Hypothetical ACA problem

[TaxGuyBill]

I wonder if it is possible, converting information from the above posts into some sort of instruction, to help us determine just what to do about this 8% threshold. First of all, I think we are all thankful for the weblink provided by Commonstalk.

Don't marvel at my ignorance - I may in fact absorb less than most of you, and this stuff is brand new. We had, at some point in the discussion, the following "roadmap":

1. Find the lowest (gross) premium in the Bronze for your state or region.
2. Subtract the CREDIT found in the second-lowest Silver plan for your state or region.
3. Annualize the results above.
4. Divide by AGI. If the results exceed 8% then the taxpayer escapes the penalty as being unaffordable.

This sank in just fine until the two posts above, where reference is made to supplant 1. above with "whatever plan you have." Where I fail to understand is if the taxpayer actually HAS a plan, then he has complied with the requirements of the ACA and is off the hook for the penalty anyway and the calculation is not necessary.

What have I missed? Dave and TaxGuyBill (two of our best people) are apparently happy with their conclusion.

I'm sorry, my comment about "whatever plan you have" wasn't very clear. What I meant was the although the Premium Tax Credit is calculated by using the Second Lowest Cost Silver Plan, the actual credit is the same no matter which plan you have. If it's a $100 credit for the Second-Lowest Cost Silver Plan, it's $100 for the lowest Bronze plan and $100 the highest Platinum plan.

For the 8% exemption, it is based on the lowest Bronze plan. And yes, if you are covered by any other plan, you would not be subject to the penalty (although others in your household might).

Your numbered list is correct IF the taxpayer did not have access to employer insurance. If they had access to employer insurance, it's based on the cost of the employer plans. The lowest "self-only" plan determines the taxpayer's eligibility for the exemption, and the lowest "family plan" determines the eligibility of the rest of the family. There is also a possible "hardship" if two or more members of the household have access to employer insurance. Unfortunately, that makes the employer plan 8% exemption or hardship is a bit more difficult.

If our software (or the IRS) does not give us a worksheet for the 8% exemption or hardship, I have made a spreadsheet to help us with this. It's not ideal because it's not interfaced with our software or the Healthcare Marketplace databases (although I may try to incorporate the databases), but it may help. I will share it with everybody if the software (or the IRS) does not provide a better version. I DO think the IRS will at least provide a webpage similar to the one that Commonstalk posted.

[jmcdtax]

For 8965 pg 11 instructions

You look up the Federal Poverty Level dollar amount for the Household Size. For example, for Household of 2 the dollar amount is $15,730. Then divide Household income by the dollar amount found on the Federal Poverty Level Chart for the Household size. The result will be used to calculate the tax credit. There is one FPL chart for 48 states and one separate for Alaska and Hawaii. See http://aspe.hhs.gov/poverty/14poverty.cfm

[Corduroy Frog]

For which purpose?

You look up the Federal Poverty Level dollar amount for the Household Size. For example, for Household of 2 the dollar amount is $15,730. Then divide Household income by the dollar amount found on the Federal Poverty Level Chart for the Household size. The result will be used to calculate the tax credit. There is one FPL chart for 48 states and one separate for Alaska and Hawaii. See http://aspe.hhs.gov/poverty/14poverty.cfm

Hi, jmcdtax. Are you speaking of calculating the credit for purposes of the 8%, or calculating the credit which goes on the tax return? Shows how complicated any question can get. You actually illuminate how complex this mess has become when you mention PAGE 11 of the instructions.

[jmcdtax]

No, I was

merely trying to help Bart with his question about page 11 of the instructions, see above. Nobody said taxes were getting easier. That's why we all keep coming back each year for more gobble-de-gook.

[arlo]

commonstqlk link

I can get to the link but it does not calculate when I put in the information. I am from Illinois and Illinois does not have an exchange so maybe this has something to do with it. Any help would be appreciated.

[Black Bart]

Arlo

I can get to the link but it does not calculate when I put in the information. I am from Illinois and Illinois does not have an exchange so maybe this has something to do with it. Any help would be appreciated.

Are you sure you're typing in all the required information to get it to calculate after you get inside the link? I just used it to pull up Illinois and it worked okay after I got in. Look at this display: http://www.valuepenguin.com/ppaca/exchanges/il

You have to fill in four spots 1. county 2. household size 3. app info 4. income. Also don't forget to mark "2014" plans at the top - I think it defaults to 2015.

Maybe give it another shot and see if you can get it.

[Black Bart]

Much obliged and thanx jmcdtax,

merely trying to help Bart with his question about page 11 of the instructions, see above. Nobody said taxes were getting easier. That's why we all keep coming back each year for more gobble-de-gook.

I'll give page 11 (and 10) another try/reading, see what I was doing wrong, and maybe dope it out.