MONEY Obamacare

Everything You Need to Know About the Latest Challenge to Obamacare

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Robert A. Di Ieso, Jr.

Next week the Supreme Court will hear arguments in a case that could have a huge impact on millions of consumers. Here's what it's all about.

The Affordable Care Act is once again before the Supreme Court.

On March 4, the justices will hear oral arguments in King v. Burwell, a case challenging the validity of tax subsidies helping millions of Americans buy health insurance if they don’t get it through an employer or the government. If the court rules against the Obama administration, those subsidies could be cut off for everyone in the three dozen states using healthcare.gov, the federal exchange website. A decision is expected by the end of June.

Here are five things you should know about the case and its potential consequences:

1. This case does NOT challenge the constitutionality of the health law.

The Supreme Court has already found the Affordable Care Act is constitutional. That was settled in 2012’s NFIB v. Sebelius.

At issue in this case is a line in the law stipulating that subsidies are available to those who sign up for coverage “through an exchange established by the state.” In issuing regulations to implement the subsidies in 2012, however, the IRS said that subsidies would also be available to those enrolling through the federal health insurance exchange. The agency noted Congress had never discussed limiting the subsidies to state-run exchanges and that making subsidies available to all “is consistent with the language, purpose and structure” of the law as a whole.

Last summer, the U.S. Court of Appeals for the Fourth Circuit in Richmond ruled that the regulations were a permissible interpretation of the law. While the three-judge panel agreed that the language in the law is “ambiguous,” they relied on so-called “Chevron deference,” a legal principle that takes its name from a 1984 Supreme Court ruling that held that courts must defer to a federal agency’s interpretation as long as that interpretation is not unreasonable.

Those challenging the law, however, insist that Congress intended to limit the subsidies to state exchanges. “As an inducement to state officials, the Act authorizes tax credits and subsidies for certain households that purchase health insurance through an Exchange, but restricts those entitlements to Exchanges created by states,” wrote Michael Cannon and Jonathan Adler, two of the fiercest critics of the IRS interpretation, in an article in the Health Matrix: Journal of Law-Medicine.

In any case, a ruling in favor of the challengers would affect only the subsidies available in the states using the federal exchange. Those in the 13 states operating their own exchanges would be unaffected. The rest of the health law, including its expansion of Medicaid and requirements for coverage of those with pre-existing conditions, would remain in effect.

2. If the court rules against the Obama administration, millions of people could be forced to give up their insurance.

A study by the Urban Institute found that if subsidies in the federal health exchange are disallowed, 9.3 million people could lose $28.8 billion of federal help paying for their insurance in just the first year. Since many of those people would not be able to afford insurance without government help, the number of uninsured could rise by 8.2 million people.

A separate study from the Urban Institute looked at those in danger of losing their coverage and found that most are low and moderate-income white, working adults who live in the South.

3. A ruling against the Obama administration could have other effects, too.

Experts say disallowing the subsidies in the federal exchange states could destabilize the entire individual insurance market, not just the exchanges in those states. Anticipating that only those most likely to need medical services will hold onto their plans, insurers would likely increase premiums for everyone in the state who buys their own insurance, no matter where they buy it from.

“If subsidies [in the federal exchange] are eliminated, premiums would increase by about 47%,” said Christine Eibner of the RAND Corporation, who co-authored a study projecting a 70% drop in enrollment.

Eliminating tax subsidies for individuals would also impact the law’s requirement that most larger employers provide health insurance. That’s because the penalty for not providing coverage only kicks in if a worker goes to the state health exchange and receives a subsidy. If there are no subsidies, there are also no employer penalties.

4. Consumers could lose subsidies almost immediately.

Supreme Court decisions generally take effect 25 days after they are issued. That could mean that subsidies would stop flowing as soon as July or August, assuming a decision in late June. Insurers can’t drop people for non-payment of their premiums for 90 days, although they have to continue to pay claims only for the first 30.

Although the law’s requirement that individuals have health insurance would remain in effect, no one is required to purchase coverage if the lowest-priced plan in their area costs more than 8% of their income. So without the subsidies, and with projected premium increases, many if not most people would become exempt.

5. Congress could make the entire issue go away by passing a one-page bill. But it won’t.

All Congress would have to do to restore the subsidies is pass a bill striking the line about subsidies being available through exchanges “established by the state.” But given how many Republicans oppose the law, leaders have already said they will not act to fix it. Republicans are still working to come up with a contingency plan should the ruling go against the subsidies. Even that will be difficult given their continuing ideological divides over health care.

States could solve the problem by setting up their own exchanges, but that is a lengthy and complicated process and in most cases requires the consent of state legislatures. And the Obama administration has no power to step in and fix things either, Health and Human Services Secretary Sylvia Burwell said in a letter to members of Congress.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

MONEY Taxes

Why Some Taxpayers Are In for a Big Shock This Year

Many middle-class families who got subsidized health coverage through Obamacare in 2014 are facing an unexpected tax bill now.

