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 cost-sharing 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

Re-enrollment: Was it worth it?

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

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!