new to ACA

[Eucerin]

Newby here to the forum as well as to the subject - ACA, I need to get myself educated on this subject, please see my questions:
1. MAGI - if I sold stocks, one capital gain is 5k, another capital loss is 3k. For ACA MAGI purpose, my total capital gain is 5k or 2k??

2. If I enroll for 3 people in the beginning of year, few month later one of them got job and receives healthcare via employer, can I cancel one person in the ACA in the middle of year?

Thank you for your reply

 

[sengsational]

1. These kinds of questions can be answered by looking at how these transactions would be reported on your federal income tax. MAGI is based on your AGI, so if your example would show an additional $2K on the tax form, then that's what it would be for the PTC.


2. Yes, this type of change is allowed, but you don't prorate the family size. In other words, the family size comes from your 1040 form, which is an integer. Of course the family size determines what 4X FPL is, so if you drop in family size, the "cliff" changes.

 

[Eucerin]

1. These kinds of questions can be answered by looking at how these transactions would be reported on your federal income tax. MAGI is based on your AGI, so if your example would show an additional $2K on the tax form, then that's what it would be for the PTC.


2. Yes, this type of change is allowed, but you don't prorate the family size. In other words, the family size comes from your 1040 form, which is an integer. Of course the family size determines what 4X FPL is, so if you drop in family size, the "cliff" changes.

sengsational-
Thank you very much for your reply.
one step closer to understand ACA

 

[jpeter1093]

Would it be allowed to live off inherited savings for the full year and, thus, show 0 income when signing up for ACA? It wouldn't be considered income, right?

 

[EastWest Gal]

Would it be allowed to live off inherited savings for the full year and, thus, show 0 income when signing up for ACA? It wouldn't be considered income, right?

You are correct. But if your income is very low, the ACA forces you onto Medicaid. Which might be ok.

It is unlikely you will have 0 income. You have to report dividend and cap gains distributions as income, even if you don’t sell any of your invested assets.

 

[jpeter1093]

You are correct. But if your income is very low, the ACA forces you onto Medicaid. Which might be ok.

It is unlikely you will have 0 income. You have to report dividend and cap gains distributions as income, even if you don’t sell any of your invested assets.

Thanks, Gal. You are right as far as dividends and interest. I shouldn't have any cap gains if I'm not selling any assets. Any idea where I might find the Medicaid cutoff for NYS?

 

[ivinsfan]

Thanks, Gal. You are right as far as dividends and interest. I shouldn't have any cap gains if I'm not selling any assets. Any idea where I might find the Medicaid cutoff for NYS?

try google...and I say this not to be snarky but for 2 reasons. Don't take other people's answers for something this important. This is complex and multi-faceted and the more reading and looking you do on your own the more likely you are to get the complete picture. If you haven't even done the basic research on your own, you don't even know the right questions to ask here.

 

[sengsational]

Thanks, Gal. You are right as far as dividends and interest. I shouldn't have any cap gains if I'm not selling any assets. Any idea where I might find the Medicaid cutoff for NYS?

It's probably between 200 and 250%FPL. When you apply for ACA, you'll know it because the web site will tell you. Back in the old days it was hard to "unconvince" the web site once it had you in Medicaid, so do your homework beforehand in case that's still true. When you apply, you're only estimating income, and things can change, so you can pick a number that goes with a plausible story and go with it. If your estimate was a bit higher than actual, there's no repercussions except maybe your next application, which would presumably be based on those actuals, might indicate an undesirable income level.


All that being said having a near zero MAGI is not typically an optimal strategy; usually you'll want to twiddle income by pulling from tIRA while watching what happens to your PTC. This can be done in previous years' tax software as an indication of how things move. And in November, the current year preliminary software will put a finer point on it.

 

[SecondCor521]

try google...and I say this not to be snarky but for 2 reasons. Don't take other people's answers for something this important. This is complex and multi-faceted and the more reading and looking you do on your own the more likely you are to get the complete picture. If you haven't even done the basic research on your own, you don't even know the right questions to ask here.

