Thursday, June 20, 2013

Are you ready?

The Patient Protection and Affordable Care Act requires all Americans to either have qualifying health coverage or pay a tax penalty. Passed in 2010, it is being implemented in stages. A "biggie" is approaching soon. Beginning January 1, 2014, any person without qualifying health coverage must pay a tax penalty -- either a stipulated flat rate or a certain percentage of the household income, whichever of these two is greater. The flat-rate penalty will be implemented in stages as well. Starting in 2014 it will be $95 per year. It increases to $325 in 2015. In 2016 it will be $695. After 2016, the flat-rate tax penalty will increase annually with a cost-of-living adjustment.

If they do not have access to "affordable" coverage from an employer, low and middle income folks can get tax credits to help them pay premiums. Employer-sponsored insurance is deemed not "affordable" if an employee’s share of the premium (i.e., excluding what is paid by the employer) is more than 9.5% of the employee’s household income. When looking at this percentage, the IRS will only consider the cost of coverage for the individual employee. In other words, the cost to insure your family could be 10%, 20%, or 30%, but as long as the cost for the individual employee isn't over 9.5% it is "affordable". If the cost of coverage for the entire family is over 8% of household income, at least uninsured children and/or an uninsured spouse would be exempted from the penalties mentioned above.

In getting ready for what is coming, you might wish to look at this Timeline of What’s Changing and When. If you're a real glutton for punishment, read the full text of the Affordable Care Act. If you do, you'll have done more than the Congress that foisted it on the American people!

Are you ready?

There's a sad day coming, a sad day coming,
There's a sad day coming by and by,
When the citizen shall hear his gloom, "Insurance or pay up."
Are you ready for that day to come?

Are you ready, are you ready,
Are you ready for tax judgment day?
(With apologies to Will Thompson)

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