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SHOP – The Real Reason Employees Will Love It

SHOP – The Real Reason Employees Will Love It

What is the SHOP?  SHOP stands for Small business Health Options Program , and it was established by health care reform as part of the state run marketplaces used to purchase health insurance plans for businesses with less than 50 employees.  The goal of the SHOP is to make it easier for small businesses to purchase a group health plan and to offer tax credits for doing so.  But is SHOP best for your employees and their families?

Small Employer Health Insurance Premium Tax Credit, All About It

Kelley-Jensen2Small Employer Health Insurance Premium Tax Credit, All About It:

Before Health Care Reform, there were no special federal tax incentives for small employers to offer health insurance coverage to their employees, other than an ordinary business deduction, and small business owners struggled with the expense of group coverage.  To encourage small employers to provide health insurance coverage for their employees, health care reform provides a small business tax credit for tax years beginning 2010, through 2015.

The credit is calculated on form 8941, as part of the employer’s annual federal tax return.  The most important things to know about the Credit for Small Employer Health Insurance Premiums:

Health Insurance Subsidy on Form 1040

Kelley-Jensen2Health Insurance Subsidy on Form 1040 Much has been written about the premium tax credit or subsidies available to those that qualify.  Here are the most important things to know about the credit, including how it will probably look the first year it will be reported on form 1040, your federal income tax return. 1)    You must file a tax return to claim the credit.  A form 1040, not a form 1040NR (non-resident, sometimes filed using a PTIN). 2)    You cannot claim the credit if your filing status is married filing separately. 3)    You cannot be listed as a dependent on a tax return and claim the credit. 4)    You cannot claim the credit if you or your spouse is provided affordable coverage at work.  This means that if one taxpayer has affordable insurance at work , the entire family is not eligible for the credit, even if it is not affordable for the entire family.  (IRC §1.36B-2). 5)     The credit is NOT based on income reported on your paycheck or W-2, it is based on the adjusted gross income reported on your tax return, modified for any tax exempt income.  Click here for an example of a 2012 form 1040 to see where the number is on your tax return (pg1), (pg2). 6)    If you are self-employed, your health insurance deduction (see a sample 2012 form 1040 here) must be taken into account when estimating your AGI, be sure to ask a tax advisor about this. 7)    If your AGI will be different this year, or if it is too hard for you to estimate, you can take the credit when you file your tax return instead of monthly against premiums, or you can report changes in estimates as the year progresses. 8)    Click HERE for a chart of the income levels that qualify for the credit. 9)    For income tax purposes, a credit is better than a deduction.  A credit is a dollar for dollar reduction in your taxes, a deduction reduces your taxable income.  The premium tax credit you received as part of Obamacare is a big savings to your tax bill, but can only be taken to pay health insurance premiums. 10) If you have large health care expenses, those may be deductible, in addition to the credit, if you itemize your deductions.  Make it a habit to keep track of money you spend on health care and bring that information to a tax adviser. Lastly, the IRS will know if you have taken the credit to pay for health insurance premiums because the exchange will be reporting that information to both you and the IRS.  So, do not apply for the credit, use it to pay premiums and then not file a tax return. When the IRS receives a report about items of income, credits or deductions, they match it against the tax return filed.  When items do not match, they are sometimes flagged for follow up questions or audit, or sometimes the IRS will just issue a bill for differences. In cases where no tax return has been filed, the IRS will file one for you, in their favor.  Once they do that, it is up to the taxpayer to file an amended return and pay any penalties for late filing.  If you have never filed a tax return before, but would like to start for health insurance, consult a tax adviser or tax preparation service.

PIN Number Instead of Social Security Number, Do I get Subsidy?

PIN Number Instead of Social Security Number, Do I get Subsidy?

Kelley-Jensen2

I am an immigrant in the United States.  I do not have a Social Security Number, but I do have a PIN number issued to me by the IRS, can I qualify for health insurance subsidies using my PIN number?

A PIN number is officially known as an ITIN (Individual Tax Identification Number)  and is issued by the IRS to foreigners that have a need to file a tax return.  Such people can be resident or non-resident aliens, or the spouse of either.  Note that:

Aetna Canceling CA Health Plans, What About My Health Plan?

Kelley-Jensen2Aetna Canceling CA Health Plans and leaving California. I heard that Aetna is leaving California, and that people with Aetna plans have received cancellation notices.  What about my health plan with a different insurance carrier, will it be cancelled too?People with Aetna plans have received cancellation notices.  I’m with another carrier, will that happen to me? I know that health insurance reform is set to start in 2014, but I already have my own health insurance plan, not through any employer.  Can I keep the plan I have, or do I have to buy another one.  I do not really want to buy a new one because I like my doctor. 

In-Network, Out-Of-Network, and Preferred Providers – Read This Before Buying a Health Plan

Kelley-Jensen2In-Network, Out-Of-Network, and Preferred Providers – Read This Before Buying a Health Plan:  One of the benefits of a health plan is decreased rates for services with certain doctors and health care providers.  The terms for these relationships are:

Preferred Provider Organization  – Insurance carriers establish a list of contracted health care providers that have agreed to a discounted fee schedule for their health plan members.  This PPO list is referred to as a provider directory of participating doctors and health care providers.

Health Care Subsidies and Premium Assistance Tax Credits, what are they?

 
Kelley-Jensen, writes about health care subsidiesHealth care subsidies – What is the difference between, subsidies, premium assistance, tax credits:  which apply to me and how do I get them?
Health care subsidies, subsidy, premium assistance, premium assistance credit, premium assistance tax credit, tax credit are all terms that are used interchangeably to describe money available to assist with the payment of monthly health insurance premiums for people that qualify for help.

What is a health insurance premium? 

A health insurance premium is an amount payable to an insurance company, usually monthly, for health care coverage to remain available.  Watch these great tutorials about health insurance by Humana.

Insurance Rates for Covered CA Health Are Here!

Kelley-Jensen2Covered CA has released Insurance Rates for the new health insurance plans.

What are Covered CA Insurance Rates?. Are they final, what information do I need before I start shopping for health insurance, and when can I start shopping?

Yes there are now average figures to give you an idea of what health insurance premiums will cost you every month, starting 2014. VERY rough average price ranges for an individual health plan are:

21 year old, with subsidy 21 year old, without subsidy 40 year old, with subsidy 40 year old, without subsidy
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