Have you lost your job? Here’s how to find free health insurance

Dear Liz: I have read that unemployed people can get free health insurance through the Affordable Care Act exchanges. I am trying to confirm if my state, which has not accepted extended Medicaid coverage, offers this to its residents. My post was eliminated without warning due to the pandemic and I find Healthcare.gov rather convoluted to navigate.

Reply: It may be July before the ACA swaps reflect the additional tax credits that will make full health insurance free for anyone receiving unemployment benefits in 2021.

Some of the health insurance changes authorized by the American Rescue Plan, which President Biden signed in March, went into effect on April 1. These included granting larger tax credits which reduced costs for most people buying health insurance on scholarships and increasing the number of people eligible for these premium reduction credits.

In the past, people with incomes above 400% of the poverty line were generally not eligible for grants that lowered their costs, but now people with incomes above 600% of the poverty line – up to $ 76,560 for a single person or $ 157,200 for a family of four – may qualify, according to the KFF (formerly Kaiser Family Foundation) medical research organization. The law also created a new special registration period that runs until August 15, 2021.

The trade has been slower to reflect the increase in tax credits for people who receive unemployment benefits at any time in 2021. These credits will effectively allow those who do not have access to other group protection to benefit. qualify for a free money plan with a deductible of $ 177. . The US Centers for Medicare and Medicaid have promised the credits “will be available from this summer.”

You shouldn’t be without health insurance, so you could sign up for coverage now then update your information when the increased tax credits become available.

But you may have another option. The American Rescue Plan also requires employers to provide free COBRA coverage from April 1 through September 30 to eligible former employees who have lost health care coverage due to involuntary termination or reduced hours. (Employers will get a federal tax credit to cover their costs.)

Even if you turn down COBRA coverage when you lose your job – as a lot of people do because it’s so expensive – you can still get free coverage if it’s not more than 18 months since you lost your job. . Employers are required to notify eligible former employees by May 31. If you haven’t heard from yours by then, but think you qualify, contact the company’s human resources department.

Taxes on the sale of a house

Dear Liz: My wife wants to sell our three year old home for a profit of $ 300,000 after extensive remodeling and move into our rental home. She wants to stay there for two years, then sell to take advantage of the capital gains exemption. If we do it his way, we reduce our monthly mortgage payment, but lose the annual rental income of $ 30,000. Our income is approximately $ 130,000. An entrance?

Reply: Each homeowner can exclude up to $ 250,000 in profits from the sale of a home from capital gains tax if they have owned and lived in a property as their primary residence for at least two of the previous five years. . Married couples can exclude up to $ 500,000. This tax break can be used over and over.

The federal capital gains tax rate is currently 15% for most people, so the total exemption of $ 500,000 could save the seller $ 75,000 in federal taxes on capital gains. capital. If your state or city has an income tax, you can save there as well. California, for example, does not have a capital gains tax rate, so profits from the sale of homes would be subject to regular tax rates of up to 13.3%.

The math is a little different when you move into a property you’ve previously rented, said Mark Luscombe, Wolters Kluwer Senior Analyst. Over the years, you have taken tax deductions for the depreciation of your property. When you sell, the IRS wants to claw back part of that benefit, which is called depreciation clawback.

When you sell an older rental property, part of the gain will be taxed as income, even if you converted the house for personal use, Luscombe said. The maximum rate of recovery of depreciation is 25%.

A tax professional can help you determine the likely tax bill. Any tax savings would be offset by the bottom line of a move, such as loss of rental income (less lower mortgage payments) and substantial selling costs, including real estate commissions and moving costs.

It is not clear if you have ever renovated your current home. If you haven’t, think twice before doing a complete renovation if you plan to sell, as you likely won’t get the money you spent back. Home improvement projects rarely earn 100% of their cost. You will usually get better performance by decluttering, deep cleaning, beautifying the yard, or applying a new coat of paint.

Liz Weston, Certified Financial Planner, is a Personal Finance Columnist for NerdWallet. Questions can be directed to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

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