Agreed and will add one additional thing:

Qualifying for Medicaid includes other factors in addition to income. As an example, my oldest son had a low enough income to qualify for Medicaid but was still ineligible because he did not fit into any of the categories (pregnant woman, single parent, things like that).

(In my state anyway. I don't know how it works in other states.)

 

[jpeter1093]

If I retire in Feb 2019, for ACA subsidy purposes, do I use my 2018 income or estimate 2019’s income(MAGI)?

 

[Dtail]

If I retire in Feb 2019, for ACA subsidy purposes, do I use my 2018 income or estimate 2019’s income(MAGI)?

You estimate 2019 MAGI.

 

[SheitlQueen]

If I retire in Feb 2019, for ACA subsidy purposes, do I use my 2018 income or estimate 2019’s income(MAGI)?

Estimate your 2019 income. Just make sure to be as accurate as possible, you don't want to be surprised at the end of the year and find out you either aren't eligible after all, or have to pay back a chunk of the subsidy money.

 

[SecondCor521]

Estimate your 2019 income. Just make sure to be as accurate as possible, you don't want to be surprised at the end of the year and find out you either aren't eligible after all, or have to pay back a chunk of the subsidy money.

Emphasis added.

My understanding is that if you estimate your 2019 income at a level that qualifies you for ACA coverage, you can have ACA coverage for all of 2019 even if your end up with a level that is disqualifying by being too low or too high.

If your estimate is lower than actual, you are correct that you will generally have to pay back some or all of the advance premium tax credits (APTC) that were paid to the insurance company on your behalf during the year. Although for lower incomes I believe there are repayment caps so you might not have to pay back all of your APTC. And you don't have to repay anything with respect to CSRs (cost sharing reductions).

 

[Dtail]

Emphasis added.

My understanding is that if you estimate your 2019 income at a level that qualifies you for ACA coverage, you can have ACA coverage for all of 2019 even if your end up with a level that is disqualifying by being too low or too high.

If your estimate is lower than actual, you are correct that you will generally have to pay back some or all of the advance premium tax credits (APTC) that were paid to the insurance company on your behalf during the year. Although for lower incomes I believe there are repayment caps so you might not have to pay back all of your APTC. And you don't have to repay anything with respect to CSRs (cost sharing reductions).

Bolded - if that's true, then that would create a new choice of ACA income management at say 64 yo, whether qualified or not, if one knew the ultimate costs ahead of time.

 

[ivinsfan]

Emphasis added.

My understanding is that if you estimate your 2019 income at a level that qualifies you for ACA coverage, you can have ACA coverage for all of 2019 even if your end up with a level that is disqualifying by being too low or too high.

If your estimate is lower than actual, you are correct that you will generally have to pay back some or all of the advance premium tax credits (APTC) that were paid to the insurance company on your behalf during the year. Although for lower incomes I believe there are repayment caps so you might not have to pay back all of your APTC. And you don't have to repay anything with respect to CSRs (cost sharing reductions).

I understand higher but how does the lower issue work? I thought if you inadvertently went lower and came it at Medicaid level, you would simply be put into Medicaid for the next year unless you could prove you expected more income....I don't think your statement on the lower income is factual....as to being disqualifying.

 

[jim584672]

Say you estimate 101% FPL and get a ACA metal plan (non expansion state). The actual comes in at 90% at the end of the year. Nothing happens, you don't owe anything back. Then create a new estimate for the next year.

 

[ivinsfan]

Say you estimate 101% FPL and get a ACA metal plan (non expansion state). The actual comes in at 90% at the end of the year. Nothing happens, you don't owe anything back. Then create a new estimate for the next year.

That's my understanding of the situation...however if you don't collect your subsidy in advance and come under the Medicaid limit you are deemed unable to collect on your ACA policy as you should be been enrolled in Medicare. Lesson here is collect your PTC by the month in advance.

 

[jim584672]

That's my understanding of the situation...however if you don't collect your subsidy in advance and come under the Medicaid limit you are deemed unable to collect on your ACA policy as you should be been enrolled in Medicare. Lesson here is collect your PTC by the month in advance.

