Health Insurance Subsidies Explained

RENO, Nev. - Oct. 22, 2013 - PRLog -- The Affordable Care Act (ACA) will require nearly all legal residents of the U.S. to obtain “minimal essential” healthcare coverage starting in 2014. On October 1^st, the Nevada Health Exchange, also called Nevada Health Link, opened in order to help you and your family meet the requirements of the new ACA mandate. To make coverage more affordable, the law makes subsidies available to individuals and families whose incomes are up to 400 percent of the poverty level, or about $46,000 per year for a single person.

These subsidies will take the form of a tax credit that you will be able to use right away to lower your monthly premium costs. The amount of credit an individual or family is eligible for depends on income, not assets, and how much they would pay for the second least-expensive “Silver” policy in the Nevada Health Exchange. A Silver policy pays for about 70 percent of your covered healthcare expenses.

The amount of the tax credit decreases with your income level. For example, an individual or family at 400 percent of the poverty level will pay no more than 9.5 percent of family income toward a Nevada Health Exchange policy; families at lower income levels will contribute an even lower percentage of their income.

One of the subsidies available is called an Advance Premium Tax Credit (APTC). Once you fill out your application, Nevada Health Link or a broker will tell you if you qualify for the credit.

If you do qualify, the credit will go directly to the insurance company so you will be paying less on your monthly bills right from the start.

Cost Sharing Reductions (CSRs) are another subsidy available to lower your out-of-pocket healthcare costs. Individuals and families who make less than 250% of the Federal Poverty Level ($27,295 for an individual and $57,625 for a family of four) are eligible to receive CSRs.

Will tax credits make it worthwhile for you to buy coverage on the Nevada Health Exchange?

Health insurance on the Nevada Health Exchange will cover a larger share of your healthcare costs and provide a slightly wider range of benefits than most individual policies have traditionally covered. If you have a grandfathered individual policy, your premiums may go up if you replace it with a Nevada Health Exchange policy.

If your employer offers health benefits, the tax advantages of employer-provided coverage almost always make it less expensive than individual coverage, even if you pay a significant share of premiums.

On the employer side, many businesses may qualify for tax credits if they provide insurance coverage for their employees. To qualify for tax credits an employer must:

·         have 25 employees or fewer

·         have average firm wages of $50,000/year or less

·         provide health insurance coverage for employees (the employer must contribute a minimum of 50% of the cost of their employees’ coverage)

·         file the appropriate tax returns (Form 8941; Line 44f of Form 990-T for exempt organizations) with their tax preparer

Tax credits are available now and increase in 2014, so please consult with a broker to figure out if your business qualifies. For more information on available subsidies, please call 775-329-3041 x 107.