Roberta and Curtis Campbell typically look forward to tax time. Most years, they receive a refund–a little extra cash to pay off credit card bills.

But this year the California couple got a shock: According to their tax preparer, they owe the IRS more than $6,000.

That’s the money the Campbells received from the federal government last year to make their Obamacare health coverage more affordable. Roberta, unemployed when she signed up for the plan, got a job halfway through the year and Curtis found full-time work. The couple’s total yearly income became too high to qualify for federal subsidies. Now they have to pay all the money all back.

“Oh my goodness, this is just not right,” said Roberta Campbell, who lives in the Sacramento suburb of Roseville. “This is supposed to be a safety net health care and I am getting burned left and right by having used it.”

As tax day approaches, hundreds of thousands of families who enrolled in plans through the insurance marketplaces could be stuck with unexpected tax bills, according to researchers. Those payments could be as high as $11,000, although most would be several hundred dollars, one study found.

The result is frustration and confusion among some working and middle-class taxpayers, whom the Affordable Care Act was specifically intended to help. The repayment obligations could dissuade people from re-enrolling and provide more fuel to Republicans’ continuing push for a repeal of the law.

The problem is that many consumers didn’t realize that the subsidies were based on their total year-end income and couldn’t reliably project what would happen over the course of the year, said Alyene Senger, research associate at The Heritage Foundation, a conservative think tank.

“How do you know if you are going to get that promotion?” she said. “How do you know what your Christmas bonus is going to be?”

In addition, Senger said the government didn’t go out of its way to publicize the tax consequences of receiving too much in federal subsidies. “It isn’t really something the administration focused on heavily,” she said. “It’s not exactly popular.”

The system was intended to ensure that people received the right amount in subsidies, no more or less than needed. But the means the government chose to reconcile the numbers was the tax system — notorious for its complexity well before the Affordable Care Act passed.

Enrollees who enrolled in Obamacare now are realizing that certain positive life changes–a pay raise, a marriage, a spouse’s new job–can turn out to be a liability at tax time. “We are definitely seeing some pain,” said Jackie Perlman, a principal tax research analyst at H&R Block.

H&R Block released a report Tuesday saying that 52% of customers who received health coverage through the insurance marketplaces last year underestimated their income and now owe the government. They estimate that the average subsidy repayment amount is $530.

At the same time, about a third of those enrolled in marketplace coverage overestimated their income and are receiving money back–about $365 on average, the report said.

Under the Affordable Care Act, the federal government made subsidies available to people who earned up to 400% of the federal poverty level—about $47,000 for an individual and $63,000 for a couple. For families who ended up making less than that, the federal government limits any repayments that might be due: The poorest consumers will have to repay no more than $300 and most others no more than $2,500. But the Campbells’ income last year exceeded the limit to receive federal help, so they have pay back the whole amount.

Roberta Campbell said she was only trying to do the right thing. Campbell, now 59, lost her job as a program director for the Arthritis Foundation in late 2012. She and her husband, who was working part-time as a merchandiser, downsized and moved into a smaller house.

They were left uninsured but were mindful of the federal mandate to be covered as of January 2014. So they signed up for a plan through California’s insurance marketplace, Covered California. The plan cost about $1,400 a month, but they were able to qualify for a monthly subsidy of about $1,000.

“We are rule followers,” she said. “We decided to get insurance because we were supposed to get insurance.”

They barely used the coverage. Roberta and Curtis each went to the doctor once for a check-up. Then, about halfway through the year, Roberta got a job at UC Davis and became insured through the university. Curtis, who had been working part-time, got a full-time job for a magazine distribution company.

They notified Covered California, which Campbell said cancelled the insurance after 30 days. But with the new salaries, his pension from a previous career and a brief period of unemployment compensation, the couple’s year-end income totaled about $85,000, making them ineligible for any subsidies.

Their tax preparer told them they would have been better off not getting insurance at all and just paying the fine for being uninsured. In that case, the Campbells say their financial obligation would have been much smaller–about $850.

“The ironic thing is that we tried to pull ourselves up by our bootstraps,” Curtis Campbell said. “Now they are going to penalize us. It’s frustrating.”

It’s not surprising that the projections people made about their income in 2014 in many cases were incorrect, said Gerald Kominski, director of the UCLA Center for Health Policy Research. The first open enrollment period started in October 2013, meaning that some enrollees based their estimates on what they earned in 2012.

Kominski said that policy experts knew there would be significant “churn” of people whose incomes change throughout the year and who would gain or lose their eligibility for subsidized coverage. But he and others said there was less understanding among consumers about how that could affect their taxes.

With tax season still underway, it not entirely clear how many people will have to repay the government for excess subsidies. But along with the recent H & R block estimates based on the firm’s customers, a UC Berkeley Labor Center study published in Health Affairs in 2013 suggested the numbers would not be not small.

