Question on Obamacare subsidies

So here is the scenario: let’s say I am a single guy, I sign up for Obamacare and when I am signing up I estimate my income will be $15K (above the FPL but below 133% of FPL), so I am eligible for subsidies, and let’s say over the year they come to $4000 (the amount paid in Silver plan premiums that is over the 2% - that is, $300).

Then, at the end of the year, I find out that my income was, in fact, $11K. Or $8K. Anyway, less than FPL. Which makes me ineligible for subsidies. Does the government make me repay them the $4K?

The answer to your question can be found here: http://www.kaiserhealthnews.org/Stories/2013/December/06/Michelle-Andrews-health-insurance-subsidy-income.aspx

It sounds like the liability to repay the premium is limited, although to someone making $11,000/year… $1,250 is still a very large sum.

Ooops - look at Table 2, Page 8 here: http://www.cbpp.org/files/QA-on-Premium-Credits.pdf

In your example, with the individual making less than 200% of the Poverty Line, the individual would be responsible for paying back no more than $300 of the subsidy. Way better than paying back $1250.

Ok then - why all the weeping and gnashing of teeth about the “hole” into which the people who earn less than the FPL fall in the states where they can’t go on Medicare? All they have to do is sign up for Obamacare, declare than they are going to earn just above FPL, then pay back the $300.

Because most people aren’t willing to commit intentional, easy-to-prove fraud, just to obtain a benefit to themselves? How do they then answer the audit question: “Based on what information did you make your original earnings claim?”

Or maybe just because the whole point of the original law was to help these people, and the fact that they can jump through a bunch of hoops in order to be marginally less screwed by their vindictive state governments doesn’t mitigate that?

“Because I expected to earn more this year than last year”? It’s not fraud. It’s optimism. I always expect to earn more next year than last year.

What happens to the insurance premiums in the next tax year?

AFAIU, for next year you again estimate what your income would be. And can be optimistic about it.

At a certain point, it’s not a matter of your optimism, it’s a matter of whether the judge or jury thinks it is fraud not optimism. (This assumes anyone would prosecute for this exaggeration.)

Of course no one would prosecute. Thinking/hoping you would earn more than $11500/year is hardly a wild flight of imagination.

Huh. So low income people should just game the system to overcome a problem caused by states refusing the Medicaid expansion?

I wonder how that will be played in the media if it becomes common practice. I’m seeing a new twist on *“OMG welfare queens!!” *

Somehow this just doesn’t look like a sterling idea.

Obamacare makes welfare queens of more than half of its subscribers. A few more won’t make a difference.

So let me get this straight. Those who advocate Medicaid expansion require no poor people to lie to get health insurance. Terr advocates poor people lying to get health insurance instead of the Medicaid expansion.
And we’re supposed to believe that Terr’s solution is the more reasonable way to set up rules for health insurance? And what is this doing in GQ if it’s not really about the question in the OP? It reads like a stealth political diatribe.

Nope. No lying involved. You estimate your income for next year. Optimistically.

I asked the question because I didn’t know the answer. I think that’s a good reason to ask the question, don’t you?

That’s not how abverbs work. They modify nouns, not turn farce magically into honesty.

Right after you got the answer to the question you launched into a GD/IMHO-style suggestion of unethical and possibly illegal conduct to get health insurance. I can’t see how that’s GQ territory.

Found an article dealing exactly with this question: http://www.khi.org/news/2013/aug/12/estimating-maneuver-could-help-more-people-gain-ob/

Obamacare doesn’t do any of this. Sates that declined to expand their Medicare to cover those below the AHC level force people to choose honesty or cagey optimism. Congress that refuses to pass corrective legislation once the Supreme Court clarified the rules perhaps also shares the blame. Both those states and congress know there is a problem, have the ability to fix it and, according to the Supreme Court decision, it is their respective power and responsibility to address it - supply Medicare of your own volition, or reduce the subsidy limit, or let people die on the sidewalk for lack of coverage.

I like being in Canada.

I wonder how the numbers would work if the person over-reported their actual income (say using a Schedule C to report income from doing fictional yard work). Could the personal exemptions, standard deduction, EIC, etc. keep the tax liability low enough to make things work?

Which raises the question, is it a crime to over report your income or under report your deductions in order to reach a desired income level?

Yes. You can read the fine print on the income tax signature, but you’re basically asserting that the information is complete and correct to the best of your knowledge.

There are, however, some enormous gray areas that you won’t find a good answer for, especially when the issue is omitting expenses. For example, the IRS requires that you document mileage expense with a log - technically, it is not sufficient to use an estimate. Without the log, you’re not allowed to claim the deduction. But the IRS due diligence guidance for EIC claimants with insufficient records says that you must use an estimate. These kinds of things are not going to get sorted out until someone feels like challenging it in court.

There is a major and growing problem of rural hospitals closing because of the high number of uninsured patients. People are dying unnecessarily right now. Some Republican governors are having to reconsider their rejection of Medicaid expansion because of this.