Archive for the ‘Health Insurance’ Category

Do You Qualify for a Health Insurance Exemption?

Thursday, April 16th, 2015

If you didn’t have health insurance in 2014, you could be on the hook for a penalty when you file your taxes. And if you fail to sign up for insurance during the current open enrollment period, you’ll also lock yourself into an even steeper fine for 2015.

But what if you couldn’t afford health insurance, or you have religious reasons for opposing it? The law allows for exemptions — and a lot of people are expected to qualify. In fact, according to a Congressional Budget Office report, by 2016, almost 90 percent of the 30 million people still uninsured won’t pay the penalty, primarily because they’ll qualify for one of nearly two dozen exemptions. Here, experts discuss the five exemptions likely to be most commonly used, as well as how to go about applying for them.

1. You Live in a State that Didn’t Expand Medicaid.

Nationwide, about 4 million low-income people will remain uninsured because they live in one of the 23 states that chose not to expand its Medicaid program in 2014, according to the Kaiser Family Foundation. “This should be one of the more commonly used exemptions,” says Karen Pollitz, senior fellow with Kaiser Family Foundation.

People with incomes at or below 138 percent of poverty -– about $27,000 a year for a family of three -– won’t be eligible for Medicaid coverage if they live in a state that didn’t expand the program under the Affordable Care Act. In many cases, these folks also didn’t get subsidies to help buy private insurance through the Marketplace because their income was too low to qualify for premium tax credits. The law doesn’t provide financial assistance to people with incomes below poverty.

Initially, people in this situation were required to apply for Medicaid and be denied, or to get a hardship exemption certificate by applying through the Marketplace. “The idea was you had to apply to the Marketplace by the end of this year to qualify,” says Timothy Jost, a law professor at Washington and Lee University. But the IRS recently changed course, thanks in part to a blog post Jost co-wrote in the journal Health Affairs urging it to do so. Now, this hardship exemption can be claimed on your 2014 tax return.

2. Your Income Is Too Low to File for Taxes

Millions of Americans don’t file a tax return because their income falls below the threshold that requires them to do so. That’s the case for a single person who earned less than $10,150 in 2014, or a married couple with an income below $20,300.

“If you don’t have to file taxes then you are also exempt from the mandate,” says Linda Blumberg, health economist with the Urban Institute. Since you aren’t required to file a tax return, no action is required to take advantage of this exemption from the health law. “You don’t have to apply for the exemption,” she says, because it will be automatically applied.

3. Health Insurance Is Too Expensive for You

Despite subsidies to lower costs, health insurance remains unaffordable for millions of Americans. If coverage is too pricey for you, you’ll qualify for an exemption. “The rule is you get the affordability exemption if the cheapest cost plan is more than 8 percent [of your income],” Pollitz says.

There are a number of reasons why people might find themselves in this circumstance, she says. For example, individuals with incomes in 2014 of roughly $29,000 and families of four who earned about $59,000 would qualify for a subsidy to help pay for insurance, but would still be required to pay more than 8 percent of their income –- the law’s threshold for insurance being deemed too costly.

Some people can stay under that 8 percent threshold by purchasing a less expensive plan, Pollitz points out, “although when they do so they’re going to pick up a lot more cost-sharing,” she says. But if you’re older, the law allows insurers to charge you more than a younger person for the same health plan. For many people in their 50s and early 60s, it’s possible even the least expensive bronze-level plan will be too pricey.

That’s also likely to be the case for smokers and people living in an area with high medical costs -– two additional factors for which insurers can charge consumers more. If these extra costs tacked onto your health plan premium drive the price of insurance above 8 percent of your household income, you’ll be allowed to file for an exemption. You can either claim it when you file your federal taxes, or apply for an exemption certificate through the Marketplace.

4. You Hit the Family Glitch

Here’s how this plays out: One member of a family has a job that offers “affordable” health insurance for the whole family, which means no member of the family can get financial help to lower the costs of Marketplace coverage.

But under the law, it’s only the cost of the employee’s insurance that’s taken into account when determining whether job-based coverage is affordable. It meets that standard as long as the employee’s insurance premium is no more than 9.5 percent of household income and covers, on average, 60 percent of medical costs covered by the plan. That means even if insurance for a family of four eats up 15 percent of household income, it’s still considered affordable as long as the employee’s coverage alone meets the law’s cost standards.

If the cost to cover your family through work-based insurance in this case exceeds 8 percent of your household income, the family members (not the employee with the “affordable” coverage) qualify for an exemption. “The IRS exemption [taken] at [the time of tax] filing should provide an exemption for most families in the family glitch,” Jost says.

