The new law that took effect in 2010 did not have clear implementing guidelines until last year, when the government website started to run and then failed.
When ACA came into effect, lawmakers hoped that individual states would set up their own exchanges. While cost of administration is a major factor, some states including New York, promptly set up a working website, complete with an estimator where you could calculate your actual premium, compare plan benefits and choose the providers. Each county has different providers.
Setting up the account through the exchange can take a little bit of time, as you fill in the basic personal questionnaire. If you are not sure that you will buy health coverage from the exchange, use the premium estimator.
For a quick glance, log in and put your numbers: https://www.healthbenefitexchange.ny.gov/calculator
Getting started in the application process means enabling an extension for you to complete the application beyond the March 31 deadline.
Your first predicament is how to calculate your taxable income. You can start by adding wages, salaries, tips, unemployment compensation, social security payments including disability, but excluding SSI and worker’s compensation.
Add your net income from business or self-employment, that is, after deducting allowable expenses. If married, filing a joint return, include both incomes. If you have a dependent, who makes enough money required to file a tax return, include that income. For further details, refer to the IRS publication: https://www.irs.gov/pub/irs-pdf/p525.pdf
From your gross income, take off the standard deductions and personal exemptions for 2013, as follows: if married filing jointly, $12,200 but if filing separately, or if single, $6,100 ; if head of a household, $8,950, plus additional deduction of $1,500 if you are single, or $1,200 if married, age 65 or over. Take additional personal exemptions of $3,900 for yourself and every dependent child.
Let’s look into a few cases. If you are single below 30, and you hardly go to doctors, with taxable income of $55,000, you can opt for a catastrophic plan without tax credit, amounting to $186 per month for Empire Blue Cross Blue Shield.
But if you are a family of four (parents with two children), a Gold plan from said company will cost $658 per month, after tax credit. MetroPLus offers the same plan for $403 per month, after tax credit. Compare the plans offered by different companies, use the calculator link provided above. If you choose to get it outside the exchange, there will be no tax credit. The best solution is, if there is a spouse who works for a company and can get it using pretax dollars.
Now, if you need to take more deductions, opening an Individual Retirement Account may qualify you for a lower premium and kick back free money through the Earned Income Tax Credit.
You have until April 15 to catch up with an IRA, but on the same date, you must file your returns or request for an extension. It is a win-win situation, even if you have to dip into your emergency fund to place in an IRA now, in order to reduce your taxes, your insurance premium and maybe qualify for tax refund or get an earned income credit.
The marketplace application will help you figure out your Modified Adjusted Gross Income, but before you get there, use the link to estimate your premiums due, and see if you qualify for tax credit or not.
It may make more sense for some to get health insurance plan outside the marketplace, or, even considering paying the penalty of $95 per person (plus $47.50 per child under 18 yrs, up to a maximum of $285 per family), or 1% of your taxable income, whichever is higher. Those qualified for Medicaid, or transitioning from Medicaid under Family Health Plus are not covered by ACA.