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Forum
-> Household Management
-> Finances
tryinghard
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Mon, Dec 28 2015, 8:59 pm
To the tax professionals among us:
I just noticed a mention of the healthcare subsidy tax credit which is new for 2015. Am I correct in understanding that if you qualified for a subsidy, had insurance, and did not use the subsidy, you can qualify? Or is it only for marketplace plans?
ie if I had employer-provided insurance, and therefore didn't use the subsidy that my income level seems to indicate I would qualify for, do I qualify for the credit?
Thanks!
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Amarante
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Mon, Dec 28 2015, 9:54 pm
The tax credit is only available if you purchase through the market place. Most people take the credit in the form of a subsidy towards payment each month. That amount is paid to the insurance company each month.
If you are receiving health insurance through your employer, you are are already receiving a tax benefit since the value of the policy isn't taxed to you and the employer can deduct it as a business expense like wages.
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tryinghard
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Tue, Dec 29 2015, 7:00 pm
Ah well, I thought it sounded too good to be true... Thanks!
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amother
Blush
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Tue, Dec 29 2015, 8:17 pm
I'm so unclear whether the subsidy comes off of my tax refund.
I need to decide within next two days wether to join through marketplace or pay the fine and not have insurance.
To me at the point this insurance sounds more like a nightmare as I can't afford the premiums and if I allow subsidy it seems to mean that I won't get a tax refund.
I'm wondering if anyone knows more info ????
I've been googling and googling and this seems to be the situation.
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Amarante
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Tue, Dec 29 2015, 8:32 pm
It has nothing to do with your tax refund. It's a tax credit and the amount is based on your Adjusted Gross Income.
You estimate what your income will be for 2016 and the subsidy is based in that. If you make more money in 2016 than the estimate, the subsidy is less so the amount you underpaid, is deducted because you were paid money in the form of a subsidy throughout the year.
If you over estimated your income, you would receive more money when you file taxes in 2016.
In my opinion, paying the penalty and not having medical insurance is not very prudent because you would be wiped out in the event of a medical emergency.
You pay the penalty for each member of your household so the amount is not insubstantial.
Just my opinion, but why are you letting the government have your money by not calculating your exemptions and deductions mor accurately. If you are receiving a significant tax refund, you are cheating yourself because you could have used that money during the year. You could have invested it because the government pays no interest on the money it owes you :-)
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kb
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Tue, Dec 29 2015, 9:03 pm
Iirc, the penalty is pretty close to some of the premium amounts.
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kb
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Tue, Dec 29 2015, 9:06 pm
I just realized what you're asking.
It has nothing to do with your refund. The govt gives a credit to you for getting health insurance. Let's say they give you $50 a month. You can either get a $50 credit off your monthly premium, or at the end of the year (assuming your income matches what you told them it would be) you can get a $600 credit back.
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Amarante
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Tue, Dec 29 2015, 9:07 pm
I want to add that you can adjust your estimate during the year if it turns out that you were completely off base. For example, if you lose your job or if you suddenly get a huge raise.
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amother
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Tue, Dec 29 2015, 9:19 pm
Thanks for the info, I appreciate it.
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