Monday, September 02, 2013
People here in Connecticut can begin to sign up for individual medical insurance this fall, through Access Health CT, and at the same time apply for help paying their premium. Eligibility for help will be based on the household income they reported to the IRS for 2012. This new program, which I call premium support is technically an Advance Premium Tax Credit (APTC), begins January 1st for those that qualify. It will be managed by Access Health CT and monitored by the IRS.
Let’s look at how eligibility works. A Single person, after being in a part time position for a couple years, applies and gets help starting in January. Then they get a new full time job in May. The IRS will:
● Have received information on their APTC and on everyone who was approved.
● Reconcile income changes, such as going to full time, when the person files their tax return for 2014.
● Request full repayment of the tax credit for months when the new income is higher than 400% of Federal Poverty Level (FPL). This level is about $46,000 for a single person and $94,000 for a family of four.
● Request a limited repayment if the new household income continues to be below 400% of FPL. When a person’s tax credit was too high for certain months their max liability for the year is currently limited to:
+ $2,500 when income is 300% to 400% of FPL
+ $1,500 when income is 200% to 300% of FPL
+ $600 when income is less than 200% of FPL
The new help program also enrolls individuals whose FPL is 400% and below in a plan with a lower maximum out of pocket (MOP) on the expenses for which they are responsible. When income is below 250% of the FPL individuals are also enrolled in a plan with reduced co-pays and cost sharing. Any benefit payments received under these cost sharing reduction provisions will not have to be paid back if their income increases above these levels.
This summary has focused on the eligibility for help, which is based on a person’s household income. How much of their premium will be paid, or the amount of APTC, however is based on an individual’s age.
Let’s look at how this special payment works: Person A is age 32 & person B is age 62. Both are Single & each earns $40,000:
● The max amount A & B will pay each month is based on a percent of their household income, which is 9.5% at $40,000. Thus, A & B will both have to pay $316.66 each month.
● The APTC is determined by taking the premium for the second lowest priced Silver plan for that person and subtracting their share or the $316.66 in this example from the total. A person's premium is based on their age and geographic location and the plan they selected.
● The resulting APTC will be sent to the Health Insurance Company they selected and the company will then send both person A & B an invoice at home for their $316.66 each month. Their payment will be made on an after tax basis.
Questions on the premium support program or other parts of federal health reform? Call (860) 451-9793.
John C Parker, RHU, LTCP