As the Affordable Care Act (Obamacare) takes effect in 2014, most individuals and families who do not already have health insurance will be required to enroll in a plan. Those whose employers do not offer a healthcare plan will be able to utilize state-run exchanges to purchase their insurance. Some workers whose employers do offer health insurance will also be allowed to use the exchanges, if the employer-sponsored plan premiums are unaffordable (more than 9.5 percent of their income) or the plan pays less than 60 percent of the cost of healthcare.
To offset the cost of health insurance, and help low- to middle-income citizens afford their premiums, the federal government will offer a tax credit or subsidy. These tax credits can be paid by the IRS in advance, rather than as a refund at tax time, resulting in lower monthly premiums for those who are eligible. Naturally, this leads to questions about how income will be verified to ensure each taxpayer receives the correct amount of subsidy.
While it has been assumed by many that the exchanges would accept applicants’ personal statements of income, the White House Administration has stated that income will indeed be verified. Insurance exchanges will be able to access an applicant’s income information in three basic ways: through IRS data, Social Security household income data, or via the wage information reported to Equifax. In the rare circumstance that none of these bureaus can provide the necessary information, applicants will be asked to provide appropriate documentation of their income.
Exchange managers will ask for additional documentation of income if an applicant reports an income that is more than ten percent below the IRS and Social Security data, and they are not found in the Equifax database.
If documentation cannot be supplied, the exchange will use available IRS and Social Security data to calculate an individual’s subsidy amount. If IRS data is unavailable, the exchange will not allow that applicant to access a tax credit.
Steve Amante is the President and CEO of Amante & Associates Insurance Solutions, Inc. To learn more about Healthcare Reform contact Steve Amante or Frank Faldmo the firm’s Employee Benefits Advisor at (951) 676-8800 or visit: www.amanteandassociates.com
