The Advance Premium Tax Credit is a government subsidy for health insurance that was part of Obamacare, aka the Affordable Care Act, and was put in place in 2010. Under this provision, the government pays part of a person's health insurance bill by sending a check directly to the insurance company. It's called a "tax credit" (i.e. you get a rebate or a deduction, so you pay less tax), but in practice, it's a direct payment from the federal government to the insurance company.
The "advance" part comes in because the government is letting you take the tax credit right away, rather than forcing you to wait for all the tax filing rigmarole. Basically, the government loans you the money you expect to be credited based on your income, but the loan only works for buying health insurance. The catch is that, if you estimate your income wrong and end up getting less of a credit than you predicted, then you'll have to pay the difference when your taxes come around.
Why does the government take such pains to do this edge paperwork? Because too many people go bankrupt waiting for health insurance to pay them the dough owed. So rather than lean on the insurers, i.e. making it illegal for them to be opaque in what they charge and how they reimburse, the government just uses taxpayer dollars as a buffer. Fair? Not fair?
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Finance: What is Bankruptcy?260 Views
Finance a la' Shmoop what is bankruptcy well in the old days
this was bankruptcy you'd go to prison if you couldn't pay your bills and [People in prison for bankruptcy]
unfortunately there weren't and still aren't a lot of legal high wage earning
opportunities in prison working your way out of debt on the chain gang wasn't [Prisoners working outside]
really a thing back then so instead the burden would be on your family to pay
back the loan you'd promised to pay back and didn't ugly situation it paved the [Officer knocking on a prisoners family member to pay their debts]
way for some well today bankruptcy has a range of flavors that it comes in but
basically it exists as a legal vehicle to avoid the aforementioned situation a [Bankruptcy van driving]
bankrupt person and/or corporation stands in front of a judge they turn
their pockets inside out with a sad face and the judge then decide who will be [Person opens their pockets inside out in front of a judge]
paid when and how much well how does she decide the order for who gets paid back
when? well, it usually prioritizes employees and vendors owed a paycheck
above banks who have made a loan and under that umbrella all different types
of loans have different priorities if the bankrupt individual owns a home it's [bankrupt individual in his home on the toilet reading a newspaper]
usually sold out from under him and anything left after paying off the
mortgage is used to pay others even if you do survive a bankruptcy your credit
is pretty much ruined who's going to want to loan you money once you've
proven that you're not good with being loaned money yeah if you've defaulted in [a really low credit score chart for a bankrupt individual]
the past on promises to pay people back why wouldn't you do the same thing again
well remember that twenty dollars you loaned your buddy Eric that he never [Person loaning 20 dollars to friend Eric
paid back well how eager are you going to be to hook him up with another twenty
especially since you'd only be feeding his betting on frog fighting habit yeah [Eric betting money on frog fighting]
not so much so long Eric you'll get the help you need!
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