5. Hardship and Other Exemptions

There are a host of other defined hardships that may qualify you for an exemption under the health reform law. These include circumstances such as being evicted or facing foreclosure, receiving a shut-off notice from a utility company, filing for bankruptcy or having medical expenses you couldn’t pay in the last 24 months. You can see a full list at Healthcare.gov.

In most hardship cases, you’ll have to apply for the exemption through the Marketplace, where you can download the forms you’ll need to complete the process. In addition, you’ll likely have to dig up some paperwork to support your claims, such as a copy of a foreclosure notice or bankruptcy filing.
If you had a gap in insurance coverage of less than three months –- another exemption likely to be widely used, according to Jost –- you can claim your exemption on IRS Form 8965 and send it in along with you federal tax return.

What Could Happen to Health Insurance in 2015?

Thursday, April 16th, 2015

WASHINGTON — The fate of President Barack Obama’s health care law again hangs in the balance as the Supreme Court weighs another legal challenge to the program, now covering millions of people. And a Republican-led Congress prepares for more votes to repeal the Affordable Care Act, ignoring threatened vetoes by the president. Five questions about health care for 2015:

1. What Does the Supreme Court Face?

The biggest health care news of 2015 probably won’t come from Congress or the White House, but the Supreme Court. The court has agreed to hear another lawsuit that goes to the heart of Obama’s strategy for providing health insurance to people who can’t get coverage through their jobs. The case will be argued early in March, with a decision expected late in June.

The plaintiffs contend that the law as written only allows the government to subsidize coverage in states that have set up their own their own health insurance markets, or exchanges. With Washington currently running the markets in 37 states, much of the law’s coverage expansion could unravel if the Supreme Court agrees. It would be a moment of truth for the law’s opponents and its supporters alike.

2. Does Anybody Have a Plan B?

If the Supreme Court rules against Obama, both sides would need a fallback plan, and quickly. Opponents of the health care law would face the prospect of more than 4 million people losing federal subsidies that cover about 75 percent of their premiums. Most of those consumers would wind up uninsured again, and presumably none too happy.

The president would have to contemplate going hat-in-hand to the Republican leadership of Congress to ask for fixes to his signature legislation, possibly opening up other contentious issues in the law. Republican governors and state legislators would have a choice, too. They could establish insurance exchanges, or watch many of their constituents lose coverage.

3. What Is Congress Doing?

With the Senate and the House both under Republican leadership, expect dozens more congressional votes to repeal “Obamacare,” whether in whole or in part. It’s not clear that full repeal can get through the Senate, where Democrats retain sufficient strength to block legislation by using procedural maneuvers.

But some provisions of the law are also unpopular with significant numbers of Democrats, and bills to roll those back may emerge from Congress. Examples: a requirement that 30 hours per week counts as full-time employment, a tax on medical device manufacturers, and a Medicare cost control board.

4. What About My Taxes?

Obama’s health care law uses the income tax system to deliver carrots and sticks. The subsidies that have made premiums affordable for millions are distributed as tax credits. And the penalties imposed on those who ignore the law’s mandate to get health insurance are collected as additional taxes.

In 2015, the law’s connection to the tax system will become clearer for most people. All taxpayers will have to report on their 2014 tax return whether or not they had insurance. Those who got subsidies will have to show they got the right amount. If they received too much, their refunds will get dinged. Those who remained uninsured will either have to pay the taxman, or show that they qualify for an exemption. Tax preparation companies are expecting lots of new business.

5. How Many Are Covered, Anyway?

At last count, about 6.7 million people got private coverage through the insurance exchanges in 2014. Another 9.7 million got on Medicaid, the insurance program for low-income people, expanded under the law by more than half the states. Some of those people would have switched from other coverage.

Still, the number of uninsured Americans has dropped significantly — by more than 10 million people as of mid-2014. While the economic recovery doubtless contributed, Obama’s law does seem to be delivering on a core promise.

Bipartisan Bill Would Widen Federal Help for Disabled

Thursday, April 16th, 2015

WASHINGTON — Congress is poised to allow Americans with disabilities to open tax-sheltered bank accounts to pay for certain long-term expenses — the broadest legislation to help the disabled in nearly a quarter-century.

The House was set to vote Wednesday on the bill, called the Achieving a Better Life Experience Act, which stands out in a bitterly divided Congress for its wide support. First introduced in 2006, the legislation now lists an overwhelming 85 percent of Congress as co-sponsors, even after a conservative group criticized it as “decisive step in expanding the welfare state.”

In the Senate, where Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., are co-sponsors, the bill was expected to move quickly in the lame-duck session once the House acts. It would be the first time that Congress passed major legislation for the disabled since the 1990 Americans With Disabilities Act.

