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Old 10-01-2013, 01:48 PM   #21
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Originally Posted by easysurfer View Post
Thx. That's good to know that HSAs are offered. My state's exchange pointed me to the national marketplace which was down when I was there.

HSAs ..the best kept secret that's been around awhile
Yes and contributions to your HSA account reduce your MAGI for ACA purposes.

http://laborcenter.berkeley.edu/heal..._summary13.pdf
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Old 10-01-2013, 02:14 PM   #22
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Yes and contributions to your HSA account reduce your MAGI for ACA purposes.

http://laborcenter.berkeley.edu/heal..._summary13.pdf
I see Tuition and Fees are deducted out of MAGI. Will this include your dependents' Tuition and fees?
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Old 10-01-2013, 02:15 PM   #23
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I talked to someone at the federal exchange and he said that actually it remains unclear what will happen if your income falls below the subsidy level yet you are not eligible for medicaid, either because you did not know your income was too low until year end, or because you are in a state that refused to expand medicaid.

So, we can't yet assume that the subsidy will automatically disappear if your income drops too low.

Unfortunately, if in fact it remains a hole in the system the odds of it getting fixed may not be good.

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Hi Martha. Thanks for stopping by!

What we do know is there is no automatic mid year income reconciliation, and the only scheduled reconciliation occurs after the year has ended and the tax return is filed. So, if he exchange accepts the taxpayer's projected income and that qualifies for a policy, there is really nothing that would change that until it is time for renewal.

If tax credits and premium assistance were extended, the taxpayer is later deemed ineligible and the taxpayer's income is less than 200% of the FPL, reimbursement is limited to $300 per individual, $600 joint filing. That was written for exchange eligible policies, but is the default for this Medicaid ineligible situation until replaced with a more specific provision.
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Old 10-01-2013, 02:23 PM   #24
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If tax credits and premium assistance were extended, the taxpayer is later deemed ineligible and the taxpayer's income is less than 200% of the FPL, reimbursement is limited to $300 per individual, $600 joint filing. That was written for exchange eligible policies, but is the default for this Medicaid ineligible situation until replaced with a more specific provision.
Thanks. This isn't consistent with what I was told. Do you have a place I can find this info?
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Old 10-01-2013, 03:27 PM   #25
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Thanks. This isn't consistent with what I was told. Do you have a place I can find this info?
Not really. Mostly things I have read. The $300/$600 limit to premium credit is probably not what you are referring to, but can be found here http://www.cms.gov/CCIIO/Resources/F...n-8-5-2013.pdf

The key to the issue of someone living in a state that has not expanded medicaid overstating their income (@<100% FPL) to gain subsidized access to the exchange policies is more bark than bite. This is the most recent (at least that I have seen) paper on income verification http://www.cms.gov/CCIIO/Resources/F...n-8-5-2013.pdf
Income must be documented and verified before subsidies are extended. This is done with prior year tax returns and employer pay records. If verification does not take place the policy and credits are only extended for 90 days and must be revisited. So, if there is verification and approval upfront and income changes during the year, it will be detected by voluntary self-reporting or subsequent income tax filing, but no other process is in place, and no penalty for not reporting the change.
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Old 10-01-2013, 05:32 PM   #26
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Not really. Mostly things I have read. The $300/$600 limit to premium credit is probably not what you are referring to, but can be found here http://www.cms.gov/CCIIO/Resources/F...n-8-5-2013.pdf

The key to the issue of someone living in a state that has not expanded medicaid overstating their income (@<100% FPL) to gain subsidized access to the exchange policies is more bark than bite. This is the most recent (at least that I have seen) paper on income verification http://www.cms.gov/CCIIO/Resources/F...n-8-5-2013.pdf
Income must be documented and verified before subsidies are extended. This is done with prior year tax returns and employer pay records. If verification does not take place the policy and credits are only extended for 90 days and must be revisited. So, if there is verification and approval upfront and income changes during the year, it will be detected by voluntary self-reporting or subsequent income tax filing, but no other process is in place, and no penalty for not reporting the change.
Thanks for the information. Your first link though is the same as the second and I think you meant to link to a different page.
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Old 10-01-2013, 05:56 PM   #27
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Old 10-01-2013, 06:02 PM   #28
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Thanks for the information. Your first link though is the same as the second and I think you meant to link to a different page.
Sorry, juggling too many links.
This is the original KFF paper on income reconciliation http://kaiserfamilyfoundation.files....13/01/8154.pdf
As you know, it has been revisited twice since with some changes, but is still valid.

