ACA subsidy trap for people who increase their income

[Wreckem]

I am willing to bet lot of people in low paying jobs get a subsidy, change jobs, do not know they have to go back and redo their health plan and will end up with a big bill come tax time.




Exactly right.

There are going to be a lot of low income families who think they are getting back a certain amount. They already have that money planned for a used car, new beds for the kids,,,, something they need.

Then they find out they are not going to get back near what they planned for. Guess what, no car, no new TV, no new furniture,,,.

Ummm what is your definition of low income? The subsidy phase outs are very much solidly in the middle class for families. The problem isn't going to be with families that have had a rise in income. Its going to be with singles. It doesn't take much for a single person to be bumped out of subsidies(where making $1 over $29k gives you a paltry subsidy, and anything over $29,999 gives you nothing). While a family of four making ~median household income still gets a hefty subsidy. When it comes to families, this issue will really only rear its head on families that move from middle class to upper middle class in a year.

And you don't get "back" a certain amount, the subsidies(credits) are given directly to the insurance companies, not refunded back at the end of the tax year.

 

[Wreckem]

What I think is an issue are low income families who may not realize if one or the other (or both) parents take a better paying job they may lose their tax return.

To say someone may go from flipping burgers to making $100k is not very realistic.

What does happen is someone goes from flipping burgers for minimum wage to making $17 an hour working construction. With a $10 hour jump the family may lose that subsidy, what then? Construction jobs do not provide health insurance for the family. After all obama decided to postpone the corperate mandate.

Father / husband works a few months construction in a chemical plant then gets laid off. It happens all the time around here.

End of the year family finds out they owe the government money.

A lot of low income families depend on that tax return to buy stuff they would otherwise not be able to afford. Now there is a clause they may not be aware of that allows the government to take that return.

You don't know the range of subsidies and cutoffs/phaseouts for said subsidies do you. In your hypo, a family would still be receiving quite a sizable subsidy(they might possibly even be eligible cost sharing, depending on family size). A single person, not so much. I am not sure you know much about the ACA or how it works because almost everything you have stated has been incorrect.

 

[Texashiker]

almost everything you have stated has been incorrect.

What have I been incorrect on?

Ahhh, another Texashiker. No matter how many different ways you explain it to him he'll never change his crazy hard headed stance.

Please explain to me how someone who can not understand "plus jalapenos on that burger" is supposed to understand the ins and outs of the ACA subsidy.

Someone working at sonic for example gets a job offer to go work construction, does not redo his ACA plan, is hit with a bill at the end of the year.

How difficult is it to understand this is going to pose a huge downfall to low income families.

 

[Atomic Playboy]

Please explain to me how someone who can not understand "plus jalapenos on that burger" is supposed to understand the ins and outs of the ACA subsidy.

Someone working at sonic for example gets a job offer to go work construction, does not redo his ACA plan, is hit with a bill at the end of the year.

How difficult is it to understand this is going to pose a huge downfall to low income families.

It's not going to pose a huge downfall to low-income families, it's going to pose a huge downfall to low-income families who become middle class families without remembering to adjust their healthcare that they've been explicitly warned to change in the event of a change of income. I also disagree with you characterizing all low-income workers as so profoundly stupid that they literally can't understand the command "no onions;" it's much more likely that they can't be bothered to give a shit for minimum wage. But I do like your example where every minimum wage earner in the country has the intellectual capacity of a pickled beet, but is somehow going to find a job that drastically increases their income in the next year, just so the government can swoop in and take advantage of their profound mental handicap to steal money they were only given through their own negligence.

How many people do you honestly think this will affect next year? Give me a ballpark number. A million families? Ten million families? Three guys in the Rust Belt? How big a problem do you see this being?

 

[Don Vito Corleone]

Who do you think the majority of democrat voters are? Wealthy liberals who have nothing better to do than push a social agenda and people on welfare.