“This levels the playing field for people less fortunate than we are,” said Rep. Ander Crenshaw, R-Fla., the bill’s lead House sponsor. “And it demonstrates we can work together when it’s something that affects so many people.”

‘Freedom to Live Independently’

Rep. Cathy McMorris Rodgers, the House Republican Conference chairwoman, says her 7-year-old son, Cole, has Down syndrome, and that has made her committed to supporting the bill and other government policies that help people with disabilities achieve “the freedom to live independently.”

Modeled after tax-free college savings accounts, the bill would affect as many as 54 million Americans with disabilities, amending the federal tax code to allow states to establish the program. To qualify, a person would have to be diagnosed with a disability by a physician by age 26 that results in “marked and severe functional limitations”; those who are already receiving Social Security disability benefits and diagnosed by age 26 would also qualify automatically. Families would be able to set up tax-free savings accounts at financial institutions to pay for expenses such as education, housing, transportation, job training and health care.

The accounts could accrue up to $100,000 without the person losing eligibility for government aid such as Social Security disability payments; currently, the asset limit is $2,000. Medicaid coverage would continue no matter how much money is deposited in the accounts.

The measure is aimed at helping people like Sara Wolff, 31, of Moscow, Pennsylvania, who has Down syndrome. A clerk at a law firm, she cannot work additional hours to save more without losing Social Security benefits and says the death of her mother this past year made her realize the importance of being able to plan for the future.

“Just because I have Down syndrome, that shouldn’t hold me back from achieving my full potential in life,” Wolff said.

‘Daily Struggles’

Sen. Bob Casey, D-Pa., the lead sponsor in the Senate, said the measure will provide financial peace of mind to people with disabilities who “face daily struggles that we can’t even begin to imagine.”
The bill’s path hasn’t always been smooth. Some lawmakers hedged on cost until it was pared down to $2 billion over 10 years.

Many lawmakers insisted on cuts or revenue increases to offset the cost; the bill’s sponsors found the savings in part by increasing the amount of levies on property for tax-delinquent Medicare providers and suppliers and technical adjustments to cap worker’s compensation.

The conservative Heritage Foundation remains opposed, saying current asset limits on government welfare benefits are needed to ensure taxpayer aid goes to “those Americans who need them the most.” It worries that expanding aid eligibility could lead to additional potential for Social Security fraud and abuse, especially when it comes to mental disabilities, which can be sometimes difficult to diagnose.

More than 100 coalition groups which support the bill disagree, saying ABLE accounts would allow families to save money that is earned on their own. The groups are optimistic after months of petition efforts, calls and personal appeals to lawmakers that families of disabled people will get the support they need.

“We made this our No. 1 priority and have 85 percent of Congress supporting this, which is pretty historic in this political environment,” said Sara Hart Weir, interim president of the National Down Syndrome Society.

How to Select Health Insurance If You Travel Frequently

Thursday, April 16th, 2015

Of the factors to consider when choosing health insurance, your lifestyle is one of the most important. For the modern-day explorer or business road warrior, your frequent travel should be top of mind.

Learning about new cultures and unexpected adventures are part of the thrill of travel, but they also come with risks. Sometimes your destination is not medically equipped, and the unexpected can turn into illness or injury in just the place where you don’t have coverage. If you travel frequently for business, getting caught in an unfamiliar city with a medical issue can leave you with a huge bill. Here’s how to prevent that by shopping smart during insurance season.

Domestic Travelers

One of the most important considerations for travelers is the insurance network, or group of providers that your insurance company agrees to cover. For those who tend to travel only within the United States, a national provider network is key, especially if you travel to multiple locations across the country.

“You want to be able to stay in-network wherever you travel to,” says Cindy J. Holtzman, director of Medical Refund Service in Marietta, Georgia, who’s also an insurance agent and patient advocate.

If you normally travel to the same locations, make sure your plan includes network providers in those locations. For domestic travelers, this is the best way to save on health care in general, not just emergency care. When you’re out of town and have just a mild concern, it’s a lot cheaper to visit an independent clinic or urgent care in-network and avoid the emergency room all together.

It’s important to note that there may not be network providers in every city you visit. In that case, “check out how any plan covers providers outside the network,” Holtzman says.

Some plans cover a portion of costs if you need health care out of their network, but many plans cover none, except in some emergencies. If you have to go out of your network for care, plans that will cover at least a portion of that care are beneficial for travelers.

International Travelers

If you travel abroad frequently, you might already be aware that health insurance works differently outside the U.S. In emergencies, some plans may cover a portion of costs, but most cover none at all.

“The easy way to address this is to call the health insurance provider and ask them if they will cover health expenses incurred abroad,” says Mahmood Peshimam, a travel medicine specialist in Orange County, California. If not, ask if they have a separate plan specifically for travel.


