Government

And You Thought You Knew How Obamacare Works😱

Keep in mind that you, the taxpayer, are paying for Obamacare premium subsidies. Now recall the rhetoric about income and wealth inequality and fairness. Then read the following article [you too Old Bernie].

IMG_3032Imagine if the inheritance was not $30,000, but say $300,000 or even $3,000,000. We now have a wealthy person receiving a premium subsidy this year and, if their basic income does not change, each year in the future. Cool huh😎

Now let’s take this one more step. What if this person wins $10 million in the lottery? Oops, they must repay $1,250 in that year, but thereafter, they get their old subsidy, Yipee‼️

Yeah, I know, if they invest the $10 million there will be taxable earnings, but what if they just put it in the bank at .25% interest or tuck it under the mattress⁉️ And, by the way, the only way the IRS can get the repayment is by deducting it from your tax refund. 😡 Hint, hint.

Post on Kaiser Health News

Mom Left Me Money, But Does Uncle Sam Get It As Repayment For My Subsidy?
by Lynne Shallcross

This week, I fielded questions about the circumstances under which people have to repay premium tax credits for health insurance purchased on the marketplaces and about Medicare coverage of dental services.

Q. My 60-year-old sister lost her $45,000-a-year job in 2014, and she and her husband bought a marketplace plan this year. They had estimated their annual income at $22,000, but then she inherited $30,000 from our mother’s estate. If I’m calculating correctly, they’ll have to repay $18,000 in premium tax credits. Are there no allowances made for a death in a family or unforeseen circumstances?

A. Fortunately for your sister, your calculations are incorrect. There are special circumstances that likely apply in her case.

The premium tax credits that people receive to buy health plans on the marketplaces are based on annual household income. An unexpected increase in taxable income, whether it’s because someone gets a big raise at work or a home-based business takes off, may change the amount of tax credit people are entitled to. If your income estimate was too low, you’ll generally have to repay some or all of the excess at tax time when your estimate is reconciled against your actual income for the year. The repayment amount is capped at $1,250 for an individual if annual income is less than 400 percent of the federal poverty level, or about $47,000 for one person.

However, not all types of income are counted when figuring annual household income for premium tax credits. An inheritance, such as your sister received, is considered non-taxable income, says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. It isn’t counted when determining “modified adjusted gross income,” the tax term for the household income figure on which the premium tax credits are based.

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1 reply »

  1. Politicians, news idiots, reporters and frankly most people conflate the terms income and wealth – thinking they are always consistent and descriptive of the same individual. Just like the idiots who think someone with a significant retirement income, because they committed to significant savings while working, is now rich – where they should not receive social security or taxpayer funded medicare.

    Why are you surprised the D’s and president Obama don’t have even the most basic understanding of economics? They have consistently demonstrated such ignorance.

    Like

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