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Report details eligiblity for tax credits under Affordable Care Act

Thursday, April 4, 2013 | 7:53 p.m. CDT; updated 7:18 a.m. CDT, Monday, April 8, 2013
Starting next year, 12,810 people from Boone County will be able to buy subsidized health coverage under the Affordable Care Act. More than 525,000 individuals from the entire state will be eligible. The charts below show the percentage of eligible people distributed by age and race in Missouri and Boone County.

COLUMBIA — There were 12,810Boone County residents living without health insurance in 2010, according to a report released Thursday by Families USA, a consumer advocacy group.

<p >When the Affordable Care Act takes full effect in January 2014, Boone County residents without health insurance will be eligible for federal "premium tax credits" that would help pay health insurance premiums, according to the report. 

Eligibility for the credits will be determined annually based on income reported on the previous year's income tax forms. Those with the lowest incomes will get the largest tax credits.

With the current Medicaid program covering Missourians below the federal poverty line, this new proposal would expand coverage to residents with annual incomes between $47,100 and $94,200 who live above the poverty line, depending on family size.

The report illustrates the effect of the credits with a hypothetical family of four. With a household income of $35,300, the family would today be unable to afford adequate health care. After the act goes into effect, the family's insurance premium of $12,500 would be split into equal payments of $118 a month, or $1,410 total. The remainder would be covered by a tax credit of $11,090.

Under the act, Missouri residents who are unable to get insurance through work will be able to buy coverage through a health insurance exchange created by the federal government. 

State Rep. Stephen Webber, D-Columbia, said Missouri had the opportunity to create its own health insurance exchange, but state lawmakers chose not to.

"The state was given a certain amount of time to create the health insurance exchange, but we didn't," Webber said. "Now, we will have a federal government designed health insurance exchange." 

Enrollment in the health insurance program will begin in October, according to the report.

The tax credits will be available for people of all ages. Young adults are expected to make up about 58 percent, or 304,380 of those Missourians eligible, according to the report.

An estimated 8,680 Boone County residents, or 66.3 percent of the population, will be eligible for the credits, according to the report. Of those eligible in Boone County, 81 percent are white or non-hispanic, 10 percent are African-American, and about 5 percent are Hispanic. The data was based on 2010 Census data.


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Comments

Michael Williams April 4, 2013 | 10:30 p.m.

"The report illustrates the effect of the credits with a hypothetical family of four. With a household income of $35,300...After the act goes into effect, the family's insurance premium of $12,500 would be split into equal payments of $118 a month, or $1,410 total. The remainder would be covered by a tax credit of $11,090."
________________________

Hey, wait a minute....

They get a tax credit of $11,090?

What does that mean? To me, a "tax credit" means a person can deduct that "credit" from any owed taxes.

Does a family of 4 making $35,300 even PAY $11,090 in taxes? Does that same family pay ANY federal taxes? If these musings are correct, what good does that tax credit do for that family if they can't use any or all of it? Also, if unused, is it cumulative into prior years?

Somebody help me out here. Is my definition of "tax credit" wrong in this context?

(Report Comment)
Mark Foecking April 5, 2013 | 4:50 a.m.

Michael Williams wrote:

"Does a family of 4 making $35,300 even PAY $11,090 in taxes? Does that same family pay ANY federal taxes?"

My question is that the article stated that families between $47,000 and $94,000 would be eligible for credits. I'd imagine a family of four at $35,000 would be eligible for Medicaid (which I suspect would be cheaper than $12,500). This article raises more questions for me than it answers.

DK

(Report Comment)
Corey Parks April 5, 2013 | 7:36 a.m.

When I have a tax credit it is an amount that is taken right off the top of my total I earned. Take for instance energy efficient windows. The Govt was giving a tax credit of up to $1000 a while back. Meaning I paid full price for my windows and then filed a form with the IRS and they subtracted that amount off my total income.
This article states that the premium would be split into equal $118 monthly payments and the rest would be covered by tax credit. Does this mean they still have to pay the full amount each month and then get "reimbursed" or are they given a loan each month to pay the remained after they pay the $118? I think the guys above are correct in the writer does not know what a tax credit is or more then likely the lobbyist who wrote the bill do not.
We will have paid into the system for 2 years when it goes into effect and the word on the street is it will be out of money by 2015. Sounds a little like SS to me.

(Report Comment)
Michael Williams April 5, 2013 | 7:42 a.m.

MarkF and Corey: Agreed. Either the article was written without much understanding, or I'm being especially dense.

Don't know which, but the latter has distinct possibilities.

That $35,300 family is supposed to pay $118 a month, or $1,410 total, and get the remainder with a tax credit of $11,090. With the definition of "tax credit" rattling around my brain, if that same family has no tax to credit against, do they have to pay the entire thing? If they DID pay taxes of... say...$5000, do they still have to come up with the remaining $7500?

In fact, the article's example is $35,300 in "family income." Is that gross income, or AGI? If the former, then two families with identical gross income but differing deductions would have to come up differing amounts for their premiums.

The article didn't help much. The only thing that makes sense here is that the definition of "tax credit" has changed from my definition to...something else. Here's hoping the reporter makes some clarifications..........

(Report Comment)
Michael Williams April 5, 2013 | 7:43 a.m.