Don’t confuse traveler’s health insurance with regular traveler’s insurance
 Supplemental health insurance that covers international travel is available from some health insurers. It’s temporary insurance that covers only the length of one trip and may be cheaper through your main health insurer thanks to member discounts. This is a great question to ask any potential insurer when choosing among plans. Don’t confuse traveler’s health insurance with regular traveler’s insurance, which covers incidents such as cancelled reservations and lost baggage.

Evacuation insurance, also for Americans abroad, can be long-term or short-term and covers transportation to adequate medical care. This type of insurance can help cover charges if you need to be urgently transferred for medical care from a remote area. Plans often cover air rescue expenses and emergency returns back home.

Some evacuation insurance policies also cover emergency health care abroad. Evacuation insurance is available from many health insurers, as well as from independent providers. “Ask your travel agent for companies that will provide overseas health insurance coverage,” Peshimam says. He also recommends finding medical facilities in your destination before leaving and carrying that information on your trip.

Adventure Travel

Thrill seekers, there are special health insurance considerations for you. Evacuation insurance is probably a good idea for when you climb Mount Everest or go on that skydiving trip, but don’t stop there. Take a look at any long-term health insurance plans you’re considering for two features: emergency care and high-risk exclusions.

The reason for emergency care is obvious, and for all Affordable Care Act-era plans, it’s covered as an essential health benefit. How much emergency care is covered is as variable as the plans themselves. Whether you travel a short distance or across the globe to seek your adrenaline rush, make sure your health insurance plan has comprehensive emergency coverage.

Less obvious is the need for a plan with few high-risk exclusions, probably because you don’t know they exist. Many health insurance plans don’t cover emergency services due to risky activity or injuries incurred doing activities such as rock climbing and snowboarding. This may not be disclosed on an information sheet when you sign up for insurance, so call your insurer’s customer service to ask.

If You Thought Taxes Were Bad This Year, Just Wait

Thursday, April 16th, 2015

No one looks forward to tax season. Even the people who make money from preparing returns grit their teeth because they know the stretch from January to April 15 will be long and hard. But it could be worse, right?

Actually, it’s about to be, and that comes straight from the officials at the top. Internal Revenue Service Commissioner John Koskinen said that 2015 “will be one of the most complicated filing seasons we’ve ever had,” as the Journal of Accountancy reported.

It’s not that you will own more money, although you might very well. The main driver of the pain will be factors making filing far more complicated than usual. With provisions of the Affordable Care Act that become active, a Congress that likely doesn’t, uncertainty about dozens of tax provisions that are phasing out, other mind-bending aspects coming into force and an IRS that says it doesn’t have the resources to do what it’s obligated to, this is going to be one interesting ride.

Feeling Ill Over ACA Paperwork

Two provisions of the ACA — tax credits for health insurance premiums and individual mandates — will provide two sources of pain. People who haven’t made enough to afford health care may have been eligible for tax credits to offset their increased expenses. The insurance exchanges frequently calculated the likely subsidy and reduced the premiums by the appropriate amount.

Only the calculations were initially made on the previous year’s taxes. Now comes the time to settle up and figure out whether people received the right number of credits — or too few or too many. That means at least an extra form to calculate what the impact should be, and whether people with too little money already may have to send some of it to the IRS because their circumstances improved between 2013 and 2014.

Also on the ACA front is the type of coverage you have. If you do have full coverage, you check a box off on the 1040. If not, there is another form with a “complicated penalty calculation” depending on multiple factors, according to what Mark Luscombe, principal analyst for the tax and accounting group of tax information publisher Wolters Kluwer, told DailyFinance.

Uncertain Tax Regulations

Expiring provisions in the tax code will mean perspiring consumers and professionals. “It’s one of the things is something we seem to face every couple of years,” Luscombe said. “All these regularly expiring provisions have tended to be extended only a couple of years at a time.” This year there are about 60.

Some include the individual deduction for state sales tax, the above-the-line deduction for college tuition and fees, teachers’ out-of-pocket expense deduction and the ability of people over 70½ years to distribute from an individual retirement account directly to a charity so you don’t increase adjusted gross income and see a hit to Social Security income.

Not only could you end up having to pay more, but the longer a bitterly divided Congress delays on making decisions, the more pressure they invariably put on taxpayers and preparers. “The IRS forms are still in draft stage because they’ve reserved these lines, not knowing whether to include them or not,” Luscombe said. Until it’s done and the regulations are set, there are no forms to fill, software can’t correctly run, and preparers won’t be sure how to handle some situations.

Even the IRS’s own software won’t be ready to process returns and issue refunds. According to Luscombe, in 2013, problems with IRS software held up the start of the filing season by a couple of weeks and delayed refunds.

