? lose ACA subsidy if below fpl?

[newtoseattle]

Was trying to help a friend. Wanted to keep her above medicaid level but otherwise as low as possible. I might have overshot the IRA contribution and gotten her below the approx 16,300$ threshold for medicaid (in a state that did expand medicaid). Would she lose her aca subsidy she already got for 2015 and owe money?! I was hoping to get her even more of a subsidy and therefore "refund" at tax time, but Might have messed it up? Although it seems unlikely the government would want to go after people who are poor...

But it leads to the next question (assuming they don't make you pay back the subsidy)- if you want to keep an aca plan rather than medicaid, why couldn't you just overestimate your income every year and pay as little as possible but keep the aca plan?

thanks

 

[MichaelB]

If actual income is higher than estimated, some of the premium assistance must be repaid, but the total is capped unless the MAGI is more than 4X the federal poverty level. Here's a table http://kff.org/health-reform/issue-brief/explaining-health-care-reform-questions-about-health/ and here's a more detailed analysis and explanation from KFF https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8154.pdf

 

[newtoseattle]

actually asking if actual income is below estimated

Thank you - but actually asking what I think is a bit more complicated. In states that expanded medicaid you are not eligible for aca assistance if you are eligible for medicaid - i.e. your income is too low (below approx 16300$).

So if your income is BELOW what you estimated - for most people that would mean an extra refund at tax time. But in the particular case of someone on the border of medicaid eligibility - if their income is now too low for aca subsidy - do they owe it back? (i.e. they should have signed up for medicaid instead)

 

[MBSC]

Was trying to help a friend. Wanted to keep her above medicaid level but otherwise as low as possible. I might have overshot the IRA contribution and gotten her below the approx 16,300$ threshold for medicaid (in a state that did expand medicaid). Would she lose her aca subsidy she already got for 2015 and owe money?! I was hoping to get her even more of a subsidy and therefore "refund" at tax time, but Might have messed it up? Although it seems unlikely the government would want to go after people who are poor...

Reference: https://www.healthinsurance.org/faq...-do-during-open-enrollment-to-cover-my-bases/

If you receive an advance premium tax credit and then your income actually ends up being under 100 percent (or 138 percent in Medicaid expansion states) of poverty level, you do not have to pay back the subsidy. However, you are required to notify the exchange of changes in circumstances, so it’s unlikely that you would remain on a subsidized plan when you actually qualify for Medicaid.

But it leads to the next question (assuming they don't make you pay back the subsidy)- if you want to keep an aca plan rather than medicaid, why couldn't you just overestimate your income every year and pay as little as possible but keep the aca plan?

If the income estimate is substantially different than reported on past tax returns, the exchange will request documentation supporting the income estimate.

 

[John Galt III]

Newto, I understand your question. It looks to me like your friend can fall below the 2016 estimate, into Medicaid income territory, and not be penalized. What matters is whether the Ocare people initially accept your estimate for 2016, when you are applying in2015. See end of first page in this thread http://www.early-retirement.org/forums/f38/aca-medicaid-income-79007.html?highlight=medicaid+/+aca

 

[RunningBum]

What if you converted enough of that IRA contribution or other IRA funds to a Roth to raise the income enough?

 

[newtoseattle]

thanks to all

thank you for responses - MBMC link really did answer question directly (I didn't find that when I tried googling it!)
Basically wouldn't have to pay anything back, but also wouldn't get any refund for overpaying...
Yes - once final tax stuff comes in we will roth convert if I overdid the IRA contribution and got her income below 138% fpl. Next year I'll wait until after year over to make sure we maximize subsidy and don't fall below 138%

Having said that- I will say for anyone interested - medicaid is not a bad deal. don't have to worry about any out of network balance billing, drug cost, etc. Yes, some private docs don't take it (maybe an elective new hip or knee)- but most university medical systems do - so any fancy cancer treatment, etc. you can often get. Yes, you'll have to meet with residents and students - but you can be sure that they are basing info on the latest research available... Also often medicaid has poor rehab choices if heaven forbid you had a bad car accident and had a brain injury or something...

 

[GTFan]

Whether or not Medicaid is a bad deal entirely depends on what state you're in. In my non-expanded Medicaid state (GA) there's no way any of us would qualify because it's means-based. But even if you could qualify (if they ever expand under the ACA) you wouldn't want it simply because of how limited the network is - too many doctors and providers here won't take it because of low payouts.

 

[Jackanory]

I 'think' the threshold is $16,243: http://hbex.coveredca.com/toolkit/renewal-toolkit/downloads/OE3-Income-Guidelines.pdf


I've been confronting the spreadsheet again this week! With taxable income from my credit union at around $885 and 'non-taxable' dividends around $3600, to exceed 138% of FPL ($16,243) I shall be withdrawing $12,000 from pre-tax accounts, to give myself a little buffer!


Mind you, with income like that, I'm tempted to put a tiny dent in SDG&E's profits by applying for a subsidy there too!