Affordable Care Act As War Tax Redirection

| Federal Income Tax,Health Insurance,IRS,Real Life Stories

(This article appeared in the June/July 2014 edition of More than a Paycheck, NWTRCC’s bimonthly newsletter, but several links have been added.)

By Robert G. Randall II

Several of you have written about your own experiences with the Affordable Care Act (ACA, I call it Obamasurance rather than Obamacare, because, other than the free preventive care included in each policy, it really is not care; it’s only an opportunity to wrestle with an insurance company over who will pay for what care; that’s better than nothing, but we all know that real care will only come with some kind of single-payer or socialized medical system.) Because my wife and I have had a good experience with ACA, I think I should post here my current thinking on the subject.

First of all, I made a nice-sounding speech at our NWTRCC gathering in New York about opting out of ACA as a form of economic disobedience, because Obamasurance is a huge re-allocation of money into the pockets of large insurance companies and their CEOs. And we know that ultimately it will be paid for, not by cuts in military spending, but by cuts in the social spending most needed by our nation’s poor. In fact, as in my own case, the very poorest are losers so that those of us who are better off (that’s me) can be winners.

Despite those negatives, I’ve also found that, for some of us individual war tax converters, the ACA may be a way to redirect taxes from war to the meeting of human need, even if the meeting of human need is limited to the providing of health insurance for ourselves. Getting such insurance for my wife and I is, after all, better than owing taxes to the war machine.

Caveats: this method of war tax redirection will only be possible for you if you are eligible for a federal tax subsidy (i.e., income tax credit) to help you pay for an insurance plan purchased through one of the state or federal insurance marketplaces. This means your income must be above the amount eligible for Medicaid in your state but below a specified limit based on the number in your household. It also means you must not be eligible for insurance through your employer (unless your employer’s plan fails to meet certain standards of affordability and benefits). You cannot be eligible for Medicare. And, of particular importance for many war tax resisters, it means you must file a joint return if you are married and living together.

The amount of the subsidy (tax credit) is based on your income, the number of people in your household, and the cost of the second-lowest priced, silver health insurance plan in your marketplace. While you have some control over the first two of those, you have no control over the last. And it’s likely to change from year-to-year as insurance companies change their prices or as companies enter or leave your exchange. All you can do is run the numbers and see.

While there are several subsidy calculators online, I found that their results will vary. The only way to really know how much subsidy you can expect will be to plug your figures into the healthcare.gov website. And, of course, this means you need to have a pretty good idea what your income will be in 2015. (It’s too late now to sign up for 2014 unless you experience a life-changing event such as a birth, death, divorce, or loss of your job.) Ultimately, the amount of your tax credit will be determined when you file your income tax return, at which point you may be entitled to more or less credit than was initially calculated by the website. The feds might owe you, or you might owe them.

For us here in Georgia, everything seems to have worked out to provide us with a way to redirect all, or nearly all, of our federal income tax liability away from the IRS and into an insurance company. I would encourage war tax redirectors in other places to at least run the numbers to see if you might fare as well.

Specifically, in our case, because I am salaried I know exactly what my income will be. My wife has retired, so we know that my income is the only income we’ll have this year (she has chosen to delay receipt of Social Security). In Georgia, there are only two insurance companies in the exchange: BlueCross BlueShield and Humana. The BCBS premiums are so much higher than Humana’s that the subsidy we get for the second highest silver plan is enough to pay for Humana’s platinum plan with nearly $1,200 left over to offset our income tax liability. We’ll come very close to owing nothing, which is a huge relief after the annual amount of taxes I’ve had to redirect every year while filing separately.

The final result is that both of us now have health insurance, something we’ve not had for many years, with relatively low out-of-pocket maximums (so long as we stay in-network for our care), for only 84 cents per month. Most of our income tax liability will disappear. And if we do owe anything, it will be only a fraction of what the feds are paying each month for our health care coverage. So we could even tell ourselves that we’re not paying for war even if we do pay a little something at the end of the year, as the net cost to the federal treasury is going to be over $17,000! (Had we purchased the gold Humana plan instead of the platinum we could have been sure that the excess tax credit would have eliminated any tax due, but, because we know that Linda will have to have surgery this year, it makes more sense to get the better plan.)

Again, it seems to me that we may have been lucky and everything just worked out very well for our particular circumstance. I know that others have found the ACA puts them in worse shape. Nevertheless, the ACA tax credit provides one more possible way to owe nothing (or at least less) at the end of the year. If you are eligible for it and if one of your goals is to not pay for war then I would encourage you to run the numbers in your state and see how you would fare.

Robert Randall holds the all-time record for attendance at NWTRCC gatherings over the past 30 years. He lives and works in Brunswick, Georgia.