<p>CF, the problem with that stat is that it is looking at those who were uninsured, but there’s another significant segment of people who were and are insured on the individual market, but whose insurance policies are being discontinued with the advent of the new law, and/or those who had grandfathered plans but are shopping the exchanges because of increased premiums. I assume that in general, the financial demographics are higher for that group: we were buying insurance on the open market because we could afford to do so. </p>
<p>So I think you have to go back to a different set of numbers. Roughly 2/3 of American households are at the 400% FPL or less. I do think that it is safe to assume that the financial demographics of the exchange buyers are somewhat lower, because by definition, almost none of us has full time employment with a large employer. But it wouldn’t be that much lower. So you might be able to ball park it at 70-75% of the insurance buyers being subsidy eligible. I’d guess that there would be a small group, perhaps 5% or so, whose income levels will tend to move in and out of subsidy eligibility. </p>
<p>Down the line, there may be future sticker shock as households change – when my kids graduated from college and got jobs providing insurance, my own costs went down because I was no longer paying premiums for their coverage. But if Obamacare had been in effect, I would have been qualifying for subsidies as long as I was head of a multi-person household, but possibly lost them as a single person, at the same time as I am continuing to age up into gradually more costly premium levels. </p>
<p>I’d add that despite all the grousing going on, higher income individuals paying higher premiums will still get the benefit of other tax deductions. A person who is not eligible for subsidies but who itemizes deductions is still able to deduct all medical expenses over 10% of their AGI; and the self-employed generally will be able to write off 100% of the premium cost.</p>
<p>"I’d add that despite all the grousing going on, higher income individuals paying higher premiums will still get the benefit of other tax deductions. A person who is not eligible for subsidies but who itemizes deductions is still able to deduct all medical expenses over 10% of their AGI; and the self-employed generally will be able to write off 100% of the premium cost. "</p>
<p>I am a bit confused. What exactly are you saying in your last two statements about 10% AGI vs full premium cost?</p>
<p>CF, they may be improving the tool as we speak, but when I decided to shop for my imaginary self who had moved back to my childhood home in Texas, there were 47 plans offered by 3 companies. The names of the 3 companies were clearly printed in a list on the bottom left side of the page. If I really wanted to know, the 2nd easiest thing I could do would be to go to each of those 3 company web sites and get a quote there. The 1st easiest thing I could do would be to call a licensed insurance agent in the state and county where I wanted to buy insurance and let that person do all the work for me. </p>
<p>Also, FWIW, you can shop ehealthinsurance.com – they seem to have it all online now.</p>
<p>If I go to the Amerihealth website, the rates are broken out for each person, each plan. For the plan I like, a 30 year old woman is $ 390.00 A 63 year old woman (me) is $ 1014.35</p>
<p>If I go to the exchange, they ask under 49 or over 50. The over 50 price is $ 613.70. The under 50 price is $ 360.11.</p>
<p>So if anyone is using the federal exchange WITHOUT registering, the prices are no where near making sense. I just hope people realize this and don’t think it’s a real price.</p>
<p>^That’s what I was wondering. I went on the healthcare.gov site and entered all of the information they asked, but there was no place to enter our ages. The prices were VERY reasonable. But I guess once they know I’m 51 and my husband is 59, the numbers will go up a lot. That’s annoying.</p>
Thanks for posting this very informative link! </p>
<p>I was shocked to see the highest premiums via the link for rates on healthcare.gov that I found this afternoon (they have “listened” to the public!) are over $5000/month. I’m sure there is a mistake, but what about the people who don’t realize that it is a mistake?</p>
<p>Texaspg – lets say you are a married couple in your early 60’s with an AGI of $75,000 and so you aren’t subsidy eligible. You live in that town in Texas where I come from and you usually have a lot of health expenses, so you opt for a Gold PPO plan that costs $1415 month (an actual premium I found at the ehealth insurance site). That’s $16,980 in premiums per year. </p>
<p>10% of your AGI is $7,500 – so all premiums over and above that $7,500 can be deducted as a medical expense on your schedule A. $16,980 minus $7,500 = $9.480. An AGI of $75,000 equates to a 25% marginal federal tax rate – so that $9,480 tax deduction translates into tax deduction translates into $2,370 of reduced tax liability. </p>