My unemployment payments ended mid year so I made a point of re estimating my income to get into Medicaid and save on some premiums. Now they just auto renew it, I guess they look at tax returns electronically.

 

[SecondCor521]

Emphasis added.

[1] My understanding is that if you estimate your 2019 income at a level that qualifies you for ACA coverage, you can have ACA coverage for all of 2019 even if your end up with a level that is disqualifying by being too low or too high.

[2] If your estimate is lower than actual, you are correct that you will generally have to pay back some or all of the advance premium tax credits (APTC) that were paid to the insurance company on your behalf during the year. [3] Although for lower incomes I believe there are repayment caps so you might not have to pay back all of your APTC. [4] And you don't have to repay anything with respect to CSRs (cost sharing reductions).

Citatations (first three from IRS itself):

[1] https://www.irs.gov/instructions/i8962#idm140719960689856
[2] https://www.irs.gov/instructions/i8962#idm140719954236288
[3] https://www.irs.gov/instructions/i8962#idm140719954222560 and https://www.irs.gov/affordable-care...ut-advance-payments-of-the-premium-tax-credit
[4] How do cost-sharing reductions work? | Working America

I understand higher but how does the lower issue work? I thought if you inadvertently went lower and came it at Medicaid level, you would simply be put into Medicaid for the next year unless you could prove you expected more income....I don't think your statement on the lower income is factual....as to being disqualifying.

Emphasis added. See above citations. I am not sure which statement I made that you think is not factual, but if you'd like to clarify that would be great.

 

[ivinsfan]

Citatations (first three from IRS itself):

[1] https://www.irs.gov/instructions/i8962#idm140719960689856
[2] https://www.irs.gov/instructions/i8962#idm140719954236288
[3] https://www.irs.gov/instructions/i8962#idm140719954222560 and https://www.irs.gov/affordable-care...ut-advance-payments-of-the-premium-tax-credit
[4] How do cost-sharing reductions work? | Working America



Emphasis added. See above citations. I am not sure which statement I made that you think is not factual, but if you'd like to clarify that would be great.

I'm not trying to pick a fight I'm just confused So let's say you farm as we do and based on your best information about yield price etc, you estimate that your income will be around 140% of the poverty line. Now you don't actually have a crop to sell until November and in November as you start to sell grain you sell that wet weather and lower crop prices means this year you actually to be around 125% of the poverty line and you are in a Medicaid expanded state so under the Medicaid threshold. You didn't know until November so you can't adjust anything on the exchange. You got your PTC in advance and now you are under your estimate and the limit. I've seen several sources that say no problem since you get a good estimate that was accepted by the government. I've seen if you didn't take your credits in advance and try to claim them on your tax return you get no subsidy because according to the numbers you should have been on Medicaid anyway. I've seen lots of stuff about underestimating your income and caps on paying back your excess credit if you got too much credit, because your income is too high or higher then your estimate.
In fact it's been a poor year to farm and that's the way it goes sometime but we have the options of pulling out 401 money if we need it for a cushion I'm just trying to figure out if we need it..

I understood you to say that you can be denied all your premium credits retroactively if you don't stay above the 133% threshold and I can't find a source that says that will actually happen.

 

[jim584672]

The max repayment would be $300. But I don't believe it applies to the situation being discussed.

https://www.irs.gov/pub/irs-pdf/i8962.pdf
Page 16 Table 5

 

[SecondCor521]

I'm not trying to pick a fight I'm just confused

No worries!

I do try to be accurate in what I write, but sometimes I make mistakes, so for the benefit of everyone reading things later I like to clear things up. Whether I turn out to be correct or incorrect is of a distant secondary importance.

So let's say you farm as we do and based on your best information about yield price etc, you estimate that your income will be around 140% of the poverty line. Now you don't actually have a crop to sell until November and in November as you start to sell grain you sell that wet weather and lower crop prices means this year you actually to be around 125% of the poverty line and you are in a Medicaid expanded state so under the Medicaid threshold. You didn't know until November so you can't adjust anything on the exchange. You got your PTC in advance and now you are under your estimate and the limit. I've seen several sources that say no problem since you get a good estimate that was accepted by the government.

