OK, so I figured if I can't beat them, might as well join them. Of sorts, anyway. Not really trying to beat anyone, but I can say that the extremely high health insurance payments Connie and I have been paying were just getting way out of hand. When we got the current bill due for the first quarter of 2015, it was obvious that a change needed to be made. To be perfectly honest, those bills would eat up all our retirement budget completely. Had it not been for the modest income I am getting from my websites, we would be in BIG trouble financially. I used to joke about becoming a greeter at Walmart to try to make ends meet, but it wouldn't have been so funny had it come to be true.
I'll be 65 this upcoming July, so I presume I will go on Medicare then. But that still leaves Connie needing insurance. We needed to figure out what to do about that. So we went to talk to an insurance agent with Blue Cross & Blue Shield (they call it "Florida Blue" here) to see what sort of options we have, if any.
Well, short story is that by signing up for ObamaCare, the government would pay the insurance company directly a big chunk of what the policy costs without the subsidy. We are going with the lowest version (bronze) with the high deductible, simply because we just don't get sick. Except for the appendicitis I had in 2008, the only time I have been to the doctor has been for a problem with ear wax impaction that crops up every 4 years or so. Connie hasn't been to a doctor at all except for regular checkups. So we're thinking that a catastrophic plan would be our best bet. Yeah, we get the typical aches and pains associated with just getting old, but it's not anything to be running to the doctor about. We just deal with it. So anyway, it works out that we would be paying out of pocket something like $250 per month for this health insurance and the government will be paying Florida Blue around $1200 per month as a sort of prepaid tax credit.
OK I'll be honest, I don't have a clue about how this is supposed to work. So the government is going to be paying $1200 per month in my behalf which is considered as being a tax credit on my projected 2015 income. So in yearly terms, that is a $14,400 tax credit. Now I have NEVER paid that much income tax, so how can there be an expected credit of that amount? I'll be honest, that is over half of what I would even expect to make next year as gross adjusted income. So WHERE does this money come from?
More importantly, when I fill out my 2015 taxes in April of 2016 and this prepaid tax credit has to be reconciled, am I going to get a bill for it? In effect, I will have already gotten my tax refund in the form of this credit. It went to the insurance company directly. I'm sorry, but this just doesn't make any sense to me. The money doesn't even exist at the time it is being paid to the insurance company. I haven't earned any income yet, so surely the tax income hasn't been received by the government. Heck, I could DIE before filing my taxes. Then what?
So suppose I would expect to normally pay around $6,000 in federal income taxes for 2015. With the government paying $14,400 towards my health insurance, what happens on the bottom line of my tax return? Do I now OWE them the difference? So instead of having to pay $6,000 will I owe $20,400 to pay for the money already sent to the insurance company?
There is something either really screwy about this or I am just missing an important part of the puzzle. Or, more likely, there is one hell of a hook hidden in this worm dangling in front of me.
I'll be 65 this upcoming July, so I presume I will go on Medicare then. But that still leaves Connie needing insurance. We needed to figure out what to do about that. So we went to talk to an insurance agent with Blue Cross & Blue Shield (they call it "Florida Blue" here) to see what sort of options we have, if any.
Well, short story is that by signing up for ObamaCare, the government would pay the insurance company directly a big chunk of what the policy costs without the subsidy. We are going with the lowest version (bronze) with the high deductible, simply because we just don't get sick. Except for the appendicitis I had in 2008, the only time I have been to the doctor has been for a problem with ear wax impaction that crops up every 4 years or so. Connie hasn't been to a doctor at all except for regular checkups. So we're thinking that a catastrophic plan would be our best bet. Yeah, we get the typical aches and pains associated with just getting old, but it's not anything to be running to the doctor about. We just deal with it. So anyway, it works out that we would be paying out of pocket something like $250 per month for this health insurance and the government will be paying Florida Blue around $1200 per month as a sort of prepaid tax credit.
OK I'll be honest, I don't have a clue about how this is supposed to work. So the government is going to be paying $1200 per month in my behalf which is considered as being a tax credit on my projected 2015 income. So in yearly terms, that is a $14,400 tax credit. Now I have NEVER paid that much income tax, so how can there be an expected credit of that amount? I'll be honest, that is over half of what I would even expect to make next year as gross adjusted income. So WHERE does this money come from?
More importantly, when I fill out my 2015 taxes in April of 2016 and this prepaid tax credit has to be reconciled, am I going to get a bill for it? In effect, I will have already gotten my tax refund in the form of this credit. It went to the insurance company directly. I'm sorry, but this just doesn't make any sense to me. The money doesn't even exist at the time it is being paid to the insurance company. I haven't earned any income yet, so surely the tax income hasn't been received by the government. Heck, I could DIE before filing my taxes. Then what?
So suppose I would expect to normally pay around $6,000 in federal income taxes for 2015. With the government paying $14,400 towards my health insurance, what happens on the bottom line of my tax return? Do I now OWE them the difference? So instead of having to pay $6,000 will I owe $20,400 to pay for the money already sent to the insurance company?
There is something either really screwy about this or I am just missing an important part of the puzzle. Or, more likely, there is one hell of a hook hidden in this worm dangling in front of me.