<p>Now if that couple made $62,000, then they would be entitled under ACA to buy a Silver plan for $5890. The benchmark Silver plan premium (2nd lowest) in the area in Texas that I’m checking is $918/month – $11,016 annually. So the couple with the $62K MAGI would be able to get a subsidy of $5,126 annually. So obviously the subsidy results in a bigger direct benefit. </p>
<p>But it’s not like the higher earners get zilch. They’ve graduated out of eligibility for one type of tax benefit but they are still entitled to another.</p>
<p>My imaginary self would call the insurance agent, but my real self is not going to call an insurance agent to jerk her around finding out premiums for imaginary people. (I don’t mean to imply that calmom or anyone else would jerk around an agent that way.)</p>
<p>But also, I’m not sure that the insurance agent my imaginary self called would be willing to do the calculations about my subsidy.</p>
<p>So the answer is, if you are facing big premiums like Goldenpooch, and you are not subsidy eligible-- that means you are in a pretty big tax bracket, and you can and should deduct your medical expenses over 10% of your AGI for a nice tax deduction. You still have to pay a lot of money, but at least you get some of it back in a tax deduction.</p>
<p>It’s like finding out that damn, your mortgage has a higher interest rate. And then searching around and finding that at least you get a tax deduction for it. You’re not going to be happy to pay more money, but if you do have to pay more money, at least figure out how to pay the least more money.</p>
<p>Question: You are self employed and not sure about your income being above or below the 400%, so you buy on the exchange but don’t take an immediate subsidy. At the end of the year, you are below the threshold. If you deduct your premiums on schedule A (subject to 7.5% since your DH is over 65) and then you get a tax credit for your subsidy, do you then have to declare your subsidy as income the following year?</p>
<p>Or is this a loophole to not take the subsidy monthly?</p>
But the subsidy calculation is easy, you just need to know the premium that you would pay for the 2nd lowest cost Silver plan in your region. I agree that we don’t want to be wasting insurance agents’ time for imaginary people, but in a real life situation you certainly could contact an agent and ask them to send you a rate sheet showing your options – then you’d have the numbers.</p>
<p>But then as I’ve noted they are on the ehealthinsurance site anyway – it was a big deal for them a few months ago to get whatever permission they needed to list and sell the exchange policies. (I remember reading about it and following the value of their stock – EHTH – for awhile – that was probably about the time the stock price jumped from 24 to 32.) Anyway, the point is that there is another easy source for the info</p>
No, it’s like being happy that I HAVE a mortgage with no government help, and a slight tax advantage, as opposed to living in a government subsidized, Section 8 rental.</p>
<p>No, I don’t think it will work that way, I’ve been wrestling with this because there are no clear written guidelines as of yet, but I think that things will be set up so that that you will probably have to elect one or the other each year: tax credit or deduction.</p>
<p>Do you do your own taxes? There are several places where my tax software gives me a choice of doing one thing or another – for example, for business use of a car, either taking a set rate for mileage or else calculating a number based on actual costs. When my kids were in college, I could choose between a tuition credit or a deduction, but not both. So I think it will work pretty much the same way. </p>
<p>So I am thinking that if you take the subsidy, then no part of the health insurance premium will be allowable for a deduction. The tax software will probably calculate eligibility automatically, and then also do the math to see which is better for you. If you don’t have software, I am very confident that IRS will develop an incomprehensible ne form with a lot of numbers to enter and instructions that will tell you that if the amount on line 12a is higher than X, it should be subtracted from line 14, and then the total should be added together on line 22, but not if the amount on line 16 is equal to the amount on line 17, etc. It’ll look something like this - <a href=“http://www.irs.gov/pub/irs-pdf/f8941.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/f8941.pdf</a> – except it wlll be even more confusing. ;)</p>
<p>That’s easy for you. It’s easy for me too; I do math for recreation. Non-convex optimization? So much fun! Singular value decomposition? Yes please. Computing what my subsided premium would be, if I had income of $X, the base premium was $Y, and the second-lowest Silver premium was $Z? Trivial.</p>
<p>But I’ve also tutored remedial math, so I know that a lot of people are hopelessly bad at math. Fractions, percents, these concepts are foreign to them. I’m thinking about the new consumer who is afraid of numbers. That person needs everything spelled out, and every number computed for them.</p>
(I don’t mean to imply that calmom or anyone else would jerk around an agent that way.)</p>