Overtaxed Tax Officials

Starting behind isn’t good for any organizations, including the IRS. Throw in inadequate resources, and it’s worse. Koskinen noted that the IRS has expanded responsibilities with a budget that’s declined by 7 percent since 2010 and a 13,000-person drop in headcount. That means fewer people to get systems ready, fewer people to process returns, fewer people to perform audits and fewer people for everything else.

This year, the IRS was able to answer taxpayer calls only 71 percent of the time. Koskinen thinks that in 2015, the number will probably drop to 53 percent.

As he almost said, things will get ugly. Leave yourself plenty of time to prepare and try to keep a sense of humor. Or maybe have a bottle of aspirin handy.

FSA vs. HSA: What You Need to Know for Health Care

Thursday, April 16th, 2015

Open enrollment season for health insurance brings attention to Flexible Spending Accounts and Health Savings Accounts. I’m a huge fan of the latter. Let’s look at both.

First Came FSAs

Flexible Spending Accounts have been around since the 1970s. Employers establish FSAs for their employees, and the account allows workers to contribute a portion of pre-tax earnings to pay for qualified health care costs. Many employers also offer a separate FSA for dependent care expenses, such as day care.

The tax advantages of FSAs serve as one of the biggest benefits to employees. Because you contribute earnings before they’re taxed, you lower your annual tax liability. Your contribution limits are $2,500 for a medical FSA and $5,000 for an FSA used for dependent care (as long as you don’t file taxes married filing separately, then the limit is $2,500).

Different Rules for HSAs

Health Savings Accounts were created to help ease the financial burden of rising health care costs.

Like FSAs, the money you contribute to the fund is pre-tax (which again reduces your overall tax burden). HSAs allow you to spend money on qualified health expenses if you have a high-deductible health plan. You can also pay for medical costs not covered at all by your insurance (such as Lasik eye surgery like I had).

You can contribute up to $3,300 to an HSA ($3,350 for 2015), and a family can contribute $6,550 ($6,650 for 2015). Like a Flexible Spending Account, the HSA limit does not vary based on your tax bracket. However, there is a $1,000 “catch up” contribution for those over 55.

However, unlike an FSA, anyone can set up an HSA — you don’t need to get through your employer (although that is an option). To qualify, you must be under 65 and have only high-deductible health insurance.

Pros and Cons for Flexible Spending Accounts

FSAs have no restrictions on what type of health insurance you have. You don’t even have to have health insurance.

Your FSA is set up and owned by your employer, which means you cannot take it with you if you leave, lose or retire from your job.

With an FSA, you have to use or lose the money you contribute by the end of the year (you can carry over $500 into March of the following year). If you are a careful planner, this will be easy for you, but last year, 20 percent of people with FSAs left $500 or more on the table. Don’t make this mistake! (Buy yourself a new pair of glasses!)

Before investing in an FSA, have a reasonable estimate of upcoming medical expenses for you and your family. That way you can use all of that money and not be stuck with extra money at the end of the year you have to use up quickly.

Pros and Cons for Health Savings Accounts

You own your Health Savings Account. You can take it with you when you leave your employer and either cash it out (although don’t do that — because you’ll likely incur a penalty) or roll it over into a new plan.

You can also invest the money in your HSA, and the value rolls over from year to year. Some plans only invest your money once you’ve reached a minimum, but others allow you to invest immediately. If invest the money in your HSA to use for future health care costs, make sure you have enough to cover your deductible so that you don’t have to sell investments quickly to access the funds.

HSAs are limited to those with high-deductible health plans. An individual HDHP deductible can range from $1,250 to $6,350. For families, the minimum deductible is $2,500 and the maximum is $12,700. Make sure you can cover your deductible, although you can use your HSA contribution to pay for out-of-pocket health-care costs, prescriptions and other medical expenses.

Which is Right for You?

Married couples with a young child and a lot of doctor’s visits may lean toward an FSA for co-pays. A lower deductible PPO or HMO plan may also benefit this family more than a high-deductible health plan. In addition, the Dependent Care FSA offers a huge tax benefit.

A healthy single person, on the other hand, may decide the HSA is a better deal, which is why I encourage many of my Gen Y clients to strongly consider this option. This account is good for those who can’t predict how much (or how little) they may use a medical savings account.

With an HSA, you can continue to invest and make money, which you can then use, without a tax penalty, when you get to your retirement years. (Some people choose to think of an HSA like an additional individual retirement account). An FSA can give you peace of mind to help you with child care or medical care expenses right now.

You can contribute to both — but be careful. You can technically have an HSA for medical expenses if you have a high-deductible plan and an FSA for dental and vision costs; however, I would generally recommend that you just stick to one or the other.

