Tara Straw
March 4, 2013

What to think about in 2013:
◦
◦
◦
◦

Accurate and complete information
Filing requirement
Filing status
Confronting expectations and preferences
What to think about in 2014:
◦ Staying up-to-date on changes in income and family

What to think about in 2015:
◦ Dependents
◦ Reconciliation or penalty



Premium credits help pay for health plans
People can receive the credits in advance but might
need to pay back excess at year end
Some plans (‘silver’ level plans) have lower costsharing for people with incomes up to 250% of
poverty

Must have income between 100-400% FPL

Cannot have minimum essential coverage
◦ Does job-based plan cost more than 9.5% of household
income for single coverage?
◦ Does it meet minimum value?

Cannot be eligible for public coverage

Must have a valid SSN

Must plan to file taxes
◦ People with previous unpaid taxes may be deterred

Must file jointly if married
◦ Rules to come re abuse/abandonment

Advance credits are based on projected
annual income
◦ Reconciliation
Is it …


The most accurate amount of tax credit today?
The most accurate amount of tax credit based on
estimates for the entire year?

The highest amount of credit?

The credit with the lowest risk of repayment?
And will client, assistor/navigator, and tax preparer
all agree?



The starting point on premium credit eligibility are
the tax returns being filed right now (2012 income)
What has changed between now and open
enrollment? And what will change again by
December 2014?
Initial application burden
◦ Special case: People without a valid social security number




Should I take less assistance in advance?
What plan should I select, considering benefits,
premiums, and cost sharing assistance?
What if only some members of my family need
coverage?
What if electronic data not available or doesn’t
match?
- Medicaid, CHIP, Basic Health, Premium Tax Credit disputes

Anticipate incomplete information on:
◦ Employer offer of coverage & cost of coverage
 Inconsistencies?
◦ Income
 Cash income
 Wages from multiple part-time/part-year jobs
◦ Knowledge of who in the family currently has coverage and
how
◦ Presence/absence of wellness incentives

How accessible will information be?

Filing Requirements:
◦ Single - $9,750 (~87% FPL)
◦ Married Filing Jointly (with no kids) - $19,500 (~129% FPL)
◦ Head of Household (with two kids) - $12,500 (~65% FPL)


Generally, people below filing requirement will be
Medicaid eligible (in expansion states)
Who might fail to file?
◦ IRS (or other) collectible debt
◦ Good news: advanceable premium tax credit won’t be used
to offset debt

Joint filing requirement

No credit if married filing separately
◦
◦
◦
◦

Similar to EITC and other credits
Prospective/retrospective problem
Marriage/divorce counselor
How does someone change the presumption?
Exceptions for …
◦ Survivors of domestic violence? (And others?)
◦ When?
◦ How?

Reluctance
◦ Perceived value of coverage

Skepticism
◦ What’s the catch?

Gaming
◦ Due diligence

Advanced credit, lump sum or something else?
◦ Lump sum won’t be a viable option for most
◦ Fixed penalty vs risk of repayment

Learning from the EITC

Barriers toward use of advanceable credits
◦
◦
◦
◦

Lack of awareness
Uncertainty
Desire for a large refund
Perceived inability to save
Premium tax credits can be different because:
◦ Infrastructure for accessing them
◦ Penalties for failure to obtain coverage
◦ Inability to collect large refund without incurring large costs

Who, what, when of reporting income &
family changes, including filing status
◦ Avoid large obligations at the end of the tax year
◦ Affects cost-sharing meanwhile
◦ Duty to counsel on this but it may be a deterrent


Changes in the offer of affordable job-based
insurance
Due diligence with the “silent” exchange
◦ Can I trust the Exchange and my insurance company
to make timely and accurate changes based on my
information?
 Loss of coverage
 Gain dependent
 Change in immigration status
 Gain eligibility for tax credit
 Move
 QHP violates contract with respect to enrollee
 Error (sometimes)
 Exchange-provided exception

Filing Status
◦ If Married Filing Separately – exceptions?

Potential effects on dependency exemptions
◦ Dependents who are not your school-aged children
◦ “Qualifying relative”  Older kids, other relatives, members
of your household who are not related to you
 To claim exemption, must provide more than ½ of person’s
support, including health care.
 Support by the government is not support the taxpayer is
providing

Reconciliation
Income

Maximum Repayment
(Single/Family)
<200% FPL
$300/$600
200%-300% FPL
$750/$1,500
300%-400% FPL
$1,250/$2,500
>400% FPL
No Cap
Re-enrollment: Was it worth it?
Penalty the greater of a flat dollar amount or a percentage
of taxable income.

◦ 2014: $95/adult or 1% of taxable income

Exemptions if:
◦
◦
◦
◦
◦
◦
◦

No “affordable” coverage (in 2014, costs >8%)
Income below the tax filing requirement
Uninsured < 3 months
Undocumented immigrants
Hardship
Incarcerated
Membership in certain religious sects
Motivation or anger?

Volunteer Income Tax Assistance (VITA)
◦ Free tax assistance for people with income below $51,000

Tax Counseling for the Elderly (TCE)
◦ Free tax assistance for people age 60 and older

Visit irs.gov for a list of programs in your
community

Develop local partnerships
◦ Work with tax partners and others
◦ Comprehensive public education
◦ Comprehensive training of enrollment staff and volunteers

Prepare for the unexpected

Expect the unprepared
◦ This is a multi-year effort!