Healthcare: navigating the marketplace and paying

Healthcare in the USA has been a big topic of conversation over the last few years, and rightfully so. While the debate on how the
healthcare system should be run could be discussed at length, this will not be that forum. The focus for this post is getting an
understanding of how you can pay for healthcare when your income has been decreased.

When you lose employment, most of the time your previous employer no longer pays your premiums. What happens is
the employer notifies your insurance company that you are no longer employed by them and they will no longer be paying your
premiums.

The insurer then sends you paperwork that lets you know they are aware your previous employer is no longer paying your benefits
and if you’d like to continue coverage that you will be able to pay for your insurance yourself. This option is available through

COBRA was an act brought about in the 80’s to allow those losing their benefits and their employment the option to keep
benefits if they pay themselves. The only downfall that most see when it comes to COBRA is that you are responsible for the full
premium, including what your previous employer paid as well as administrative fees.

For me - that was a bit more than I could afford. So I immediately went to the healthcare marketplace.

It is completely understandable that this solution is not for everyone. Personal beliefs may not align with this option but when you
have been working for a long period of time, have lost your job and are able to receive unemployment, you may qualify
for tax credits that will pay your premium through the marketplace.

Premium tax credits are based on how much income you are losing. The marketplace looks at your projected income and then
determines how much money you will have available to you per month to pay for your premium with tax credits. It then shows you
the plans you have available to you and the cost, if any, you will have once the tax credits have been applied to the monthly
premium.

These credits are great but it is important to know what it means for you down the road. There are two outcomes when comes to
filing your tax returns according to the healthcare.gov website:

  • If you use more advance payments of the tax credit than you qualify for based on your final yearly income, you must repay the difference when you file your federal income tax return.
  • If you use less premium tax credit than you qualify for, you’ll get the difference as a refundable credit when you file your taxes.

Because of these potential outcomes it is important, if you have a tax person, to keep in contact with them when something
changes regarding employment or income levels once enrolled in the marketplace. Not properly reporting your income will affect your tax returns for that year so keeping in contact is a good idea.

Don’t have a tax person? Not a problem. Finding a local person is usually great because they are available all year round. I
recommend locating a CPA’s office via a quick search on the internet. You can even just ask for recommendations on social
media, or my personal favorite - ask a family member who does their taxes.

It is also fine to go to some of the big chains that are available during tax season. There are often CPAs at those offices so they
will be able to help you or answer your questions.

What is also acceptable is compiling your tax information yourself. Make sure you have Form 8962 when you are filing your tax
returns for years you are using premium tax credits (NOTE: this form is for 2017, there may be a new one available when filing
taxes for 2018 and subsequent years).

There are plenty more details that are available and can be found on the IRS website should there be questions about specifics. I
am also looking into performing an interview with a CPA to get a bit more information about this process and how premium tax
credits will impact individuals.

What questions would you ask a CPA if you could?

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