Dear lord are you out of touch with reality. http://www.ropercenter.uconn.edu/elections/how_groups_voted/voted_12.html

 

[Texashiker]

I also disagree with you characterizing all low-income workers as so profoundly stupid that they literally can't understand the command "no onions;" it's much more likely that they can't be bothered to give a shit for minimum wage. But I do like your example where every minimum wage earner in the country has the intellectual capacity of a pickled beet, but is somehow going to find a job that drastically increases their income in the next year, just so the government can swoop in and take advantage of their profound mental handicap to steal money they were only given through their own negligence.

Any job worth doing is worth doing well.

If you are not going to do a good job for $7.75, you are not going to do a good job for $10 or $12 an hour.

It goes back to work ethic. You are either going to do a good job, or you aren't, its that simple.

How many people do you honestly think this will affect next year? Give me a ballpark number. A million families? Ten million families? Three guys in the Rust Belt? How big a problem do you see this being?

You asked for a number, lets just say 10,000. I think that is a low number.

We will have to wait and see the reported numbers around March and April of next year, which just happens to be right after the mid-term elections.

 

[Wreckem]

What have I been incorrect on?




Please explain to me how someone who can not understand "plus jalapenos on that burger" is supposed to understand the ins and outs of the ACA subsidy.

Someone working at sonic for example gets a job offer to go work construction, does not redo his ACA plan, is hit with a bill at the end of the year.

How difficult is it to understand this is going to pose a huge downfall to low income families.

Your whole premise of this effecting low income families for one. Most everything else for two.

Going from wages where your children are eligible for medicaid to still less than median household income won't have much effect on a persons subsidy. Going from median income to $100k would though. So it would effect middle class moving up to upper middle class, not low income. I am not going to cry over people moving to upper middle class losing their subsidies.

Now slight changes in income for a single. Yeah they are fucked when it comes to subsidies.

 

[Wreckem]

Any job worth doing is worth doing well.

If you are not going to do a good job for $7.75, you are not going to do a good job for $10 or $12 an hour.

It goes back to work ethic. You are either going to do a good job, or you aren't, its that simple.




You asked for a number, lets just say 10,000. I think that is a low number.

We will have to wait and see the reported numbers around March and April of next year, which just happens to be right after the mid-term elections.

How many of them are going to be low income? None. All of them would be middle class/upper middle class.

 

[Atomic Playboy]

You asked for a number, lets just say 10,000. I think that is a low number.

We will have to wait and see the reported numbers around March and April of next year, which just happens to be right after the mid-term elections.

There are roughly 150 million Americans in the labor force. You think 10,000 of them are going to be affected by this... That's a really trifling amount, isn't it? But I suppose we should be commending those 10,000 on dramatically improving their long-term financial situation by finding better employment, even if it comes at the short-term expense of losing money because they didn't realize they were collecting a subsidy they weren't entitled to. They'll get past it.

I still think that estimate is pretty high, so let's revisit this next year when the numbers come in. If 10,000+ people have been nailed for collecting an inadvertent subsidy because of an unreported increase in their income, I owe you a beer.

 

[Wreckem]

There are roughly 150 million Americans in the labor force. You think 10,000 of them are going to be affected by this... That's a really trifling amount, isn't it? But I suppose we should be commending those 10,000 on dramatically improving their long-term financial situation by finding better employment, even if it comes at the short-term expense of losing money because they didn't realize they were collecting a subsidy they weren't entitled to. They'll get past it.

I still think that estimate is pretty high, so let's revisit this next year when the numbers come in. If 10,000+ people have been nailed for collecting an inadvertent subsidy because of an unreported increase in their income, I owe you a beer.

Most people that are going to be nailed are people who lied about their income(by only stating their income and not household income) or by not being eligible for subsidy to begin with. IE: A persons spouse works for a company that offers insurance coverage for spouses, no matter how un-affordable that coverage is, it bars the spouse without insurance from getting subsidies.

