When to Report New Income and ACA?

[Fleur58]

I'm retired, single, 61, with no income except investments. I estimated my income to be 35K for 2019 and I'm on track for that only if I add on a 10K Roth Conversion. I have a Gold ACA plan and I pay $260 month and get a Subsidy of $646 month. I have Kaiser insurance and they have informed me that in 2020 I will only have to pay $212 month.

I am leaving retirement. I got a full time job which starts on Dec 9. The salary will be well over 44K a year, the max income to qualify for subsidy. I would get a check for 1 or 2 weeks of work before the end of December. Healthcare benefits will start Feb 1.

I only need insurance coverage for January. I have to renew my current plan by the enrollment deadline Dec. 15. When should I report my income change? Before or After I get my first check?

 

[RunningBum]

I wouldn't bother for 2019. You'll have paid your last premium for the year by Dec 1 so there's really no adjustment that could be made. You'll square it up come tax time. Try to avoid an underpayment penalty. You could have extra withheld from your new job paychecks.

For 2020, you report your estimated 2020 income when you enroll before Dec 15. Just make the estimate high enough that you don't get a subsidy in January that you'd have to pay back.

 

[Fleur58]

Thank you Runningbum.
I guess it boils down to for 2020 do I want to pay $900 + for one month of coverage in January or change the plan to something cheaper.

Per your advice I need to make my decision for 2020 by Dec 15. I agree I'm not going to report change for 2019 when I have not received a paycheck by then.

But what is an underpayment penalty?

 

[Dtail]

Thank you Runningbum.
I guess it boils down to for 2020 do I want to pay $900 + for one month of coverage in January or change the plan to something cheaper.

Per your advice I need to make my decision for 2020 by Dec 15. I agree I'm not going to report change for 2019 when I have not received a paycheck by then.

But what is an underpayment penalty?

I believe the reference is more towards making sure you have enough withheld from your paycheck so your estimated 2019 taxes withheld is at least equal to 100% of last years' taxes or 90% of the actual taxes for 2019.
Otherwise there is an underpayment penalty.

 

[Fleur58]

I made a payment of $1000 to the IRS and $2000 to the State (also includes local tax) last March when I got my refund. That should cover me, even if I decide to do a small Roth conversion. I hope. I'm well in the 12% bracket.