First year with the ACA

This is offered as a public service.

Asyouknowbob, back in 2013, Steve and I were paying (pre-ACA) Anthem Blue Cross and Blue Shield of Maine $670/month for placeholder insurance.  Which is to say, we paid them $8,040 annually for a card that proved we had insurance. The company paid for nothing; there was no co-pay; we carried all medical expenses out-of-pocket, in addition to that $670/month, and the deductible was nearing $100,000.

We were therefore Quite Excited when the ACA (ObamaCare) arrived, though Maine is one of the states that refused to set up its own marketplace, because politics, so we were required to buy insurance through the national marketplace.

Now, the thing about the ACA is that an applicant must provide an estimate of the year’s income in order to arrive at a premium amount.  This is in direct opposition to Anthem’s flat-rate system.  Unfortunately, it is very, very hard for freelancers, and other self-employed people to predict future earnings with any amount of accuracy.  In addition, a freelancer doesn’t have the money until they have the money, and sometimes checks are years in the mail.

In order to get a baseline income for our household, I averaged our IRS income for the past five years.  In order to arrive at an estimate of 2014 income, I subtracted all the 2013 income that I knew would not repeat in 2014, including such things as the upfront money for six novels; the Audible “honoraria,” &c.

When the dust cleared, I had in hand a figure that seemed fair and reasonable to me, given that (this is key) I couldn’t begin to guess how much, if any, royalties we would see in 2014, for sales made in 2013.

Long story short, for most of the year, I guessed right.  I did have to prove myself to the government at least twice during the year, providing up-to-date profit-and-loss statements, but mostly we were on-target.

Now, here’s the thing about the ACA.

You tell the government what your income is/will be.  The government then decides how much help in the form of tax credits you will receive, in order to make your health insurance payment “affordable,” like it says in the small print.

Tax credits come off the top of your premium.  So, if the Real Monthly Cost for your insurance plan is $500, but your income level won’t support that payment, then the government will offer to pay $X on your behalf to the insurance company.  So, for instance, your $500 plan may only cost you, out of pocket every month, $200. (NOTE:  These numbers are pulled out of my head to serve as an example; each tax credit case is individually figured by the ACA.)

So!  It came about, there at the end of 2013, making the best guess possible about 2014 income, that we were eligible for government tax credits.  We did not take all of the credits offered to us, rather, we picked a number — $400.22 — that we could comfortably cover for our monthly premium.

Let me say that, unlike the Anthem insurance, the ACA insurance (which we have through Maine Community Health Options) has things like co-pays, and an out-of-pocket ceiling; some of Steve’s heart medicine costs nothing; others of our drugs are quite affordable; none cost more than $15, and often much less.  The MCHO plan is, in my opinion, far superior to the plan we had with Anthem.  It is a plan that we could never have afforded with Anthem.

Cut to the end of the year, and the blessed arrival of the October royalties, in which I discovered that I had not only guessed wrong on our estimated income, I had guessed really wrong.

This is a good thing, so we took a moment to dance.  We ought to celebrate earning lots more money than we thought we were going to earn.  We did good. Go, us.

After we had danced, I skinned 33% off the top of the check for our taxes (which is usual), did a quick-and-dirty profit-and-loss, and called the ACA to “adjust” our 2014 income.

Now, here’s the other thing with the ACA — there’s no penalty, should you happen to have wrongly guessed your annual income.  The only thing you have to do?

Is pay the tax credits back.

And it came about that the October royalties had totally wiped out any reason for the government to grant us tax credits so we could afford insurance.  We could afford insurance just fine on our own.

So, we had to pay back all of the credits we had accepted in the first part of the year.

Which meant that, counting the $400.22/month that we did pay, and the credits we had to pay back, that our 2014 monthly health insurance premium came to. . .

$1400.25

. . .which we could not have covered during any month of the year, except this month.

So, the lesson here is. . .the “Affordable” in “Affordable Care Act,” is. . .subject to interpretation.  I don’t happen to think that a $1400/month premium is at all affordable, and would not, as stated above, been able to afford the payment for 11 months of 2014.

However, the ACA did allow us to have health insurance for those 11 months, by granting us the opportunity of paying a lower monthly premium that was more in keeping with our income for those 11 months.

Looking forward, because of course, we just finished the 2015 enrollment period, in which one needs to provide an estimate of 2015’s income, we used the system we used to estimate 2014’s income.  The system generates an estimated income that triggers the tax credit payment.  I will have to provide a profit-and-loss to the government by February 15 (as I had to do, last year) defending my estimate.  As much as I hated seeing another 33% of my income peeled off of that royalty check after the taxes were paid, at least we could afford to pay back the tax credits, and we were covered all year at a cost that was, yes, affordable.

Here ends the account of the Lee and Miller ACA Adventure.