How to Navigate the Healthcare Marketplace and Make Payments

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How to Navigate the Healthcare Marketplace and Make Payments

Healthcare in the United States has been a big topic of conversation over the last few years, and rightfully so. While the debate on how the healthcare system should be run could be discussed at length, this will not be that forum. The focus for this post is getting an understanding of how you can pay for healthcare when your income has been decreased or diminished completely.

When you lose your job, your previous employers notifies your insurance company that you are no longer employed by them and therefore they will no longer be paying your healthcare premiums.

The insurer then sends you paperwork letting you know that they are aware your previous employer is no longer paying your benefits and if you’d like to continue coverage, you will be able to pay for your insurance yourself. This option is available through COBRA.

COBRA was an act brought about in the 80’s to allow those losing their healthcare benefits the option to keep them if they pay themselves. The only downfall that most see when it comes to COBRA is that you are responsible for the full premium, including what your previous employer paid as well as administrative fees. This often amounts to well over $300 a month.

For me – that was a bit more than I could afford. So I immediately went to the healthcare marketplace.

It is completely understandable that this solution is not for everyone. Personal beliefs may not align with this option but when you have been working for a long period of time, have lost your job and are able to receive unemployment, you may qualify for tax credits that will pay your premium through the marketplace.

Premium tax credits are based on how much income you are losing. The marketplace looks at your projected income and then determines how much money you will have available to you each month to pay for your premium with tax credits. Then you have the option to select from plans available to you once the tax credits have been applied to the monthly premium.

These credits are great but it is important to know what it means for you down the road. There are two outcomes when comes to filing your tax returns according to the website:

  • If you use more advance payments of the tax credit than you qualify for based on your final yearly income, you must repay the difference when you file your federal income tax return.
  • If you use less premium tax credit than you qualify for, you’ll get the difference as a refundable credit when you file your taxes.

Because of these potential outcomes it is important, if you have a tax professional, to keep in contact with them when something changes regarding employment or income levels, once enrolled in the marketplace. Not properly reporting your income will affect your tax returns for that year so keeping in contact is a good idea.

Don’t have a tax professional? Not a problem. Finding someone local is usually a good idea because they are available all year round. I recommend locating a Certified Public Accountant (CPA)’s office via a quick search on the internet. You can even just ask for recommendations on social media, or my personal favorite – ask a family member who does their taxes.

What is also acceptable is compiling your tax information yourself. Make sure you have Form 8962 when you are filing your tax returns for the years you are using premium tax credits (NOTE: This form is for 2017, there may be a new one available when filing taxes for 2018 and subsequent years).

There are plenty more details that are available and can be found on the IRS website should there be questions about specifics. I am also looking into performing an interview with a CPA to get a bit more information about this process and how premium tax credits will impact individuals.

What questions would you ask a CPA if you could?
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