Also, Texhiker is leaving out the fact as long you don't exceed 400% of the poverty level, you are capped on how much you will have to pay back if your household income goes up. Take for example, a family of four starts the year out making $50k. Their initial subsidy is ~$4925. If they end the year making $80k and have to pay back $2500 of the ~$4925. If they made over $94000, they'd have to pay back all $4925.

Now lets use Texhikers low income hypo. We will have to fill in some details, so we will assume it is a family of four and both spouses started out at minimum wage and the husband then got a job making $17/hr. So they started out at $29k and moved up to ~$48.5k. If they aren't on a state that expanded medicaid, they would get a ~$8290 subsidy and only have to pay ~$580 a year for health insurance(silver plan). Once they moved up to $48.5k, they'd have to pay back $1500 of that subsidy since their new income falls in between 200% and 300% of the poverty level. So their premiums for the year would be ~$2080. They may have to pay $1500 more for premiums, but they did gross an extra $19.5k, so they come out way ahead to the tune of ~$13-$15k after taxes, fica, and the subsidy clawback. The people moving from $50k to $94k and having to pay it all back increased their income by well over $30k once all is said and done. Would I rather pay ~$5k more in premiums and bring in more than $30k more net? You fucking betcha. Same would go for the $1.5k and bring in additional $13-15k net.


The $ amounts above are based on the US average. Don't forget subsidies are based on % of your income going towards premiums. Subsidies will be higher for certain states with higher insurance rates and lower in states with lower insurance rates.

 

[DrPizza]

What have I been incorrect on?




Please explain to me how someone who can not understand "plus jalapenos on that burger" is supposed to understand the ins and outs of the ACA subsidy.

Someone working at sonic for example gets a job offer to go work construction, does not redo his ACA plan, is hit with a bill at the end of the year.

How difficult is it to understand this is going to pose a huge downfall to low income families.

It's not a downfall. The amount that they would have to pay back is a tiny percent of the increase in income. You seem very dedicated to not comprehending this. I'll try to put it another way, with an analogy:

Let's say you ask the electric company to figure out how much electric you use each month and bill you the same from Jan through Dec., and your meter is only read at the end of the year.

So, a family uses their electricity usage for the previous year to estimate it. The family knows exactly how much they used in January, and the bill is right on. THEN, in February, the family buys an electric car. The drive 300 miles each day and completely recharge it every night.

YOU apparently think that at the end of the year, the electric company shouldn't be able to recoup the extra costs? You think that it's too complicated for the family to realize that they're going to owe some more money?

 

[Victorian Gray]

Yeah, this has the potential to be a problem. Most people aren't very good at estimating their income for the future (next yr in this case).

The problem is the result of the 'corrective payment' (IDK what it's called) and the (new) increased premium both being lumped together and due in the same year. A double whammy in a single year. (There's also the possibility of additional and unexpected income taxes being due as well.) That can screw up their budget.

I expect that this is one part of Obamacare to be extended/ignored.

BTW: IIRC, there were numerous reports that the ACA 'assistors' were encouraging people to understate income to help enrollment. Also, there are limits on how much many will have to repay if they understated income. That could have an interesting effect on cost estimates.

Fern

And I'm sure that you won't mind providing us links where we can see some of those "numerous reports" that were, I'm sure, well researched and proven to be true.

 

[Darwin333]

People know they have to pay income tax.

This ACA is a new program. People probably do not know how it works. They just get on the healthcare.gov website, sign up, see the price and think how obama is doing a great thing.

Its a great thing until you get a better paying job and are hit with a big tax bill.

Just to be clear, are you for people keeping subsidies that they didn't deserve or are you just for people who aren't smart enough to figure out the terms of the money they are getting?

 

[Texashiker]

There are roughly 150 million Americans in the labor force. You think 10,000 of them are going to be affected by this... That's a really trifling amount, isn't it?

