Income Questions for Healthcare Application

[TromboneAl]

I'm looking at the paper-based application form for CA Exchange health insurance, and some questions are not easy to answer for someone living off savings.

Let's say you are living off your after-tax savings, and you'll do a Roth conversion of $15,000 and have $5,000 in investment income.

The application says "Do you work now?" and if you answer "No," you go to the other income section shown here:

Here's my best guess as to what to enter:

Is that the way you would answer those questions?

 

[ERD50]

While a Roth conversion counts as taxable income, I can't say if it would be considered income for this case. But if this is looking at anything that makes up MAGI, then it seems you would count it as you did.

I think I would split up investment income and the conversion - that looks like more than one box there. I'd use them. $15k once/year in the Roth box, $5k/12 per month in the investment box.

That said, I am about the worst person in the world at reading legalese/IRS inputs.

-ERD50

 

[Martha]

Love it. I certainly get "paid" irregularly from investments so none of the boxes would be correct. I do have a few investments that pay monthly (minor), a few quarterly and the rest whenever.

Where you have to put an amount for the monthly income I think I would put that it varies and only put a number in the last two boxes, where you put $20,000.

 

[Fermion]

I am really liking the idea of using my gambling winnings to increase MAGI if needed. I do like the dice...

 

[FIREd]

Sounds like "other income" is supposed to come from stable sources (pension, annuity, that sort of things). So if my income only came from investments, I would answer "no" in the "other income" section and then proceed to the "income change" section where I would enter my expected investment income for this year and next year.

 

[rbmrtn]

What were the examples of other income mentioned on att E pg 26 ? might explain what they are looking for.

 

[M Paquette]

You've got it. If you flip back to page 26, there is a list of income types. "Investment Income" is the correct choice.

When you get to the Deductions box, don't forget to enter traditional IRAs and Health Savings Accounts (HSA). They're listed in the appendix on page 27 as valid deductions for all you MAGI managers...

 

[donheff]

I doubt it much matters whether you get the boxes right. No one is going to do a gotcha on that. Total income for the year is what will matter. If you get that wrong (in retrospect based on tax returns) you may owe some money as described in other threads.

 

[TromboneAl]

I doubt it much matters whether you get the boxes right. No one is going to do a gotcha on that. Total income for the year is what will matter. If you get that wrong (in retrospect based on tax returns) you may owe some money as described in other threads.

Yes, that would be good. I had hoped that the whole income thing would be one line:

"What did you enter on line 37 of your federal tax return? _____________"

or better:

"Don't worry about specifying your income, we'll check your tax return."

Where you have to put an amount for the monthly income I think I would put that it varies and only put a number in the last two boxes, where you put $20,000.

Yes, that sounds better.

 

[TromboneAl]

I'm going through the online application now. It makes math errors.

Putting in annual lump sums, it divides by 12:

20,012 / 12 = 1667.60
5938 / 12 = 494.81
6228 / 12 = 518.98

 

[donheff]

I'm going through the online application now. It makes math errors.

Putting in annual lump sums, it divides by 12:

20,012 / 12 = 1667.60
5938 / 12 = 494.81

They outsourced the calculations to a Cloud based service in India. No wait, they know math in India, maybe it is in Texas where they want science textbooks asserting the earth is 8000 years old.

 

[REWahoo]

No wait, they know math in India, maybe it is in Texas where they want science textbooks asserting the earth is 8000 years old.

Hey, be nice...

 

[MRG]

I'm going through the online application now. It makes math errors.

Putting in annual lump sums, it divides by 12:

20,012 / 12 = 1667.60
5938 / 12 = 494.81
6228 / 12 = 518.98

There just little errors.

MRG

 

[TromboneAl]

Warning: You cannot enter the annual income as a lump sum. I had entered all the amounts such that they added up to the correct $22,140 AGI, and this is what I got:

I went back and divided each amount by 12, put things in as monthly, and then it worked.

 

[M Paquette]

I'm going through the online application now. It makes math errors.

Putting in annual lump sums, it divides by 12:

20,012 / 12 = 1667.60
5938 / 12 = 494.81
6228 / 12 = 518.98

Bwahahaha! I recognize this error. Javascript floating point math for BCD (dollars and cents) numbers! I hope they at least got the lowest bidder for that page.

