ACA! Do I understand this correctly?

[monte1022]

We want to exit 12/31/22. This will require that we use the ACA for insurance. My understanding is that we must estimate our income for 2023 to the best of our ability. Since we will have zero w2 income for tax year 2023 and beyond this number will be a combination of interest, cap gains, etc. For my state, we must be above the 138% level to stay off medicaid. To obtain the needed 138% income level we will add the above mentioned income sources AND make a Roth conversion, if needed, to get us over the top. Rinse and repeat. Yes?

 

[teejayevans]

You don’t have to be on medicaid, just always estimate your income above the limit. The estimate is not binding. Just like medicare and social security, you have to sign up, it’s just now it will be done automatically. Expect a tax refund every year.

 

[Dtail]

We want to exit 12/31/22. This will require that we use the ACA for insurance. My understanding is that we must estimate our income for 2023 to the best of our ability. Since we will have zero w2 income for tax year 2023 and beyond this number will be a combination of interest, cap gains, etc. For my state, we must be above the 138% level to stay off medicaid. To obtain the needed 138% income level we will add the above mentioned income sources AND make a Roth conversion, if needed, to get us over the top. Rinse and repeat. Yes?

You got the gist of it.
See the below attached for a summary of the calculation.

https://laborcenter.berkeley.edu/pdf/2019/magi.pdf

 

[MichealKnight]

Good question

We want to exit 12/31/22. This will require that we use the ACA for insurance. My understanding is that we must estimate our income for 2023 to the best of our ability. Since we will have zero w2 income for tax year 2023 and beyond this number will be a combination of interest, cap gains, etc. For my state, we must be above the 138% level to stay off medicaid. To obtain the needed 138% income level we will add the above mentioned income sources AND make a Roth conversion, if needed, to get us over the top. Rinse and repeat. Yes?

This is my first year on ACA - but my income for 2020 was too high for subsidies. Next year I can manage income and one of my important objectives is to max-out ACA subsidies. One thing puzzles me:

What if my income is too low?

Let's say I estimate an income of $90,000 -- great, I'd get a nice $1000 subsidy for family of 4.

But let's say I didn't sell any stocks, and my rental properties were depreciated....and at end of the year my income, as stated to the IRS are well UNDER the $90,000? Obviously they can't go back in time, and put me on medicaid for that year....but I wonder what the repercussions are.

 

[Aerides]

But let's say I didn't sell any stocks, and my rental properties were depreciated....and at end of the year my income, as stated to the IRS are well UNDER the $90,000? Obviously they can't go back in time, and put me on medicaid for that year....but I wonder what the repercussions are.

You'll be fine as long as it's not a habit. If you basically overestimated income, and ended up in a year where your income was too low to have qualified for the exchange-ACA in your state, there is no penalty.

 

[monte1022]

Thanks to all for the responses. I was on another board and was lead to believe that I was wrong about how the ACA/income/subsidies work.

 

[Dtail]

You'll be fine as long as it's not a habit. If you basically overestimated income, and ended up in a year where your income was too low to have qualified for the exchange-ACA in your state, there is no penalty.

I wonder if they pay just as much attention to overestimates of income vs. underestimates of income, whereby one is receiving certain silver plan benefits which don't get reconciled at tax time.

 

[pb4uski]

We want to exit 12/31/22. This will require that we use the ACA for insurance. My understanding is that we must estimate our income for 2023 to the best of our ability. Since we will have zero w2 income for tax year 2023 and beyond this number will be a combination of interest, cap gains, etc. For my state, we must be above the 138% level to stay off medicaid. To obtain the needed 138% income level we will add the above mentioned income sources AND make a Roth conversion, if needed, to get us over the top. Rinse and repeat. Yes?

Yes. You can pretty much manage your income to a desired level by doing Roth conversions. I do a sizeable conversion early in the year to get the money into tax-free earlier rather than later but leave enough leeway for surprise income and then true it up to my desired target in late December.

 

[cathy63]

This is my first year on ACA - but my income for 2020 was too high for subsidies. Next year I can manage income and one of my important objectives is to max-out ACA subsidies. One thing puzzles me:

What if my income is too low?

Let's say I estimate an income of $90,000 -- great, I'd get a nice $1000 subsidy for family of 4.

But let's say I didn't sell any stocks, and my rental properties were depreciated....and at end of the year my income, as stated to the IRS are well UNDER the $90,000? Obviously they can't go back in time, and put me on medicaid for that year....but I wonder what the repercussions are.

They can challenge your income estimates in subsequent years. When I lowered our income estimates for Covered CA a couple of years ago, I got a phone call from them and had to explain and justify the new numbers. They accepted what I said and just warned me that we could have a huge tax bill if we underestimated our income and had to pay back the subsidies, but they could have required additional documentation or even denied us the advance subsidy if they weren't satisfied with our answers. I imagine they'd have prodded even harder if there were a question of under/over the MediCal limits.

I haven't seen a similar story from anyone else here, though I've met several other people in CA who've received these calls, so the amount of enforcement seems to vary from state to state.