Opting Out of Obamacare? Here’s How Much It Will Cost You

Thursday, April 16th, 2015

Open enrollment for insurance plans under the Affordable Care Act begins on Nov. 15. Between then and Feb. 15, you’ll be able to enroll in a new health care plan, re-enroll in the one you picked for 2014, switch plans, and apply for subsidies, depending on your income.

Crucially, as HealthCare.gov points out, “If you don’t enroll in a health plan by Feb.15, 2015, the only way you can get health insurance for 2015 through the Marketplace is if you qualify for a Special Enrollment Period.” And unless you have other health coverage, enrolling in Obamacare is the only way you can avoid having to pay the government’s fee for failing to secure health care coverage.

Hold Up a Sec — What Was That About a Fee?

To ensure that insurers have enough healthy persons in the system, paying premiums and offsetting the cost of taking care of those who get sick, Obamacare requires that everyone either sign up for health insurance — or pay a fee (sometimes referred to as a “tax” or even a “penalty”) to opt out.

And the fee the government requires you to pay in 2015 for not signing up for insurance may be double or even triple what it was in 2014 during the slow ramp-up of the Affordable Care Act.

There’s a long list of exceptions. For example, if you meet the government’s definition of being too poor to afford even Obamacare — no penalty. If you’re an American Indian — no penalty. Or if you’re in jail — no penalty. (This is what we call a “mixed blessing.”)

Crunching the Numbers

Those exceptions aside, in 2014, the first year in which fees were charged for opting out of Obamacare, opt-outers were required to pay either $95 per person or 1 percent of their income above a certain threshold. Whichever number worked out to be greater was the one you paid for forgoing health care insurance. In 2015, these fees jump to the greater of either $325 or 2 percent of income over the filing threshold.

And that’s just if you’re single. If you have a family to provide for — and insure — then forgoing Obamacare could cost you as much as $975 (or 2 percent of income over the threshold). And in 2016, the numbers will jump again. Individuals will pay $695 (or 2.5 percent of income) for opting out of health insurance coverage. Families will pay up to $2,085 or 2.5 percent.

Result: If you didn’t pay attention to the Obamacare debate last year, this year it’s more important than ever to study the math on whether you can afford to opt out.

Unfortunately, the numbers can quickly get tricky. For example, you probably noticed mentions of a “threshold” above, right? Well, there’s not just one threshold, but 10 that could apply to you, depending on your filing status and age. So your penalty can vary based on whether you are a single tax filer, a married couple filing jointly, a married couple filing separately, etc.

The Internet to the Rescue!

Fortunately, the good folks at insuranceQuotes.com, a subsidiary of Bankrate (RATE), have an online calculator that will help you do the math based on your replies to three short questions: •How many adults are in your household?
•How many children are in your household?
•What is your estimated annual household income?
The Obamacare Penalty Calculator will quickly estimate what your penalty should have been in 2014, and what it will probably rise to in 2015.

A Few Examples, Please?

Our pleasure. The calculator’s pretty simple, so we won’t spend a lot of time on this, but just to satisfy your interest, here are a couple examples:

A single taxpayer earning an adjusted gross income of $33,422 a year — which, according to the Internal Revenue Service, was the average earned by single filers in 2012 (the latest year for which the IRS has complete data) — would have paid a penalty of $232.72 in 2014, rising to $462.44 in 2015 for refusing to buy insurance.

The IRS estimates average adjusted gross incomes at $110,769 for married couples filing jointly. Such a couple, at such an income — regardless of whether this couple has no children, one child or several children — would have owed a family penalty of $904.69 for forgoing health insurance in 2014, rising to $1,803.38 in 2015.

These are, of course, just examples. As Leo Tolstoy once wrote: “Every unhappy family is unhappy in its own way.” To find out how unhappy you will be if you miss the deadline for signing up for health insurance, check out insuranceQuote’s Obamacare penalty calculator.

Motley Fool contributor Rich Smith doesn’t have Obamacare (yet), and he has no position in any stocks mentioned above, either (also yet). The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

Want to Work Past Age 65? Here’s What to Watch Out For

Thursday, April 16th, 2015

Continuing to work after age 65 can certainly help your retirement finances. You can continue to save for retirement, your existing savings will have more time to grow before you begin withdrawals and the number of retirement years you need to pay for will be shorter. But there are a few ways employment after age 65 can hurt your retirement finances. Take care to avoid these problems when working after age 65.

Signing up for Medicare. It’s important to sign up for Medicare at the correct time, even if you are still working and don’t need the coverage yet. You can first claim Medicare benefits during a seven-month period that begins three months before the month you turn 65. If you don’t sign up during this initial enrollment period, your monthly Part B premiums may increase by 10 percent for each 12-month period you were eligible for Part B but didn’t claim it.

