ObamaCare has gotten me!

OK, so I figured if I can't beat them, might as well join them. Of sorts, anyway. Not really trying to beat anyone, but I can say that the extremely high health insurance payments Connie and I have been paying were just getting way out of hand. When we got the current bill due for the first quarter of 2015, it was obvious that a change needed to be made. To be perfectly honest, those bills would eat up all our retirement budget completely. Had it not been for the modest income I am getting from my websites, we would be in BIG trouble financially. I used to joke about becoming a greeter at Walmart to try to make ends meet, but it wouldn't have been so funny had it come to be true.

I'll be 65 this upcoming July, so I presume I will go on Medicare then. But that still leaves Connie needing insurance. We needed to figure out what to do about that. So we went to talk to an insurance agent with Blue Cross & Blue Shield (they call it "Florida Blue" here) to see what sort of options we have, if any.

Well, short story is that by signing up for ObamaCare, the government would pay the insurance company directly a big chunk of what the policy costs without the subsidy. We are going with the lowest version (bronze) with the high deductible, simply because we just don't get sick. Except for the appendicitis I had in 2008, the only time I have been to the doctor has been for a problem with ear wax impaction that crops up every 4 years or so. Connie hasn't been to a doctor at all except for regular checkups. So we're thinking that a catastrophic plan would be our best bet. Yeah, we get the typical aches and pains associated with just getting old, but it's not anything to be running to the doctor about. We just deal with it. So anyway, it works out that we would be paying out of pocket something like $250 per month for this health insurance and the government will be paying Florida Blue around $1200 per month as a sort of prepaid tax credit.

OK I'll be honest, I don't have a clue about how this is supposed to work. So the government is going to be paying $1200 per month in my behalf which is considered as being a tax credit on my projected 2015 income. So in yearly terms, that is a $14,400 tax credit. Now I have NEVER paid that much income tax, so how can there be an expected credit of that amount? I'll be honest, that is over half of what I would even expect to make next year as gross adjusted income. So WHERE does this money come from?

More importantly, when I fill out my 2015 taxes in April of 2016 and this prepaid tax credit has to be reconciled, am I going to get a bill for it? In effect, I will have already gotten my tax refund in the form of this credit. It went to the insurance company directly. I'm sorry, but this just doesn't make any sense to me. The money doesn't even exist at the time it is being paid to the insurance company. I haven't earned any income yet, so surely the tax income hasn't been received by the government. Heck, I could DIE before filing my taxes. Then what?

So suppose I would expect to normally pay around $6,000 in federal income taxes for 2015. With the government paying $14,400 towards my health insurance, what happens on the bottom line of my tax return? Do I now OWE them the difference? So instead of having to pay $6,000 will I owe $20,400 to pay for the money already sent to the insurance company?

There is something either really screwy about this or I am just missing an important part of the puzzle. Or, more likely, there is one hell of a hook hidden in this worm dangling in front of me.

I just finished enrolling in Obamacare (I was really pleased, I found an insurance company that does not collect copayments for primary care physician visits until after the third visit, which is a bonus for generally healthy people like myself).

A tax credit is different than a tax deduction. You can elect to have the credit applied to your insurance premiums automatically. If you pay your insurance premiums yourself and do not have the credit applied, you have still qualified for the credit, so at tax time, after you pay your federal tax obligations, the federal government will send the balance of your credit to you as a refund check. This is because this particular type of tax credit is a refundable tax credit. Some tax credits are not refundable, meaning that once your tax liability is reduced to zero with the credit, the balance evaporates.

However.

The credit you were assigned depends on the reality of the income you estimated on your application. If your income turns out to be less than you estimated, you might get additional funds credited to you.

But if your income exceeds your estimate you may get a smaller refund if paying for your premiums yourself, or you could theoretically end up owing the government for some of that credit if you elected to have it applied every month to your premiums, but it would not be a 'surprise, we gotcha' type thing, your income would have to be substantially different and higher like winning the lottery, or if your investments had an unexpected increase, or if a bunch of people here on Fauna got one of those premium memberships.
Social security is counted as income for these purposes so if you suddenly elect to start receiving benefits, you should take that income into consideration when applying on the portal.
(If you are waiting a few more years, the year that you do elect to begin benefits you can include the amount you expect to receive in your application that year, since it will be only a half year of benefits because your birthday is in the middle of the year).

I'm only drawing my Florida state retirement right now, and not planning on taking Social Security until I reach at least 66 years old when I will get the full benefit. Income has been steadily slowing down with this internet stuff for me, so this might work out OK with the SS benefits taking up the slack. If the income from the sites drop down below a level where it just is not worthwhile dealing with the headaches, or it winds up operating in the red, then I can go into FULL retirement and shed myself of all this internet crap.

But hopefully this Obamacare medical insurance thing will work out. The money we were paying for our insurance policy was downright ridiculous. If I didn't have this internet income, it would have sucked up ALL of our budget from retirement savings each year. It was heading towards us just having to drop health insurance completely. Either that or give up the habit of eating every day.

My father in law who is tea party type has admitted through gritting teeth that he wouldn't have been able to completely retire mid 2015 if not for the ACA or Obamacare. It almost kills him to, lol. I'm glad that I will have insurance at retirement because the whole thing is confusing to me also.

Originally Posted by JColt

My father in law who is tea party type has admitted through gritting teeth that he wouldn't have been able to completely retire mid 2015 if not for the ACA or Obamacare. It almost kills him to, lol. I'm glad that I will have insurance at retirement because the whole thing is confusing to me also.

Heck, I seriously doubt that anyone who voted on the bill, whether it was positive or negative, really understood it at all. Wasn't it Pelosi who said that they needed to pass it into law so they could then figure it out?

Actually it is true what she said she just didn't word it correctly. Not that I'm standing up for her but as usual 1 party will run with what ever is said. Here is what U.S. Rep. Michael Burgess, R-Lewisville who is a doctor said about her comment

Palosky declined to comment precisely on Pelosi's forecast, saying her comment seemed more about politics than policy. "It’s not our role to police such comments," he said. "If you want to know what members of Congress are doing, you have to speak to members of Congress.”

His nudge led us to call U.S. Rep. Michael Burgess, R-Lewisville, among a handful of physicians in Congress and an opponent to the Democrats' proposal.

Burgess told us it's often true that the ins and outs of legislation aren't widely known until after a measure passes into law; that held true, for instance, for the Republican-steered measure providing government aid toward prescription drugs for seniors.

Pelosi's "right," Burgess said, though "I don’t think that’s a good strategy (to declare as much). I wouldn’t recommend anyone actually broadcasting that."

That also completely ignores the fact that it is the JOB of those representatives in Congress to fully understand what the heck it is that they are asked to vote on. Otherwise, why not just put all bills for consideration up on a wall and throw darts at them? The ones hit by the darts then become law, and they can afterwards do what they are apparently doing now, which is to figure out what the laws mean that "win".

Seriously, stupid is as stupid does...... If they don't know what the bills are about, then exactly what criteria are they using to vote on them?

You got me there Rich, I don't know. Seems like every bill put out one side says it's the greatest thing since wonder bread while the other side says life as we know it will cease to exist, lol

I believe that just as much could get done in Congress if there were only three people involved. One Democrat, one Republican, and one Independent. Except for the Independents (if their title is actually accurate) they tend to vote as a block anyway, depending on what the party leadership twists their arms to do, so why pay all those salaries and overhead just to keep the strings of puppets employed in Washington D.C.?