Nationwide, 6.7 million people enrolled in marketplace exchanges through Obamacare in the first year. About 85% of people got federal help paying their insurance premiums.

Using California as a model, labor center chair Ken Jacobs estimated that even if everyone reported income changes to the insurance marketplace during the year, nearly 23 percent of consumers who were eligible for subsidies would have to pay the government back at least some of the amount received. About 9 percent of those receiving subsidies would have to pay the full amount. If no one reported changes, 38 percent would owe money.

The median repayment–if people reported income changes along the way—would be about $243 but some couples could owe more than $11,000, according to the research. The median amount due if people didn’t report the changes during the year would be $750.

“The most important thing for people to do along the way is to report [income] changes so the subsidy amount is adjusted,” Jacobs said.

For those who must repay money, the IRS will allow payment in installments, even after the April 15 tax deadline. Interest will continue accruing, however, until the balance is paid.

Covered California spokesman Dana Howard said he understands paying back excess subsidies puts some in a difficult spot. But he said consumers who think their circumstances might change can decline the money or just take part of it.

Howard also said the subsidies were designed to give the working class and middle class folks a leg up in affording health coverage. So when people get good jobs, he said, they don’t necessarily need the federal help to get insurance.

“When you get that really good fortune, that has to be shared back,” Howard said. “That is just how the ACA law was written.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

MONEY Health Care

Why You’re Still Paying for Birth Control Even Though It’s “Free” Now

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Laura Johansen—Getty Images

Most women with private health insurance can get contraception for free, but a lack of information means some are still paying out of pocket—even when they shouldn't be.

A record scratch sounded in my head one weeknight this January, when a pharmacist at my local drugstore told me my birth control pills would—for the first time—cost more than $50 a month.

Strange, I thought, since I could have sworn I heard contraception was one of the preventive health services that are free under the Affordable Care Act, and that the law was rapidly expanding access for most women, with at least 67% of insured women on the pill paying $0 (up from only 15% in 2012), according to a recent study by the Guttmacher Institute. Perplexing.

After all, I don’t work for an exempted religious organization or a company such as Hobby Lobby, which in a Supreme Court case last year won the right to deny contraceptive coverage because of conflicting beliefs. And the same pills—Ortho Tri-cyclen Lo—cost me nothing under my old health plan. Sure, I had switched insurance companies in the new year (to Aetna, the third largest in the country), but I’d opted for a high-premium Gold plan. A monthly copay on par with the cost of an iPod shuffle seemed hefty and unfair.

So I left the pharmacy empty handed and went home to call Aetna.

My happiness was brief when a customer service agent informed me that—while most brand-name pills had a copay—I could simply switch to a free generic version of the same compound. The problem? Turns out there is no generic version of Ortho Tri-cyclen Lo yet. So I was trapped, much like women whose insurance companies have denied them coverage for the NuvaRing, reasoning that they can take generic pills with the same hormones—even though the Department of Health and Human Services has been clear that the ring is a distinct form of contraception (and should therefore be free).

I hesitated to simply choose a different generic for a reason that should not surprise the many other women who have tried multiple birth control methods: Switching from pill to pill in the past caused me side effects, which thankfully subsided once I finally found one that worked for me.

“People respond differently to different pills and a change can cause side effects like irregular bleeding and headaches,” says Jill Rabin, an ob-gyn and professor at Hofstra North Shore-LIJ School of Medicine. “There’s no predicting how someone will do unless they try it.”

The pressure I felt to switch seemed especially unjust given this aspect of the law: While women can be charged a copay for brand name drugs when an equivalent generic is available, this Department of Labor FAQ explains, “if, however, a generic version is not available, or would not be medically appropriate for the patient” as determined by her doctor, “then a plan or issuer must provide coverage for the brand name drug … without cost-sharing.”

When I brought my dilemma (and the fact that I was a journalist planning to write about it) to Aetna’s director of communications, Susan Millerick, she took swift action. Within a week, I had my Ortho Tri-cyclen Lo, free of copay.

“It is always Aetna’s intent to abide by the laws that govern our health benefits coverage, and to fairly interpret and apply all laws and regulatory guidance on behalf of our customers and members,” Millerick wrote in an email.

Millerick’s explanation for what had happened suggests any woman would be wise to question any insurer denial for contraceptive; she said Aetna’s “service reps erred” in not telling me about the option to appeal the copay. I should have been told that I could just ask my doctor to call and verify that I really needed my pill and that a different generic would not suffice.

The good news for many women is that simply being informed of your options—and getting your doctor on your side—may be enough to go from paying a wallet-draining copay to nothing at all, says Rabin.

“Figuring out the best contraception that minimizes cost and maximizes efficacy is a conversation that should be between doctor and patient,” Rabin says. “Most doctors don’t want that decision taken out of their hands and would be happy to help make that call for their patients.”

