Dear Kirk: If you purchase health insurance through the Affordable Care Act exchanges, are the premiums tax-deductible? What other benefits are there for shopping the health insurance marketplace? And will premiums be lower for individuals if they choose to buy coverage directly through the Marketplace instead of through an insurance agent or broker?
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Kirk Says: Great questions! If you get your health insurance through the Health Insurance Marketplace, then you may be eligible for a Premium Tax Credit. Eligibility is determined by meeting all of the following requirements:
- You must purchase health insurance through the Marketplace
- You are not eligible for coverage through an employer or the government
- You meet certain income requirements
- You file a joint return, if married
- You cannot be claimed as a dependent by another person
Go to the Marketplace and provide information about your projected income and family composition, and the Marketplace will estimate the amount of the Premium Tax Credit you may be able to claim for the 2014 tax year when you file your 2015 return. When your credit is calculated, you will have the choice of applying all, some or none of your credit paid in advance directly to your insurance company.
The amount you save depends on your family size and how much money your family earns. In general, if your income falls within the following ranges you’ll qualify to save money on your premiums in 2014. The lower your income within these ranges, the more you’ll save. (Bear in mind that the amounts below are based on 2013 numbers and are likely to be slightly higher in 2014.)
- $11,490 to $45,960 for individuals
- $15,510 to $62,040 for a family of 2
- $19,530 to $78,120 for a family of 3
- $23,550 to $94,200 for a family of 4
- $27,570 to $110,280 for a family of 5
- $31,590 to $126,360 for a family of 6
- $35,610 to $142,440 for a family of 7
- $39,630 to $158,520 for a family of 8
If you purchase a plan outside of the Marketplace, you will not be eligible for the Tax Credit.
And to answer your question regarding whether premiums will be lower if coverage is purchased through the Marketplace instead of a broker, the short answer is no. Health care reform requires that insurers charge the same premiums for identical products, no matter how the customer purchases coverage.
In summary, visit www.healthcare.gov, do your research and use the tools to determine tax credit eligibility. Speak with the health insurance navigators who are there to assist, but remember that navigators are not licensed in your state like brokers and agents are. If you have a broker or agent that you have a relationship with already, they can be an invaluable resource as you contemplate which choice is right for you and your family. Good luck!
Kirk Gwaltney is a Chartered Financial Consultant and a Chartered Life Underwriter in Brentwood, Tenn. Learn more about him at kirkgwaltney.com.
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