Obamacare question (of sorts)

[Black Bart]

Lady came in last week -- asked "Can anyone get on Obamacare?" Unsure of her puzzlement, we talked and she explained that her daughter (age 45/unmarried/no kids) lives with her--just the two of them; no spouses or other relatives. Daughter has never worked, receives no government checks or other support of any kind and mom (who is now on Social Security/Medicare) has always furnished everything.

The question: She said since daughter didn't work, was not disabled (other than being lazy), doesn't qualify for Medicaid, and since she had heard everybody in the U.S. was now going to have health insurance, would Obamacare cover her Daisy Mae? She thought it would be nice in case the gal came down with something (hmm, maybe bed sores I guess).

As I understand it, if no tax return's required, that's the end of it--but you still get no free lunch (insurance). True?

Come to think of it, what about people who've been unemployed long enough that benefits and COBRA have run out? Are they obligated to buy ACA even if they're just temporarily living off savings/with relatives/whatever and can barely buy lunch?

[buzzardbreath]

Yes I think

Bart, I believe from all I've learned about ACA that the answer is Yes. The intent of the law was to provide a way for more people to be insured, and it sounds like the daughter would be the poster child of affordability if she were covered.

What might be curious is how much her premium is going to cost, with all the assistance/credits/whatever.

[ATSMAN]

I believe when this woman applies under ACA she will be enrolled under the medicaid provisions because she does not have any income if the state has the expanded medicaid to cover ACA.

[Bees Knees]

Notice how our clients are now asking us questions that should be directed to insurance agents.

[AZ-Tax]

I agree with Bees Knees and the ACA....

I agree with Bees Knees. Early one morning I did a chat on Healthcare.gov and asked if they have any names of a local agents or brokers. The chat person gave me a toll free # to call. I called the number and I was told I was on my own to locate a local agent or broker. I am a local agent and the issue I have on this ACA is not promoting the local agents that got trained. Yes its a drastic cut in commissions but its very similar when the Fed standardized Medicare supplements simplifying all the plans years ago and the local agent was not cut out of the deal.

[Bees Knees]

I am a local agent and the issue I have on this ACA is not promoting the local agents that got trained.

Seems to me that is exactly what the Exchange is designed to do...cut out the need to call a local agent to buy insurance. No need for professional help. Simply trust what the government website says and sign up for insurance. I read somewhere that said the government believes local agents tend to only sell insurance for one insurance company. Thus, the website is supposed to eliminate the bias a local agent may bring to the table.

It may just be my paranoia, but I predict the same thing will happen to tax preparers. Why pay all that money for tax prep when you can simply go to a government website, enter some data, and have the government calculate your taxes for you? Ever heard of free file? IRS already offers that to low income taxpayers. It is only a matter of time before they offer that to everyone, and in fact, encourage people to by-pass professional help.

Tell me what's the difference between the State Exchanges under ACA eliminating the need for an insurance agent, and free tax return filing on the IRS website that eliminates the need for a tax professional?

[JohnH]

I think the only difference is simply a matter of whose ox is being gored.

[geekgirldany]

I am starting to get calls about health insurance. Can I help them get the insurance, how much is the penalty... to ...it is doubling with local insurance agents in January 2014, and is my info safe on the government website. I am telling my clients all I can do is tell them the penalty and if asked recommend my a good insurance agent.

Drake Software is promoting their on health insurance website. Although I will more than likely not be recommending clients to it... it does have great calculators.

Looks like it is time to take another CPE class in ACA again. I've took one for the past three years.

[AZ-Tax]

Dany, is this a typo?

I am telling my clients all I can do is tell them the penalty and if asked recommend my a good insurance agent.

Is this a typo, did you mean to say "recommend a good insurance agent?" Is so, not all Insurance Agents are qualified to sell the Fed or State Exchange products so if you know one, need to ask them if they met the qualifications.

[JohnH]

I've only had a couple of inquiries so far. Both said they don't use the internet so they were wondering what to do. I gave them the phone number from the web site, told them to respond with their state when prompted, and then say "representative" in response to everything else until a human comes on the line.

[Black Bart]

Funny thing,

Notice how our clients are now asking us questions that should be directed to insurance agents.

I asked a local, independent, old-timer (like me) insurance agent something about Obamacare last month and he said, "Hell, I don't know. So far, I just told the ones that asked me anything to check with you tax guys."

