Thursday, January 31, 2013

IRS to the Rescue

The white knights at the IRS have swooped in to save the day by defining "affordable" . . . sort of.

Employees can receive government tax credits to buy insurance for their families if the coverage their employers offer would cost more than 9.5 percent of their income, the IRS said today in final regulations. That calculation will be based on the cost of self-only coverage, not family coverage, which is more expensive and would give more people access to the credits.

So if you earn $50,000 (AGI) and you have a spouse and one child the government considers your employer based health insurance to be affordable as long as YOUR portion of the insurance does not exceed $4750 ($396 per month).

But if the cost to cover your family is another $1000 per month (definitely possible) your coverage is STILL affordable and "No subsidies for you!".
The IRS said in a proposed rule also issued today that most families in such a situation won’t have to pay a penalty to the government if they choose not to buy insurance. 
So, even though your coverage is not affordable you will not have to pay a penalty.


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