Should I create an Individual ACA account for daughter

[ratface]

I have registered for ACA this year with DW and daughter. I have broken it down to two groups on their site with my wife and I in group 1 and my daughter alone in group two. We would not qualify for subsidies. We will not need ACA this year but my daughter loses insurance thru my private plan at age 22 on 1-14-2016. They call it "aging out". It seems private plans do not have to adhere to the 26 y/o age for college children living at home. I need to buy her a policy but am wondering if I should log on by creating a separate account for her as her part time work last year amounts to a few hundred dollars and she filed an income tax return? Will the subsidy standards be applied then to her individual tax return regardless of which way we log on?

 

[MBSC]

The following assumes you are on the federal exchange (some state exchanges are quirky). If you expect to claim your daughter as a dependent on your 2016 tax return filed in early 2017, then you were correct in creating a household account of 3 with her in a separate group. You should report a 2016 estimated household MAGI that includes both tax returns if she expects to file a return for 2016. You may not be eligible for a premium subsidy at this time but should the family's income drop you could become eligible.

Income is counted for you, your spouse if married, and everyone you’ll claim as a tax dependent on your 2016 federal tax return who is required to file a tax return. Include their income even if they don’t need health coverage.

Reference: https://www.healthcare.gov/income-and-household-information/how-to-report/

Creating a unique account for her indicates she is self-sufficient and will not be claimed as a dependent on the parent's tax return. Only her income would be considered and she would be placed into Medicaid if you live in an expansion state. In non-expansion states, she would pay the full premium because her income is below 100% FPL. She would not receive a subsidy if the household income fell since the parent's income is not connected to the account.

You do not have to purchase a plan through the exchange if you do not qualify for subsidies. You can use the Off-Exchange Health Plan Finder below to see additional options:

https://finder.healthcare.gov/

 

[sengsational]

That's a great post MBSC.

I'll only add that if you want the same coverage/policy for the whole family, you might not need to have a separate group for your daughter. If everyone has the same policy, I've found it doesn't affect pricing when you split into groups vs join together. If you want separate pricing, then grouping is the way to go. Before the clarification on embedded deductibles, it was smarter to go separate, but that's less of a concern now.

 

[ratface]

Thank-you

Agreed that is a great response which allows me to go forward with a decision as I have to buy a plan by the 15th. Appreciate the time and effort!

 

[rbmrtn]

They call it "aging out". It seems private plans do not have to adhere to the 26 y/o age for college children living at home.

That does not sound correct unless there is some special exception.

Frequently Asked Questions regarding Young Adults and the Affordable Care Act

Q2: What plans are required to extend dependent child coverage up to age 26?
The Affordable Care Act requires plans and issuers that offer dependent child coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to all employer plans.

https://www.cms.gov/CCIIO/Resources/Files/adult_child_faq.html

 

[GTFan]

Creating a unique account for her indicates she is self-sufficient and will not be claimed as a dependent on the parent's tax return. Only her income would be considered and she would be placed into Medicaid if you live in an expansion state. In non-expansion states, she would pay the full premium because her income is below 100% FPL. She would not receive a subsidy if the household income fell since the parent's income is not connected to the account.

This is correct and what I have done for my son who is still living with us, but he makes just enough to be over the 100% FPL threshold so he gets the max credit. It is much cheaper for us to do it this way vs. adding him to our plan as dependent.

Do note that if your child makes close to the min for a subsidy you can still estimate that the income will be above min and if that's accepted by the exchange there is no penalty if income is subsequently below min FPL during the next year. In other words, your child can get full subsidy without penalty as long as the income estimate above min is accepted by the exchange, because when you later file taxes to reconcile the credit there is an exemption for income falling below min as long as you had an accepted exchange filing and an enrolled, paid for plan.

 

[ratface]

some followup information

My daughter is a full time college student who works a handful of hours in the summer amounting to just several hundred dollars. Since I claim her as a dependent I am going to have to insure her as part of the household group or go private.

There is an exemption to the 26 year old rule or known as the aging out clause because I am a retiree and not an active employee. It seems that this allows them a way to circumvent the rule. They tell me that the law only applies to active employee policies. This is a major metro municipality engaging in this practice, ( Chicago). I also have to submit proof of full time student status as well as proof of tuition payment twice per year. I have to send this registered mail because they routinely lose the documentation. They have denied prescription coverage on two occasions claiming I failed to submit documentation and on both instances I was able to provide copies to the contrary. It borders on insanity and I might be better off going private, from what I can see it will also be a few bucks cheaper.

 

[ratface]

Bought a private plan

Just a follow-up. Bought a Silver PPO on the private market from BCBS for $60 less than I was paying thru myretirement insurance policy.