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View all Courses However, if you are covered by a group health plan based on your or your spouse’s current employment after age 65, you can avoid Medicare’s late enrollment penalty if you sign up anytime you’re still covered by the group health plan or within eight months of leaving the job or the coverage ending. “If you are currently working when you become entitled to Medicare, you don’t have to sign up for Part B if you have group-sponsored coverage through your employer or if your spouse does,” says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation. “If you don’t sign up for Part B when you are either first entitled or when you first don’t have other coverage, you will be subject to a late enrollment penalty.” COBRA coverage and retiree health plans are not considered coverage based on current employment for the purposes of avoiding the late enrollment penalty.

There’s also a late enrollment penalty that is applied to Medicare Part D premiums if you don’t sign up when you are first eligible or go 63 or more days in a row without prescription drug coverage. And a Medigap open enrollment period begins the month you’re first enrolled in Part B, after which you could be denied the option to buy a Medigap policy or it could cost significantly more.

Impact on Social Security. Continuing to work after age 65 is typically good for your Social Security payments. Most baby boomers aren’t eligible for unreduced Social Security payments until age 66, and for people born in 1960 or later, the full retirement age is 67. Payments further increase by 8 percent for each year you delay claiming up until age 70. “It can work in your favor to delay benefits in order to maximize the Social Security benefit that you will receive,” says Jim Blankenship, a certified financial planner for Blankenship Financial Planning in New Berlin, Illinois, and author of “A Social Security Owner’s Manual.” After age 70, there is no additional increase for waiting to claim your Social Security payments.

However, if you decide to sign up for Social Security benefits before your full retirement age while you are still working, part or all of your payments could be temporarily withheld. Social Security beneficiaries who are younger than their full retirement age will have $1 in benefits withheld for every $2 they earn above $15,720 in 2015. Retirees receiving Social Security payments who will turn 66 in 2015 can earn up to $41,880, after which one benefit dollar will be withheld for every $3 earned above the limit. However, once you turn full retirement age, you can earn any amount without having your benefit withheld, and Social Security payments are recalculated to give you credit for any withheld benefits.

Required minimum distributions. Withdrawals from individual retirement accounts typically become required after age 70½, and income tax will be due on withdrawals from traditional retirement accounts. However, if you are still working and don’t own 5 percent or more of the company you work for, you can continue to delay withdrawals from the 401(k) associated with your current employment until April 1 of the year after you retire, if the plan allows it. “When you turn 70½, if you are still working for an employer, you have a 401(k) and assuming that you don’t own 5 percent or more of the company, you can still delay taking money out of the 401(k),” says Howard Hook, an accountant and certified financial planner for EKS Associates in Princeton, New Jersey. However, withdrawals from IRAs and 401(k)s from previous employers will still be required, and there’s a steep 50 percent tax penalty if you fail to withdraw the correct amount. Additionally, retirement savers age 70½ and older are no longer eligible for a tax deduction if they make traditional IRA contributions.

Obamacare Open Enrollment: 3 Must-Know Facts for Year 2

Thursday, April 16th, 2015

Open enrollment for health insurance through the Patient Protection and Affordable Care Act runs from Nov. 15 through Feb. 15. Here are a few things you need to know to make sure you get the best deal that’s available to you.

1. You’re Not Stuck With Your Initial Plan

Those who are satisfied with the current coverage typically don’t need to do anything to keep that coverage, as their insurance company will automatically renew their policies if they don’t hear differently. But under certain circumstances, it makes a lot of sense to look at other options. •If your health has changed dramatically, then it might make sense to look at more comprehensive insurance plans. You’ll pay more in up-front premiums for higher-quality plans, but your out-of-pocket costs will typically be lower. You’ll have to run your own numbers to figure out which way leaves you ahead.
•Even if nothing has changed with you, you need to make sure that your plan didn’t change. In some cases, you’ll notice higher copayments and deductibles or more restrictive health-provider network choices that no longer fit your needs.
2. Penalties for Not Having Coverage Will Go Up in 2015

The Act’s cost structure was designed around the idea that it would get as many people as possible covered by health insurance, and paying for coverage. The bigger the pool of insured, the better it works for everyone. So the law penalizes those people who don’t buy qualifying insurance. During 2014, that penalty was limited to the greater of 1 percent of your income above the Internal Revenue Service filing threshold, or $95 per adult plus $47.50 per child within the household, up to $285 for an entire family. That may have gotten some attention, but for many people, it wasn’t enough to justify paying the costs involved in getting an health insurance.

For 2015, those penalties are on their way up. The percentage amount doubles to 2 percent of income over the filing threshold, and adults will have to pay $325 and kids $162.50, up to a family maximum of $975.

