Tuesday, October 1, 2013

Affordable Care Act - info to get you started

There has been a lot of information circulating the internet, news outlets and around the office water coolers.  I wanted to try and provide some information related to this re-vamping of the health insurance industry so here is information that I think folks need to know:

1) Individual Insurance coverage is required to be in place as of 1/1/2014.  To help facilitate that, the insurance exchanges open on 10/1/2013 (regardless of Federal shut down or not, this has been deemed an essential government service). To apply for individual coverage, you can go to www.healthcare.gov to find out more information and fill out the application.

The government is providing insurance premium assistance to qualified individuals and families that have income levels up to 400% of the Federal poverty amount.  For a single person that would be up to roughly $44,000 or more to still qualify for assistance. 

If you have Medicare, Medicaid or employer provided insurance, you do not have to apply through the exchanges for insurance.  As long as you have insurance in place for 2014 you will not be subject to the tax (that is how the Supreme Court decided the penalty under ACA is applicable), this includes insurance through the exchange, Medicare, Medicaid or employer plan.

2) another change in the law is more tax related, the limitation on Medical expense deductions.  The limit has been historically subject to a reduction for 7.5% of Adjusted Gross Income, that now changes to 10% reduction.  Taxpayers that have attained 65 years old are "grandfathered" in at the 7.5% for the next few years. This change is effective for the 2013 tax return to be filed in 2014.

For Arizona taxpayers (my home state), there is no reduction or threshold if you itemize deductions.  So all medical expenses may provide tax relief for Arizona taxpayers.

3) Health insurance costs have dramtically increased and are expected to increase for some populations.  Older insured individuals may be provided reduced insurance costs due to ACA, but younger insured individuals will see costs increase. Speaking with a local broker, currently the 64 year old's premium is 6 times that of a 20ish individual, that is going to change to 3 to 1 next year.  Insurance agents and brokers are awaiting rates to be released by the companies.

As I learn more I will attempt to provide updates.

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