kaneohe wrote:This might be a better question than you imagined:
see p.6 here http://www.ncsl.org/documents/health/defincacamedicdprov.pdf
I don't need to know so I'll let you figure it out.
Specifically, gross income is total income minus certain exclusions (e.g., public assistance payments, employer contributions to health insurance payments). From gross income, adjusted gross income (AGI) is calculated to reflect a number of deductions, including trade and business deductions, losses from sale of property, and alimony payments. MAGI is defined as AGI plus certain foreign earned income and tax-exempt interest.
Correct answer is MAGI. However, there are still details that may affect you but are not finalized yet. For example, if you are self-employed, and do not have access to employer sponsored plan (the group that is supposed to reap the biggest financial benefits of the law), you will be able to buy coverage on your state health exchange website. The issue is that only certain type(s) of plans will be eligible to receive subsidies, and it may not be the best option for you and your family. Also, HOW you can receive the subsidy up front has not been finalized by the IRS (you can always receive corresponding refund, if eligible, when you file your taxes the following year for the previous tax year). Finally, it APPEARS that penalty for not buying the coverage is too low, and so more people than expected may opt out of the system, which will put additional financial pressure on it, causing it to change some rules/thresholds. (Some critics of the law predict low penalties will cause it to die).
In a nutshell, I think it's great that you are starting to plan for a potential tax benefit, but there are just too many unknowns at this point to make any specific financial moves. Hence the reason there are only 2 calculators on the web as far as I am aware of.
Yipee-Ki-O wrote:Regardless of the name, I'm personally pretty excited that come October of this year I can choose among health insurance plans which should be vastly superior to my present individual coverage and its $5,000 deductible...
Yipee-Ki-O wrote: ... I don't see much difference between my eligibility for a tax credit for the purchase of an individual health insurance policy than the tax credit someone who receives group coverage enjoys since they are not taxed on their employer's contribution to their group health insurance premium
Yipee-Ki-O wrote:Regardless of the name, I'm personally pretty excited that come October of this year I can choose among health insurance plans which should be vastly superior to my present individual coverage and its $5,000 deductible.
rec7 wrote:I would like to ask a question if we remain on our own insurance will the government give us something to do that? My income is under 10k.
snowman wrote:I will also point out that while the silver plan (second from the bottom - bronze, silver, gold, platinum) is the one often cited as the "subsidized plan", it's actually a "benchmark plan" determining the level of tax credit. What this means is that you can apply the tax credit towards gold or platinum level plan, if you choose to do so, but obviously the premium (and benefits) associated with such plan will be higher. However, you cannot take the tax credit and apply it towards the plan that costs less than the amount of credit you are eligible for (more than likely bronze level plan).
Income Eligibility for Premium Credits
Beginning in 2014, qualifying individuals will be able to receive “premium assistance credits”
toward the purchase of exchange coverage. The credit is an advanceable, refundable tax credit,
meaning taxpayers need not wait until the end of the tax year to benefit from the credit (advance
payments will actually go directly to the insurer14) and may claim the full credit amount even if
they have little or no federal income tax liability.
FinanceGeek wrote:If one has large unrealized gains, is it feasible to borrow money against the value of brokerage accounts, from a 401k, etc. to meet living expenses while retaining subsidy eligibility? This would seem more attractive than selling appreciated securities which would trigger a large tax hit and loss of subsidies.
FinanceGeek wrote:To the extent 9.5% of 400% of FPL greatly exceeds the cost of an insurance policy, the subsidy system is going to be played like a stradivarius.
snowman wrote:OK, I see what you are saying. Yes, you can reduce your MAGI by $5K ($6K if over the age of 55) if you currently contribute to TIRA instead of contributing to your 401k.
However, I don't quite get this statement:
"I'm presently an employee of a very small organization that does offer a company health insurance plan but does have a 401k so this isn't just an academic concern on my part... I agree that a lot of folks with 401Ks will also have employer health plans and thus not be so concerned about subsidized exchanges."
Did you mean to say that your employer does NOT offer health insurance?
snowman wrote:...you truly are in a special situation, and I don't know how your employer will choose to comply with the new law, it's quite an interesting case. You are doing the right thing by exploring your options come 2014.
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