No matter what number I gave you you would find something wrong with it.

The people who need the ACA the most are barely getting by. Being hit at the end of the year with an unexpected tax bill could be financially devastating.

You seem very dedicated to not comprehending this.

You are good at throwing insults around. I expect no less from a teacher.

You also seem to be disconnected from the working poor. Somehow you think someone can magically go from minimum wage to $100k a year, and then they are going to buy an electric car.

It must be nice to come from such wealth that you think money grows on trees.

We are talking about people who the ACA was "supposed" to help. It is going to help them alright, as long as they do not try to better themselves.

The working poor already have enough barriers facing them when it comes to upward mobility. Having to pay back the subsidy at the one time of the year these people have expendable income is going to spell disastrous for a great number of families.

 

[theeedude]

If you unexpectedly start making enough to not qualify for an Obamacare subsidy, you are not the working poor anymore. You are making $46K as an individual or $94K as a family of 4. If having to repay your Obamacare subsidy, which pays for insurance you should carry anyways, is going to be financially devastating to you when you are making $94K, then you are an idiot, and deserve no sympathy from anyone except the kinds of people who have sympathy for idiots. Namely other idiots.

 

[cabri]

If you unexpectedly start making enough to not qualify for an Obamacare subsidy, you are not the working poor anymore. You are making $46K as an individual or $94K as a family of 4. If having to repay your Obamacare subsidy, which pays for insurance you should carry anyways, is going to be financially devastating to you when you are making $94K, then you are an idiot, and deserve no sympathy from anyone except the kinds of people who have sympathy for idiots. Namely other idiots.

94K is roughly $45/hr gross
Take away 9% for SS/Medicare, avg 6% State income tax and 20% Fed Tax and you have about $1200 Net (may not even be take home.)
Unsubsidized plans will run between $600-1800/month for a family of 4.

So you have the insurance being forced on you taking between 15 and 25% of your salary.

Yes, that will be devastating.

Most people would love a 10% salary boost, but in this case it will cost them from 5-15% of the previous income level.

 

[DCal430]

Ummm what is your definition of low income? The subsidy phase outs are very much solidly in the middle class for families. The problem isn't going to be with families that have had a rise in income. Its going to be with singles. It doesn't take much for a single person to be bumped out of subsidies(where making $1 over $29k gives you a paltry subsidy, and anything over $29,999 gives you nothing). While a family of four making ~median household income still gets a hefty subsidy. When it comes to families, this issue will really only rear its head on families that move from middle class to upper middle class in a year.

And you don't get "back" a certain amount, the subsidies(credits) are given directly to the insurance companies, not refunded back at the end of the tax year.

You are wrong. People who make under 133% of Poverty, 31,000 for a family of 4 are disqualified for the subsidy.

If a family of 4 signs up and when they signed up they believed their income was 35,000, and when they file if their income is 31,000 or below in stead they must repay the whole subsidy.

 

[Vic]

94K is roughly $45/hr gross
Take away 9% for SS/Medicare, avg 6% State income tax and 20% Fed Tax and you have about $1200 Net (may not even be take home.)
Unsubsidized plans will run between $600-1800/month for a family of 4.

So you have the insurance being forced on you taking between 15 and 25% of your salary.

Yes, that will be devastating.

Most people would love a 10% salary boost, but in this case it will cost them from 5-15% of the previous income level.

Your math is for shit. 65% of $94k/yr is $5,091.67/mo.

 

[Atomic Playboy]

94K is roughly $45/hr gross
Take away 9% for SS/Medicare, avg 6% State income tax and 20% Fed Tax and you have about $1200 Net (may not even be take home.)
Unsubsidized plans will run between $600-1800/month for a family of 4.

So you have the insurance being forced on you taking between 15 and 25% of your salary.

Yes, that will be devastating.

Most people would love a 10% salary boost, but in this case it will cost them from 5-15% of the previous income level.

