For those who did not purchase what is called a Qualified Health Plan under the Affordable Care Act, they will see a fine or now as Justice Roberts renamed what it already was, a Tax as you file your taxes this week. If you did not have insurance in 2014, you will pay a tax of 1% of your Modified Adjusted Gross Income (MAGI). That is only the first part. I am now getting calls from clients of mine who did have insurance, and got what is known as a subsidy from the government. This subsidy is actually an Advanced Premium Tax Credit. Or in a reader’s digest term they tried to calculate the tax credit you would get for having insurance and paid that to your insurance carrier instead of making you wait until the end of the year. Here is why they are calling.. They were advanced too much for insurance! Now the law did state if you had a change in income, up or down, to notify the marketplace. I know many folks did slightly modify their income to get a larger amount as they thought they could get away with it, but in the last week, I have gotten calls from clients in Georgia, Ohio, and Illinois, who did not have a change in income, earned almost exactly what they reported and now owe thousands of dollars, because they were advanced too much. Talk about a shock! My Georgia Client yesterday called to ask if she really owed $1300 on her taxes. My Ohio Client called and this was really good!! They could not confirm citizenship for her husband and daughter so instead of just removing the subsidy, they dropped them from the policy. If you ask me ( and I am not a Constitutional Scholar) that violates HIPAA where it states in section 2742 A health issuer that provides individual policies shall continue to renew or continue to force such coverage at the option of the individual. The difference here is the Marketplace just resubmits a new application with only one person on it and the insurance company has to process it. Lastly, in Illinois, same thing, my client was told he got too much subsidy and has to pay it back, except in his case in 2014, he made less than he projected ( still more than if he was on Medicaid), but I really thought they were going to owe him. Now, my best guess here is with as bad as the enrollment process was in 2014, there were probably some issues with the system that awarded the subsidies. I think it could have been handled by an audit, but who am I to say. Either way, the Tax man is coming!! Happy Tax day boys and girls!
Thanks for reading.