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Friday, April 17, 2015

Guest Post - Resolving a Premium Tax Credit Problem

In a 3/26/15 post, I described an Affordable Care Act oddity of someone starting the year getting the Premium Tax Credit (PTC) in advance because their income qualified them for it. But later in the year, their income increases and they lose all or part of their PTC.  That caught the attention of financial executive Randall Bolten, author of Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You (John Wiley & Sons, 2012).

He suggests that a compensation practice can be used to help address this payback problem. He notes that this problem is caused by the legislation’s failure to address the impact of significant income fluctuations throughout the year. An approach that could deal with this takes a page from “accelerated” sales commission plans, where commission rates increase as sales volume increases. To see how this might work, he offers an explanation along with charts and graphs.

Please click here to see Randall Bolten's full post with all of the graphs and details. Thank you.

What do you think?

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