 

[calmloki]

So I'm the only one that thought this thread was about the "superfood" acai berry?

maybe the glasses need cleaning

 

[teejayevans]

They can challenge your income estimates in subsequent years. When I lowered our income estimates for Covered CA a couple of years ago, I got a phone call from them and had to explain and justify the new numbers. They accepted what I said and just warned me that we could have a huge tax bill if we underestimated our income and had to pay back the subsidies, but they could have required additional documentation or even denied us the advance subsidy if they weren't satisfied with our answers .

They may care if you under estimate your income, but I bet if you increased your income estimate you would have never heard from them.

 

[jim584672]

Medicaid is like Platinum plus coverage, so trying to avoid it makes zero sense to me.

 

[Dtail]

Medicaid is like Platinum plus coverage, so trying to avoid it makes zero sense to me.

In my area, there are many doctors who will not accept Medicaid.

 

[jim584672]

In my area, there are many doctors who will not accept Medicaid.

Most states have it run by Managed Care Orgs with defined provider networks. Fee for Service is much less common. If the Provider is in network it shouldn't be a problem.

 

[pb4uski]

Medicaid is like Platinum plus coverage, so trying to avoid it makes zero sense to me.

In my area, there are many doctors who will not accept Medicaid.

+1 with Dtail... in many parts of the country many providers do not accept Medaid patients... in part because the Medicaid reimbursement rates are so low and I suspect also because of the billing hassles.

According to the link below:

... only 71% of providers accept Medicaid. That's compared to 85% who take Medicare and 90% that accept private insurance.

Physicians in general/family practice were less likely to accept Medicaid patients (68%) than Medicare (90%) or private insurance (91%). ...

https://www.healthcaredive.com/news...-accept-medicaid-than-other-insurance/546941/

 

[jim584672]

+1 with Dtail... in many parts of the country many providers do not accept Medaid patients... in part because the Medicaid reimbursement rates are so low and I suspect also because of the billing hassles.

According to the link below:


https://www.healthcaredive.com/news...-accept-medicaid-than-other-insurance/546941/

That is why you look at the Provider networks of the plans. The same thing with ACA plans with Provider networks. All my doctors from work are in many of the MCO plans.

 

[pb4uski]

So we agree that Medicaid has narrower provider networks... or as Dtail said:

... there are many doctors who will not accept Medicaid

In many areas Medicaid is second class coverage. In our area we have a dental practice that has was purchased and the new dentist hasn't been providing the same level of quality of services and the practice's private pay patients are going elsewhere and the practice is taking on a lot of Medicaid paitents to fill the gap.

 

[jim584672]

As far as quality the places I have been to have tons of different plans accepted. It isn't like they say "Wait, lower care because plan X". Can't speak to dental care since I don't have any experience with it.

 

[pb4uski]

No, I agree that for those places that accept Medicaid that they probably don't treat patients very differently... but if you are on Medicaid you are less likely to get the A team than if you have private insurance because those A team practices less likely to accept Medicaid.

But we can agree to disagree... and good luck to you with Medicaid... in some parts of the country it is good coverage.

 

[jim584672]

My state (NY) spends more on things like Medicaid, so that may be a reason.

 

[Aerides]

I'm always skeptical of these "medicaid not good" types of comments, because most of us have no first hand experience, and all healthcare varies wildly in the US, from person to person, city county state, provider and plan. I wouldn't know how to know if I had the A team or not.

This quote from the article begs for more info also:

"MACPAC found that only 71% of providers accept Medicaid. That's compared to 85% who take Medicare and 90% that accept private insurance."

Darn it doesn't 90 sound better than 71! Yeah! But wait, that 90 is most definitely not ALL private insurance. I can absolutely tell you that nowhere near 90% of providers take my Florida Blue plan. Do they take some insurances? Sure, but almost no providers take all insurance. Mine might have 60, your Aetna plan might get 80, the other dude's AmBetter gets 70... etc.

I think anyone would be glad to find a plan that 71% of providers they want take.

But anyway, no one gets forced onto Medicaid unless they don't estimate income at least 138%. It's not like going over the cap where you are automatically hit with a tax penalty. Going under the cap is far less worrisome.

 

[ncbill]

Here at least for dental on Medicaid you go to the charity clinic.

Staffed by retired or semi-retired dentists, of course.

But it's the only game in town for children or adults on Medicaid.

 

[monte1022]

Medicaid would be preferable to paying full freight on ACA policies. However, we have lots of pretax so it would make little sense to keep income so low as to qualify for medicaid. In my state, we are looking at $517/mo (2 people) for the best silver plan with $200 deductible and max out-of-pocket $2800 IF we just hop over the 138% level by 1 or 2k. Every few thousand more and the deductible and max o-o-p increases fairly quickly. We can get much cheaper plans, but they do not have national provider networks. I would be somewhat reluctant to travel beyond the coverage area for fear of getting cleaned out by a sudden illness.

 

[GTFan]

Yep, the sweet spot for CSR'd Silver plans is to keep MAGI below 200% FPL. Here in the ATL we do this and get decent Ambetter insurance for $0/mo. (after the ACA subsidy boost this year) with very low max OOP, like $1500 max PP. Free PCP visits, $10 specialists, free generic drugs etc. And they have the largest provider network in the area in the plan.

We've had them for a number of years now with no real complaints.