For those women who encounter more resistance than I did—or find, as Kaiser Health News reported, that certain insurers are even trying to wriggle out of covering generics—there are other resources to turn to, like the National Women’s Law Center. Their website has clear instructions on how to fight back if you think your insurer is unfairly denying you free birth control, with templates for appeal letters and a free hotline (866-745-5487) for additional assistance.

Even with all the progress, thousands of women have been contacting the NWLC’s hotline in recent months after running into problems getting free contraceptives, says Mara Gandal-Powers, a lawyer at the NWLC.

Generally, the biggest obstacle to free birth control access right now is ignorance, she says. Many women—and their insurance representatives, doctors, and pharmacists—aren’t on the same page about whether their particular contraception should have a copay or not. Instead of doing a double take at the cost of their contraceptives, Gandal-Powers says, some women never question the charge.

That’s a compelling reason to double check your insurer, pharmacist, and even doctor’s assumptions.

“There is definitely a lot of education that still needs to happen,” says Gandal-Powers, “not just among women themselves but also among health care providers and pharmacists.”

Beyond a lack of education, a few more obstacles to universally free birth control remain. Besides the religious exemption, there’s also a subset of insurance plans that are “grandfathered” in such a way that they don’t have to cover contraception right away—though they will in coming years. Enrollment in grandfathered plans is dropping, with only 26% of covered workers enrolled in a grandfathered health plan in 2014, down from 56% in 2011, according to the Kaiser Family Foundation. Another exception is self-funded student plans.

The takeaway? If you’re paying more than $0 for birth control, it can’t hurt to do a little digging. If you are lucky (and persistent), you could end up pushing your insurer to better comply with the law—and save hundreds of dollars a year, to boot.

TIME White House

White House Says Obamacare Signups in 2015 Enrollment Top 11 Million

People Rush To Enroll Before Deadline For Affordable Care Act
Joe Raedle—Getty Images Jose Ramirez, left, and Mariana Silva speak with Yosmay Valdivia, an agent from Sunshine Life and Health Advisors, as they discuss plans available from the Affordable Care Act in the Mall of the Americas on Dec. 15, 2014 in Miami.

"The Affordable Care Act is working," Obama says

The White House announced Tuesday that 11.4 million people across the United States signed up for health insurance or renewed their plans during the 2015 enrollment period for the Affordable Care Act.

More than 1 million people enrolled for private health care coverage under President Barack Obama’s law during the last nine days until the Feb. 15 deadline, the White House said in a statement and video posted to Facebook. Health and Human Services Secretary Sylvia Burwell added that the final day was the biggest open enrollment day for new consumers, this year or last.

“The Affordable Care Act is working,” Obama says in the video. “It’s working a little better than we anticipated.”

The administration’s preliminary estimate could change, the Associated Press reports, as the White House has offered those who started but didn’t finish applications before the deadline until Feb. 22 to do so. Conversely, the number could fall if any enrollees don’t pay their part of the premiums.

Watch the video here.

MONEY Health Care

What to Know About Obamacare Open Enrollment This Year

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Jeffrey Coolidge—Getty Images

The Obamacare deadline to sign up for a policy is February 15. Here's what you need to do to make sure you're covered.

Update: The Obama administration has announced a special open enrollment period for people who did not realize they would need to pay a tax this year. So you have one more shot to get insurance for 2015, from March 15 to April 30. Here are our tips from February.

Time is running out. The open enrollment period for buying individual health insurance for 2015 ends February 15. Miss this important deadline, and you could remain uninsured all year—and face a steep tax penalty.

As of early February, about 9.9 million Americans had purchased or re-enrolled in private health insurance through the federal and state insurance exchanges created by Obamacare. But an estimated 29 million Americans remained uninsured as of the end 2014, according to the Commonwealth Fund.

Anne Filipic, president of Enroll America, a non-profit that educates Americans about health insurance, says too many people still don’t know that they can get financial assistance if they are struggling to pay for coverage.

“There has been a lot of confusion and misinformation,” Filipic says. “For a lot of people, they’ve heard of the ACA or Obamacare, but they don’t know what it means for them.”

Here’s what next week’s deadline means and what you need to know about getting covered in time.

1. February 15 is a hard deadline.

The window to buy individual health insurance for 2015 runs from November 15, 2014 to February 15, 2015. After that, you won’t be able to buy a policy this year unless you have extenuating circumstances. You may have to remain uninsured until 2016 (open enrollment for 2016 coverage doesn’t begin until next October).

There are exceptions. If you marry, divorce, have a baby, move to another state, lose your employer health insurance, or experience another “qualifying life event,” you can sign up for health insurance any time. You have 60 days after the event to enroll in a new health plan.

2. You have choices where to shop.

Under the Affordable Care Act, aka Obamacare, you can buy private insurance through government-run shopping websites, also called exchanges or the marketplace. Some states run their own sites; others use the federal government’s site. You can find the option for your state at Healthcare.gov, where you’ll also be able to see if you qualify for financial help with your premiums.

