Obamacare Penalty Affordability Exemption

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Correction on the ACA penalty - it is far more complicated than originally reported. What I reported earlier was correct for the status of Married Filing Separately - but not for other statuses. Apparently, MFS filers get no ACA subsidy so penalties only kick in when the cost of a plan is less than 8% of income. However, for all other statuses, you need to take into account the ACA subsidies, so people are subject to penalties if their income exceeds poverty level (~11,800 for a single filer).
*************CORRECTION TO DISCUSSION BELOW*****************

Since I cannot golf in Chicago during the winter, I am preparing taxes. I found out something interesting about Obamacare. We were all led to believe you need to get insurance or face stiff penalties which are at least $695 per adult and as much as 2.5% of income (for higher earners).

As usual, most people were scared into buying insurance as there is an "affordability" exemption available. If the cheapest bronze plan would consume 8.13% or more of your income, you can claim this exemption when you file your taxes and avoid the penalty. Since the average bronze plan costs $2,676/year for one person and $13,380/year for a family of five, this means you would not need to pay the ACA penalty unless your income exceeded ~$33,000 for a family of one or ~$164,000 for a family of 5.

More information here:
ACA Penalty
ObamaCare Facts

Of course, the Healthcare.gov site is not yet updated for 2016, but you can run the numbers for your personal situation here using the 2015 planner:
Healthcare.gov tax tool

Most people don't know this and may have their tax refunds reduced significantly as a result.

I passed this on to one of my sisters who has 4 kids and the penalty this year will be crushing.

I've been working on this for months. Nobody and I mean NOBODY, (um. except you), knows about this. I've called healthcare.gov twice and it was like I was talking a foreign language. Various insurance brokers I worked with knew nothing either. It's like they hid it from everyone.

A couple things to know about this;
1) I believe it does NOT apply if you qualify for subsidies. As I recall this was settled in a court case, but don't have the info readily available.
2) The other thing this rule can do is qualify you for a "catastrophic policy". Usually, that's just a bronze policy with a higher deductible, (and probably none of the free diagnosis items, but I don't know for sure).

If you do the math you may find it to be less, even if you have an event that's uses the entire deductible. If I get the "catastrophic" policy and then run under a train my total out of pocket cost would be $16,824 and with a bronze package it would be $17,324. So with the cheaper policy I'd save $886. If I never use the policy at all I'd save about $4,386 from what the bronze cost was.

But you can't buy a catastrophic policy unless you get the exemption on healthcare.gov. It's "supposed" to automatically qualify you when you use their program, but I could never get it to work, even fiddling with it 3 times. My least expensive policy is going to run about 15% of pre tax income, so I should qualify, yet it won't give me the exemption. At this point it seems my only option is to send in a form, (16 pages as I recall), to get it.

Your sister has four children without health insurance?

This affordability exemption is valid if you did not apply or qualify for medicaid. Another low cost option might be medical cost sharing - typically less than half the cost of traditional insurance but they do not cover abortions and have a cap at $250k per year.

And I was assured by many on this site that Obamacare would not become a wealth redistribution program. Is anyone surprised that I was correct?

"Cost sharing" is the definition of insurance.

Here's the hard truth that Republicans will be coming to terms with very quickly: healthcare aint cheap.

If you are going to subsidize it for lower income people like Republicans say they want to do then you need to come up with a way to pay for it. Democrats used the "unconscionable" individual mandate. If you are going to get rid of that then you need to find something that coughs up an equivalent amount of cash - or more....or find ways to massively reduce costs in the industry itself.

It sounds like Trump will be grabbing some low hanging fruit with Medicare drug negotiation. Good. I applaud that. But we will need a whole lot more to pick up the slack from the mandate going away. Of course, this presumes that Republicans actually do want to help lower income people with healthcare access. We'll find out soon enough

Here's my cynical prediction: Republicans will bring back "healthcare plans" that are super cheap....and super worthless. $50/month will get someone access to Cigna's negiotiated prices with providers...but the plan participants will have to pay 100% of everything out of pocket. But you wont hear about how worthless they are - you'll only hear about how affordable they are. Watch. Its coming.

Pj we were told that with obamacare costs & insurance would go down

PJ has a very selective memory, one that only suits his misguided beliefs. And so it goes...

And Republicans told us they had a better plan.
Crying isn't a plan, Hoops. And since Republicans own all three bodies of the legislative process they cant just cry about Obamacare anymore. Sucks, huh?