I keep hearing about a “refundable, advanceable tax credit” in the new Republican healthcare plan. What is that?

Let’s break down the three terms:

• A tax credit is a dollar for dollar reduction of the taxes you owe. If you have a $1,000 tax credit, you deduct $1,000 from what you owe the IRS. It is valuable, much more so than a tax deduction (like mortgage interest expense), which reduces taxable income, and only saves a partial tax dollar for every dollar of expense.
• A refundable tax credit means that if you can’t use the full amount of the credit, the unused balance will be refunded to you. Not many tax credits have this feature. With most credits, if you can’t use the full amount of the credit in the year in which it is earned, you lose the unused balance.
• An advanceable tax credit means that the government will let you claim the credit immediately and not have to wait until you file your return for that tax year as is customary with non-advanceable tax credits.

Why does this matter?
The House Republicans introduced the American Health Care Act (AHCA), the week of March 6, 2017. In it they propose replacing the Advance Premium Tax Credit (APTC), which is the tax credit mechanism used in the ACA, with a refundable, advanceable tax credit. It’s likely you’ll be hearing much more about the new tax credit as the AHCA makes it way through Congress.

Resources
The IRS’ web page describing refundable and non-refundable tax credits is quite helpful. And for an historical perspective on the use of tax credits to encourage adoption of healthcare coverage, this Forbes article provides good context and further explanation (apologies in advance for the advertisements).

If the Affordable Care Act is repealed, will Covered California for Small Business have the funds to continue operating?

Covered California is wholly self-financed. Covered California no longer uses federal start-up funding, and will not be using any state funding. Covered California’s operations are funded by the per-policy-sold fee it charges carriers.