You don’t have to shop on a government-run exchange. You can also get insurance from web brokers, such as getinsured.com, gohealth.com, or ehealthinsurance.com. But if you qualify for a premium subsidy, make sure you get a plan that is sold on the government marketplace.

3. If you can’t afford insurance, you may qualify for help.

Almost half of uninsured Americans say they didn’t sign up for Obamacare because they thought they couldn’t afford it, according to a Kaiser Family Foundation poll. Generally, that shouldn’t be the case. The government will pay for part of your health insurance if you earn between 100% and 400% of the poverty level.

The poverty level varies based on your family size. A single person earning between $11,670 and $46,680 this year is eligible for a tax credit. So is a family of four earning between $23,850 and $95,400. With a tax credit, your health insurance will cost between 2.01% and 9.56% of your total income.

The Department of Health and Human Services found that 87% of the people who bought a health plan on the exchanges got financial help, and those people paid an average of just $82 a month. “This is a little known fact for many people,” Filipic says.

And if you earn less than the poverty line? The plan was for households making less than 138% of the poverty line to enroll in Medicaid, a state-administered health care program for low-income Americans. Here’s the catch: The Supreme Court ruled that the federal government could not force states to expand their Medicaid programs.

As a result, some people in the 21 states that did not expand Medicaid may earn too much to qualify for Medicaid but earn too little to qualify for an Obamacare tax credit. The Kaiser Family Foundation estimates that 18% of uninsured Americans fall in this so-called “coverage gap.” Fortunately, about 30% of uninsured Americans are eligible for tax credits to buy private insurance. Another 18% are eligible for Medicaid.

4. If you’re not covered, the penalty is going up.

Another reason not to miss this deadline: Under Obamacare, most Americans are required to have a qualified health insurance plan, or pay a fine.

If you went without health insurance for more than three months in 2014, you could owe the IRS up to $95 per person in your household (capped at $285 for large families), or 1% of your income, whichever is higher. And if you go without health insurance this year, the penalty increases to $325 per person (capped at $975) or 2% of your income. The penalty increases again in 2016.

However, you can qualify for an exemption, including for financial hardship. “Most people who are uninsured will qualify for an exemption because there’s a lot of exemptions,” says Karen Pollitz, senior fellow at the Kaiser Family Foundation. You can apply for most exemptions right on the tax return; you can apply for other hardship exemptions using this form.

5. You can ask an expert to help you enroll.

Still confused? Get help. All across the country, there are thousands of experts, sometimes called “navigators,” who can assist you in-person, for free.

Getting help is especially valuable if you aren’t sure if you are eligible for financial help, Pollitz says. Oftentimes, assisters work year-round for free clinics or other public agencies, so if you’re in the Medicaid “coverage gap,” an assister might be able to connect you with other resources, such as nutrition assistance or free community health services. Plus an ACA navigator or another adviser could help you tally up your income and see if you can claim a tax credit.

You can find an assister near you on the government’s site, localhelp.healthcare.gov. Or sign up for an appointment online using Enroll America’s connector tool at getcoveredamerica.org/connector. There are about 65,000 appointments available before February 15 at some 4,000 locations, and Enroll America offers contact information for another 11,000 locations. “There’s help out there waiting for you,” Filipic says.

6. Even if you bought health insurance last year, you should shop again.

If you bought health insurance on the exchanges last year and then did nothing, you’ve been auto-enrolled in that plan or a similar plan from the same insurer. But you can still switch plans until February 15.

Take a minute to see if that’s still the best deal, especially if you chose the least expensive plan in the first go-round. Last year’s cheapest plans have gotten 9.5% more expensive, on average, according to an analysis by the New York Times. You may be able to lower your monthly premiums by switching.

And your benefits can change too, including your deductible and out-of-pocket maximums.

Another reason to re-enroll is to see if you qualify for a bigger tax credit. “Your tax credit from last year was also automatically renewed, but it may or may not be the right amount,” Pollitz says. “Even if your income didn’t change at all, you probably qualify for a little more tax credit just because you got older. It’s based on a benchmark plan for someone your age.”

And while you’re at it, think about how you liked your health coverage in 2014. “Are you satisfied with the network? Were you able to get in to seeing the doctors you wanted to see? Were there a lot of hassles getting your claims paid?” Pollitz says. “Now is a good time to see what your options are.”

This article was updated to clarify that you can claim most tax penalty exemptions on your tax return, and premium subsidies are only available for plans sold on the government marketplace.

TIME Congress

Lawmakers Propose Free Birth Control for Female Troops

TIME.com stock photos Birth Control Pills
Elizabeth Renstrom for TIME

The bills stand little chance against in the GOP Congress

Two congressional Democrats are proposing that women in the military be given free access to birth control and family planning counseling.

