If You Do Or Don’t Qualify for Health Insurance Tax Credits
June 1, 2013
Vol. 9, Issue 6
Everyone’s objective should be to lower the net cost of your health insurance as much as possible, while maintaining adequate protection. Unfortunately, the healthcare reform law is pushing costs higher starting in 2014, particularly for younger people. But some people will also qualify for tax credits which will lower their costs. So this month, I’d like to review strategies for people on both sides.
Who Qualifies for a Subsidy?
As I mentioned in the March issue, here’s what the subsidy allocation looks like:
|Annual Income as % of Federal Poverty Level||% of Income Spent on Health Insurance|
|≤ 133% of federal poverty (± $14,000 for one)||≤ 2%|
|133 - 150% ($14,000 - $15,500 for one)||Between 3% and 4%|
|150 - 200% ($15,500 - $21,600 for one)||Between 4% and 6.3%|
|200 - 250% ($21,600 - $27,000 for one)||Between 6.3% and 8.05%|
|250 - 300% ($27,000 - $32,500 for one)||Between 8.05% and 9.5%|
|300 - 400% ($32,500 - $41,500 for one)||No more than 9.5%|
HSA for America can help you with the subsidy, with policies offered through the state exchange and with policies you can’t find there. If you think you will qualify for a tax credit, let us know and we will evaluate your net rate, after the tax credit, so we can let you know your best options. HSA plans will still be the least expensive options, and you can still take full advantage of the tax benefits of an HSA as well.
There is also the possibility that it may be better for your to keep your currently plan, rather than signing up for a more expensive, subsidized plan. We’ll help you make that decision.
What to Do if You Do Not Qualify for a Subsidy
Individuals who pay for their own health insurance are going to get hit the hardest by rate increases that are coming in 2014, particularly those who do not qualify for any subsidy.
If you have a grandfathered plan that went into effect prior to March 23, 2010, you may want to keep that plan for now if possible. (Some carriers may discontinue their grandfathered plans).
If your coverage went into effect after March 23, 2010, you will have to switch to one of the new approved “metal” plans. If most cases, you can do this with the carrier you currently have, or you can switch to a different carrier if we see better rates elsewhere. Once rates are available, we’ll help you review your options so you can make the best decision.
By starting an HSA, you’re already planning for your future. HSA policies will be included as bronze-level coverage next year so you can keep building your medical/retirement fund. And, your HSA is the smart way to save on taxes. That won’t change next year, either. You’ll still be allowed to deposit up to the IRS limit and get tax-free earnings.
If you are married and self-employed, also check out a health reimbursement arrangement (HRA). For just $25 per month, our average client is saving more than $4,000 a year with the additional tax savings of an HRA. Read all about it at www.HSAforAmerica.com/HRA.htm.
I’ll keep bringing you tips to help you save money in the next issue. Be sure to take advantage of the HSA online rebate program and earn cash-back rewards for online shopping. If you’re not already signed up, get started now at www.HSAforAmerica.com/online-rebate-program.htm.