Obamacare Cheat Sheet
If you can’t afford Obamacare
Like most laws in life, Obamacare has its loopholes. The stipulations attached to the health insurance plans offered on the health exchanges have their faults.
For those who do and don’t want insurance, here’s how to make the un-Affordable Care Act – well, affordable.
- The Tax Penalty is unenforceable except when deducted from a tax return
- The Tax Penalty does not apply if you have paid coverage 9/12 months of the year
- If you’ve paid 1 month’s coverage, you qualify for a 3 month “grace period” to delay payments
- There is no repercussion for dropping or being dropped from your plan because of payments
- Even if you’re dropped from coverage one year, you can re-enroll the next
- You cannot be denied from a qualified subsidy unless you neglect to file taxes the year prior
Tax Penalty – You don’t have to pay it!
Guess what? There is no obligation to pay the penalty. The government and IRS cannot send you to Obamacare jail, or prohibit you from purchasing subsidized healthcare on the exchange in subsequent years, as long as you continue to file your taxes.
If the IRS owes you money on a tax return, then the unpaid Obamacare penalty will be deducted from your return. Other than that: you can’t be penalized.
So, that $95 fine that seemed like no big deal this year, but seemed like a $400+ concern in years to come? It’s nothing. Keep your head down, file your taxes and ignore the penalty. They’ll deduct it if and when they can, but you don’t need to go out of pocket.
What happens to my tax penalty – I know I don’t have to pay it – if I have coverage part of the year
The Healthcare.gov language says this: “If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than 3 months, you don’t have a make a payment.”
So, this year, it’s $7.91 for each month of 2014 that you do not pay for insurance or do not have coverage. (Unless you pay for 9/12 months, then you’re penalty-free).
I want basic catastrophic coverage, but I just can’t afford a whole year of premiums. Even with the subsidy.
Fair enough: 12 months is a long time to pay for something you don’t need every month of the year. This is especially true when the monthly premium sounds something like $250 or $500, versus $50 or $100.
Here’s the catch: under any plan purchased on the exchange with an Advanced Premium Tax Credit (APTC), there’s a three month “grace period.”
As long as you have paid at least ONE MONTH’s premium, you have a three month grace period by which you may neglect to pay your premiums and you will NOT be dropped from coverage. Some claims may appear as “pending,” but if you avoid frequent doctor and prescription fees during this time, you should be okay.
So, pay every other month! Pay the first 9 and not the final 3! Then enroll in next year’s coverage! You cannot be denied coverage and subsidy under the exchange unless you do not file your taxes. (Plus, by only neglecting payment during the final 3 month grace period, you won’t be saddled with the unenforceable penalty.)
I need a quick procedure. It will take 2 months of doctor’s visits and then I’m done.
Well, you probably won’t even exceed your deductible during that 2 month period (sorry, but it’s the truth, can’t help that).
But, other than that, easy! Sign up, get the plan, get the subsidy & coverage – and then drop out! There’s no penalization and you cannot be turned down because of a pre-existing medical condition.
Recent Obamacare updates worth knowing:
- There was a recent fix which allows state insurers to delay the cancellation of plans considered sub-par to Obamacare requirements. If you live in Oregon, Utah, Hawaii, Wyoming, Texas, Arkansas, Tennessee, Kentucky, Georgia, South Carolina, Florida, North Carolina or Ohio – you can keep your plan. Most states are still deciding what they will allow to happen – and some states (the “successfully implemented states”) will not be allowing a year reprieve (Washington, Minnesota, Indiana, New York, Maryland, Vermont, Massachusetts and Rhode Island).
- The government still hasn’t set up the means by which to pay subsidies to the insurers. So if the insurer isn’t getting paid for their services by January – yikes. We’ll see what happens there.