Obamacare giveth and Obamacare taketh away.

Dazed and Confused

Typical website experience for the healthcare exchange. Pick a plan, but no way to make a payment.
Not at CoveredCA’s website, the insurance company’s website. Nothing.

AND then have to upload or fax in documentation on income and residency within 90 days.

• How many people will forget to do it in 90 days. 
• How many will be confused by what is being asked for?
• Could this be any more complicated?

True Sample

Here is a sample of documents requested for a 16-year-old high school student, daughter in a family that has conditionally qualified for Advanced Premium Tax Credit. 

Note how they ask for a “Copy of last year's federal tax return that accurately reflects current income” 4 TIMES!!! If she’s a full-time student and DOESN’T HAVE ANY OF THE THINGS on the list, what does she do? How do you upload a ‘no document’?

• Copy of last year's federal tax return along with federal schedule E that accurately reflects current income (1)

• Other documents to support Proof of Rental Income

• Receipts displaying gross profit and expenses

• Business records such as profit and loss statements

• Copy of last year's federal tax return along with federal schedule C. D, E, or F as appropriate that accurately reflects current income (2)

• Other documents to support Self Employment Income

• Court papers

• District Attorney/Family Support (DAFS ) records

• Copy of check

• Copy of pay stub

• Copy of pay stub showing garnishment specified for alimony

• Sworn affidavit from absent parent

• Other documents to support spousal income and child support

• Award letter or most recent cost-of-living increase notice

• Current bank statement

• Copy of the current benefit check

• Signed statement from the individual or organization providing the income

• Copy of last year's federal tax return that accurately reflects current income (3)

• Gift income letter

• Other documents to support Proof of Unearned Income

• Pay stub

• Copy of last year's federal tax return that accurately reflects the current income (4)

• Signed letter from employer that displays the gross income, payment frequency, and date of paycheck

• Affidavit

• Other documents to support Proof of Earned Income

• Form 1099

• Bank statement

• Investment account statement

• Payment records (notes and mortgages)

• Other documents to support Proof of Interest Income

• Lease or sales agreement

• Records such as gross rents and expense receipts
•  

Did I lose you somewhere in the above list?

Here’s another question:
What do you do if your federal tax return from last year doesn’t reflect current income?
The enrollment period is ALWAYS before the tax filing date. Which means in March 2014, people still haven’t filed their 2013 taxes. Which means they need their 2012 tax return. What if the 2012 tax return doesn't accurately reflect their 2014 income?

And for self-employed people and entrepreneurs: what if they won’t even know their 2014 income until they file in October of 2015? Oh, that’s right--you can’t wait that long to file taxes and get the Advanced Premium Tax Credit. Yet another way self-employed people are at a disadvantage with this law.

But I am using a 2012 tax return to gauge 2014 income which I won't know for sure until the middle or end of 2015. What if I’m wrong?

If you guess high, you'll get more of a tax refund--the government sat on your money for 16 to 22 months. If you guess low, you’ll owe more: about 9.5% of any additional income. That’s quite a tax ON TOP of self-employment tax of 15.3%. [That makes a combined self-employment/health insurance tax of about 24.8%!!!] And that’s before state and federal taxes.

But that was being optimistic. 

There are some very common scenarios where your kid earns $2000 by working a part-time job over the summer, and you (the parent) now owe ALL OF IT in additional taxes on your health care program. That’s in addition to payroll taxes (FICA, state and federal unemployment, etc) your kid pays.

Obamacare giveth and Obamacare taketh away.