December 4, 2013

Enrollment Periods: Impact on your taxes

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

One is closing Dec. 7, one still open until March 31

An overriding issue with both these enrollment periods is the cost to the government. … Government pays these costs through taxation.

Medicare Open Enrollment Period is ending Dec 7. This annual event allows Medicare beneficiaries the opportunity to change their choice of plans for 2014. Medicare beneficiaries satisfied with their current choice of plans did not need to make any changes. That plan will renew automatically Jan 1. These Plans with potential changes included Medicare Supplements, Medicare Prescription Drug Plans and Medicare Advantage Plans. This enrollment period is over. Medicare folks will now keep current plans unless they qualify for a Special Enrollment Period during 2014. The next Medicare Open Enrollment period will be Oct 15, 2014.

The Healthcare Reform (Obamacare) initial enrollment period began Oct 1 and runs until March 31. This enrollment period applies to folks who do not have major medical insurance. You will recall the Affordable Care Act (Obamacare) passed into law in 2010 and is being phased in over the years. January 1, 2014 is the date when the mandate begins. By January 1, all Americans are required to have major medical insurance OR face a penalty. There has been lots of discussion and media coverage on some members of Congress attempting to postpone the mandate. I am not sure the postponement is going to happen. As of this writing, the January 1 mandate is still in force.

Folks, you’ve heard me say previously this law (the Affordable Care Act) has got to be misnamed. I say that because of all the requirements under the Affordable Care Act; requirements of guaranteed acceptance, NO pre-existing conditions, NO limits on claims. With all of these requirements, the law is going to do nothing but drive up major medical insurance premiums. I anticipate considerable increases in costs of major medical insurance.

But as we investigate the availability of insurance and other provisions of the Affordable Care Act, remember there are premium subsidies available. These premium subsidies come from government money that is applied toward the premium for plans purchased through the insurance exchanges – the insurance Marketplace. Remember each state has an insurance Marketplace. You can find the Marketplace by going on the website www.healthcare.gov . NOW before going on I want to remind Medicare folks premium subsidies are not available for Medicare folks. Premium subsidies are available for everyone qualifying except Medicare folks.

Do you qualify for a premium subsidy on the insurance Marketplace? The general rule is single tax filers earning up to $45K per year and married tax filer’s earning up to $94K (assumes a family of 4) may qualify for premium subsidy. This subsidy then may help to make major medical insurance “Affordable.” If you fall within these general income guidelines then you may qualify for a premium subsidy.

Recent media coverage is focusing on some employers dropping major medical insurance coverage for employees. I think these premium subsidies could be the reason for this change. Some employers may believe employees are better off – cost wise – with an individual policy subsidized by the Affordable Care Act. That rationale could be worth considering.

Do you qualify for a premium subsidy? The general rule for qualification is income. There is a special website sponsored the Kaiser Family Foundation with a calculator to help determine potential premium subsidy. That website is www.kff.org Encourage you to look at that website for your situation.

An overriding issue with both these enrollment periods is the cost to the government. Medicare has a cost, healthcare exchanges has a cost along with a larger cost with the premium subsidy availability. Government pays these costs through taxation. Both Medicare and Exchanges is going to create a huge tax burden. Options for taxpayers to minimize or reduce taxes continue.

We are available to assist with determining the extent of tax options that could be available through the use of our very attractive annuity options. Call us to schedule a special time for us to visit and review your situation to determine appropriate option for you.

Best wishes for the Christmas and Holiday Season.

Filed Under: Finance, Health & Wellness