You better be a good guesser about your income in 2014 if you apply for Obamacare health insurance

2013

To some of us, the fact that the Affordable Care Act can tell you your current health insurance is not acceptable, that you must subsidize contraceptive services, or that you can only put $2,500 in a flexible spending account is bad enough, but you would think that merely complying with the Law would be sufficient. That may not be so easy. 😯

For those who use the Obamacare marketplace, estimating your next year’s household income will be key. Estimate too low and you may lose tax credits, too high and you will owe the government money at year end. You would think that such a critical element of the Law would be tightly monitored and accurately and promptly adjusted. That may not be the case because the actual dollar amount you need won’t be known until more than a year after the estimate is used.

Ultimately, the correct amount will be reflected in tax subsidies you receive, but that will be after the fact, way after. Rather than use available data to monitor inaccurate information at the point of enrollment, the individual is responsible for presenting the accurate information for the following year.

Given the misinformation and confusion surrounding the law, not to mention the enrollment glitches, what individuals put down as their 2014 household income is problematic – define household. Do you estimate overtime or a bonus, is your spouse going to work? What will you receive in interest or dividends, will you sell stock for a capital gain? Any of these events will cause some people to be ineligible for the tax subsidy they expect to receive for the year.😧

The following is an excerpt from a Bloomberg column on the testimony by Marilyn Tavenner, head of CMS.

QUESTION: How will the government prevent people from inadvertently getting subsidies they’re not entitled to?

Tavenner suggested that the responsibility for presenting accurate information about subsidy eligibility will rest with those who apply, but it’s easy enough to imagine people being confused or uninformed about the coverage offered by their employer or a parent’s plan. CMS needs a strategy to help people avoid making a mistake, thereby risking a tax penalty.

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