deductible and out of pocket

[ikubak]

I am buying into the ACA for the first time in 2018. I have the flexibility of having my MAGI land from 29K and up. For the purposes of getting an insurance policy off the exchange, obviously a lower MAGI gets you a better deal. So here is my question as it relates to deductibles and out of pocket maximums...if my MAGI is 32K in 2018, the silver plan I am leaning toward would have my deductible at 900 and out of pocket max at 3300. If my MAGI is 33K, the same silver plan has my deductible at 4,000 and out of pocket max at 11,700. In both scenarios, the monthly premium is 0. So if I estimate my MAGI at 32K and get the policy with the 900 deductible and 3300 out of pocket max, and I get an unexpected distribution that throws my MAGI up to 33K at the end of the year and I have had a medical issue costing 15K, would the distribution that put me at 33K cost me 8,400 out of pocket (11,700-3,300)? If so, how does the insurance co. know if someone went over on MAGI? Seems weird that deductibles and OOP are based on year end MAGI because many people don't know what their year end number will be.

 

[Trawler]

Based on what you have I assume the big difference in max OPP and deductibles is with small change MAGI is between $32k and $33k is it crosses the line on the Cost Sharing Reduction (CSR) which is different than the Advance Premium Tax Credit. They use your stated MAGI income to determine if you qualify for a plan that has CSR when you sign up. Then when you file your 2018 tax return the Advance Premium Tax Credit is reconciled with actual 2018 MAGI. IF your actual MAGI is higher then what was stated when you applied the IRS will collect known as claw back the over amount or if MAGI is lower than stated then IRS will give you credit. I do not see where the IRS gets into the Cost Sharing Reduction it is a Subsidy that is sent to the insurer directly from the US treasury so the insurer is subsidized for the lower OPP and deductible plans offered to lower income people and they must offer these per ACA law. Recently when the president stopped those payments thru executive order however the insurers still must provide the program on their dime. The insurer will not know if your MAGI crosses the CSR threshold. You should be in the clear. That is my understanding but would see what other chime in as well as ask the IRS if there is a claw back for the CSR. I do not see it but..

 

[MBSC]

Only the premium subsidy will be reconciled if you do not notify the exchange of the income increase during the year. The cost sharing is not reconciled when you wait until tax filing.

If you report the income increase to the exchange DURING the year, the insurer applies the higher cost sharing to claims processed for the remainder of the year.

 

[VanWinkle]

Only the premium subsidy will be reconciled if you do not notify the exchange of the income increase during the year. The cost sharing is not reconciled when you wait until tax filing.

If you report the income increase to the exchange DURING the year, the insurer applies the higher cost sharing to claims processed for the remainder of the year.

Exactly this!

VW

 

[ikubak]

Thanks for the replies! If I had asked this question to any people I work with or know from daily interactions, I would have gotten a blank stare and a, "what are you talking about?" Lots of great information on this message board!