Why no health insurance tax credit if bought direct from Kaiser?
March 13, 2015 10:42 PM Subscribe
Can someone explain the rationale for requiring health insurance to be purchased through a "marketplace" in order to qualify for a tax credit.
I ask because I purchased directly from Kaiser as my state's, (Oregon,) marketplace was a basketcase and I now realize that there is no tax credit for me and that I will have to gin up a "life event" in order to be able to buy the same insurance I already have outside of the open enrollment period in order to qualify. I would be especially curious if anybody else did this to themselves. I would be extra especially curious if anyone in Oregon remembers how explicit the requirement for a marketplace purchase was. My understanding at the time was that you needed to purchase through Cover Oregon in order to get an advance premium tax credit but don't recall anybody saying you would get bubkiss if you paid upfront and filed for a credit with your tax return. In fact I remember being encouraged to go to an agent or an insurance company directly. (apologies if a little ranty, but I would like to understand.)
I ask because I purchased directly from Kaiser as my state's, (Oregon,) marketplace was a basketcase and I now realize that there is no tax credit for me and that I will have to gin up a "life event" in order to be able to buy the same insurance I already have outside of the open enrollment period in order to qualify. I would be especially curious if anybody else did this to themselves. I would be extra especially curious if anyone in Oregon remembers how explicit the requirement for a marketplace purchase was. My understanding at the time was that you needed to purchase through Cover Oregon in order to get an advance premium tax credit but don't recall anybody saying you would get bubkiss if you paid upfront and filed for a credit with your tax return. In fact I remember being encouraged to go to an agent or an insurance company directly. (apologies if a little ranty, but I would like to understand.)
The ACA specifies that the tax credit is only available to people who buy through a state exchange. (That's being disputed, and right now it's before SCOTUS.)
The reason it was written that way was to give the states an incentive to create insurance exchanges, in order to get that federal largesse for their citizens. Equally, it was intended to give individuals an incentive to get their insurance through the state exchanges. This would increase the number of people doing so, and ideally bring in people who are healthy to help make the pool more insurable.
posted by Chocolate Pickle at 12:01 AM on March 14, 2015 [2 favorites]
The reason it was written that way was to give the states an incentive to create insurance exchanges, in order to get that federal largesse for their citizens. Equally, it was intended to give individuals an incentive to get their insurance through the state exchanges. This would increase the number of people doing so, and ideally bring in people who are healthy to help make the pool more insurable.
posted by Chocolate Pickle at 12:01 AM on March 14, 2015 [2 favorites]
The good news is that there is a special Tax-Season enrollment period for the residents of all but three states (see the nationwide round-up here here) for those that did not understand the tax implications of their previous insurance choices. For Oregon(on the Federal Exchange), the special enrollment period will start tomorrow, so at least you can have a plan with subsidies starting in April of this year.
As for the reason...well, the bill wasn't perfect, and there were lots of compromises. I think that a combination of Chocolate Pickle and Postel's Law's reasoning was how your situation happened. Ideally, there would be people in Washington who are interested in governing and making things better and stuff, but that isn't really the case any more, so we have the ACA that we have, instead of the ACA that could be.
posted by rockindata at 9:20 AM on March 14, 2015 [1 favorite]
As for the reason...well, the bill wasn't perfect, and there were lots of compromises. I think that a combination of Chocolate Pickle and Postel's Law's reasoning was how your situation happened. Ideally, there would be people in Washington who are interested in governing and making things better and stuff, but that isn't really the case any more, so we have the ACA that we have, instead of the ACA that could be.
posted by rockindata at 9:20 AM on March 14, 2015 [1 favorite]
The reason that you need to buy insurance on the exchange in order to get a subsidy is that subsidy eligibility is based on more factors than just income total at the end of the year. These items need to be verified first.
You must be a legal U.S. resident. You must be currently living in the U.S. You and your spouse must not be eligible for qualifying insurance from an employer. Further, there are Cost Sharing Reduction provisions that are reimbursed throughout the year, not just at the end of year. This means that if your income is in a certain range, your deductible and co-payments will be covered as you incur them. All of these qualifications are screened through the exchange web site. If you buy your insurance outside the exchange, you bypass this screening.
It would have been much simpler to just have Medicare for all, but that wasn't politically possible. All of these means testing and qualification restrictions were necessary to get the bill passed. If you want to blame anyone, blame obstructionist Republicans.
posted by JackFlash at 11:33 AM on March 14, 2015 [1 favorite]
You must be a legal U.S. resident. You must be currently living in the U.S. You and your spouse must not be eligible for qualifying insurance from an employer. Further, there are Cost Sharing Reduction provisions that are reimbursed throughout the year, not just at the end of year. This means that if your income is in a certain range, your deductible and co-payments will be covered as you incur them. All of these qualifications are screened through the exchange web site. If you buy your insurance outside the exchange, you bypass this screening.
It would have been much simpler to just have Medicare for all, but that wasn't politically possible. All of these means testing and qualification restrictions were necessary to get the bill passed. If you want to blame anyone, blame obstructionist Republicans.
posted by JackFlash at 11:33 AM on March 14, 2015 [1 favorite]
Another reason purchasing through an exchange is required: there are some plans only available at certain income levels.
That insurance agent you were being encouraged to see? They almost certainly would've been a trained Navigator, who would help you through the process of purchasing healthcare through your exchange. Cover Oregon can locate one near you, who may help you figure out how to move forward.
posted by JackBurden at 12:41 PM on March 14, 2015
That insurance agent you were being encouraged to see? They almost certainly would've been a trained Navigator, who would help you through the process of purchasing healthcare through your exchange. Cover Oregon can locate one near you, who may help you figure out how to move forward.
posted by JackBurden at 12:41 PM on March 14, 2015
Response by poster: Rokindata, I think the special tax season enrollment is for people who did not purchase health insurance and paid a penalty for being uninsured. Thats how I read the qualifications. Thanks though.
posted by Pembquist at 1:05 PM on March 14, 2015
posted by Pembquist at 1:05 PM on March 14, 2015
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posted by postel's law at 11:49 PM on March 13, 2015