Tax Credit and Common Health Insurance Terms

Tax Credit and Common Health Insurance Terms.

Who Qualifies for a Tax Credit in the USA?

You may be eligible for the premium tax credit if you meet the following requirements:

• Have family income that is within the range required by the Federal Government.
• Have filed a tax return using the filing status of single or separated.There is an exception to this rule that allows certain victims of domestic abuse and spousal abandonment to claim the credit using the Married filing status.
• You cannot be claimed as a dependent by another person.
• Meet the following additional requirements: In the same month, you or a member of your family:
• They must have health insurance coverage through the Marketplace.
• They cannot get affordable coverage through an eligible employer-sponsored plan.
• Are not eligible for coverage through a government program, such as Medicaid , Medicare , CHIP or TRICARE .
• When you enroll, the Marketplace will determine whether or not you’re eligible for advance payments of the premium tax credit ; these are also called advance credit payments.
  Advance credit payments are amounts paid to your insurance company on your behalf to reduce the out-of-pocket cost (what you must pay) of health insurance premiums.

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Do I have to Report Change of Circumstances to get the Tax Credit in the USA?

If you benefit from advance payments of the premium tax credit, it is important to report life changes to the health plan provider as they occur during the year.

Certain changes in your household, income, or family size can affect the amount of your premium tax credit.

These changes may alter your insurance costs or cause you to owe taxes. Reporting these changes right away will help you get the right kind and amount of financial help from the Federal Government.

Claim and Credit Reconciliation

If you receive the benefit of advance credit payments in any amount, or if you plan to claim the premium tax credit, you must file a federal income tax return and attach Form 8962 to your return.

This requirement is mandatory and is only available to US citizens.

You must file a return even if you generally don’t have to. Filing your return without reconciling advance payments will delay your refund and may affect future credit payments.

Even if you do not meet the credit reconciliation requirements, you can lose your health insurance .

Frequent questions

Understanding the terms used in health care policies can be confusing. That is why it is useful to know the meaning of some commonly used words, such as co-payments, deductibles and coinsurance.

Knowing these important terms can help you understand and manage when and how much you have to pay for your health care.

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What is a Co-payment?

A co-payment is a fixed fee that you pay on the spot, this happens every time you visit a network doctor, and he or she fills you with a prescription.

For example, if you hurt your back and visit a doctor or require medication for your child’s asthma, the amount you pay for that visit or medication is your copay.

Always remember that your co-pay amount is printed on your health plan identification card. Lastly, co-pays cover your share of the cost of a doctor’s visit.

Do I Always Have a Co-payment Available with a Health Plan?

Not necessarily. Not all plans use copays to share the cost of covered expenses. Or, some plans may use copays and a deductible/co-insurance, etc.

All of this may vary depending on the type of covered service. Also, some services may be covered at no cost to you, such as annual checkups and other preventive care services.

What is a Deductible in the Health Insurance Marketplace?

A deductible is the amount you pay each year for most eligible medical services or drugs before your health plan begins to share the cost of covered services.

For example, if you have a $2,000 annual deductible, you’ll need to pay the first $2,000 of your total eligible medical costs before your plan helps pay all the bills for you.

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What are the costs that count towards the deductible?

Normally, they should be the following:

• Hospital bills
• Surgery.
• Lab tests.
• MRIs and CT scans.
• Anesthesia.
• Physician and therapist visits not covered by a co-pay.
• Medical devices such as pacemakers.
• What are the Costs that DO NOT count towards the Deductible?
• Co-payments.
• Cousins.
• Any cost not covered by a plan.
• How do I decide which Deductible to choose for my Health Plan?
• If you’re a person with a healthy health profile and don’t usually need expensive medical services during the year, a plan with a higher deductible and lower premium may be a good option for you.

On the other hand, a person with some medical condition that will need constant attention; or have an active family with children who play sports, require lower deductibles and higher premiums.

This way they will get the health plan to pay a higher percentage of their medical costs

What is the difference between a Deductible and a Co-payment?

A deductible is the amount you pay for most eligible medical services or drugs before the plan covers the costs of the medical services.

If your health policy includes co-payments, you will be required to pay the fixed co-payment rate at the time of service (at the pharmacy or doctor’s office, for example).

What is coinsurance?

Coinsurance is a portion of the medical cost you pay after you meet your deductible.

Coinsurance is a way of saying that you and the insurance company each pay a portion of eligible costs that add up to 100% of your health plan.

What is an out-of-pocket maximum?

The out-of-pocket maximum, as its name indicates, is the ceiling or the most you can pay for covered medical expenses in a year.

This amount includes the money you spend on deductibles, copays, and coinsurance.

Once you reach your annual out-of-pocket maximum, the health plan you chose will pay for covered medical and prescription drug costs for the rest of the year.

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What is the difference between in-network coverage and out-of-network coverage?

Every time you seek medical attention, you can choose your personal doctor. In fact, you have the option to choose between an in-network and an out-of-network doctor.

When you visit a network doctor, you get coverage and have lower out-of-pocket costs.

This is because participating health care providers have agreed to charge lower fees, and plans typically cover a larger portion of the charges.

Conversely, if you choose to visit a doctor outside of the plan’s network, your out-of-pocket costs will generally be higher or your doctor’s visit may not be covered.

What happens if I need to visit an emergency hospital outside the Health Insurance network?
In an emergency, your medical care will always be covered.

Requests for non-emergency hospital stays and other than maternity stays must be approved in advance or pre-certified.

These procedures allow insurers to determine if services are covered by your plan.

Also, we must mention that pre-certification is not required for maternity stays of 48 hours for vaginal deliveries or 96 hours for cesarean sections.

Who performs the pre-certification in a Health Plan?

A doctor can help you decide which procedures require hospital care and which can be handled on an outpatient basis.

If you use an out-of-network doctor, you should be aware that you are responsible for making the arrangements.

Your health insurance documents will clearly and precisely identify which procedures require precertification.