And we want to simplify the tax code! - Under the health law, millions of Americans will face a new test of their fortunetelling skills: precisely predicting their next year's income. "A $500 holiday bonus could be the most expensive bonus somebody ever got."

From The Wall Street Journal:

Under the health law, millions of Americans will face a new test of their fortunetelling skills: precisely predicting their next year's income.

The federal health-care overhaul creates a potentially rich new class of benefits for people—namely, federal subsidies they can use to buy insurance on the new marketplaces created in each state. Eligibility for subsidies is based on income.

But there are pitfalls for people whose incomes unexpectedly rise or fall. And there is a sharp dividing line between people who qualify, and those who earn too much. "A $500 holiday bonus could be the most expensive bonus somebody ever got," says Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service Inc.

For some middle-income earners, that may change the way they think about income and tax planning, tax experts say. People can take the subsidies in the form of a credit when filing taxes at year's end. Or, the amount can be estimated up front and applied toward the cost of insurance premiums each month.

When people apply for subsidies, beginning this fall, the federal government will ask a series of questions—about family size, income and potential deductions—designed to help them estimate what their final income will be in 2014.

People who qualify for the subsidies, but wind up underestimating their income (for instance, thanks to a midyear raise) could find themselves owing the Internal Revenue Service if they took the money up front. They would have to refund any overpayments when filing taxes for that year.

Eligibility for subsidies cuts off at four-times the federal poverty level: $45,960 a year for single people, $62,040 a year for couples and higher for families with dependent children. Lower earners qualify for larger subsidies.

At the top income level for an eligible couple, two 60-year-olds could get $540 in monthly subsidies in Toledo, according to a Wall Street Journal analysis of rate filings in Ohio. With that, their direct cost for the least expensive policy in the area would be $300.

However, a $1 pay increase would erase the subsidy, leaving the pair to pay the full premium for their health insurance—about $840 a month.

Mr. Haile said his firm will advise clients who anticipate income increases to consider applying for partial upfront subsidies when they sign up for coverage under the law, or to plan ahead to make sure they can pay back any difference at tax-filing time.

Consumer groups are encouraging people to consider buying individual insurance policies through the exchanges even if they don't think they will be eligible for subsidies, so they can apply for the tax credit later if their income decreases suddenly.