This week, I fielded questions about the circumstances under which people have to repay premium tax credits for health insurance purchased on the marketplaces and about Medicare coverage of dental services.
Q. My 60-year-old sister lost her $45,000-a-year job in 2014, and she and her husband bought a marketplace plan this year. They had estimated their annual income at $22,000, but then she inherited $30,000 from our mother’s estate. If I’m calculating correctly, they’ll have to repay $18,000 in premium tax credits. Are there no allowances made for a death in a family or unforeseen circumstances?
A. Fortunately for your sister, your calculations are incorrect. There are special circumstances that likely apply in her case.
The premium tax credits that people receive to buy health plans on the marketplaces are based on annual household income. An unexpected increase in taxable income, whether it’s because someone gets a big raise at work or a home-based business takes off, may change the amount of tax credit people are entitled to. If your income estimate was too low, you’ll generally have to repay some or all of the excess at tax time when your estimate is reconciled against your actual income for the year. The repayment amount is capped at $1,250 for an individual if annual income is less than 400 percent of the federal poverty level, or about $47,000 for one person.
However, not all types of income are counted when figuring annual household income for premium tax credits. An inheritance, such as your sister received, is considered non-taxable income, says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. It isn’t counted when determining “modified adjusted gross income,” the tax term for the household income figure on which the premium tax credits are based.
Q. I qualify for a premium tax credit for marketplace coverage in 2016. I will turn 65 in April, and I’ll switch from my marketplace plan to Medicare. If I take a part-time job after I switch and my 2016 income increases, will I retroactively lose some of the monthly tax credit I received for the time I was eligible for marketplace coverage and have to repay it?
A. As discussed above, your premium tax credit is based on your annual income, not just your income for the months during which you’re eligible for subsidized health insurance on the marketplace. If you think you might get a part-time job after you drop your marketplace plan in the spring, take that into account when you estimate your income for your 2016 marketplace coverage.
“He should include what he expects to make [later on] in his income estimate, and get it as close as possible,” says Solomon.
Most people take the premium tax credits in advance to help them cover the cost of their monthly payments. But if you’re worried about having to repay premium tax credits, you could opt to pay the entire premium up front every month while you have your marketplace plan and take the premium tax credit on the back end when you file your 2016 taxes.
Q. I have an autoimmune disease called Sjogren’s syndrome that attacks all my moisture-producing glands. Because of my dry mouth, my doctor says I will eventually lose every tooth I have. I desperately need dental care. I am on Medicare, and it clearly states that it does not cover routine dental care. I do have dental insurance through the company that I retired from, but it doesn’t begin to cover all the care I need. I have spent all my savings. Is there anything I can do?
A. You have a few options. Medicare only covers dental care in very limited circumstances: for example, if someone needs teeth pulled before receiving radiation to the jaw or if someone is hospitalized and needs an oral exam before kidney transplant surgery.
Dental insurance typically covers a few thousand dollars worth of care or less every year, and usually only pays half the cost of major restorative work such as crowns or implants.
People like you, who have a medical condition that affects your teeth, are in a tough spot, says Dr. Matthew Messina, a consumer adviser for the American Dental Association who practices in Cleveland, Ohio.
In health care, “somehow the mouth got disassociated from the rest of the body,” Messina says. “Oral health is a significant component of whole body health.”
If Medicare won’t cover the care you need, check out dental schools or community health centers in your area.
Three-quarters of community health centers provide dental services, generally charging on a sliding scale based on income, says Amy Simmons Farber, communications director at the National Association of Community Health Centers. The specific services offered may vary from center to center.
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