Determining Workers Income
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Mental health services and maternity care, for example, must now be included as covered services in every new health plan.Another reason for a possible hike in insurance rates is the new requirement that insurers accept everyone who applies for a health plan.That means people with higher health costs can no longer be denied insurance, and they can’t be charged more for their coverage than healthy people.This may contribute to the rise in the average cost of health insurance premiums.It’s possible that some people will see their insurance rates increase as the burden of cost is spread more evenly across healthy and the sick, older, and younger policy holders.Whether or not costs rise may also depend on where you live.Some states had stricter guidelines in place for insurers before the Affordable Care Act became law.However, it should be said that health plan rates released by a handful of states by July 2013 have not shown any great spikes in prices.Let’s get down to business.Do you and your family qualify for the tax credits that will lower the cost of health insurance for millions of Americans?If you do qualify, how do the credits work and how will you go about taking yours?First, let’s look at a few things that will determine whether or not you qualify.The amount of help you’ll get depends on your family income and your family size.If your income is near the amounts shown, you may qualify for a tax credit to reduce the cost of your health insurance.To be eligible, your income must be less than roughly two and half times the poverty level, which is about $28,000 for an individual or about $58,000 for a family of four.One option is to have the federal subsidies sent directly to your health plan so that you pay less each month for your policy.To get firm prices for your insurance coverage, you will need to check with your state’s marketplace.If he chose to save even more money on his insurance premium, he could choose a bronze plan, priced at $2,165 a year or roughly $180 per month.In addition, because John is younger than age 30, he can opt for a catastrophic health plan if one is sold through his state’s marketplace.Again, these plans offer lower premiums but for considerably less coverage.In addition, individuals purchasing catastrophic plans are not eligible for premium tax credits.If Beth and her two kids live in a state expanding Medicaid, she would qualify for the program.She could bring her premium down to $0 per month by choosing to purchase a bronze plan instead.If the family chooses instead to buy a bronze plan, they would lower their premium to $2,270, or about $189 per month.This family would therefore be responsible for the full cost of their health insurance.You can also check on your state’s health insurance marketplace.You can find your state’s marketplace at Healthcare.gov.No Other Offers of CoverageIn most cases, you won’t qualify for a tax credit if your employer offers health insurance, even if you meet income requirements.The premium cannot cost more than 9.5% of your annual income.The rules apply only to the cost of health insurance provided to the employee.If the plan costs less than 9.5% of the worker’s income, family members will be able to buy insurance through the marketplace, but will not be eligible for subsidized coverage.Where You Shop MattersTo take advantage of the price break you’ll get from available tax credits, you must buy health insurance through your state’s marketplace.How to Take Your Tax CreditWe’ve talked a lot about the tax credits available under the law, and the various ways in which your costs may be reduced if you qualify.But how does the tax credit get applied?What do you have to do in order to take advantage of any savings to which you’re entitled?You can take it now, which will lower the amount of your monthly health insurance premium.In this case, the government will send the tax credit directly to your health plan.You can also pay the full premium during the year and take your credit at tax time.Two different ways to take your tax credit.There is, actually, one more alternative for taking your tax credit, and that is by taking a partial credit.For example, if you qualify for a credit that reduces your insurance premium by $200 per month, you can instead reduce your premium by $100 per month and claim the rest at tax time.Your monthly premiums will still be lower, just not by as much.Because the tax credits are based on your income, changes that take place during the year because of a job loss, a change in your family situation, or an increase in salary can impact how much you’ll owe in taxes at year’s end.By taking some now and the rest at tax time, there is less chance of the need for repayment.

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