You're comparing $1,200 net PER WEEK to insurance costs of $600-1800 PER MONTH. Do you see the problem there? No matter how dirty the estimate you use, framing one value as weekly and one as monthly throws off the comparison. If we use ~$5,000 PER MONTH net income, $600-1800 doesn't seem like quite the imposition. If you can't afford food and shelter for a family of four on $94,000 a year, it does leave one to wonder how on Earth you manage to do anything; the vast majority of the country manages to get by on a lot less.

Also, a 10% salary boost to $94K would mean someone was originally making ~$85,500 annually; the ACA subsidy one would qualify for at that income level is tiny ($168 annually according to this calculator). In what world do you forego $8,000 in income to save a $168 subsidy?

 

[theeedude]

Looks like APB beat me to the calculator link.

 

[Londo_Jowo]

this calculator

Good thing I work for a self insured company and only pay a fee for an insurance company to administer the plan. Based on that calculator monthly premiums (admin fee) would double ($350/month* to $690/month) and my family max out of pocket could potentially triple ($12.7k vs $4k). My current deductible is $300 individual/$700 family and max out of pocket is $2,000 individual/$4,000 family.

*Medical, dental, & vision

 

[MixMasterTang]

94K is roughly $45/hr gross
Take away 9% for SS/Medicare, avg 6% State income tax and 20% Fed Tax and you have about $1200 Net (may not even be take home.)
Unsubsidized plans will run between $600-1800/month for a family of 4.

So you have the insurance being forced on you taking between 15 and 25% of your salary.

Yes, that will be devastating.

Most people would love a 10% salary boost, but in this case it will cost them from 5-15% of the previous income level.

A married couple with 2 kids making 94k a year will have a taxable income of 66,200 or less. Federal tax will be 9000 unless they qualify for the child tax credit, and then it would only be 7000. And this is without itemizing. SS is 6.2% and Medicare is 1.45% for a total of 7.65% which would be 7191. So your numbers are actually way off. State tax rates are mostly progressive as well, but even the full 6% on their taxable income would be just under 4000. So total taxes would be ~$20,000 at most for a total weekly net pay of 1423 or a monthly net pay of $6166. And this is at the absolute low end.

 

[DCal430]

Someone actually poor can get a hardship exemption for the tax.

And because it's early and my snark isn't fully awake yet, someone teetering past the edge of the subsidy cutoff can open an IRA and use the deduction to drop their avg income back down into the subsidy range.

Actually someone actually poor doesn't qualify for subsidy, the subsidy is only for those making over 133%+ of poverty level. The medicaid expansion was suppose to cover those under 133%, but this has been killed in almost half of the states. So in those states people who make under 133% will get nothing, no insurance, no subsidy, nothing. Those with power (right wing conservatives) expect these people to just roll over and die.

 

[cabri]

You're comparing $1,200 net PER WEEK to insurance costs of $600-1800 PER MONTH. Do you see the problem there? No matter how dirty the estimate you use, framing one value as weekly and one as monthly throws off the comparison. If we use ~$5,000 PER MONTH net income, $600-1800 doesn't seem like quite the imposition. If you can't afford food and shelter for a family of four on $94,000 a year, it does leave one to wonder how on Earth you manage to do anything; the vast majority of the country manages to get by on a lot less.

Also, a 10% salary boost to $94K would mean someone was originally making ~$85,500 annually; the ACA subsidy one would qualify for at that income level is tiny ($168 annually according to this calculator). In what world do you forego $8,000 in income to save a $168 subsidy?

I was going from no subsidy @94K. Original quoted post did not indicate what the original subsidy was - I treated it as a full subsidy.

Your math is for shit. 65% of $94k/yr is $5,091.67/mo.

Which is roughly $1200/wk

 

[Vic]

Which is roughly $1200/wk

It's $1,175.00/wk exactly. Which you then compared to monthly payments for presumably dishonest reasons.