That larger amount still won’t be enough to get everyone to enroll, and exemptions consider factors like income, financial condition and other hardships. Nevertheless, government officials expect to emphasize the penalty more during this open enrollment period to encourage more people to participate.

3. Consider Your Obamacare Subsidy in Your Total Cost

One of the most attractive elements of the health insurance exchanges under Obamacare is that the federal government subsidizes premiums depending on your income level. Yet because income can change from year to year, your insurance company might only tell you what your gross premium before subsidies is, and that could leave you thinking that your rates just went up by a huge amount, when they haven’t really.

Subsidies are based on how your income compares to the federal poverty level. In general, the more you earn, the more you’re expected to pay for your own coverage, and the less of a subsidy you’ll receive. Caps for how much of your income you’ll pay range from 2 percent for those making less than 133 percent of the federal poverty level to 9.5 percent for those earning up to 400 percent of the federal poverty level.

Our Emergency Fund? It’s Already Topped By Our Medical Debt

Thursday, April 16th, 2015

Our health and our wealth are more closely tied than many of us realize. For example, you’re more likely to make necessary lifestyle changes to improve your health if you’re also saving for retirement. But a recent Bankrate.com study suggests that a big reason many American don’t save, even for emergencies, is because they have far too much health care debt.

It’s not exactly news that many Americans aren’t financially ready for an emergency, let alone for retirement. But a quarter of people completing the Bankrate survey reported that their medical debt was higher than their emergency savings fund. By comparison, 51 percent said they had more in emergency savings, and 24 percent either didn’t know or refused to answer. What that actually means is that 25 percent is, in fact, the lowest possible percentage among those surveyed with more medical debt than emergency savings — the true percentage is likely higher.

Depending on demographics, it gets worse. Among people who make less than $30,000, the percentage was 41 percent, and more than a third of parents with children under 18 had medical debt that outweighed savings.

More Financial Stress

“One of the messages we’re always emphasizing is the need to have some cash in case of emergency,” said Bankrate.com insurance analyst Doug Whiteman in an interview. “That’s difficult for a quarter of Americans who have more medical debt than they have emergency savings. This is another cause of financial stress for a lot of people, like stagnant wages and school loans [also are].”

And 55 percent said that they were either somewhat or very worried that they might not have affordable health insurance in the future. Half of men were worried, compared to 60 percent of women. Only 22 percent of all respondents weren’t worried at all.

Even the problem of medical debt doesn’t affect you personally, it still does indirectly. “I think this is an important issue that affects consumer confidence and the broader economy,” Whiteman said. “[People’s worries] about their health insurance or medical cost[s] … are additional reasons why they might hold back on their spending, which is something the economy needs to keep powering forward.”

What About the Affordable Care Act?

You might wonder why so many people still live in fear of medical debt — the potential future variety, not debt they’ve already taken on — given that Obamacare is designed to relieve some of the pressure and subsidize health care for families and individuals with lower incomes. But there are a number of reasons why the Affordable Care Act isn’t making more of a dent in their pessimism. •The ACA only came into full force this year. The most recent Health Reform Monitoring Survey from the Urban Institute’s Health Policy Center said that the uninsured rate among non-elderly adults is 13.9 percent. But there’s a great deal of existing debt that was incurred before the law took affect.
•Despite a nationwide campaign to get the word out, some people’s fears are likely due to a “lack of awareness of the Affordable Care Act,” according to Whiteman, who also said that “maybe people aren’t buying the promises being made by the law.”
•And then, 59.4 percent of uninsured adults said that they can’t afford coverage. That is likely due in part to the fact that in 20 states, Republican governors, legislatures, or both, have refused to expand Medicaid coverage, a move that has had a deep impact on the level of care available to the poor. (Currently, 27 states have expanded Medicaid; three more are considering doing so, or are floating alternative plans.)
•Many people opting for subsidized plans are choosing cheaper bronze plans that can have out-of-pocket deductibles as high as $6,350 for an individual or $12,700 for a family. Those options can easily lead to hard to manage debts after a significant accident or hospitalization — though far less than if the patient was uninsured.
Although critics have complained that the ACA and its attempts to remake the U.S. health care system would put the brakes on the economy, the numbers make it clear that it’s the converse that is true. Those millions of Americans who are still unable to get quality health care that they can afford are an anchor, dragging on economic growth. With their households in perpetual jeopardy of financial collapse, they can’t participate fully in the consumer economy — and consumer spending is the largest driver of GDP growth in America. Even those who firmly believe in the sink-or-swim school of economics should recognize that strapping lead weights to people runs counter to the twin goals of promoting personal responsibility and national economic recovery.