There are packages to do decimal math properly that they could have used. Noobs... (sez the old phart...)

 

[clifp]

Bwahahaha! I recognize this error. Javascript floating point math for BCD (dollars and cents) numbers! I hope they at least got the lowest bidder for that page.

There are packages to do decimal math properly that they could have used. Noobs... (sez the old phart...)

LOL

I was thinking maybe they were using the old Pentium chips with floating point division errors

The WSJ interviewed a dozen people yesterday and none of them manage to get through the application process online. So Al you are a pioneer.

But I remaining concerned about the lack of testing on the website. There is some serious money involved in this program and that stuff should have been caught months ago.

 

[GrayHare]

The "How often do you get paid?" wording makes me think they are talking about earned income only. IMO withdrawing from an account or selling a stock to pay FIRE bills is not a payment to me and thus not income.

 

[M Paquette]

The "How often do you get paid?" wording makes me think they are talking about earned income only. IMO withdrawing from an account or selling a stock to pay FIRE bills is not a payment to me and thus not income.

There's an appendix (pages 26 and 27 of the paper form) that list the different sorts of income and deductions that should be there. The income items are basically all the Modified Adjusted Gross Income items that have been discussed in other threads here and in the Finance areas. Deductions are the usual things like IRA and Health Savings Account contributions.

The form could perhaps be worded better, but it is aimed at the vast majority of folks who get by on a regular paycheck of some sort, not us FIRE types. We're a tiny portion of the general population.

 

[GrayHare]

Agree the wording could be better. "Other income is money you get from something other than your job." One of the "how often" options is an hourly checkbox. Umm, who gets money hourly for something other than job/work?

 

[homestead]

Warning: You cannot enter the annual income as a lump sum. I had entered all the amounts such that they added up to the correct $22,140 AGI, and this is what I got:

22140 AGI, Doesn't that put you into Medicaid land?

 

[Refresher]

Instead of a Roth conversion maybe it would make the application process clearer
to just take an outright IRA distribution and record that as retirement income.

 

[TromboneAl]

22140 AGI, Doesn't that put you into Medicaid land?

Apparently not.

Instead of a Roth conversion maybe it would make the application process clearer to just take an outright IRA distribution and record that as retirement income.

I could consider doing it that way this year, since I'm now 60 years old.

Let's say our expenses are 60K per year.

Method 1:
Do 20K Roth rollover
Use 60K from already-taxed accounts

Method 2:
Take 20K from IRA
Use 40K from already-taxed accounts.

Both should be equivalent in terms of the health care app, but the gubmint might understand method 2 better.

Method 1 -- better taxwise in the long run??

 

[Refresher]

Method 2:
Take 20K from IRA
Use 40K from already-taxed accounts.

Both should be equivalent in terms of the health care app, but the gubmint might understand method 2 better.

Probably, IRA can distribute $1667 to a checking account monthly.
Federal application has a box for retirement accounts and a blank space
to add monthly. Should be simple to understand.

On the other hand a Roth conversion will reflect the same $20000 as a taxable distribution on the 1040.
Moving $1667 from a money market account to checking may satisfy the same retirement income box.

How would you handle a situation where the $3000 carryover loss exceeds
all dividends and interest received.
Would you record the divs and int and the the loss or leave it all out since there is no net investment income.

In either case line 37 will differ from info on ACA form.

 

[RockyMtn]

22140 AGI, Doesn't that put you into Medicaid land?

It would if you got your income down a couple of G's....

"The Affordable Care Act proposes to make changes that affect the eligibility of certain individuals for receiving Medicaid coverage. If put into effect, all individuals from ages 19 to 65 whose income is at or below 133 percent of the federal poverty level for the pertinent year will be eligible to receive Medicaid."

So based on the chart below if you make less than $20,628 ($15,510 x 133%) you should be eligible for Medicaid. Now whether you want to enter that pool is an entirely different discussion.

2013 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES
AND THE DISTRICT OF COLUMBIA
Persons in family/householdPoverty
1 $11,490
2 15,510
3 19,530
4 23,550
5 27,570
6 31,590
7 35,610
8 39,630

 

[tinlizzy]

Medicaid and CHIP Eligibility Levels | Medicaid.gov

The links in this link break down Medicaid income levels by state.