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Insurance exchanges tied to 2012 tax returns

Originally published: Jan. 31, 2013
Last modified: Jan. 31, 2013

Adam Orr

Filing an individual tax return for 2012 could help low-income residents gain access to important provisions of the Affordable Care Act, including tax credits to help low- and moderate-income families purchase health insurance through new insurance exchanges beginning in 2014. 

Beginning next January, provisions in the Affordable Care Act, also known as “Obamacare,” will make available federal subsidies to eligible individuals for the purchase of health insurance through newly created health insurance exchanges, according to information released by the Henry J. Kaiser Family Foundation.  
 “These subsidies are a centerpiece of the law and are designed to provide financial assistance to millions of Americans who cannot afford health coverage today,” according to the KFF, which estimates more than 19 million Americans will receive subsidies through the exchanges by 2019. 
To have access to the subsidies next January, it’s important to file your 2012 tax return, as enrollment in the program will begin in October, say officials familiar with the act. 

“One of the main features of the Affordable Care Act is that everyone above 100 percent of the federal poverty guidelines is required to by insurance, with subsidies ranging between 100 and 400 percent,” said Ashe Free Medical Clinic Director Greg Bolac. “Many people down the economic spectrum don’t file taxes, but it’ll be important to do so this year, as the tax credits to be used with the new exchanges will be credited by the Internal Revenue Service, and those will be on (their) returns.”  

The premium assistance tax credit is available on a sliding scale basis for individuals (single or joint filers) with household incomes ranging between 100 and 400 percent who are not eligible for other coverage, according to KFF: “Offered on a sliding scale based on income, the premium credits limit what people will be required to pay for health insurance to a percentage of their income, ranging from 3 percent of income for people with incomes at 133 percent of the federal poverty level to 9.5 percent of income for people with incomes between 300-400 percent of the poverty level.” 

Those who qualify can take the tax credit in the form of advance payments to lower their monthly health plan premiums starting in 2014, according to information on healthcare.gov. The tax credit will be sent directly to the insurance company and applied to premium payments.  

“In general, the premium assistance credit amount individuals are eligible to receive will be based on annual income as reported on the tax return,” according to the KFF. “For those who choose to claim the credit when they file their taxes, this credit will be applied against any taxes they owe or will be refunded for taxpayers who do not owe any taxes.”  

However, because annual income will not be available when people apply for advance payments, the law outlines a different process for determining the advance payments. 

“Eligibility for advance payments will be determined using prior year’s income (as reported on the prior year’s tax return) or current income if it is different from prior year income and can be verified through pay stubs or other documentation,” according to KFF.  

“Bottom line: North Carolina residents can begin applying for the new health insurance exchanges in October of this year,” said Bolac. “So its going to be important to educate everyone that filing their (2012) taxes is important.” 

For more information and stories, see Ashe Mountain Times.