I’ve always considered myself a ‘lifelong learner’, someone who is continually seeking knowledge and looking to expand their realms of thought. This can happen both consciously and unconsciously and since I am a big proponent of experiential education I love those unexpected moments when knowledge seeps in. However this tax season, I must admit I have not been in love with my unexpected lessons and the learning that they have inspired.
As a contract employee working in wilderness education I was excited about the Affordable Care Act, also known as Obamacare. At the end of 2013 when I first enrolled with the Health Insurance Marketplace, that excitement was justified as I was awarded a whopping $270/month tax credit towards the plan of my choice. Since this number made me nervous, thinking that I might have overestimated my income, I took $170/month. Feeling buoyed, I went into the next step of choosing a plan excited to finally (after 10 years in the industry) have a health insurance plan that would actually do something for me if I was sick or injured. I dutifully followed the directions and chose a plan that was equal to the second lowest cost silver plan that I qualified for (a stated requirement in the system).
With the plan and my subsidy I was paying $98/month all of 2014, going to the doctor when I needed to, and taking care of all of my preventative care and it felt great. Fast forward to February 2015 and tax season. As I started to enter the information I wasn’t nervous because I only earned $4,000 more than I predicted and that seemed like a small number. After entering all of my information into TurboTax, the software was telling me that I needed to pay back $1,250 of the subsidy. In my indignant state I thought that this couldn’t be right. So I stopped there and did not file my return. Instead, I took my information to a local bank that provides lower income individuals with free tax assistance. They looked at my information and came up with the same conclusion: I owed money back.
Determined to find answers I called the Health Insurance Marketplace, and while they were sympathetic, they couldn’t give me any guidance and suggested that I call the IRS. Which I did. Four transfers and an hour later I was on the phone with an agent who could help me. He asked me the questions on form 8962 and filled in the numbers on his computer while I was on the phone.
The verdict was (according to tax form 8962):
- Line 8a = $3439 (how much the government thinks that I could have afforded to pay for health care for the year which translates to $287/month)
- Line 11A = $3276 (the amount of the plan I chose for the year)
- Line 11B= $3276 (the cost for the year of the second lowest priced silver plan)
- Line 11F = $2100 (the amount of subsidy that I used for the year)
Because the plan that I chose was less than line 8a, the amount the government thinks I could have spent on healthcare, I did not qualify for a subsidy. The agent on the line then confirmed that yes, had I chosen a plan that was MORE expensive per month (greater than line 8a $3239) than I would have been eligible for some of the subsidy I used. But, since I didn’t I needed to pay back $1,250 of the $2,100 (the reason it is less is because the amount you have to pay back is capped based on your income in relation to percentage of the poverty line).
After much reflection the things that really bother me about these lessons are as follows:
- The government decides how much they think I can afford to pay for healthcare based solely on my income. The number they chose for me ($287/monty) is much higher than I would ever decide to pay for healthcare per month on my own. If the whole idea of this is to save people money on health care, why is the system set-up to discourage me to from choosing a less expensive plan?
- The Health Care Reform Act is a system shrouded in mystery.
- It is impossible to know going into the year why you are offered which amount of subsidy and the impact small adjustments to your overall income will have on this amount. This makes choosing a plan particularly difficult for people whose yearly income is variable based on the availability of contract and seasonal work.
- At no point in the process was I informed about the rule regarding the need to choose a plan that is MORE than they think I can afford.
- If all of this information had been made available I would have made different choices at the beginning of the year.
After weeks of research, phone calls and meetings I feel like I have overturned every stone and at least I understand where the numbers are coming from even if I don’t agree with them. I am going to pay my taxes (not sure I have a choice) but I’m not sure what I am going to do moving forward. Currently, I’m enrolled in the Health Insurance Marketplace for 2015 and since it is past the open enrollment period I don’t think I can change my plan but I am going to try.
What about you?
What has your experience been navigating Health Care Reform while living the Dirtbag Way?
Hi J!
Great article.
The ACA is designed to maximize the number of people in Healthcare and minimize the cost increases of such care. Insurance companies use the history of health care used by people to predict the cost of insuring X number of people in that category. This process sounds ugly; one out of a thousand women in their early thirties will get (name your fear) and it will cost the company Y, so we must charge all women in this category Z. They are actually quite sophisticated about it and the factors.
In order to provide health care for people who need it and can’t afford it, particularly the elderly, all healthy young people MUST buy insurance. And as you have noticed, buy more than they need. This gives the Insurance Companies an excess of money for the young and fit to use to keep costs down for the older and more infirm.
As an example, in our police union about one half the cost of healthcare for a career was between the ages of 45 and above. And most our people retired before 55.
The ACA came into being half compromised and half improvised. I would rather that young folks like you were not being tricked like this. A government healthcare system would mean that we all pay a set amount and we all get care as needed.
Who would make up the cost of single-payer? People like me. People with an astounding healthcare plan. I pay nothing monthly, have truly minimal deductible, and co-pays. A single-payer government system would be more expensive and perhaps not as expansive for me.
People like you would as well, but not as much as you are being asked to give now.
I’d happily give up my excessive benefits to make sure that those who truly need it get care. I am confident that you would pay the greater payroll deduction for the same reason.
It seems the politicians don’t understand that people like us need not be tricked to help others. Sad.
Kristian,
Thanks for your note and insights. It is interesting to hear another perspective on the system and it helps bring together a broader view. I do believe that the system before the ACA was ‘broken’ and while I don’t think that the current framework is the answer something did need to change. My hope is that as the system becomes more refined the rules will be transparent and enable people to make educated decisions about both their healthcare and how that impacts their finances.