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Proving Estimated Income for ACA Subsidy
Old 01-09-2020, 04:06 PM   #1
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Proving Estimated Income for ACA Subsidy

If you have been following my tale in other threads, I went over the ACA subsidy cliff again in 2019. However, to protect myself from that happening again in 2020, I sold all my shares in an actively managed stock fund I had owned since 1996 and bought shares in a comparable index fund.

With the dividends and especially cap gain distributions projected to be much, much lower in 2020, I expect to not only qualify for an ACA subsidy in 2020 but will get a pretty big one. What I would like to do is to receive this subsidy as an advanced premium subsidy to reduce my monthly premium by about 50%.

I had to re-enroll with my state's (New York) exchange and enter the new, lower income I estimate to receive in 2020. However, the exchange has asked me to prove that my income will be this low. The only income data they have is for the last few years where I went over the cliff.

It looks like they will grant me the subsidy for a few months and have given me until early April to prove my estimate is worthy. So, at least I have some time.

What I have been putting together is a step-by-step analysis of what I believe my income will drop in 2020. This includes providing not-yet-created forms such as my 2019 income tax forms, a 1099 form, a completed sale order, and some historical data on the index fund I have bought into. I hope the exchange folks will believe me and grant me the advanced subsidy so I won't have to wait until next year to file for a large tax refund and re-apply for the advanced subsidy.

Have any of you had to prove a low estimated income amount to your state's exchange or to the federal exchange in this rather complicated fashion in order to receive an advanced subsidy? Were you successful? Did you have to file an appeal or get a hearing?
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Old 01-09-2020, 05:05 PM   #2
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I found the letter I wrote for 2017. I explained that I was retired, and that my larger income in 2016 was due to selling stocks at a profit and doing a Roth conversion, and that I wasn't planning to sell stock in 2017 and could control my Roth conversion to whatever I wanted. I did a pretty complete analysis of what I expected 2017 to be, with divs+interest-HSA numbers. That's all I have a record or recollection of doing. Sounds like you are planning to do the same. From my experience, you should be good with what you're planning.
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Old 01-09-2020, 05:14 PM   #3
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We never had to prove anything other than Residence (Drivers License) & Citizenship (Passport), and that was this year only, never before. We have an ACA rep do ours.
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Old 01-09-2020, 05:22 PM   #4
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I found the letter I wrote for 2017. I explained that I was retired, and that my larger income in 2016 was due to selling stocks at a profit and doing a Roth conversion, and that I wasn't planning to sell stock in 2017 and could control my Roth conversion to whatever I wanted. I did a pretty complete analysis of what I expected 2017 to be, with divs+interest-HSA numbers. That's all I have a record or recollection of doing. Sounds like you are planning to do the same. From my experience, you should be good with what you're planning.
I did about the same thing and had no problems. I really don't think they actually analyze anything you send in. It's in the script.
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Old 01-09-2020, 05:25 PM   #5
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NY has never asked me, even when I first signed up, and its been 5 years now.
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Old 01-09-2020, 07:09 PM   #6
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I had the same experience as MRG and RunningBum. My situation didn’t involve a cliff but I moved states in the middle of the year from a state exchange back to a state that uses federal. They questioned my projected income as it was lower than the previous 2 tax years. I supplied both tax returns and explanations about non recurring Roth conversions and stock sales and they approved it without coming back for further explanation.
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Old 01-09-2020, 07:12 PM   #7
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Had this situation for 2019 coverage. It took a couple tries, but it was ultimately no big deal. Just got my insurance card rather late (April) and had some catch-up costs. (Not more than I should have paid - just uneven.)
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Old 01-09-2020, 07:42 PM   #8
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NY State did the same to me when I filed for a subsidy prior to my final year there (I subsequently moved my domicile to Florida). I decided it wasn’t worth the bother to constantly upload documents and spreadsheets to their clunky website that I figured they probably wouldn’t read anyway. Instead, I just went without the subsidy during the year and then collected it when I filed my FL federal tax return the following year.

PS bear in mind that NY State does not use age rating. In other words I discovered that the subsidies are much more limited for an older person there than what they could receive if they were to reside and apply in another state. Another advantage of leaving NY State I suppose.
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Old 01-10-2020, 06:25 AM   #9
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I have to do this to get affordability exemptions so I can get a catastrophic plan. What I have done that was always accepted is show line by line comparison with my last submitted tax return. Ie now use 2018 return.
For lines where there is a significant drop I provide a detailed substantiated explanation.

This has worked two years in a row.
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Old 01-10-2020, 06:35 AM   #10
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PS bear in mind that NY State does not use age rating. In other words I discovered that the subsidies are much more limited for an older person there than what they could receive if they were to reside and apply in another state. Another advantage of leaving NY State I suppose.


Actually that is an advantage to staying in ny. While it may make you feel better by getting a larger subsidy, for a person late 50s or 60s non age rating makes premiums lower. And reduces the impact of a single year even that could eliminate your subsidy.....like a jackpot at the slots for example.

If you are subsidy eligible what you pay for insurance is “baked in” to some degree. It’s one of the problems with the aca in that insurers know this so why try to control costs? Your cost and their profit are controlled by the government (I support the aca though so don’t flame me).
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Old 01-10-2020, 06:59 AM   #11
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I haven't had to do anything other than the form estimator in healthcare dot gov:

First year sign up was for 2019 - All prior years incomes would have exceeded subsidy levels, but estimated under the cliff - accepted
This year, (now that 2018 was filed and also exceeded, we had sold a bunch of old stuff ready to "hunker down") - got a note on the site saying hmmm... but re-estimated for 2020 and they accepted it.

