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My taxes are easy. Pension income plus dividend income minus standard deductions and personal exemptions for a married couple filing jointly times ten percent. So I do my taxes myself and file online using one of the IRS’s free software tools.
In the previous two years, it took me about an hour to do my taxes. This year, however, it took about an hour and a half. Obamacare added one little layer of complexity. I had to figure out if the subsidies Mrs. Groovy and I received for our healthcare premiums were correct. Here’s how that calculation went down.
Calculating the Correct Obamacare Subsidy
When Mrs. Groovy and I signed up for Obamacare, we estimated that our 2017 adjusted gross income (AGI) would be $30,000. This estimated AGI entitled us to a monthly premium subsidy of $1,948 for our Silver Blue Cross-Blue Shield plan, nearly 95% of the plan’s cost. But because of larger than expected pension and dividend payouts, our actual AGI for 2017 was $33,615.
Since our AGI for 2017 was larger than we estimated, our Obamacare subsidy was too dear. We owed the feds some money. But how much?
Hello IRS form 8962. This is the form all Obamacare recipients must include in their tax returns and it’s rather straight forward.
Step One: Divide AGI by the Federal Poverty Line for Your Household
As per form 8962 instructions, the federal poverty line for a household of two in 2017 was $16,020.
33,615 ÷ 16,020 = 2.09831.
Step Two: Take Result from Step One and Multiply It by 100
2.09831 x 100 = 209.831.
The feds don’t care about the numbers after the decimal point. All they care about are the numbers before the decimal point. So my result in step two was 209. This in turn means our household income was 209% of the federal poverty line.
Step Three: Find the “Applicable Figure” for the Step Two Result
As per form 8962 instructions, the “applicable figure” for 209% is 0.0675.
Step Four: Multiple Your AGI by the Applicable Figure to Determine Your Annual Contribution Amount
$33,615 x 0.0675 = $2,269.
Step Five: Subtract Your Annual Contribution Amount from the Annual Applicable SLCSP Premium
SLCSP stands for the second lowest cost Silver plan, and I really don’t know what the eff that is or how it’s effing determined. But that’s okay. The Obamacare Exchange sent me form 1095-A, and line 33B on form 1095-A said our annual applicable SLCSP premium for 2017 was $25,047.
Okay, with the annual applicable SLCSP premium graciously provided, all I had to do was subtract our annual contribution amount from it.
$25,047 – $2,269 = $22,778.
According to form 8962, my $22,778 result is deemed the annual premium tax credit allowed. In normal talk, this is the total premium subsidies we were entitled to in 2017.
Step Six: Subtract the Annual Premium Tax Credit Allowed from the Annual Advance Payment of Premium Tax Credit
The annual advance payment of premium tax credit is just the sum of all our monthly premium subsidies. Since we received a subsidy of $1,948 a month, our total premium subsides for 2017 came to $23,376. But according to step five, we were only entitled to total premium subsidies of $22,778.
$23,376 (what we got) – $22,778 (what we should have gotten) = $598.
So there you have it. We had to send the feds $598 to make up for a larger-than-appropriate Obamacare subsidy. I’m not complaining, mind you. We paid $115.33 a month for our Blue Cross-Blue Shield policy in 2017. Spread the $598 refund over 12 months and the final monthly cost of our healthcare insurance in 2017 came to $165.16. For two people on the cusp of 60, that was ridiculously cheap.
Sasha
This week in Crooked Creek Park, Mrs. Groovy and I ran into a number of our four-legged friends—Thelma and Louise and Sterling. And we also met a new friend, Sasha. Sasha is a six-month old Siberian Husky who was in the park with her mommy, Allison. Check out the picture below. We loved Sasha because she was so unique. It was the first time we ever came across a brown husky in person. What a beautiful dog.
Talking Trash
Okay, groovy freedomist, that’s all I got. In this week’s Talking Trash episode, Mrs. Groovy and I discuss step two of our Groovy Guide to Geoarbitrage. Have a groovy weekend. Peace.
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