Will You Qualify for Obamacare Tax Credits in 2014?

Find out if you'll qualify for new health care credit available starting in 2014.

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Will you qualify for the new health care credit? It depends on how much you earn. Take a look at the following chart. It shows the maximum income households of various sizes can have to earn no more than four times the federal poverty level--the qualifying limit for the credit. If your household income is within these levels, you'll be among the 28.6 million Americans who will qualify for Obamacare health care credits starting in 2014.

For example, if you're single and have no more than $45,960 in income in 2014, you'll qualify for a health care credit. A family of four can earn as much as $94,200 and qualify.

Household Size

400%

1

$45,960

2

62,040

3

78,120

4

94,200

5

110,280

6

126,360

7

142,440

8

158,520

For each additional person, add

$16,080

Although they are called credits, the payments made under Obamacare are really a government-funded subsidy. You don't need to owe any income taxes to receive the credit. And it's paid directly to your health insurance company, not to you when you enroll in your health insurance plan. This means that you will not need to wait until your taxes have been filed and processed in to receive the credit; nor will you need to pay the full premium when you purchase health insurance and then wait to be reimbursed.

How much is the credit? It depends on your household size and income. Those with the lowest incomes will receive the largest tax credits. You can get an idea of how big a credit you'll qualify for by using theĀ Kaiser Family Foundation Health Reform Subsidy Calculator. Plug in your age and income numbers and the calculator will give you an estimate of your subsidy. For example, a 40-year-old single person who earned $35,000 would qualify for annual credit of $532. A couple age 40 who have two children and $75,000 in annual income would get a $4,422 credit. The older your are, the larger your credit, because your health insurance costs are higher. For example, a single person age 60 with $35,000 in income would qualify for a $4,866 credit--far more than a 40-year-old single.

So, you can see, we're talking about a fair amount of money--enough so that you should be able to purchase health insurance even if you don't have it now.

If you already have health coverage through an employer or your spouse's employer, you won't need or qualify for the health insurance credits, subject to two important exceptions:

  • your employer's health plan covers less than 60% of the cost of covered benefits, or
  • your share of the employer's premium that you must pay from your own pocket is over 9.5% of your income.

If either exception applies, you may enroll in a plan through you state health insurance exchange and be eligible for premium and cost-sharing subsidies.

Individuals and businesses will be able to purchase health insurance through state online health insurance exchanges. Each state will have its own exchange. Each state's exchange is supposed to be up and running on October 1, 2013, and you'll be able to enroll in a health plan with coverage starting in January 1, 2014. For details, visit the HealthCare.gov website.

May 2013

by: , J.D.

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