Smart Choices: Options in the New Health Insurance Marketplace
Free workshops in November and December will provide needed information and tools for consumers shopping for health insurance. Look here for more information!
Click here for the Smart Choice: Health Insurance webpage.
The Smart Choice Health Insurance program will be available on November 25 from 2:30-4:30 pm and again from 5:30-7:30 pm at the Cerro Gordo County Extension Office, 2023 S Federal Ave, Mason City. The program will also be available on December 5 from 5:30-7:30 pm at the Mason City Public Library.
Brenda Schmitt, ISU Extension and Outreach
Changes in health insurance policy create both an opportunity and an obligation for people who are currently uninsured.
Obligation: those who are not insured in 2014 will be subject to a penalty (with just a few exceptions).
Opportunity: two key obstacles to health care coverage are removed:
- Insurers can no longer deny coverage or charge higher premiums to those with pre-existing health conditions.
- Most people without employer-provided health insurance will get help paying their health insurance premiums.
Premiums assistance will only be available if you purchase your insurance policy through the official Health Insurance Marketplace. As you sign up for insurance coverage, you will be asked about your expected income for 2014. Based on your income estimate and family size, you will learn how much premium assistance you’ll receive in the form of a tax credit.
Many Americans are eligible for these “premium tax credits:”
- single individuals with income up to $45,960 and
- families of four up to $94,200 will qualify.
The assistance will be calculated on a sliding scale, so people at the higher end of the scale will receive a small amount of assistance, while those with lower incomes will receive more.
Imagine you are eligible for a $4800 tax credit (equivalent to $400/month). If your monthly premium is $500, then you will pay just $100/month out of pocket (with the rest paid by the government). At the end of the year when you file your tax return, you’ll put in your actual income. If your initial estimate was exactly right, then the tax return will show the $4800 tax credit, and you’ll come out even. If you are actually eligible for a larger credit, then you will receive the extra as part of your tax refund; if your actual premium tax credit is lower than you planned, then that will factor into your tax return, reducing your refund or creating an amount due.
If you discover partway through the year that your income will be different than expected, you can revise your initial application. Doing so will prevent unpleasant surprises at tax time (for those whose income goes up) OR will reduce your monthly premium payments (for those whose income goes down).
If you are already covered through an employer plan or a public program such as Medicare or Tricare, you will probably not need to make any change. Those with employer-provided coverage are NOT eligible for premium tax credits in the Marketplace unless their employer plan does not meet guidelines for adequate coverage or affordability. The marketplace is primarily designed for those who do not have health coverage through an employer plan. Those who shop the Marketplace for insurance will also be referred, if appropriate, to Medicaid or Hawk-I (for children) or the new Iowa Health and Wellness plan.
Some who shop in the Marketplace will discover that in addition to assistance with paying premiums, they also qualify for lower out-of-pocket costs (deductibles, co-pays, etc). This will apply to those with income at or below 250% of the poverty level (approximately $59,000 for a family of 4).
The penalty for not carrying health insurance will be significant, but fortunately coverage should be affordable for nearly everyone. If your income is low enough that you are not required to file a tax return, you will be exempt from the penalty. You will also be exempt if your share of the premium, even with assistance, would be more than 8% of your income.
Watch for information about ISU Extension and Outreach workshops on making smart health insurance choices beginning in October. For more information on personal finance topics, go to www.extension.org or www.extension.iastate.edu/finances, OR contact me at 641-512-0650 or firstname.lastname@example.org). Subscribe to our blog at www.blogs.extension.iastate.edu/moneytips.
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