Obamacare: A Deception

Obamacare was formulated on the concept of health care as a commercial commodity and was cloaked in ideological slogans such as “shared responsibility,” “no free riders” and “ownership society.” These slogans dress the insurance industry’s raid on public resources in the cloak of a “free market” health care system.

You will learn how to purchase a subsidized plan at the Exchange, what will happen when income and family circumstances change during the year or from one year to the next, and other perils brought to you by Obamacare. It is one of the most important articles that will be posted on my website this year. Americans will be shocked to learn the extent to which they have been deceived. The legislation neither protects the patient nor are the plans affordable.

The author shows that for those Americans whose income places them between 138% and 400% of the Federal Poverty Level, the out-of-pocket cost for one of the least expensive (lower coverage) subsidized policies ranges from 2% to 9.5% of Modified Adjusted Gross Income (MAGI), a tax base larger than the Adjusted Gross Income used for calculating federal income tax.

4. PAYBACK OF TAX CREDITS TO THE IRS

Perhaps you recall hearing politicians including Mr. Obama say if you can’t afford to pay for health insurance, the government will help you. That was one of the key talking points repeated non stop. We just went over the help part – the tax credits. Now we’ll look at what Mr. Obama et al didn’t tell you which is important to understand because it could cause you some serious financial distress.

Remember the “advance payment of the tax credit” in topic 2 of this lesson? Well, essentially, that was a loan from the government which was paid in advance to the insurer on your behalf when you purchased your plan, and, as you know, loans have to be paid back. So, when you file your tax return for the year you received your “advance tax credit” (your loan), if your income has changed, you have to settle this with the IRS. Here’s the deal:

a) If your MAGI is higher and the increase puts you into a higher FPL, you may have to pay back a portion or all of the tax credit because it was based on a lower MAGI. In other words, you could have an additional tax liability on top of the income taxes you already paid (or still owe) because you received a higher tax credit than you were entitled to.

b) If your MAGI is lower and the decrease puts you into a lower FPL, a refund could be coming to you because you were eligible for a larger tax credit than the government paid to the insurer. In other words, you overpaid for your portion of the insurance premium.

c) If you earned a bit more or less, but your extra earnings or loss didn’t bump you into another FPL, you’re home free.

To figure out your payback, you will have to enter the relevant figures on the reconciliation page of the tax return. Changes in filing status such as the number of people in your household will also have an impact. For those of you who marry or divorce, the rules for the payback amount as well as the amount of the tax credit you are eligible to receive will make your head spin – the computation includes pre- and post-marriage FPL and uses the highest FPL of the two people involved. Ditto for divorce.

Here is one of the reconciliation explanations in IRS-speak: Your liability for an excess tax credit you received must be reflected on your current year income tax return subject to a limitation on the amount of such liability.

Oh! Limitation on the amount of such liability. That sounds good.

Let’s take a peek at the payback limitations on record at the time of this writing. “At the time of this writing” are the operative words because the cap has been increased twice since the ACA was signed into law. The original payback was capped at $400 for families under 400 percent FPL and $200 for individuals. We’ll skip over the first increase. The story behind the second one is that a particular revenue stream was removed from the original law, so something had to be done to compensate for this lost money. Thus, an amendment was passed that increased the cap using a sliding scale, thereby putting a huge financial burden on the backs of the very people the ACA claims to help. In other words, tag, you’re it. You are the cash cow.

Here are the current sliding-scale caps:

If the household income (expressed as a percent of poverty line) is: less than 200 percent, the applicable dollar amount is $600 at least 200 percent but less than 300 percent, the applicable dollar amount is $1,500 at least 300 percent but less than 400 percent, the applicable dollar amount is $2,500

Effective date: the amendment made by this topic shall apply to taxable years ending after December 31, 2013. Very truly yours, House Ways and Means Committee

The name of this bloodsucker is The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. http://www.gpo.gov/fdsys/pkg/PLAW-112publ9/html/PLAW-112publ9.htm

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