California Democratic Rep. Jackie Speier introduced the measure Wednesday and New Hampshire Democratic Sen. Jeanne Shaheen introduced it in the upper chamber.

“We owe female servicemembers the same access to contraception and family planning services as the women they fight to protect,” Speier said in a statement.

Under President Barack Obama’s health care reform law, civilian women can receive generic birth control at no additional cost if they have insurance. But service members use the military health care system Tricare, which does not provide this benefit. Speier’s bill would consolidate the two plans. But the legislation stands little chance of passage in the Republican-controlled Congress, which wants to repeal Obama’s health care law and is loathe to expand it in any way.

MONEY Taxes

You Just Got a Break If You Messed Up Your Obamacare Tax Credit

The IRS will give you more time to pay back any excess premium subsidies when you file your taxes.

Consumers who received too much in federal tax credits when buying insurance on the health law’s marketplaces last year got a reprieve of sorts from the Internal Revenue Service this week. Although they still have to repay some or all of the excess subsidies, the IRS won’t ding them with a late payment penalty if they don’t repay it by the April 15 tax deadline.

“They’re trying to make this work,” says Timothy Jost, a law professor at Washington and Lee University who’s an expert on the health law.

Under the law, people with incomes between 100% and 400% of the federal poverty level ($11,670 to $46,680 for an individual in 2014) who did not have insurance through their job could qualify for tax credits to make premiums more affordable. They could elect to have these subsidies paid in advance directly to the insurance company, and many did. A typical tax credit was about $3,000 annually.

The amount people received was based on an estimate of their 2014 income. At tax time, that amount has to be reconciled against consumers’ actual income on IRS Form 8962. If consumers or the marketplace underestimated their 2014 income, they may have received too much in tax credits and have to pay back some or all of it.

How much people have to repay is based on their income and is capped at $2,500. People with incomes over 400 percent of the poverty line have to repay the entire amount, however.

This penalty reprieve only applies to the 2014 tax year. The IRS will allow people to repay what they owe on an installment basis. But be forewarned: Interest will continue to accrue until the balance is paid off.

MONEY Taxes

Where to Get Free Tax-Prep Help

American flag graphic on laptop computer key
Pgiam—Getty Images

Use a free program from the IRS to get a jump on tax season.

The IRS Free File program is now open, giving the 70% of Americans with adjusted gross incomes of $60,000 or less free access to federal tax preparation and e-filing software from 14 different tax-prep companies.

Available on irs.gov, Free File provides links to software that can help guide you through preparing and filing the most commonly used tax forms. The site also has an online tool to help you determine which software is the best fit for you and a guide for filing new forms required by the Affordable Care Act. Some of the programs also offer assistance for filing state taxes, but fees may apply.

The IRS will begin accepting electronically filed returns on January 20, but you may not be ready that soon. By law your employer has until the end of January to send your W-2 form, which spells out how much you earned and how much you had withheld in taxes.

If you make more than $60,000 and feel comfortable doing your own taxes, you can use Free File fillable forms starting on January 20.

When combined with direct deposit, electronic filing is the fastest way to get your refund. Considering this year’s tax season is expected to be exceptionally frustrating for taxpayers, with long wait times when calling the IRS, getting a jump on the process might not be a bad idea. If you tend to be a procrastinator, remember the filing deadline for federal taxes is, as usual, April 15. That’s a Wednesday this year.

 

MONEY Health Care

The Most and Least Expensive Places in the U.S. for Health Insurance

South Franklin Street with Mount Roberts tram car passing overhead in Downtown Juneau, Alaska.
Alamy Buy your own health insurance? You're paying top dollar if you live in Alaska.

A survey of health insurance premiums on the exchanges finds that costs tend to be the highest in rural areas with less competition.

In health insurance prices, as in the weather, Alaska and the Sun Belt are extremes. This year Alaska is the most expensive health insurance market for people who do not get coverage through their employers, while Phoenix, Albuquerque, N.M., and Tucson, Ariz., are among the very cheapest.

In this second year of the insurance marketplaces created by the federal health law, the most expensive premiums are in rural spots around the nation: Wyoming, rural Nevada, patches of inland California and the southernmost county in Mississippi, according to an analysis by the Kaiser Family Foundation, which has compiled premium prices from around the country. (KHN is an editorially independent program of the foundation.)

The most and least expensive regions are determined by the monthly premium for the least expensive “silver” level plan, which is the type most consumers buy and covers on average 70% of medical expenses. Premiums in the priciest areas are triple those in the least expensive areas.

Along with the three southwestern cities, the places with the lowest premiums include Louisville, Ky., Pittsburgh, and western Pennsylvania, Knoxville and Memphis, Tenn., and Minneapolis-St. Paul and many of its suburbs, the analysis found.

Starting this month, the cheapest silver plan for a 40-year-old in Alaska costs $488 a month. (Not everyone will have to pay that much because the health law subsidizes premiums for low-and moderate-income people.) A 40-year-old Phoenix resident could pay as little as $166 for the same level plan.

