Tax Penalties and Tax Credits: How the New Healthcare Bill Differs from the ACA
The Republicans have recently released their replacement for the Affordable Care Act. One of the differences between the ACA and the GOP’s American Health Care Act is a shift away from a tax penalty for not having insurance to a plan that adjusts the tax credits if you do have health insurance. Let’s take a look at some of those differences.
Currently under the ACA, there is a tax penalty for nonexempt individuals for not having health insurance. This penalty also applies to employers with 50 or more full-time workers who do not offer them health insurance. In the new proposed plan, this penalty would be eliminated.
As far as tax credits, both plans offer them, but the credits would be altered under the American Health Care Act. In the AHCA, premium tax credits would be available for people who buy insurance on the individual market. These credits would be determined by age, with older Americans receiving more. Currently under the Affordable Care Act, tax credits are on a sliding scale based off income. The ACA tax credits also take into account the cost of insurance locally.
The new bill would have income limits when it comes to tax credits. People who earn under $75,000 (or $150,000 for a married couple) get fixed amounts for their age groups. It starts at $2,000 a year for people under 30 and increases by $500 per decade in age. It goes up to $4,000 a year for people 60 years or older. There are caps per family — $14,000 — using the five oldest family members to get that amount. If you earn above the $75,000 or $150,000 threshold, the tax credit is lowered by ten percent of the amount earned above the threshold.
For a more detailed look on how that would affect people in different age groups, check out this interactive map from the Kaiser Family Foundation.
There’s distinct differences between the Affordable Care Act and the American Health Care Act, and it’s important to look at them and understand how they will affect you and the country. The switch from a penalty to a more tax credit based system is one of the major changes in the new healthcare bill.
This is a guest post written by Brandon Marcum with Health Insurance Innovations.
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