What Tax Credit Would Your Family Get in the Exchange?
Published September 25, 2009 @ 09:09PM PT
Look, if you’re an individual or a breadwinner struggling to maintain costs for a health insurance plan on your own, or looking to see how you can trade in your affordable but largely worthless high-deductible plan, there are two burning question that doesn’t get answered enough: how much is my premium going to be? Am I going to be able to afford it? It’s been a tricky question because, frankly, every health care bill has a slightly different answer. But thanks to Kaiser Family Foundation, we’ve got a slightly better idea.
This non-partisan nonprofit has put together a handy subsidy calculator, allowing you to compare and contrast the bills as written by the Tri-Committee in the House, as modified by the Blue Dogs in the House Energy and Commerce Committee, as passed by the Senate Health, Education, Labor and Pensions Committee, and as currently constituted in the Senate Finance Committee -- at least this week. All of these figures are subject to change, but it helps ground the whole process of getting subsidies into something resembling reality.
The set-up is the same for all the bills. Individuals would be able to buy from an Exchange or a Gateway, which is a one-stop marketplace of comprehensive plans with comparable benefits, and fixed regulations on who they can accept and what they can charge. Individuals who make under $43,000 and families under $88,000 (less for Senate Finance) would be entitled to a tax credit or a subsidy. Whatever you want to call it, it would fix your premium to a percentage of your income. You could always pay more for better cost-sharing (read: less co-pays) or for more benefits, but this would put a high-quality plan within reach of nearly all low- and middle-income families.
So of course, I’ve been playing with the calculator for the past hour. Here’s a real-world example. When I graduated from college, my first job’s salary (adjusted for inflation) was about $24,000. The average plan for an individual, per America’s Health Insurance Plans data, is about $5,000 today -- tough to manage on that salary. But I’d have been able to pick up a plan on the House version of the Exchange for a little less than 6% of my income, or $1,407 -- not bad! The Senate Health, Education, Labor and Pensions Committee would have given me an even better deal -- $1,031.
A few times now, I’ve cited a fictional family from Luzerne County, PA, who I call the Sullivans. These imaginary friends are basically a composite of the financial situations of a number of people I met doing campaign work -- working families who have suddenly lost their benefits and, all too often, their jobs. The Sullivans make about $50,000, and would have trouble affording the average cost of $13,000 for an average family plan. They’re exactly in the demographic that’s most likely to be working full time but have recently lost their benefits -- or struggling to work multiple jobs with no benefits at any of them. Even under the Baucus Senate Finance bill -- widely chided as the one that does the least to address affordability -- the Sullivans receive a lot of help. Their premium for a comprehensive plan -- one that covers primary care, their kid’s pre-existing conditions, and a sizeable chunk of their needs -- is a mere $4,169.
So play around with the tool. And if you know a family making under $88,000 and making the tough choice each month between paying for the bills or paying for their premiums, let them know we’ve got a good guess about how much health care reform means to them.
(Photo credit: http://www.flickr.com/photos/andrec/ / CC BY 2.0)
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Comments (17)
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Tim has been an online organizer and blogger on health care policy for the Obama for America campaign (during the primaries) and currently for the Committee of Interns and Residents/SEIU Healthcare, a labor union for intern and resident doctors. Views expressed here are Tim's, and don't represent the positions of CIR or SEIU.
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What if you have no income or very little income? Will the really poor be able to get Medicaid? From HR 3200, it looks like Medicaid will be extended to even childless adults 133% of the Federal Poverty Line.
Thanks for posting, very sensible calculator most Americans should be able to use.
Posted by Rachel Russell on 09/25/2009 @ 09:20PM PT
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Nevermind. Really cool tool answered my question for me. Thanks so much!
Posted by Rachel Russell on 09/25/2009 @ 09:24PM PT
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See how much more we'd all save under Medicare for All HR 676 single payer at Health Care for All Texas. Scroll down a bit on the first page to the "Estimate your Savings" button.
www.hcfat.org
Posted by Christine Adams on 09/26/2009 @ 10:13AM PT
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I loved the calculator. About half is paid for, not too bad.
Posted by M Arnest on 09/26/2009 @ 04:37PM PT
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For me, only the HELP Committee bill is affordable... The worst bills came out of the House Ways and Means/Education and Labor Committees and the House Energy and Commerce Committee. These two committees presume I should pay 17% of my income for health insurance.
