurance, there is always that fine.</p>
<p>We have two separate employee based insurances in our home and when I added the 12DD (?) numbers a month ago from 2012 w-2s, it added to be around 14k. Don’t know what it will be next year.</p>
<p>There are going to be people losing insurance that they were able to afford, and are not going to be able to afford what is now available. Some insurance that folks had were not meeting the new requirements, but suited some folks just fine. Took care of their needs just fine and they weren’t interested in the things that the insurance has to include that theirs did not. These type of policies range from down right rip off in that they would not cover much of anything in the event of a catastrophe, to those that do cover a goodly amount and the exclusions may well be things that a given individual is unlikely to need. So. yes, this can happen. </p>
<p>The reason for this, is that over a large population, the coverage that is now required is what is most needed or needed enough to be required, and for everyone to pitch in to be able to address those medical issues. That you are a male, so will not need obstetric coverage, does not take into account the fact that such coverage is needed for a large core population and for good reason. There are females, those of child bearing ages who are screaming they don’t want to pay for this either, in certain areas, as they will use home births, midwives and not need the high tech, hospital, doctor coverage that is requiered in policies. The problem is that if they have problems mid birth, and I know a number of times this has happened, they will need the very services they don’t want to pay for. And then as mentioned before, there are the male who will never need it and females as well, but for it to be available for all at a cost that is somewhat mitigated, all have to pay, even those who will never need to use it. Just like school taxes that we all have to pay when we live in an area even if there is no way in the world we use the schools.</p>
<p>What such people can do is not get the insurance and pay the fine if caught and take their chances as uninsured, or they have to ante up the cost. Something else would have to go, and if they are sewn up so tight in the budget that they can’t, then they go uninsured.</p>
<p>There will be those who lose out under ACA. The question is whether the net gain will be such that we are, as nation, better off overall, But as I have said in other threads, when one takes averages, it can often mean that we are all comfortable on average, is that our backsides are in the fire and our heads in the freezer. Hopefully, that is not going to be the case in this situation, except for some stray numbers of people, small enough that personal judgement can be used for exception when they are at such extremes. </p>
<p>Anyone looking at every single possible situation will find some where it isn’t going to work well. As I was saying, there will be those who are content with what they had, cost, coverage and all, and now this upsets the cart. There will be those whose companies are going to cut their hours so they don’t have to cover then with insurance. Some people who found insurance that fit their specific medical condition will find that the coverage for that condition isn’t as good, that they will now have to pay a lot more, and they don’t care that other coverage is better. A huge problem now is what the medical profession, hospital, health care providers are going to do with changes. Some, many, are not on board yet with the exchange options, so that there may be those who will be stuck as Medicaid folks are–can’t find a doctor to accept the coverages. In time some of this may be worked out.</p>
<p>Until this time next year, we won’t know what all of the bugs are, and how many people in this country were affected directly with this and what the overall impact will be. Many people did not want this simply because they did not want to deal with the inevitable mess this is going to be as it is incorporated. Heck, I HATE it when our coverage is changed, when we have to get new insurance, when we move. HATE,HATE, HATE it. So I understand perfectly why people are up in arms. Some will gain, some will lose. I’m just hoping that the net result is moving our health care issues as a nation up a notch from the present situation.</p>
<p>“I’m just hoping…”</p>
<p>great points, cpt, but, IMO, one does not radically change 1/6th of the nation’s economy on “hope”. As I tell my CEO all the time, “hope” is not a strategy for success.</p>
<p>'Can you find a company where there are people making 60k where no insurance is offered?"</p>
<p>Texaspg, since we are talking about a married couple, you could have a situation where each person is making $30K to $35K a year.</p>
<p>So, if that comment upthread was directed toward me I did not intend my observation to be snarky in any way but the point has been made by others so…carry on.</p>
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<p>Keep in mind that the “income” is the modified AGI - NOT total income. So the couple making just over $62K can opt for an HSA, fully fund their HSA (at least $6550 for 2014, up to $8550 with catchup contributions over age 55). They don’t have to contribute right way; they can make the funding decision based on whatever they “need” to qualify for the subsidy. So right there, the cut off is pushed up to over $70K.</p>
<p>Not enough? They can set up regular IRA’s - that’s another $11,000, up to $13,000 with catchup contributions. So now we are looking at a couple with earnings potentially up to around $84K qualifying for the tax credit.</p>
<p>And that’s without looking at additional AGI-reducing deductions available to the self-employed. I don’t think many self-employed people would end up “just above” the cut off in the first place, at least not if the are intent on getting that subsidy, because the self-employed have some control of the cash flow of their businesses. For a few hundred dollars, it would be easy. For a few thousand, I think it’s just a matter of hiring a temp or a part-timer to eat up the difference. At a certain point it’s not worth it any more – if you calculate the maximum tax credit and factor in the marginal tax rate, you’ll get the number that shows where it becomes more profitable to focus on increasing income rather than worrying about qualifying for the health insurance tax credit.</p>