That three-fold spread is similar to the gap between last year’s most expensive area — in the Colorado mountain resort region, where 40-year-olds paid $483—and the least expensive, the Minneapolis-St. Paul metro area, where they paid $154.

Minneapolis remained one of the cheapest areas in the region, although the lowest silver premium rose to $181 after the insurer that offered the cheapest plan last year pulled out of the market. Premiums in four Colorado counties around Aspen and Vail plummeted this year after state insurance regulators lumped them in with other counties in order to bring rates down.

Cynthia Cox, a researcher at the Kaiser foundation, said the number of insurers in a region was a notable similarity among both the most and least expensive areas. “In the most expensive areas only one or two are participating,” she said. “In the least expensive areas there tends to be five or more insurers competing.” She said that other factors, such as whether insurers need state approval for their premiums and the underlying health of the population, may play a role as well in premiums.

The national median premium for a 40-year-old is $269, according to the foundation’s analysis.

Alaska’s lowest silver premium rose 28% from last year, ratcheting it up from 10th place last year to the nation’s highest. Only two insurers are offering plans in the state, the same number as last year, but the limited competition is just one reason Alaska’s prices are so high, researchers said. The state has a very high cost of living, which drives up rents and salaries of medical professionals, and insurers said patients racked up high costs last year.

Ceci Connolly, director of PwC’s Health Research Institute, noted that the long distances between providers and patients also added to the costs. Restraining costs in rural areas, she said, “continues to be a challenge” around the country. One reason is that there tend to be fewer doctors and hospitals, so those that are there have more power to dictate higher prices, since insurers have nowhere else to turn.

By contrast, in Maricopa County, Phoenix’s home, the lowest silver premium price dropped 15% from last year, when Phoenix did not rank among the lowest areas. A dozen insurers are offering silver plans. “Phoenix, during the boom, attracted a lot of providers so it’s a very robust, competitive market,” said Allen Gjersvig, an executive at the Arizona Alliance for Community Health Centers, which is helping people enroll in the marketplaces.

The cheapest silver plan in Phoenix comes from Meritus, a nonprofit insurance cooperative. The plan is an HMO that provides care through Maricopa Integrated Health System, a safety net system that is experienced in managing care for Medicaid patients. Meritus’ chief executive, Tom Zumtobel, said they brought that plan’s premium down from 2014. The insurer and the health system meet regularly to figure out how to treat complicated cases in the most efficient manner. “We’re working together to get the best outcome,” Zumtobel said.

Katherine Hempstead, who oversees the Robert Wood Johnson Foundation’s research on health insurance prices, found no significant differences in the designs of the plans that would explain their premiums. “In most of the plans – cheap or expensive – there seemed to be a high deductible and fairly similar cost-sharing,” she said.

Highest and Lowest Premiums

Here are the 10 most and least expensive regions in the country–with the counties listed in parenthesis–based on premium prices for the lowest-cost silver plan. Regions are counties that share the same price for the same lowest-cost-plan and are either geographically contiguous or are part of the same rating area created by the state.

Premiums are listed for 40-year-olds; and for most states the difference in prices stays the same for people of any age. Vermont and two upstate New York area—Ithaca and Plattsburgh—also are among the 10 most expensive places, although those states do not let insurers adjust premiums based on the consumer’s age, making comparisons inexact. Older residents in those states will end up getting better deals than in most places, while younger ones tend to pay more.

10 Highest Premiums
Region Monthly premium
Alaska (entire state) $488
Ithaca, NY (Tompkins) $459
Bay St. Louis, Mississippi (Hancock) $456
Plattsburgh, NY (Clinton) $446
Rural Wyoming (Albany, Big Horn, Campbell, Carbon, Converse, Crook, Fremont, Goshen, Hot Springs, Johnson, Lincoln, Niobrara, Park, Platte, Sheridan, Sublette, Sweetwater, Teton, Uinta, Washakie, and Weston) $440
Vermont (entire state) $428
Rural Nevada (Churchill, Elko, Eureka, Humboldt, Lander, Mineral, Pershing, and White Pine) $418
Casper, Wyoming (Natrona) $412
Inland California (Imperial, Inyo, and Mono) $410
Cheyenne, Wyoming (Laramie) $401
10 Lowest Premiums
Region Monthly premium
Phoenix, Ariz. (Maricopa) $166
Albuquerque, N.M. (Bernalillo, Sandoval, Torrance, and Valencia) $167
Louisville, Ky. (Bullitt, Jefferson, Oldham, and Shelby) $167
Tucson, Ariz. (Pima and Santa Cruz) $170
Pittsburgh, Pa. (Allegheny and Erie) $170
Western Pennsylvania (Beaver, Butler, Washington, Westmoreland, Armstrong, Crawford, Fayette, Greene, Indiana, Lawrence, McKean, Mercer, and Warren) $179
Knoxville and Eastern Tennessee (Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Hamblen, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier, and Union) $181
Minneapolis-St. Paul (Anoka, Benton, Carver, Dakota, Hennepin, Ramsey, Scott, Sherburne, Stearns, Washington, and Wright) $181
Memphis and suburbs (Fayette, Haywood, Lauderdale, Shelby, and Tipton) $184
North of Minneapolis (Chisago and Isanti) $189

Kaiser Health News (KHN) is a nonprofit national health policy news service.