Posted by Martin Bring on 09/28/2009 @ 11:09AM PT
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Went back and reworked the calculator.. For some reason the first time I used it there was no subsidy allowed for me in the House Ways and Means/Education and Labor Committees and the House Energy and Commerce Committee. Now it says there is.
Posted by Martin Bring on 09/28/2009 @ 11:36AM PT
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I'm having the same issue, Martin - no subsidies in any of the House bills even though I'm entering incomes well w/in the subsidy parameters.
Posted by robin stelly on 09/28/2009 @ 12:57PM PT
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I had the same problem but then it worked.
Posted by M Arnest on 09/28/2009 @ 01:16PM PT
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I love the rosy picture of tax credits and subsidies. The other side of this discussion is the Baucus bill, it has a penalty of 25,000 or 1 year in prison if folks don't have proof! Would we have voted for president Obama if we knew this? Butt out of my life Senator Baucus.
Posted by M Arnest on 09/28/2009 @ 01:23PM PT
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It does nothing of the sort. That $25,000/ 1 year in prison is for blatant fraud. Specifically, "knowingly and willfully offer, pay, solicit, or receive anything of value (i.e., -remuneration), directly or indirectly, overtly or covertly, in cash or in kind, in return for a referral or to induce generation of business reimbursable under a Federal health care program." (pg 193 of Chairman's Mark.)
It's the same garbage misinformation as always.
Posted by Timothy Foley on 09/28/2009 @ 01:40PM PT
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Ty Tim for clarification! I don't want misinformation and will check past hear say:)
Posted by M Arnest on 09/28/2009 @ 03:14PM PT
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Ah, if someone fails to pay the penalty for not paying for insurance then the prison term applys. Is this true?
Posted by M Arnest on 09/28/2009 @ 03:16PM PT
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Tim, I have found several sites that talk about this but I still can't find the actual verbiage. The syntax may elude spirit and intent. Do you have anything more concrete? We don't want misinformation and we don't want to be treated like we lack discernment.
Posted by M Arnest on 09/28/2009 @ 03:25PM PT
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I'm digging into this further. The fine for not getting insurance (the mandate) is added to your federal income tax and would be payable that way. I suppose someone could refuse to pay their income taxes -- that usually requires some jail time.
What I haven't looked at in enough detail is how the hardship exemptions compare to what's in the law for Massachusetts, which has had a similar state income tax for the past three years. As near as I can tell, absolutely zero people have been jailed because they evaded taxes specifically to evade buying insurance.
Posted by Timothy Foley on 09/28/2009 @ 03:25PM PT
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Yep, we need hardship exemptions. Page 21 "13% of income would be max payed for coverage?"
Posted by M Arnest on 09/28/2009 @ 03:37PM PT
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Here's the passage on the individual madate (pg 32). I need to do some more comparative research and will post on this later this week.
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Excise Tax. The consequence for not maintaining insurance would be an excise tax. If a taxpayer‘s MAGI is between 100-300 percent of FPL, the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the maximum penalty for the taxpayer unit is $1,500. If a taxpayer‘s MAGI is above 300 percent of FPL the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year. However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.
The excise tax would apply for any period for which the individual is not covered by a health insurance plan with the minimum required benefit but would be prorated for partial years of noncompliance. The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed. No excise tax will be assessed for individuals not maintaining health insurance for a period less than or equal to three months in the tax year. However, assessed excise taxes for those not insured for more than three months include the entire duration the individual was uninsured during the tax year.
Exemptions from the excise tax will be made for individuals where the full premium of the lowest cost option available to them (net of subsidies and employer contribution, if any) exceeds ten percent of their AGI. Available policies are defined as an employer policy in the case of an individual who works for an employer who offers coverage and an individual policy in the case of an individual who does not have access to an employer sponsored plan. Exemptions from the excise tax will also be made for individuals below 100 percent of FPL, any health arrangement provided by established religious organizations comprised of individuals with sincerely held beliefs (e.g., such as those participating in Health Sharing Ministries), those experiencing hardship situations (as determined by the Secretary of Health and Human Services) and an individual who is an Indian as defined in Sec. 4 of the Indian Health Care Improvement Act. Additionally, in 2013, individuals at or below 133 percent of FPL will be exempt from the excise tax. When making these determinations, income from individuals not subject to the mandate should not be considered.
Posted by Timothy Foley on 09/28/2009 @ 03:59PM PT
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Got it (found it). Tim, do you know if all the plans are enforced by the IRS/through tax codes?
Posted by M Arnest on 09/28/2009 @ 06:05PM PT
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