To understand the basics of disability insurance and how it applies to Obamacare, one must first understand what it is. Obamacare, also known as the Patient Protection and Affordable Care Act (ACA) is a piece of federal legislation that has made changes in how health insurance is paid for. The ACA was signed into law in 2010 and requires individuals who don’t receive health insurance benefits through an employer to purchase coverage or else pay a penalty. Along with that, it also puts certain limits on what insurers may or may not do with respect to eligibility and coverage. Although those with very low incomes are exempt from the Obamacare benefits, the Affordable Care Act provides ways to make health care coverage better accessible.
So, where does disability insurance come into play? Individuals who are receiving benefits from disability insurance just so happen to have unique issues and concerns as it applies to Obamacare. For instance, many people will gain from the expanded access they now have for insurance and treatment. However, those currently receiving disability benefits must be careful and take into consideration whether or not their benefits should be included when determining if they qualify for insurance subsidies and other benefits.
The Big Question: Do Disability Benefits Count as Income Under Obamacare?
If you currently receive disability insurance benefits, then you may have to include them as income when determining what you qualify for with Obamacare. Your eligibility for income-based Medicaid and subsidized health insurance is calculated under a thing known as Modified Adjusted Gross Income (MAGI), which is calculated and determined by the IRS and Medicaid regulations. In most situations, the MAGI will be the same as the person’s adjusted gross income. However, people who receive benefits from disability may have MAGIs that differ from this amount.
In cases where you are receiving Social Security Disability Insurance, your benefits are included as part of the MAGI. Individuals who have received these benefits for 24 months will automatically qualify for Medicaid and won’t have to worry too much about the benefits counting as income. However, if you find yourself in a situation where you are not insured under Medicare, Medicaid, or other qualifying health insurance, your disability insurance payments must be calculated as Obamacare income.
When you receive Private Disability Insurance, this will not count as your income. If you’ve purchased your own disability insurance, your disability benefits are not subject to income tax because you’ve paid the premium with your after-tax dollars. These benefits are not included as part of your MAGI when making the determination in whether or not you qualify for reduced premiums under Obamacare.
If you receive benefits from your Employer’s Disability Insurance Policy, these benefits are almost always considered income. If you receive disability insurance through the workplace, it is most often a tax-free benefit, which means the benefits will be considered income when they are received. If both you and your employer have paid the necessary premiums for your disability insurance, only the part of the benefits due to your employer’s payments count as income.
Obamacare is a large, complex law that a skilled and experienced attorney will be able to help you with and also help you review your potential case. Furthermore, rules and regulations are still evolving since this is a fairly new concept. You may want to contact an attorney who will be able to help you with health care or disability law. Speak to your attorney at MDL today to schedule a free consultation and review of your case!