<p>'Can you find a company where there are people making 60k where no insurance is offered?"</p>
<p>This is entirely possible in a small business. Good salespeople can make that much. In fact, if they don’t they usually quit or get fired.</p>
<p>I think the point is that health care is a necessity, right after food and housing. Also, unlike food and housing, when someone cannot pay for their own health costs, there is a greater likelihood that the costs will be borne by others. I don’t like to see people homeless, but their homelessness doesn’t impact my housing costs. But with health care, I know very well that the hospital emergency room is charging me (or my insurer) more to recoup the unreimbursed or uncollectible costs of others. In that way it is similar to the way prices at a market may be raised to compensate for theft, except that the percentage of health care “theft” is much higher than the the rate of shoplifting at the supermarket. </p>
<p>As people move up the economic ladder, they have more flexibility as to how they allocate their resources. Allocating 25% of one’s income to health care is burdensome, but there are many people right now who have been habitually allocating more than that, simply because they needed insurance and that was what they had to pay, and others who gave up and are uninsured because the premiums they faced were even higher in relation to their income.</p>
<p>"Texaspg, since we are talking about a married couple, you could have a situation where each person is making $30K to $35K a year. "</p>
<p>"This is entirely possible in a small business. Good salespeople can make that much. In fact, if they don’t they usually quit or get fired. "</p>
<p>It is possible to have anything but I am not aware of companies where people make 60k but their companies don’t provide insurance. It would be interesting to see if you have real examples.</p>
<p>Two people making 30k each, it is quite possible they have no insurance.</p>
<p>Again, there are multiple ways to control your income - save more, take a paycut.</p>
<p>Find employment with insurance or pay fine are the other choices.</p>
<p>I don’t think taking a pay cut is ever a good option, but I’ve already pointed out the various income-reducing deductions. Are those two $30K earners also contributing $5500 a year apiece to IRA’s, for example? If not, then they could start by opening IRA’s and contributing $1000 apiece (bringing AGI down in 2014) and that strategy of simply opening a retirement account will carry them through until their joint income has risen to ~$75K.</p>
<p>The people at the 400% level have an array of options to extend their ability to qualify for subsidies. That’s why the hypotheticals fail – you have to account for all those other variables.</p>
<p>"Texaspg, the reason why I cite the 25% figure is because the premiums for the plan (Bronze) I am being transitioned to would cost around 24% of the income of a couple who make just over $62,040</p>
<p>The standard deduction is 12200 for a married couple so a couple that makes 62040 a year starts off with an adjusted income of 49840. This couple would be eligible for a subsidy.</p>
<p>Then this couple can use IRAs to lower their adjusted income as
calmom suggested.</p>
<p>Dstark, a standard deduction does not reduce AGI. You are confusing “taxable income” with AGI. </p>
<p>The only relevance if the standard deduction is its impact on the penalty. A $60K-earning couple qualifies for subsidies. A couple earning $63,200 won’t qualify for subsidies, and will have to pay a $510 tax penalty if they don’t buy insurance.</p>
<p>You are kiddng?</p>
<p>The standard deduction is taken where on the tax return?</p>
<p>I never take the standard deduction. </p>
<p>Now I have to look. :)</p>
<p>Ok…I was wrong…</p>
<p>[Tax</a> Planning 101: 3 Basic Strategies for Reducing Your Taxes](<a href=“http://taxes.about.com/od/taxplanning/a/taxplanning.htm]Tax”>Reduce Your Taxable Income: Tax Deductions and Tax Credits)</p>
<p>“Taxable income is another key element in your overall tax situation. Taxable income is what’s left over after you have reduced your AGI by your deductions and exemptions. Almost everyone can take a standard deduction, and some people are able to itemize their deductions.”</p>
<p>It’s the same with itemized deductions-- they don’t reduce AGI either. </p>
<p>AGI is on line 37, front side, of the 1040. The Standard or Itemized deduction is taken off at line 40; Taxable income is line 43. </p>
<p>That’s the difference between “above the line” or “below the line” deductions. Tax pros know that the “above the line” deductions are more valuable because of the way that AGI impacts tax calculations.</p>
<p>Okay, let’s say a couple makes $65,000 to $70,000 a year. Each person works, either for someone else or maybe they have their own business. They could contribute the $9,000 to an IRA or 401K, but you would have to believe they would be hard pressed to set this amount of money aside at this income level, particularly if they have over $13,000 of health insurance premiums, not to mention the deductible they are responsible for if they need medical care. I would think they are probably living paycheck-to-paycheck. </p>
<p>The only way I see this working is if in the following year they withdraw the money from the retirement account for living expenses and pay the tax and penalties. Of course, the more likely scenario, as texaspg suggests, is that they forgo health insurance.</p>
<p>The problem with my solution is they are not eligible for the subsidies in the year they take a distribution from their retirement accounts.</p>
<p>If you are self employed… You get to deduct your employer paid SS and your health insurance premiums from your income to get to your adjusted gross income. So an income of 65000 is going to have an adjusted gross income well below 60000. </p>
<p>I have my tax return in front of me so I dont have to rely on my memory and I can be more accurate. :)</p>
<p>Those arent my income numbers. ;)</p>
<p>Let’s say the income is $70,000 and one spouse is an employee for someone else and the other spouse is self-employed.</p>
<p>edit: or both spouses are employees.</p>