These sources are correct, because they agree with the IRS and federal law.

Generally speaking, APTC and CSRs are based on your estimated income. A reconciliation is done at tax time on Form 8962 between what you did receive and what you should have received.

I've seen if you didn't take your credits in advance and try to claim them on your tax return you get no subsidy because according to the numbers you should have been on Medicaid anyway.

I think these sources are wrong. Read the instructions for Form 8962.

I've seen lots of stuff about underestimating your income and caps on paying back your excess credit if you got too much credit, because your income is too high or higher then your estimate.

This is generally right. If your actual income is higher than your estimated income, you will have to pay back the excess of what you received over what you should have received. If your income is over 400% of FPL, you'll have to repay all of that excess; if your income is less than 400% of FPL, the amount you have to pay is limited. See my citations under items 2 and 3 above or just look at Form 8962 lines 27 through 29 if you want it from the horse's mouth.

In fact it's been a poor year to farm and that's the way it goes sometime but we have the options of pulling out 401 money if we need it for a cushion I'm just trying to figure out if we need it..

Ah, I see. It sounds like you're concerned you may end up under the ACA lower limit and may want to do a 401(k) withdrawal to increase your AGI to be above that lower limit to ensure you don't have to repay your APTC.

I'm not going to give tax advice so I'd just suggest you read the Form 8962 instructions carefully and consult your tax professional. The lines that relate to repayment of APTC are lines 27 through 29.

I understood you to say that you can be denied all your premium credits retroactively if you don't stay above the 133% threshold and I can't find a source that says that will actually happen.

I've carefully reread everything I wrote. I don't believe I said that. In fact I believe I said the exact opposite.

Happy to further discuss.

 

[jim584672]

https://www.irs.gov/pub/irs-pdf/i8962.pdf
Page 8 Line 6

It says you can qualify for PTC if you meet certain conditions and your FPL is under 100%.

 

[ivinsfan]

No worries!

I do try to be accurate in what I write, but sometimes I make mistakes, so for the benefit of everyone reading things later I like to clear things up. Whether I turn out to be correct or incorrect is of a distant secondary importance.



These sources are correct, because they agree with the IRS and federal law.

Generally speaking, APTC and CSRs are based on your estimated income. A reconciliation is done at tax time on Form 8962 between what you did receive and what you should have received.



I think these sources are wrong. Read the instructions for Form 8962.



This is generally right. If your actual income is higher than your estimated income, you will have to pay back the excess of what you received over what you should have received. If your income is over 400% of FPL, you'll have to repay all of that excess; if your income is less than 400% of FPL, the amount you have to pay is limited. See my citations under items 2 and 3 above or just look at Form 8962 lines 27 through 29 if you want it from the horse's mouth.



Ah, I see. It sounds like you're concerned you may end up under the ACA lower limit and may want to do a 401(k) withdrawal to increase your AGI to be above that lower limit to ensure you don't have to repay your APTC.

I'm not going to give tax advice so I'd just suggest you read the Form 8962 instructions carefully and consult your tax professional. The lines that relate to repayment of APTC are lines 27 through 29.



I've carefully reread everything I wrote. I don't believe I said that. In fact I believe I said the exact opposite.

Happy to further discuss.

Thanks Second Cor and I did say I was confused... sometimes when I am reading several comments strung together my
thinking can get muddled up, also ACA articles can string together several scenarios at one time and make it hard to figure out what is germane to your situation.

I think your comment about being above and below the income thresholds and maybe having to pay back all of your APC threw me off.

That is the form I needed to look at and it's looks as though my income won't be a problem for 2108. I won't actually know if its a problem until I seen my taxable dividends for the year anyway..after all this I'll probably end up over my estimate. Oh well 45 years of farming teach you to be a worrywart.

 

[ivinsfan]

https://www.irs.gov/pub/irs-pdf/i8962.pdf
Page 8 Line 6

It says you can qualify for PTC if you meet certain conditions and your FPL is under 100%.

Thanks for digging through that and making it easy..yes that's the bingo page for me.