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For those too poor to qualify for Obamacare, a tax 'loophole' may help

LISSETTE AT TOPA

A diabetic patient gets blood tested at Jackson Memorial Medical Center/Miami Herald photo

@patriciaborns  When Lissette Fernandez was a medical  transcriptionist at University of Miami's Miller School of Medicine, her healthcare plan cost her about $150 a month, deducted from her paychecks. When the job ended, her health coverage continued under COBRA. Then:  "No one wanted to offer me health care because of my preexisting condition," Fernandez says. She has diabetes. 

Fernandez is one of over 10 million diabetic Floridians who the Affordable Care Act should help the most -- people with pre-existing conditions who can no longer be denied coverage as of Jan. 1st, 2014. But she's also one of more than 3 million people whose income is below the poverty level: Fernandez makes about $10,000 a year as an at-home temp so she can care for her mother with Alzheimer's.

Because Florida declined the federal funds to expand its Medicaid program, she and hundreds of thousands of others will fall through the healthcare cracks.

Or will they?

Phil Galewitz of Kaiser Health News reports there may be a way for people like Fernandez to get help, but the strategy carries risk. 

Experts say the key is for them to project their 2014 income to at least the federal poverty level, about $11,500 per person or $23,500 for a family of four, writes Galewitz.

That would entitle them to federal subsidies that would cover nearly all the cost of private coverage sold on new online insurance marketplaces set up by the federal health law.  The subsidies are available on a sliding scale to people making between the poverty level and four times that amount. 

Everyone applying for subsidies must estimate their 2014 income. For Fernandez, the difference between qualifying – or not – is roughly $1,000 a year. Since she relies on temp work, her income is likely to fluctuate by a few thousand dollars each year. The same holds true for hourly and seasonal workers. That’s one reason why people often lose eligibility for Medicaid, the state federal insurance program for the poor. 

While there are steep fines for knowingly lying on a government application for financial assistance, if someone merely miscalculates their income above the poverty level in 2014, and is later found to have made less than the poverty level, they won’t have to pay any money back, according to the Treasury Department. 

The opportunity for affordable healthcare could actually become an incentive for people to report income they might not have disclosed before, such as cash from babysitting and tips.  

Under regulations released in July, all the exchanges or marketplaces must first check the income level that an individual reports on his or her application against a federal database that contains data on the applicant’s federal income tax returns as well as Social Security and current wage data.

But if an individual projects their income up to 10 percent higher than shown in electronically available data such as a prior tax return, there will be no questions asked. If there is more than a 10 percent discrepancy, the exchanges will ask for more information, such as a pay stub. If an applicant is unable to provide such data, the regulations allow the exchanges in 2014 to rely on the individual’s “self-attestation” to determine the subsidy. This applies only when someone overestimates their income, according to a spokeswoman for Health and Human Services.

Still, buying healthcare on the new exchange will still cost two percent of the lowest qualifying income. It also means paying deductible and out-of-pocket costs, although susbsidies are available for those costs, too, for people earning less than 250 percent of the poverty level/ 

Medicaid is a much more affordable option for people who qualify. If that's not an option, clinics and hospitals provide a safety net with free or sliding scale services. 

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