Health Care Reform Subsidies Are Considered a Tax Credit and Taxable Income

[STIBROKER]

I have been trying to wrap my mind around this when I first saw it.......now....IF this is true......AND the sub's ARE considered taxable income.....and people are suppose to guesstimate what their income is going to be in 2014 will these sub's also be counted as income.....added to what they make....will it cause a claw back on everyone that takes a sub......

...btw..when I asked it on the broadcast last night "Austin Texas Affordable Care Act Live Town hall Meeting"....this was censored on the Link keye uploaded for re-watch...so to see the question asked uninterrupted you would have to be watching live on the net...
Shopping Guide - Save money

"How Your Savings Are Applied"

If you qualify for a credit toward your health insurance premium, your savings are considered a tax credit and taxable income. This credit will be applied directly toward your monthly premium. Talk with a tax expert to decide if and how to use your credit. "


KEYE...not broadcasting the rest of this question...



part 2.....

 

[AllenChicago]

I have "heard" other people saying that the APTC (subsidy) is taxable just like normal income, but I could never find an IRS publication with this wording.


This could be a Trojan Skunk that the IRS slipped into one of its new RULES over the Summer...dry rules that the media never reads. Maybe BCBS-TX found this in one of them? If so, having to add the subsidy to one's income would turn even more citizens against the Affordable Care Act.


Thanks for pointing this out STIBroker! It looks like people will have to estimate their subsidy based on their subsidized-adjusted income. Sounds like this could be an analogous to the dog chasing his tail.


Are there any super analytical members here that can find this new IRS rule and share it with us?


ac


Edit: I just checked our BCBS-IL website. It says the same thing:
Ref - http://www.bcbsil.com/health-insurance-shopping-guide/health-insurance-cost

 

[STIBROKER]

Thanks for pointing this out STIBroker! It looks like people will have to estimate their subsidy based on their subsidized-adjusted income.

and subsidize them out of subsidies in the second year....does not cost the govt. a dime.....

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but I could never find an IRS publication with this wording. http://www.bcbsil.com/health-insurance-shopping-guide/health-insurance-cost

That is why I tried to call The IRS on Oct 1....got a recording....do to the govt shut down we are closed....

 

[TXINSURANCE]

I do not see how an advanced tax credit would meet any logical definition legal or otherwise of income.

http://legal-dictionary.thefreedictionary.com/_/dict.aspx?rd=1&word=income

Definitely needs clarification.

 

[STIBROKER]

I do not see how an advanced tax credit would meet any logical definition legal or otherwise of income.

income legal definition of income. income synonyms by the Free Online Law Dictionary.

Definitely needs clarification.

In the words of Si Robertson ..."IT'S THE LAW JACK"

 

[houcoogster]

I do not see how an advanced tax credit would meet any logical definition legal or otherwise of income.

income legal definition of income. income synonyms by the Free Online Law Dictionary.

Definitely needs clarification.

I'm with you. People get Earned Income Tax Credits those are not treated as income.

However MLR rebate checks from group plans are taxable.

Maybe we'll be able to write off the penalty off as a tax deductible expense.

 

[Ann H]

I do not see how an advanced tax credit would meet any logical definition legal or otherwise of income.

income legal definition of income. income synonyms by the Free Online Law Dictionary.

Definitely needs clarification.

The big issue here is that BCBS published it on their site. Blue Cross usually does not publish anything unless their legal department has reviewed it, and STI called them and they said their legal department approved of it. BCBSTX has the same parent company as BCBSIL, and both are showing the same statement.

I have searched for documentation ever since STI told me about the rumor a few days ago, and I cannot find any documentation for it being income. Neither can any CPA we talked to. We even called the CPAs who produce seminars on PPACA for other CPAs and they had never heard of the APTC subsidy being income. However, that doesn't mean it's not hidden somewhere in the 20,000+ pages of regs. So if anybody has proof that it is true, please show us the source documentation! If true, this is HUGE. What a nightmare that would be.

Now, we know that excess subsidy is taxable. So, for instance, if you get a $4,000 subsidy but you are only qualified for $2,000 of it, then the excess is taxable. (EDIT: I should have said "additional tax" instead of "taxable". It's also called a clawback.). But what STIBroker is talking about is more than just excess subsidy. The BCBSTX site says the whole subsidy is taxable income. Crazy, I tell you. Since when is a tax credit also taxable income?

 

[TXINSURANCE]

I'm with you. People get Earned Income Tax Credits those are not treated as income.

However MLR rebate checks from group plans are taxable.

Maybe we'll be able to write off the penalty off as a tax deductible expense.

MLR group rebate checks are taxable because that money was never taxed.

I suspect this is just a case of bad verbage on the site...

 

[STIBROKER]

I suspect this is just a case of bad verbage on the site...

Really...try 2 sites...Texas and Illinois....

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and the thing that makes this a quagmire how are self employed that work on commissions ....contacts ....project income in 2014.....have a home builder friend that made $30,000 this year...family of 5....next year thinks he will do $175,000.....how do you deal with this....if anyone had half a brain would have set this up to were the sub's that you get for 2014 are determined by what you file for in 2013.....NO CLAW BACKS..... and so forth.....

 

[bluediamond]

This question was asked at every seminar and we were told no it was not considered taxable income, by Florida Blue legal department who was present at one of them.