Tax Credits and the New Health Care Bill

The health care exchanges are being rolled out on October 1^st and 50 million people will be encouraged to go to the exchanges to obtain coverage. Upon the roll out of the exchanges there are 5 developments that you need to consider:

• What is an exchange? Where do you purchase coverage?

An exchange is an online marketplace where individual and small group consumers will be able to go online to shop for and purchase health insurance plans. Individuals and small business owners can access the exchanges through navigators, government websites, or independent brokers. Many brokers, like Newtek Insurance Agency, are appointed on the exchange and with private markets. This will help line up the coverage options and differences between the exchanges options, and what is available in the private market.

• How do the subsidies work?

If you do not meet certain income requirements then the federal government will give you a tax break / subsidy to purchase health insurance. As a consumer, you can choose one of two ways to accept your tax credits:

• You can accept an estimated credit that will lower your health insurance premiums by a set amount each month. The actual amount of the credit will be settled out when the individual’s taxes are filed.
• You can pay the monthly premium in full, and then deduct the amount of the coverage from your yearend tax return.

• What will the coverage look like?

The plans available on the exchange will have metallic coverage levels consisting of catastrophic, bronze, silver, gold, and platinum. Please see our next blog post “Understanding Exchange Plan Options” to be posted tomorrow.

• What is not included?

Ancillary lines of coverages are not included. Many people are used to having the option to buy dental, vision, life and disability coverages with their health insurance. These coverages will not be available through the exchange.

• Is there a benefit to the exchange plan?

If you are unable to afford coverage in the private market then the exchange options are a great value. They will provide individuals, the opportunity to purchase some form of health insurance coverage, whom would otherwise not be able to due to cost.

Thank you to Forbes.