We've yet to go over in a year AFTER after accepting a subsidy, and there's no state-extra thing here. I doubt you need to submit as much detail as you're assembling, but it can't hurt to have it.
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Old 01-10-2020, 07:27 AM   #12
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Sent a letter explaining my income for the upcoming year and they accepted it without any questions.
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Old 01-10-2020, 07:59 AM   #13
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Like others I sent in a letter explaining why my income would be lower than the previous year when we first went on the ACA in 2017.

Actually they called me after the fact and said my submitted W-2 for the previous year showed an amount that would disqualify us. I asked them if they read my accompanying pdf file letter explaining the change. Took them a few minutes and then was told they send it on for review. A few weeks later my file was updated to accepted.
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Old 01-10-2020, 08:05 AM   #14
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I'm going through this right now with them. Our income for 2018 was over the cliff, due to a property sale. They called me asking for specifics. and they wanted income proof for 2019 and 2020.


I told them about the property sale, and that we paid back all the subsidies/tax credits at tax time, and that our income had dropped down to subsidy levels.


They said to write a letter explaining the drop in income, and also a signed statement from my wife that she doesn't earn an income anymore. I'm waiting to hear back.


If this doesn't work, my 2019 1040 will be available soon, for further proof.
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Old 01-10-2020, 08:20 AM   #15
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Thanks for your replies.


I will call the NY Marketplace to see if they need the documentation (attachments) or would just my one-page letter without the attachments be good enough.
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Old 01-13-2020, 09:37 AM   #16
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So, I called the NY Marketplace to see what they want. It will be a PITA, of course, as they are not well suited to handle my outlier situation. (Yet another way I am an outlier.)


They want me to redo my application (again) to remove any estimated income from the new stock fund. As that fund generates its income (in June and December), I will have to amend my application each time to reflect the added income. I hope this will be needed only for 2020 so there will be track record (i.e. 2020 tax forms) for future years. The online process takes about 15 minutes but is a minor PITA. There is some question as to what is sufficient proof of the added income. The transaction confirmation letter should be enough proof, but I am leery of that.


When I get my 2019 1099 form and complete my 2019 taxes, they will need some of that, too (which was going to part of what I planned to send anyway). Nothing unexpected there.


Still, I hardly expect this to go smoothly. I expect more hurdles throughout the year.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

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Old 01-13-2020, 11:32 AM   #17
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Probably not a horrible idea to bite the bullet by enrolling in the coverage and pay for it all out of pocket and get a big tax (premium reimbursement) return the year after.

I've considered it as I thought that if I did go over the cliff, that I would have pretended the account, so to speak.
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Old 01-13-2020, 01:16 PM   #18
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Probably not a horrible idea to bite the bullet by enrolling in the coverage and pay for it all out of pocket and get a big tax (premium reimbursement) return the year after.

I've considered it as I thought that if I did go over the cliff, that I would have pretended the account, so to speak.
What you describe is what I did in 2014 and 2015. Back then, the subsidy was small, $400 a year tops, so not getting a $40 per month reduction in my premium payment wasn't a big deal. Also, my federal taxes due the following April was more than $400, so I simply regarded the overpayment of my premium a backhanded federal tax withholding.

In 2016, after I changed insurance companies (but not sure if that had anything to do with it), I began seeing the $40 per month reduction in my premium. This continued into 2017 and 2018 although in those 2 years I had to repay the entire $480 subsidy at tax time. In 2019, I didn't get a subsidy and went over the cliff anyway.

But now, in 2020, the subsidy's value has increased tenfold compared to 2014-2016, and it will be much more than my federal taxes due. Getting a $360 per month reduction in my premium will have a significant effect on my cash flow from month to month. I'd like to see that reduction throughout the year instead of having to wait until next April to reclaim it.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

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Old 01-16-2020, 07:18 AM   #19
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Pleasant surprise! One hurdle gone, with my insurance company having already received notice about the subsidy and processed it through their billing system. They sent me a revised February bill reflecting the subsidy which turned out to be $100 more than I originally thought!


My remaining hurdle is to send sufficient proof that my 2020 income will be low enough to deserve this. I have until early April, so I will wait until I have some 2020 monthly statements showing my new portfolio and low income.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

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Old 01-16-2020, 07:30 AM   #20
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....They want me to redo my application (again) to remove any estimated income from the new stock fund. As that fund generates its income (in June and December), I will have to amend my application each time to reflect the added income. I hope this will be needed only for 2020 so there will be track record (i.e. 2020 tax forms) for future years. The online process takes about 15 minutes but is a minor PITA. There is some question as to what is sufficient proof of the added income. The transaction confirmation letter should be enough proof, but I am leery of that. ....
For one, that is stupid on their part. You currently own the stock fund and the timing and amount of dividends can probably be reasonably estimated from their 2019 distributions. In any event, it makes no sense to amend your application for the December income since your December subsidy will have been paid by then.

But nonetheless, can you exclude the new fund as they ask and then conveniently forget about the amendment and the true up will get caught up when you file your 2020 tax return in early 2021?
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