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Affordable Care Act update, part 2

WALSENBURG — Part 1 presented the tally of people who had signed up for health insurance through the national and Colorado exchanges as of the deadline on March 31, 2014. It also listed the qualifying events that would allow some to continue the process of signing up and some to change plans during 2014. Part 2 will first address the tax penalty that will be paid in 2014 by persons who don’t have health insurance. One source of confusion has been the exact amount of tax which will be assessed to taxpayers without health insurance. While it was thought the first-year penalty was only $95 dollars for each adult and $47.50 for each child up to a maximum of $285 per family, the rest of the statement reads “or one percent of household income above the filing threshold,” whichever is higher. The filing threshold in 2014 is $10,500. So a single taxpayer without health insurance earning $35,000 a year (minus the $10,500) will be taxed 1% of $24,500 or $245. The dollar amount of the penalties are scheduled to increase each year. To estimate apenalty for 2014, use the following link: http://taxpolicycenter.org/taxfacts/acacalculator.cfm. If you did not sign up for the exchange, it may already be too late as we discussed last week, but if your income falls within the 138% of federal poverty level (185% if you are pregnant), you may be exempt or eligible to sign up for the state Medicaid program. County of residence and household size matters when determining eligibility, so if your income falls within the grid below, you may be eligible to enroll for the state Medicaid program and apply for medical benefits that way. See your local county department of social services. Children still may qualify under the CHP+ plans. There are many other types of exemptions, including being homeless, facing eviction or foreclosure, being a prisoner or illegal immigrant, being a victim of fire or flood or being eligible for Medicaid in a state that chose not to expand Medicaid. Besides providing a health insurance marketplace for individuals, Colorado has a Connect for Health Small Business Marketplace where employers with two to 50 fulltime or fulltime-equivalent employees may shop for health insurance for their employees. The number of small employers who signed up for the exchange fell short of expectations during this first year. Small businesses sought to enter the marketplace with the promise of better, lower cost benefits. Small businesses would receive those benefits in the form of tax credits. The credits could cover up to 50% of contributions employers made for health coverage for employees and their families. However, the exchange was confusing to small business owners, because they were required to process insurance papers for each employee and might have to work through as many as fifteen pages to determine the exact number of credits received. Also, because small businesses were offered tax credits, most small businesses would not get immediate relief in the cost of premiums. They would need to wait until their taxes were filed to get the credit against taxes. The tax credits would not come in the form of a refund if the company was not profitable that year; instead the credits would carry forward to the next year. Employers came to realize they had three options. First, they could continue with their current plan and take the tax deduction off their business expenses. Another option was to buy through the exchange as a small business and receive the small business tax credit. A third option was to not offer group plans but let let their employees go into the exchange themselves and get their own tax credits. The third option seems to be the one many small employers are choosing because calculating the business credits can be costly and might require a part time CPA to calculate the premiums and tax credits. The final piece of the puzzle to discuss involves changes that will affect customers next fall. The Certified Health Care Assistants who have been guiding individuals through the system were employed and paid by federal and state grants. The grants expire this year and there will be no assistants to answer questions next year. However, Certified Brokers will still be running their businesses and helping people chose or change plans. There is no cost to utilize their services. The insurance premiums are still the same and it is the companies who pay the brokers to direct new customers their way. It will be up to the brokers and Connect for Health Customer Service Representatives to assist customers in fall 2014 when it comes time to renew or change plans.