MONEY Taxes

How Obamacare Could Make Tax Filing Trickier This Year

Affordable Care Act health insurance marketplace navigator Herb Shook pulls up information on his computer to help someone re-enroll in an Affordable Care Act health insurance plan Friday, Nov. 14, 2014, in Houston.
David J. Phillip—AP If you got a health insurance subsidy via the online marketplace, you may have more work to do on your tax return.

For the first time, you'll need to show that you had health insurance last year. For some, that means more paperwork.

In addition to the normal thrills and chills of the income tax filing season, this year consumers will have the added excitement of figuring out how the health law figures in their 2014 taxes.

The good news is that for most people the only change to their normal tax filing routine will be to check the box on their Form 1040 that says they had health insurance all year.

“Someone who had employer-based coverage or Medicaid or Medicare, that’s all they have to do,” says Tricia Brooks, a senior fellow at Georgetown University’s Center for Children and Families.

The law requires people to have “minimum essential coverage,” but most types of insurance qualify.

But for others, here are several situations to keep in mind.

If you were uninsured for some or all of the year

If you had health insurance for only part of 2014 or didn’t have coverage at all, it’s a bit more complicated. In that case, you’ll have to file Form 8965, which allows you to claim an exemption from the requirement to have insurance or calculate your penalty for the months that you weren’t covered.

On page 2 of the instructions for Form 8965 you’ll see a lengthy list of the coverage exemptions for which you may qualify. If your income is below the filing threshold ($10,150 for an individual in 2014), for example, you’re exempt. Likewise if coverage was unaffordable because it would have cost more than 8% of your household income, or you experienced a hardship that prevented you from buying a marketplace plan, or you had a short coverage gap of less than three consecutive months. These are just some of the circumstances that would allow you to avoid the penalty.

In addition, you don’t have to pay a penalty if you live in a state that didn’t expand Medicaid to adults with incomes up to 138% of the federal poverty level $16,104.60 for an individual in 2013) and your income falls below that level.

Some of the exemptions have to be granted by the health insurance marketplace, but many can be claimed right on your tax return. The tax form instructions spell out where to claim each type of exemption.

If you do have to go to the marketplace to get an exemption, be aware that it may take two weeks or more to process the application. Act promptly if you want to avoid bumping up against the April 15 filing deadline, says Timothy Jost, a law professor at Washington and Lee University who is an expert on the health law.

If you don’t qualify for a coverage exemption

If none of the exemptions apply to you, you’ll owe a penalty of either $95 or 1% of your income above the tax filing threshold, whichever is greater. The penalty will be prorated if you had coverage for at least part of the year. The amount of the penalty is capped at the national average premium for a bronze level plan, or $2,448 for an individual in 2014.

The instructions for Form 8965 include a worksheet to calculate the amount of your penalty.

If you received a premium tax credit for a marketplace plan

Under the health law, people with incomes between 100% and 400% of the federal poverty level ($11,490 to $45,960 for an individual in 2013) could qualify for premium tax credits for 2014 coverage bought on the exchanges. If consumers wished, the tax credit was payable in advance directly to the insurer. Many chose that option.

The marketplace determined the amount of premium tax credit people were eligible for based on their estimated income for 2014. At tax time those estimates will be reconciled against actual income. People whose actual income was lower than they estimated may have received too little in advance premium tax credits. They can claim the amount they’re owed as a tax refund.

People whose income was higher than estimated and received too much in advance premium tax credits will generally have to pay some or all of it back. The amount that must be repaid is capped based on a sliding income scale, but people whose income is 400% of poverty or higher will have to pay the entire amount of any tax credit back.

If you bought a plan on the marketplace, you’ll receive a Form 1095-A from your state marketplace by Jan. 31 that spells out how much your insurer received in advance premium tax credits. You’ll use that information to complete Form 8962 to reconcile how much you received against the amount you should have received.

Assuming the information on the form is correct, “It should be easy to reconcile,” says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. Tax software programs and tax preparers should know how to make the calculations, she said.

In addition to using commercial tax software or hiring tax preparer, many lower income consumers and seniors can get free tax preparation assistance through the IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.

Despite resources to help consumers, this first filing season is likely to be bumpy, particularly for people who have complicated family situations or who receive inaccurate information from the marketplace.

“There is just so much confusion out there,” says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation (KHN is an editorially independent program of the foundation.). “People are going to see these forms and not have any idea what they’re supposed to do with them.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

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