[John of PA]

I tell them I don't know much about the exchange, sorry. I also give them the web sight KFF.org (Kaiser Family Foundation) which has much info on the ACA stated in simple easy to understand terms. It also has a premium calculatior to see if your income level qualifies you for a discount.

[DaveinTexas]

IRC 152 Dependent

Lady came in last week -- asked "Can anyone get on Obamacare?" Unsure of her puzzlement, we talked and she explained that her daughter (age 45/unmarried/no kids) lives with her--just the two of them; no spouses or other relatives. Daughter has never worked, receives no government checks or other support of any kind and mom (who is now on Social Security/Medicare) has always furnished everything.

The question: She said since daughter didn't work, was not disabled (other than being lazy), doesn't qualify for Medicaid, and since she had heard everybody in the U.S. was now going to have health insurance, would Obamacare cover her Daisy Mae? She thought it would be nice in case the gal came down with something (hmm, maybe bed sores I guess).

As I understand it, if no tax return's required, that's the end of it--but you still get no free lunch (insurance). True?

Come to think of it, what about people who've been unemployed long enough that benefits and COBRA have run out? Are they obligated to buy ACA even if they're just temporarily living off savings/with relatives/whatever and can barely buy lunch?

I attended a seminar and in their materials it mentions the taxpayer is responsible for ensuring the health care coverage of their dependents (as defined by IRC Section 152); EVEN IF the taxpayer does not claim the person as a dependent. How ridiculous! Read IRC Section 152 and it includes Qualifying Relatives. The daughter you mention above is a Qualifying Relative.

The Non Filing Requirement you speak of is true, but only if your income are below the filing threshold. This is where the law is a bit contradictory. BUT, obviously if the Mother is only drawing Social Security, then she is exempt from the Individual Mandate too because her income is below the threshold unless she also draws some type of pension/annuity. Here's the wording of this provision, "Therefore, if a taxpayer is exempt, any individual the taxpayer properly claims as a dependent also is exempt."

Sorry to muddy the waters, just wanted you to know that all of this is clear as mud. This legislation is the biggest pile of garbage I've ever seen. Be sure to tell ALL of your clients that your fees will be increasing (if not this year then definitely next). The IRS will expect us to know these laws and properly apply them to each taxpayer's situation. This doesn't even include the new .9% and 3.8% Medicare Taxes, the definition of NII, how certain itemized deductions such as State Income Taxes and Investment Expenses affect the calculation of NII, properly excluding certain non-passive income from NII, Employer Mandates, etc, etc. Our burden will be great and our work will be increasing, even for the "simple" tax returns. Now, will the IRS know the same laws as well as us; probably not. This should make the CP2000 responses loads of fun in the future!!

Back to my cave now....

[TaxGuyBill]

Lady came in last week -- asked "Can anyone get on Obamacare?" Unsure of her puzzlement, we talked and she explained that her daughter (age 45/unmarried/no kids) lives with her--just the two of them; no spouses or other relatives. Daughter has never worked, receives no government checks or other support of any kind and mom (who is now on Social Security/Medicare) has always furnished everything.

The question: She said since daughter didn't work, was not disabled (other than being lazy), doesn't qualify for Medicaid, and since she had heard everybody in the U.S. was now going to have health insurance, would Obamacare cover her Daisy Mae? She thought it would be nice in case the gal came down with something (hmm, maybe bed sores I guess).

As I understand it, if no tax return's required, that's the end of it--but you still get no free lunch (insurance). True?

Come to think of it, what about people who've been unemployed long enough that benefits and COBRA have run out? Are they obligated to buy ACA even if they're just temporarily living off savings/with relatives/whatever and can barely buy lunch?

The following assumes that the daughter is the dependent of the mother and does not file her own tax return.

If the mother isn't required to file a tax return, then there is no PENALTY for the daughter not having insurance. If the daughter is not a dependent but she is not required to file a tax return, she would be exempt from the penalty.

However, Social Security IS counted for determining the Premium Assistance Tax CREDIT. If the "household income" (including Social Security) is over 100% of the Federal Poverty Level ($15,510 for a household of two) they probably ARE eligible for the REFUNDABLE credit. I haven't seen anything in the Regulations that would indicate a person would not be eligible for the credit if they were not required to file a tax return (although she WILL need to file one if they receive the advance credit).

However, the credit would be based on the cost of a FAMILY plan that would include both of them. So if they get a plan JUST for the daughter, the credit would be significantly smaller because the credit is based on the plan for BOTH of them. Does that make sense?

http://www.law.cornell.edu/cfr/text/26/1.36B-2