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Health reform and tax credits
October 14, 2010 - Jim Anderson
Tax credits that will offset a portion of the cost of health insurance premiums are a major part of the health care reform bill.
The credits will take effect in 2014. Many people who have job-based coverage are probably curious if they might qualify.
Families USA has a number of publications relating to health care reform available at its Web site, www.familiesusa.org.
One of those documents, “Lower Taxes, Lower Premiums — The New Health Insurance Tax Credit,” explains some of the criteria. The report estimates that 28.6 million Americans will be eligible for the credits, including nearly 15 million people who are already insured.
If you’re paying more than 9.8 percent of your household income to participate in your employer’s plan, assistance is generally available if your income is at or below 400 percent of poverty ($43,300 for an individual and $88,200 for a family of four in 2010).
The size of the tax credits will be determined on a sliding scale based on income.
Here’s a couple of examples:
For an individual with an income of $27,075 (250 percent of poverty), the maximum he or she would be expected to pay in annual health insurance premiums is $2,180 (based on the government’s reference plan).
For a family of four with an income of $55,125 (250 percent of poverty), the maximum the family would be expected to pay in annual health insurance premiums is $4,438.
If you’re paying between 8 percent and 9.8 percent of your household income to participate in your employer’s plan, you may receive a voucher representing your employer’s contribution. That voucher could then be used to shop for insurance in an exchange.
If you have job-based coverage, you won’t be eligible for assistance if you contribute less than 8 percent of your household income to health insurance premiums.
Again, you can find the full report, at www.familiesusa.org.
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