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Counting income to apply on the state exchange to get subsidy. Need advice.
Old 09-11-2014, 08:32 AM   #1
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Counting income to apply on the state exchange to get subsidy. Need advice.

I live in MA and had a question about income to include to apply through the state exchange.

My unemployment ran out in March and I am presently on temporary insurance of which I pay nothing. I was recently accepted for a position that would start on September 29 at an annual salary of $37,440.

Insurance through the company is more than 9.5% of income, so I figured it would be better to apply through the state.

For my 2014 income, a couple of questions:

1. Do I count unemployment? I received $3,000
2. Annual salary of $37,440 is $720/week. Starting on 9/29 leaves 13 weeks through the rest of year so do I say that the income is $9,360?
3. My dividend income would be about $6000-$8000

If unemployment is counted then would I say my 2014 income is $20,360 and then notify the exchange about an increase in income for 2015 when the new year starts so that the subsidy would change.

Would appreciate any feedback.
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Old 09-11-2014, 12:48 PM   #2
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My guess and, only that, is earned income. Unless your dividends are not REITs, dividends are not earned. I'm 95% sure unemployment is to be included.

My $.02
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Old 09-11-2014, 12:55 PM   #3
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See page six of this document for calculation of O-MAGI:
http://www.ncsl.org/documents/health...medicdprov.pdf
Quote:
The Definition of Income Under PPACA In Section 2002(a) and Section 1401(a) of PPACA, household income is defined to be MAGI in compliance with the Internal Revenue Code (IRC). Specifically, gross income is total income minus certain exclusions (e.g., public assistance payments, employer contributions to health insurance payments). From gross income, adjusted gross income (AGI) is calculated to reflect a number of deductions, including trade and business deductions, losses from sale of property, and alimony payments. MAGI is defined as AGI plus certain foreign earned income and tax-exempt interest
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Old 09-11-2014, 01:51 PM   #4
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I think what you want to do is an estimate of your 2014 MAGI based on what has happened so far this year and on your new employment for the rest of the year - IOW, your best estimate of what your 2014 MAGI will be when you prepare your 2014 tax return in early 2015 since that is the number that will be reconciled to in your 2014 tax return.

So in your case I "think" you have it about right - it would be the $3k of unemployment benefits + $8k of dividends + $9k of earned income for the 4th quarter of 2014 less any deductible IRA or 401k contributions if applicable.
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Old 09-11-2014, 03:52 PM   #5
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There are several links to income for ACA listed in the FAQ here on this forum

FAQ Archive on PPACA

State run exchange may have different definitions.
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Old 09-11-2014, 07:12 PM   #6
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Originally Posted by Surewhitey View Post
My guess and, only that, is earned income. Unless your dividends are not REITs, dividends are not earned. I'm 95% sure unemployment is to be included.

My $.02
Neither are REIT dividends earned income. They are ordinary income for tax purposes, but this does not make them earned income.

Ha
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Old 09-11-2014, 07:19 PM   #7
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Originally Posted by Surewhitey View Post
My guess and, only that, is earned income. Unless your dividends are not REITs, dividends are not earned. I'm 95% sure unemployment is to be included.

My $.02
I think they are looking for Obamacare modified adjusted gross income which would include interest and dividends included in tax return AGI plus any tax-exempt interest income.
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Old 09-11-2014, 10:49 PM   #8
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^ That is my understanding as well.For now I can keep myself in the 15% tax bracket; however, the Long Term Capital Gains and the Qualified Dividends that I do not pay tax on are included in MAGI and determine my ACA subsidy level if I were to participate in a health exchange.

Those same gains and dividends that I do not pay tax on in my MAGI would also determine that tax rate that I would pay on Traditional IRA withdrawals or Roth conversions.
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