The current frontrunner for the 2024 presidential nomination surprised his party and most of the country last month when he declared he would again try to repeal and replace the Affordable Care Act (ACA) if he gets back into the White House .
Even if Donald J. Trump's swipe at Obamacare, as the health care program still is known, is more than just campaign rhetoric, the reality of repeal is difficult. His administration was not able to end the health law during his 2017-2020 term. Trump also never provided his long-promised replacement for the ACA.
Now, even some in his own party believe that such a pledge (or threat, depending on your politics) is not worth the effort. Since the ACA became law in 2010, Obamacare is popular across the country, even in conservative areas that consistently elect Republican lawmakers.
Most Republicans in Congress "have no alternatives and have absolutely no desire to revisit the issue," said Greg Valliere, chief U.S. policy strategist at AGF Investments.
ACA enrollment time ticking down: Trump's Obamacare comment came just as the annual enrollment season for health care coverage under the ACA is winding down.
If you need medical insurance, need to make changes to your current marketplace plan, or want to switch to new coverage, you have until Dec. 15 to do so. The changes will take effect Jan. 1, 2024. Get started now at HealthCare.gov.
Even if you want to keep your same plan for next year, keep in mind a couple of things.
First, certain income and household changes can impact the savings for which you qualify. So review and update your application to make sure you choose the best plan for next year.
Second, your health care needs and budget may have changed since you last applied. Other available plans might better fit your new financial and health care needs.
Subsidy help to pay for coverage: Many people who buy medical insurance through an exchange qualify for tax credits.
The Premium Tax Credit (PTC) was created as part of the ACA. This tax break, which already was great because as a tax credit it is a dollar-for-dollar reduction in your tax liability, helps pay for part, and in some cases most, of a marketplace plan.
The amount of the credit is based on a taxpayer's annual household income multiplied by an "applicable percentage" that's calculated using the federal poverty line (FPL) for the taxpayer’s family size.
In response to financial challenges created by COVID-19 and private and governmental efforts to stem the spread of the virus, the PTC was enhanced in 2022 for some taxpayers a part of the American Rescue Plan Act. This change was extended through 2025 by the Inflation Reduction Act.
The coronavirus pandemic-prompted changes effectively increased the PTC amount by eliminating the income cap on credit eligibility through 2025. Prior to 2021, the tax subsidy to help pay was available only to low income taxpayers, specifically, those whose household income did not exceed 400 percent of the federal poverty line. Congressional revisions opened the credit to taxpayers with above the poverty line cutoff, effectively eliminating the income cap for premium subsidies through 2025.
Finding coverage, and tax help to pay for it: As with most tax provisions, the calculations can cause your eyes to glaze over.
When you go to the health exchange website, you start with your 2023 modified adjusted gross income, or MAGI. This is your adjusted gross income plus any tax-free interest, nontaxable Social Security benefits, and tax-exempt foreign earned income you received. You then add or subtract any income changes you expect in 2024.
The IRS' online Premium Tax Credit Change Estimator can give you an idea of your expected health care coverage credit. But because it's only an estimate, note that your final filing reconciliation on your tax return could be different.
Healthcare.gov also will take you through the coverage selection process and how the PTC figures into your choice.
PTC payment choice: Once your PTC amount is determined, you have two options as to how to get it.
You can wait until you file your tax return and claim the PTC to cover the insurance costs you have paid out of pocket.
Or you can have your PTC amount paid in advance directly to the health insurance company. This lowers your monthly payments, and, no surprise, is the choice most PTC eligible taxpayers make.
If you get the PTC in advance, you must file a federal income tax return the next year and complete Form 8962, Premium Tax Credit, to calculate your credit based on your actual filing, not just your earlier estimates. This two-page form, an excerpt of which is shown below, reconciles that amount with any advance payments made to your insurer.
If your PTC exceeds the premium advances, you get the excess as a refundable credit on your 1040. That means even if you don't owe tax, the excess is delivered to you as a tax refund.
If your final PTC filing show the amount you're due is less than the advances, you must repay all or part of the excess.
More PTC assistance from the IRS: In addition to Form 8962, IRS.gov has a variety of additional PTC information, including The Premium Tax Credit - The Basics; IRS Publication 974, Premium Tax Credit (PTC); IRS Publication 5120, Premium Tax Credit fact sheet; IRS Publication 5195, The Premium Tax Credit and Your Tax Return fact sheet; and Eligibility for the Premium Tax Credit.
You also might find these items of interest:
- More states now offer health care marketplaces
- When health insurance premiums are tax deductible
- Tax help for those who lost healthcare along with their jobs
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