Here is a link I read a month ago but only found again this afternoon which states that in the case of subsidy where there is no eligibility for either program, none needs be repaid.

IRS issues health insurance premium tax credit regulations - Lexology

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The IRS will make the tax credit payments directly to the insurance company on the individualís behalf. The IRS will then reconcile the amount of the advance payment against the amount of the individualís actual tax credit, based on the individualís federal income tax return. Any repayment that the individual is ultimately responsible for, however, is capped if the individualís income is under 400 percent of the FPL. These caps range from $600 for married taxpayers ($300 for single taxpayers) with household incomes under 200 percent of the FPL to $2,500 for married taxpayers ($1,250 for single taxpayers) with household incomes between 300 and 400 percent of the FPL. However, if the individualís family ends the year with a household income below 100 percent of the FPL, the individual is not required to repay any portion of the advance payment.
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Old 10-01-2013, 06:26 PM   #29
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Sorry, juggling too many links.
This is the original KFF paper on income reconciliation http://kaiserfamilyfoundation.files....13/01/8154.pdf
As you know, it has been revisited twice since with some changes, but is still valid.

Here is a link I read a month ago but only found again this afternoon which states that in the case of subsidy where there is no eligibility for either program, none needs be repaid.

IRS issues health insurance premium tax credit regulations - Lexology
Interesting.

I have a couple of friends that must have the subsidy and no way would be able to pay it back if their income dropped too much. I am worried one won't get a subsidy at all because the income is too low and she lives in Wisconsin, which did not expand Medicaid.

Still not sure how this will end up playing out. The guy I talked to at the exchange wasn't sure either.
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Old 10-01-2013, 07:29 PM   #30
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A novel approach to tax fraud. Claim extra income!
Unfortunately it's very common. Mostly to maximize the Earned Income Credit.
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Old 10-01-2013, 09:34 PM   #31
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Yippeee! Martha's back!

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+1 ! Howdy, Martha!
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Old 10-02-2013, 01:04 AM   #32
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My son is right on the cusp, so to speak between expanded Medicaid and the ACA subsidy. He would very much like to avoid Medicaid if possible (not sure if that is wise or not) but his income could fluctuate either direction by $1,000 or so. He has no earned income - only passive income of about $15,000 to $16,000 a yr. Are you denied medical (medicaid) when you have assets over a certain amount? (His father left him some money when he died) He has about $350,000 all together plus his townhouse which he now rents out. But this is a brand new account, so no built up capital gains in it to be able to pull income out.

I know with my mom when she got older and needed medicaid for assisted living help, she couldn't own any assets over $2,000 or $4,000. I don't remember the exact figure. I don't know if this is the same for medicaid health insurance eligibility. In my mother's case she had nothing, so it was not a problem.

Along the line someone joked about earlier. I think it might be harder to feign additional income then to hide it.
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Old 10-02-2013, 04:58 AM   #33
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The IRS will make the tax credit payments directly to the insurance company on the individual’s behalf. The IRS will then reconcile the amount of the advance payment against the amount of the individual’s actual tax credit, based on the individual’s federal income tax return. Any repayment that the individual is ultimately responsible for, however, is capped if the individual’s income is under 400 percent of the FPL. These caps range from $600 for married taxpayers ($300 for single taxpayers) with household incomes under 200 percent of the FPL to $2,500 for married taxpayers ($1,250 for single taxpayers) with household incomes between 300 and 400 percent of the FPL. However, if the individual’s family ends the year with a household income below 100 percent of the FPL, the individual is not required to repay any portion of the advance payment.
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Old 10-02-2013, 06:41 AM   #34
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When calling the 800 number yesterday, I was asked a question that I didn't know how to answer ....

