Do I qualify for ACA?

[Looking4Ward]

I'm faced with an interesting scenario.

I'll be FIRE'd at the end of this month, although I've agreed to be an advisor to the company in return for a $40K salary. There are no benefits other than continued access to 401K contributions.

Points to consider:

1. My annual salary will be $40K minus maximum 401k contributions for an adjusted gross of $17K. That income, combined with CG and Dividends from after-tax investments minus deductions should keep me under the top of the 15% tax bracket

2. I can no longer obtain health insurance thru my job

3. DW's annual salary is $100K but I cannot get insurance thru her job

4. We will maintain "married filing separately" status

I've gone thru the ACA Marketplace application process at healthcare.gov, profiling myself as married but filing separately, claiming my income to be $17K, affirming that I live at the same address as DW but not providing any income information or SSN for DW, and have been able to progress to the point of qualifying for and enrolling in a plan, but haven't chosen a plan yet. The costs of the plans presented to me appear to be the same as plans I can pull up on the general "health insurance" websites.

I have not seen any mention on the website in regards to what subsidy or credit I would be eligible against the cost of health insurance.

My question is - would I be eligible for subsidy/credit and where would I learn how much that subsidy/credit is?

 

[Sue J]

My understanding is that if married, you must file jointly to get the subsidy. If you file MFS you can still buy through the ACA Marketplace but you are not eligible for the subsidy on the premium cost.

I'll post a link if I find a page where this is explained.

What is the reason that you file MFS? Would the ACA premium subsidy offset any benefit you get from not filing jointly? Never mind, I realized that if you file jointly your combined income is too high for a subsidy.

 

[bizlady]

My understanding is that if married, you must file jointly to get the subsidy. You can still buy through the ACA Marketplace but you are not eligible for the subsidy on the premium cost.

+1

 

[Looking4Ward]

My understanding is that if married, you must file jointly to get the subsidy. You can still buy through the ACA Marketplace but you are not eligible for the subsidy on the premium cost.

I'll post a link if I find a page where this is explained.

Ah, thank you. Makes sense.

What is the reason that you file MFS?

We keep everything separate; we have a post-nup and all income/assets are maintained separately.

My after-tax investments are in my name. If we filed jointly, I would be paying tax on my capital gains and dividends.

She claims standard deduction, herself and our son on her return. I claim myself on mine. Ultimately, our tax liability is lower.

 

[MichaelB]

+2

Here's a link http://www.fas.org/sgp/crs/misc/R41137.pdf

Premium tax credits are generally available to individuals who enroll in an exchange plan; are part of a tax-filing unit; have household income between specified amounts; are not eligible for other forms of comprehensive health coverage; and are U.S. citizens or lawfully present resident

 

[Sue J]

Unfortunately, there are many tax benefits that are ineligible for MFS. When I worked for H&R Block for a few seasons we saw many families who stayed unmarried because filing as one Single and one Head Of Household saved so much in taxes.

 

[Looking4Ward]

Unfortunately, there are many tax benefits that are ineligible for MFS. When I worked for H&R Block for a few seasons we saw many families who stayed unmarried because filing as one Single and one Head Of Household saved so much in taxes.

I agree, it's a mess. And I do know a few couples who have gotten divorced on paper (even though they continued their life as though they were still married) strictly because of tax implications.

Given our current numbers, MFS works for both of us. But if those numbers on either side of the equation grew or shrunk considerably, it could quickly tilt in the other direction.

 

[Looking4Ward]

Here's the interesting part of my research, though.

In a strictly non-community, non-combined property scenario in which a married couple use a MFS filing status, the IRS cannot force one party to the couple to report the income of the other party to the couple as that would violate confidentiality law.

This is in respect to Form 8958 in which the IRS attempts to collect from both reporting parties the income and expenses of the other party. There is strong debate as to whether the IRS can lawfully require the reporting party to report income other than their own.

Makes sense, because in a true non-community property, non combined income/asset/expense scenario, I would have no idea what my DW earned and she would have no obligation to tell me.

 

[mpeirce]

Seriously?

You earn $140,000 a year as a couple and are trying to get government subsidized healthcare?

 

[Looking4Ward]

Seriously?

You earn $140,000 a year as a couple and are trying to get government subsidized healthcare?

I'm not "trying" to get a subsidy.

I was curious if our combination of various elements, circumstances, and filing status would actually cause one.

Perhaps my title "Do I qualify for ACA?" with preface "I'm faced with an interesting scenario" wasn't clear enough.

Try "Do I actually qualify for ACA?" and your assumption may be totally different.

Seriously.

 

[audreyh1]

You qualify for ACA, just not any subsidies.

 

[ERhoosier]

Here's the interesting part of my research, though.

In a strictly non-community, non-combined property scenario in which a married couple use a MFS filing status, the IRS cannot force one party to the couple to report the income of the other party to the couple as that would violate confidentiality law.

This is in respect to Form 8958 in which the IRS attempts to collect from both reporting parties the income and expenses of the other party. There is strong debate as to whether the IRS can lawfully require the reporting party to report income other than their own.

Makes sense, because in a true non-community property, non combined income/asset/expense scenario, I would have no idea what my DW earned and she would have no obligation to tell me.

My understanding is that one must accurately disclose (or reasonably predict) household income to be eligible for subsidy. No income report, no subsidy. And in any event, the IRS would have access to both spouses' true MAGI anyway. Any subsidy beyond what was entitled would be reconciled with the next year's fed income tax (i.e. added to the normal income tax due for that year).

 

[pb4uski]

You qualify for ACA, just not any subsidies.

What do you mean by "qualify for ACA"?

 

[Looking4Ward]

What do you mean by "qualify for ACA"?

