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As of 2014, the Affordable Care Act imposed the new requirement that all people in the United States, with certain exceptions, have minimum essential health care insurance or they will be subject to a penalty. How this affects your family will depend upon a number of issues. Penalty ends after 2018.
Already Insured
If you have insurance through Medicare, Medicaid, or the Veterans Administration, then you will not be subject to the pre-2019 penalty. You will also avoid the penalty if you are insured through an employer plan or a private insurance plan that provides minimum essential care. US individuals and those claimed as their dependents who reside outside the US are deemed to have adequate coverage and are not subject to the penalty.
Some are Exempt from the Penalty
Certain individuals are exempt from the health insurance mandate and are therefore not subject to the pre-2019 penalty. Included are:
Once the percentage in the right-hand column is determined, multiply that by the family’s household income to determine what the family’s annual responsibility is and divide it by 12 to determine their monthly responsibility.
Then, to determine the subsidy, go to the government marketplace and determine the cost of the Silver(2) level of insurance for the family and subtract the amount they are required to pay themselves; the difference, if any, is the subsidy.
Example: Family of two with a household income of $32,480. From the Federal Poverty Level Chart it is determined that a family of 2 with that income is at 200% of the federal poverty level. Using the 200% of poverty level it is determined from the second table that their responsibility toward their own insurance should be 6.43% of their household income or $2,088 (.0643 x $32,480) or $174.00 per month. If the cost of the Silver level of insurance is $350 per month, then the premium subsidy would be $176.00 ($350 – 174.00).
(2) Insurance acquired through the marketplace (exchange) is available in four levels of cost (premium), designated by the names of metals. The least expensive is the Bronze coverage, which is also the insurance that provides the “minimum essential coverage” needed to avoid a pre-2019 penalty. Next is the Silver level, which is referred to as the “benchmark premium.” The Silver or benchmark premium is the one used when determining the subsidy. The Gold and Platinum designations complete the four levels of coverage. The Bronze coverage, on an overall average, is supposed to cover 60% of the insured’s medical cost. Silver plans cover 70%, the Gold 80%, and the Platinum 90%.
Paying Back Excess Subsidies
When an insured individual receives a subsidy in excess of the allowable credit based upon the current year’s actual household income, some portion, but not necessarily all, of the excess must be paid back on the tax return for the year. If the household income is above 400% of the poverty level then the entire amount of the excess must be repaid. If the insured’s household income is between 100% and 400% of the poverty level, then payback is capped at the following amounts:
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