Their person, as one of the questions, asked whether I preferred having the IRS do a 1, 3, or 5 year look back on my reported income levels to determine eligibility for assistance. I told the lady that my income had been all over the board in recent years and she told me that I can submit a document, after notification from the IRS, that can explain any discrepancies or changes in lifestyle that cause differences.

Since I was working full time thru 2010, had very minimal taxable income reported for 2011 and will have minimal income reported in 2012 with 2013 not looking much different ... And planned to start taking 401k distributions in 2014 up to the point where I keep taxable income below the threshold of subsidies but above the threshold of Medicaid...... I had no idea how to answer the question.

I'm not sure why the "preference" would be mine or exactly what the "look back" will entail ........

Anyone hear of anything like this before
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Old 10-02-2013, 06:56 AM   #35
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Why not just say that your income fluctuates but you expect that it will be between $x and $y where $x is what your income would be with no 401k distributions and $y would be 399% FPL (or the most income you plan to take)?
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Old 10-02-2013, 08:57 AM   #36
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I am going to say it is 11.5k when it comes in lower it looks like I will be covered by this. I hope this is legal.

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The IRS will make the tax credit payments directly to the insurance company on the individual’s behalf. The IRS will then reconcile the amount of the advance payment against the amount of the individual’s actual tax credit, based on the individual’s federal income tax return. Any repayment that the individual is ultimately responsible for, however, is capped if the individual’s income is under 400 percent of the FPL. These caps range from $600 for married taxpayers ($300 for single taxpayers) with household incomes under 200 percent of the FPL to $2,500 for married taxpayers ($1,250 for single taxpayers) with household incomes between 300 and 400 percent of the FPL. However, if the individual’s family ends the year with a household income below 100 percent of the FPL, the individual is not required to repay any portion of the advance payment.
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Old 10-02-2013, 09:29 AM   #37
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Their person, as one of the questions, asked whether I preferred having the IRS do a 1, 3, or 5 year look back on my reported income levels to determine eligibility for assistance. I told the lady that my income had been all over the board in recent years and she told me that I can submit a document, after notification from the IRS, that can explain any discrepancies or changes in lifestyle that cause differences.


Anyone hear of anything like this before
I think that is part of one of final rules that came out. Additional documentation for applications for income verification when data can not be verified. Shouldn't be a big deal, peoples income can change all the time, retirement can change it a lot

http://www.cms.gov/CCIIO/Resources/F...n-8-5-2013.pdf

If you have state run exchange they may have additional steps.
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Old 10-02-2013, 10:12 AM   #38
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I am going to say it is 11.5k when it comes in lower it looks like I will be covered by this. I hope this is legal.

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The IRS will make the tax credit payments directly to the insurance company on the individualís behalf. The IRS will then reconcile the amount of the advance payment against the amount of the individualís actual tax credit, based on the individualís federal income tax return. Any repayment that the individual is ultimately responsible for, however, is capped if the individualís income is under 400 percent of the FPL. These caps range from $600 for married taxpayers ($300 for single taxpayers) with household incomes under 200 percent of the FPL to $2,500 for married taxpayers ($1,250 for single taxpayers) with household incomes between 300 and 400 percent of the FPL. However, if the individualís family ends the year with a household income below 100 percent of the FPL, the individual is not required to repay any portion of the advance payment.
It sounds to me like this policy points the way to solve the Medicaid dilemma without directly lying about income. If I found myself in the Medicaid gap I would make a commitment to find part time employment that would bring in the few thousand needed to get over the gap. Then I would project my earnings to be at that level thus getting the subsidy. I would look for a job that met my requirements for such earnings (e.g very limited part time, hourly rate commensurate with my job history, challenging and fun work...) If I was unable to find such work, I would still be poor and IRS would not penalize me. Next year, rinse and repeat. It would even seem to me that health insurance counselors should encourage people to make such a commitment and appropriately project their income. The reality is that, other than a few whacky ERs like us, and maybe some of the disabled, most people earning 100-133% of the poverty level will be actively seeking such jobs in any event.
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Old 10-02-2013, 11:41 AM   #39
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It says to estimate income so that should give people some wiggle room.
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