For many Peace Corps Volunteers serving out in the bush somewhere, we’ve all but forgotten about Obamacare. Why? Well, the days blur together and no one is ever quite sure what year it is. Also, the bush part. Yes, we have access to news and facebook and email, but sometimes that means standing on a rock waving your arms wildly in the air hoping to get a signal. So I’m sure it simply slipped the minds of many PCVs worldwide that the online marketplace has gone live. Or they have no idea what that even means.
For the Volunteers returning to America in the next 6 months, Obamacare is fantastic. We are perfect candidates for the new system. Most of us will be returning unemployed, previously uninsurable (chronic Montezuma’s revenge should be a pre-existing condition), and likely in serious need of insurance. Peace Corps provides one month of insurance upon returning to the States, after that you can decide to purchase AfterCare for some months. (Word on the bush path is AfterCare will no longer be an 18 month contract, but 3 months instead.) After reviewing the premium cost (about $240/month) and reviews (terrible) of AfterCare, I’ve decided that shopping for options on the marketplace is a better alternative.
Shopping for plans hits a snag though for Peace Corps Volunteers. Firstly, you need to know what state you live in. Secondly, you need to estimate your 2014 income. I’m going to go out on a limb here and assume that all Peace Corps Volunteers returning to America hope that their income will be higher than their in country allowance. If I go back to America and I get a job making $175 a month, I’m coming back to Ghana! So you can see the difficulty here – we don’t know where we will be living or how much money we will be making (if we can get a job). We might move back in with our parents while we look for a job, but odds are many PCVs are looking for jobs in multiple states. So, what’s a poor, homeless RPCV to do?
Well, let’s learn some facts about the new Obamacare roll out and answers some questions (scroll down for some insurance related definitions as well):
1. 2014 income estimation determines whether you qualify for tax subsidies or Medicaid. The tax subsidies can change your out-of-pocket premium expenses in the long run. If you earn enough though, you won’t qualify for subsidies. Let’s do an example of what a returning PCV might have to pay:
Example A: a 27 year old PCV has just returned to America. He’s living with his parents right now in Oregon as he readjusts to running water, stable electricity, grocery stores, and hipsters. He is applying for jobs in Oregon and estimates that once he gets a job, he’ll be making $30,000 a year. Here’s his estimate for the Silver plan:
$164/month ($1976/year) premium
Example B: a 25 year old has just returned and wants insurance. Since she’s 25 she still qualifies under her parents’ insurance. She tells her parents to add her as a dependent on their insurance. Done.
Example C: a 26 year old RPCV is looking for jobs in many different states, she needs insurance in the interim though. She doesn’t know how long it will take to get a job, so she’s living at home with her dad in Texas. She’s looking at nonprofit jobs though for when she does get a job. She guesses her salary will be $25,000. Her estimate:
$223/month ($2680/year) premium
$951 tax subsidy
Premium after subsidy: $144/month ($1729/year)
(All estimates are from: http://kff.org/interactive/subsidy-calculator/)
2. If you estimate your income incorrectly, it will be adjusted for your 2014 taxes (read: April 2015). But what does that mean? Here’s a breakdown:
You estimate $30,000, but end up making $42,000 (first of all, congrats!). You don’t qualify for subsidies either way. You’re fine.
You estimate $22,000, but end up making $37,000. You qualified for subsidies with the lower income, but since you made more money, you’ll have to pay the subsidy back.
You estimate $40,000, but end up making $20,000. You probably qualify for subsidies now, which means you’ll be getting money back.
So, my advice: estimate high. It is better to be pleasantly surprised with a subsidy check, than disappointed when one doesn’t come. (Although, not having a subsidy means you are doing well, so win win either way.)
3. Does my readjustment allowance count as 2014 income? If you COS before December 31, 2013 you don’t have to worry about this question.
For the past two years, you’ve been paying taxes on your readjustment allowance since it has been adding up each month. In terms of income, it isn’t the lump sum in tax terms you think it is. If you COS in 2014, your income should be adjusted based on whatever remaining months you had for your readjustment allowance. (Disclaimer: I am by NO MEANS a tax accountant or professional, my mother is and this is what I understood from her.) So that means:
If you COS in March, that’s $825. It isn’t going to affect you terribly when estimating your income, but if you feel wary overestimate.
4. If I take cash-in-lieu does that count as income? Again, according to my tax-loving mom and the Peace Corps (http://files.peacecorps.gov/multimedia/pdf/policies/taxguide2011.pdf), it does not.
Where do I live?!
1. If you move after you apply/receive insurance, you are qualified for a 60 day new open enrollment. If you apply for insurance in Oklahoma, but move to Texas a few months later you will have 60 days in which to reenroll for insurance. After 60 days, you have to wait for the next time to sign up for insurance – October 2014. If you COS in 2014, you will most likely apply for this exception as well. So you can apply for insurance after returning to the States.
2. What if I get a job that offers insurance and I already bought a plan through the marketplace? You will have to decide if you want to keep your current plan or switch to the insurance provided through your employer. If you want to cancel your current plan, you will have to contact the actual insurance company and discuss with them cancelling. Be sure to ask about premium proration! If you want to keep your current plan, but switch later – talk to your new employer about the next open enrollment period. Mark that date on your calendar and switch then.
What are these terms?
open enrollment – a couple months during the year in which you can sign up for insurance. This is the only time when you can sign up for new insurance or switch.
premium – consider it like a monthly subscription cost. This is the amount of money you pay each month in order to have insurance. (Just like car or renter’s insurance)
income – if you are curious what qualifies as income and what doesn’t check out this website: http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf
subsidy – The health care subsidy is in the form of a tax credit, but unlike most tax credits, you won’t have to wait until you file your taxes to receive it. The subsidy will be applied directly to your insurance premium when you purchase a plan through the online marketplace.
You have until March 31, 2014 to purchase insurance through the marketplace. Starting April 1, you will have to pay a penalty for not having insurance. For Peace Corps Volunteers returning to America with our incredible amount of parasites, worms, and scars – Obamacare is a great thing. So ditch AfterCare and pick a plan that works for you.
If you are looking for jobs, estimate your income based on the salary of jobs you’re looking at. Check glassdoor for more ways to estimate salary. If you move, just reapply for insurance. You never know, you might get a better deal in a different state!
If you are still curious about Obamacare and how it impacts new RPCVs, ask away in the comments below. Or check out these websites for more information:
Wary about Obamacare’s impact on your taxes when you return to the land of paying taxes, here’s information about how Obamacare/Affordable Care Act is being paid for:
You can find the marketplace at: https://www.healthcare.gov/
Update: October 21 – for details on the prices I found for plans check out this post: https://mapya.wordpress.com/2013/10/21/obamacare-update/