I think what Audreyh1 means is that I'm eligible to enroll in a plan via the exchange, but I would not be eligible for a subsidy.

Which is the answer to my original question that apparently did not convey my disbelief that I would actually be eligible for a subsidy although I wasn't sure because the site didn't specifically state such nor provide an amount; it simply allowed me to continue to the point of enrollment which led to my question would I actually be eligible for a subsidy and how much.

Which is where I stopped, and posed the question to this forum, because I was somewhat surprised that I'd possibly be eligible for a subsidy. Seriously.

 

[sengsational]

You may need to switch from being married to being room mates and back, depending on how the laws change over the years. Being more nimble than our legislators shouldn't be too difficult.
​

 

[audreyh1]

What do you mean by "qualify for ACA"?

That was the title of the original post. Change in employment status means you can sign up immediately for an ACA-compliant policy.

 

[meierlde]

That was the title of the original post. Change in employment status means you can sign up immediately for an ACA-compliant policy.

To boot if not subisidy eligible you don't have to use the government sites to buy insurance. Ehealthinsurace.com is one alternative to shop on. Another is to shop there and use the chosen insurance companies site to sign up. I am surprised the government sites don't have a box to check, to say, I am not eligible for a subsidy and don't want to even see if I am. It would eliminate a lot of the issues that occur.

 

[bmcgonig]

Seriously?

You earn $140,000 a year as a couple and are trying to get government subsidized healthcare?

Would you ask the following question in the same manner?

You earn $140,000 a year as a couple and are trying to get government subsidized mortgage?

Or

You earn $140,000 a year as a couple and are trying to get government subsidized IRA?

 

[audreyh1]

To boot if not subisidy eligible you don't have to use the government sites to buy insurance. Ehealthinsurace.com is one alternative to shop on. Another is to shop there and use the chosen insurance companies site to sign up. I am surprised the government sites don't have a box to check, to say, I am not eligible for a subsidy and don't want to even see if I am. It would eliminate a lot of the issues that occur.

I think they did have a way to let you get approximate quotes with no subsidy - they only required your age and zip code and gave you a list of companies and plans. I never created an account but was able to get this info from healthcare.gov. Then you can go directly to the company web sites to look at plans, and sign up directly with the company you choose. I don't remember the quotes as being particularly accurate, but at least I got a list of companies to research.

 

[MBSC]

Seriously?

You earn $140,000 a year as a couple and are trying to get government subsidized healthcare?

If the spouse is receiving her health insurance through her employer, then she is already receiving government subsidized healthcare since those benefits are provided pre-tax.

The huge health-care subsidy everyone is ignoring

 

[MBSC]

I am surprised the government sites don't have a box to check, to say, I am not eligible for a subsidy and don't want to even see if I am. It would eliminate a lot of the issues that occur.

When I created an account and enrolled on the Federal exchange, I chose the option that said I already know I am not eligible for a subsidy. It skipped a lot of income questions during enrollment.

 

[Looking4Ward]

When I created an account and enrolled on the Federal exchange, I chose the option that said I already know I am not eligible for a subsidy. It skipped a lot of income questions during enrollment.

That was the confusing part - I fully expected a concise question or statement at some point about subsidy and an opportunity to decline or skip but it never came.

Lots of innuendo that I "would" or "could" be eligible but nothing definitive.

Instead were a lot of questions about filing status (MFS), whether we lived at the same address, did I want to provide spouse's income (no), did I want to provide spouses SSN (no), etc..etc.. and then finally "You're approved!".

I felt like I was in a DriveTime commercial.

Then, the various plans were presented. I noticed that the pricing was the same as what I had previously researched thru healthinsurance.com

The only option at that point was a button on each of the plans to "ENROLL" and I stopped there because I wasn't sure what level of commitment I would be making at that point.

Which also led me to wonder how many people just went with the flow of the website, have been counted as having "enrolled" but merely went a bit too far clicking buttons.

 

[pb4uski]

To boot if not subisidy eligible you don't have to use the government sites to buy insurance. Ehealthinsurace.com is one alternative to shop on. Another is to shop there and use the chosen insurance companies site to sign up. I am surprised the government sites don't have a box to check, to say, I am not eligible for a subsidy and don't want to even see if I am. It would eliminate a lot of the issues that occur.

That is not true in all states. In my state you must buy from the exchange, you cannot buy from a carrier. The exchange collects the premiums as well. A big mistake on the part of the state IMO - they should have just let us deal with the carriers.

 

[mpeirce]

Would you ask the following question in the same manner?

You earn $140,000 a year as a couple and are trying to get government subsidized mortgage?

Or

You earn $140,000 a year as a couple and are trying to get government subsidized IRA?

While trying to avoid bacon, I'll just say that there is a matter of degree. And yes, it is a slippery slope.

 

[rbmrtn]

That was the confusing part - I fully expected a concise question or statement at some point about subsidy and an opportunity to decline or skip but it never came.

Lots of innuendo that I "would" or "could" be eligible but nothing definitive.

Instead were a lot of questions about filing status (MFS), whether we lived at the same address, did I want to provide spouse's income (no), did I want to provide spouses SSN (no), etc..etc.. and then finally "You're approved!".

Sounds like you missed the option to skip the income check for subsidy. It's was in the start of the enrollment process.

It needs the income info then to process the application. You should get a "Eligibility Notice" document that shows your approval and what subsidy you qualify for ( if any )

The site has a lot of info in the FAQs

MFS info
https://www.healthcare.gov/what-inc...what-if-my-spouse-and-i-file-taxes-separately

Plans and prices without enrolling ( estimated subsidy )
https://www.healthcare.gov/how-much-will-marketplace-insurance-cost/