[Editor’s note: With significant portions of the Affordable Care Act to be implemented on Jan. 1, 2014, the Kokomo Tribune is running a series that explores how the personal responsibility mandate, the expansion of Medicaid and the new health exchanges will affect consumers.]
Q: Can your tax filing affect your ability to qualify for a subsidy? If my wife and I file jointly, will that disqualify her from getting a subsidy for a marketplace plan?
A: Married couples must file jointly to qualify for any available health care subsidies, said Jennifer Lyons, a financial planner with Bucheri McCarty & Metz. Any married couple earning more than 400 percent of the federal poverty level, or $62,040 a year for a family of two, earns too much to qualify for any subsidy under the Affordable Care Act.
“If you’re over 400 percent of poverty, you’re never eligible for premium” support, Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation, told Atlantic Monthly magazine.
Ironically, if that same couple lived together but was not married, they could earn up to $45,960 each, or $91,920 total, and be eligible for subsidies through the exchanges.
Additionally, the health reform law included two new taxes that took effect this year to help fund the expansion of Medicare. One tax applies to individuals earning more than $200,000 a year and to couples filing jointly who earn more than $250,000 a year.
For wages over those amounts, payroll taxes are increased .09 percent, Consumer Reports said.
There is also a new unearned income tax of 3.8 percent on unearned income, including investments, interest, dividends, annuities, rent, royalties and certain capital gains. Exemptions to the tax include income from tax-exempt bonds, veteran’s benefits and qualified plan distributions such as those from an Individual Retirement Account or 401(k).
Readers can submit their questions on the Affordable Care Act to Enterprise Editor Ken de la Bastide at email@example.com or by mailing them to Kokomo Tribune, care of Ken de la Bastide, 300 North Union St., Kokomo, IN, 46901.