Myths and misconceptions about Obamacare/Affordable Healthcare Act plans abound. Here are four misconceptions that are commonly heard in conversations around the water cooler.
The less money that I make the more my tax credit will be.
This is true to an extent. Your tax credit will be based on your income. Those making less money will get a larger tax credit. The catch is that you have to make at least $11,490 to get the tax credit. So if your income is lower than $11,490 for 2014, you will not qualify for a tax credit. Your state may have Medicaid available for those who make less than that amount, but you will need to check with your local Social Security office to find out. You can also find more information on the Health and Human Services website .
If I do not purchase a plan, my tax penalty will only be $95.
The $95 flat rate penalty only applies to single individuals who make less than $19,650 per year. Those who make over that amount will pay a penalty of 1% of your yearly household income. So a single person making $50,000 per year will owe a $500 tax penalty at the end of the year when they file their taxes.
I can keep the current health policy I have now and use my tax credit to help me pay for it.
Your insurance company should notify you as to whether or not you can keep your 2013 plan another year. But unless you sign up for one of the new Obamacare/Affordable Healthcare plans, you will not be eligible to receive any tax credits to help pay for your plan.
It is very expensive to add my spouse on my policy at work so he/she is going to buy an individual plan and apply for a tax credit to help pay for it.
If you have coverage through your employer, it is very likely that you will not be able to apply for any tax credits to help your family buy individual plans. If the employee spends less than 9.5% of their annual income on their own coverage, the plan is considered affordable for the entire family. So for example, let’s say that Company ABC provides a plan to all of their employees that complies with the new guidelines, and they do not charge the employee anything for the employee premium. Even if it costs $2500 per month to add on a family member, the plan is considered affordable since the company pays the entire amount of the employee only premium. For that reason, none of the family members are eligible for the tax credit.
Several people need to be involved in helping you made a decision about your health plan needs. These people would include your tax advisor, your insurance agent, and your employer.