Corey: "Meaning I paid full price for my windows and then filed a form with the IRS and they subtracted that amount off my total income."
___________________

Did you mean to say "off my total [tax]?" instead of "off my total income?"

I'm trying to keep up.........;^)

(Report Comment)
Mark Foecking April 5, 2013 | 8:36 a.m.

A tax credit is an amount you declare when you file. If you have no tax liability after the various deductions (or simply no taxable income) that amount is refunded to you. The idea here is to subsidize low-income falimies so they can afford health insurance.

DK

(Report Comment)
frank christian April 5, 2013 | 8:57 a.m.

After Chief Justice, John Robert's gross error in judgement, our only hope is that this monster can be defunded in the Republican House.

(Report Comment)
Mark Foecking April 5, 2013 | 9:21 a.m.

Actually what I wrote above isn't totally correct. There are credits that offset any tax liability until it becomes zero, and other credits that are considered "Payments" (EIC, for example) and are refundable even if tax liability is zero. I'm not sure what kind of credit this would be, but since low-income families typically have low or no federal tax liability, I'd imagine it's the latter.

It'd be nice to see a comparison of how much public money goes into indigent and partially paid health care now versus public money spending to subsidize insurance (as this does) or putting these patients on Medicaid. Without that, we can't really make a judgement on which way is best.

DK

(Report Comment)
Corey Parks April 5, 2013 | 10:21 a.m.

I said total income as from what I understand from my accountant and looking at my tax returns from that year it shows that the $1000 was taken off my total income along with other credits I qualified for thus moving me down.

Since I don't want to us my actual numbers I will just use 50k as income. So instead of me paying the 28% on 50k I would essentially be paying the 28% on 49K. If it was a smaller amount that $1000 could potentially lower me into a lower lower tax bracket as well. Of course I am a business owner and not an accountant so I could be looking at these forms all wrong. Surely there is an accountant that reads the Missourian online and will comment. Or perhaps the reporter could do a follow up and get a professional tax person to break it down instead of relying on govt workers or personal take of what they mean.

(Report Comment)
frank christian April 5, 2013 | 10:37 a.m.

Cory - I'm not an accountant either but, believe you are referring to a tax deduction, which reduces the amount of income subject to taxation.

Tax credit is best. It's amount is deducted from the amount of tax you are deemed to owe.

Some quick reading tends to lead me to agree with Mark about credits for those owing no tax. We have two types of tax credits: nonrefundable and refundable. The ACA credit would have to be a refundable one.

(Report Comment)
Jimmy Bearfield April 5, 2013 | 11:05 a.m.

So nothing really changes. If you can't afford insurance, the government will continue to fund your care by taking more from those who can.

(Report Comment)
John Schultz April 5, 2013 | 11:34 a.m.

I drilled down from the link at the very beginning of this article to the Missouri-specific report below:

http://familiesusa2.org/assets/pdfs/prem...

Some notes of interest. The 525,000 number of people who will be helped by the plan is only 60% of the uninsured Missouri residents from 2001. I don't know if the other 39ish% would be covered by Medicaid or if this glorious health plan that was supposed to save us isn't that great after all.

The bit below is long, but I figured it was best rather than directing people to the right page in the report since it's a topic of interest:

Eligibility for Tax Credits

Generally, the tax credits will be available to uninsured individuals and families who have incomes between 138 and 400 percent of poverty (between $15,860 and $45,960 for an
individual, and between $32,500 and $94,200 for a family of four in 2013). Some people with incomes below 138 percent of poverty who do not qualify for Medicaid (mainly
immigrants who are legal residents but who have been in the United States for fewer than five years) will be eligible for tax credits as well. Workers who would have to pay
more than 9.5 percent of their wages to participate in their employer’s plan, and workers whose employer plan pays less than 60 percent of the cost of covered benefits, will also
be eligible for the tax credits to help purchase coverage in the state marketplaces.

What Will Happen When a Family Receives a Tax Credit?
When a person or family qualifies for a tax credit, the dollars from the credit will flow directly to the health plan in which the individual or family enrolls, offsetting the total cost of the family’s health insurance premiums for that plan.
The tax credits will be fully advanceable. This means that the tax credit will be available to pay the premium at the time the person enrolls in a plan. Thus, families will not need to wait until their taxes have been filed and processed in order to receive the credit and enroll in coverage, nor will they need to pay the full premium at the time of enrollment and then wait to be reimbursed.

Finally, the tax credit will be refundable, which means that families with very low incomes who do not owe taxes will be eligible for these tax credits to assist with the cost of
premiums. However, the majority of these very low-income families will be eligible for Medicaid, and hence, ineligible for premium tax credits.

(Report Comment)
Corey Parks April 5, 2013 | 7:22 p.m.

Thanks Frank and John.

"Generally, the tax credits will be available to uninsured individuals and families who have incomes between 138 and 400 percent of poverty (between $15,860 and $45,960 for an
individual, and between $32,500 and $94,200 for a family of four in 2013)"

Not sure where most people live but if and individual is making $45,959 I would not really classify him as in the poverty area. Hell I remember making 28k a year and I bought a house and a car and make the payments plus trips. It is all in how you spend. Who know I would have been eligible for free crap all those years.

(Report Comment)

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