Couple of ACA newbie questions

[PaunchyPirate]

Quote:

Originally Posted by Carpediem Unfortunately when I answered the "why is your income lower" question, I said household expenses are going to be lower this year. Hopefully they'll realize that means lower withdrawals. But I'm still not sure what to submit by March. I'll look for that link you mentioned.

I would first try to just send a short letter. I would send it ASAP so it can be processed sooner in case they ask for more.

I would say “In 2021, our entire income will be derived from withdrawals from our Retirement savings. We have no other sources of income. Our estimated income is $60,000.”

If applicable, you could add “In previous years our income was higher because we were employed but we no longer are.” Or something comparable.

If they need a copy of your IRA statement, let them ask for it.

[pb4uski]

Quote:

Originally Posted by Carpediem ....Question: If my income is from TIRA withdrawals only, what would I be expected to send to them by March 5th? Proof of 2 months of withdrawals in 2021? I'm not clear on what type of confirmation they need.

"I am retired and my income in 2021 will be solely from withdrawals from a traditional IRA that are included in my tax return as pension income. This income is totally discretionary, but I intend to have $60,000 of pension income in 2021."

[RunningBum]

For a contrasting story, I found my letter from 2017. I wrote a much longer explanation, giving numbers from the 2015 return and how each was going to be lower or 0 in 2017. No CGs (in fact, a carryover loss from 2016), smaller Roth conversion, and larger HSA contribution (with the 55+ catch up). I'm sure I gave a lot more details than needed, but it's what I did.

Don't overthink it. Write something. If it's not enough, I assume they'll ask for more.

[Carpediem]

Quote:

Originally Posted by RunningBum Don't overthink it. Write something. If it's not enough, I assume they'll ask for more.

I think that's my problem - overthinking it. I feel like I'm trying to cheat the system or something but I'm not. I guess I will write a letter and get it uploaded soon so that as PaunchyPirate mentioned they can ask for more if needed.

Thanks again, everyone.

[Carpediem]

Here's a draft of my letter of explanation. Thoughts?

"My wife and I are now both retired - I retired from my full-time job in July 2019. In 2020, our income was derived from withdrawals from our Retirement savings, my wife's $200 per month pension, and from a rental property. However, our rental property was destroyed in 2020 by hurricane Sally. We have no other sources of income. Our estimated income for 2021 is $60,000.”

[pb4uski]

I would just add after the $60,000... "of pension income" and leave it at that.

Being $2,400 for your wife's pension and $57,600 of tIRA withdrawals... right?

[Carpediem]

Quote:

Originally Posted by pb4uski I would just add after the $60,000... "of pension income" and leave it at that. Being $2,400 for your wife's pension and $57,600 of tIRA withdrawals... right?

Right but do you think the term "pension income" will confuse them since it's technically not a company pension?

[pb4uski]

I dunno, but there's a good chance that they consider tIRA withdrawals as pension income since that is they line that they show up on on your tax return.

I guess you could repharase it as something like "We expect our 2021 tax return income will be solely $60,000 of pension income." You aren't saying it is a pension, just that it is pension income.

[SecondCor521]

Quote:

Originally Posted by Carpediem Right but do you think the term "pension income" will confuse them since it's technically not a company pension?

I really doubt they care or that they will follow up.

All they're trying to do is figure out if you've reasonably understood and estimated your income so that the AGI you calculate is reasonably likely to be in the ballpark when you reconcile on your taxes. They don't want to overpay subsidies for you, because they may not get them all repaid (there are repayment limitations at the bottom of Form 8962). And they want you to get the subsidies you're entitled to during the year to help you out.

Once they have assured themselves of that (which I am 99.9% sure that they will with your letter), they could care less to know any more information, details, backstory, or anything else about your income.

Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

[Carpediem]

Sounds good. IYO, is it okay to say what I did about the rental property?

It is currently gutted down to the studs and will not be rentable until mid-year. It's a short-term vacation rental condo. Of course, I don't plan on including any of that info in my letter.

[Carpediem]

Quote:

Originally Posted by SecondCor521 Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

Your reply makes me feel much better! And yeah, I'm really (overly) concerned about it since it's our first year using ACA. Thank you!

[cathy63]

Quote:

Originally Posted by Carpediem Sounds good. IYO, is it okay to say what I did about the rental property? It is currently gutted down to the studs and will not be rentable until mid-year. It's a short-term vacation rental condo. Of course, I don't plan on including any of that info in my letter.

You can say whatever you want to say in the letter. However, my recommendation is to assume that the person reading it has a high school diploma and no financial background and 1,000 other letters to read. If you can, avoid saying anything that might be confusing to that person.

"In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income." This is a complete description of your situation. It won't hurt you to explain about rental houses and hurricanes, but you really do not need to.

[RetiredAndLovingIt]

The first year, they came back in Feb or March and asked for proof, I sent them a letter saying I was no longer working and would be living off my retirement savings and listed dividend income and estimated Roth conversion amount. I got no response so I then sent them my estimated tax return for the previous year which I had not filed since TurboTax was not ready yet. My coveredca account continued to remind me I needed to submit the proof every time I checked so so I called them and sat in hold forever but once I got a live person she pushed a button on her end and I got an approval e-mail followed by a letter. They don't need much explanation and as long as the numbers come close they won't bug you the next year.

[Carpediem]

Quote:

Originally Posted by RetiredAndLovingIt The first year, they came back in Feb or March and asked for proof, I sent them a letter saying I was no longer working and would be living off my retirement savings and listed dividend income and estimated Roth conversion amount. I got no response so I then sent them my estimated tax return for the previous year which I had not filed since TurboTax was not ready yet. My coveredca account continued to remind me I needed to submit the proof every time I checked so so I called them and sat in hold forever but once I got a live person she pushed a button on her end and I got an approval e-mail followed by a letter. They don't need much explanation and as long as the numbers come close they won't bug you the next year.

In hindsight, do you think sending the estimated tax return was necessary?

[Carpediem]

Fyi, I uploaded my letter for income verification today. Below is what I sent them. Will I hear back from them on the status of the verification? Or do I need to keep checking the status online? Right now, it says my application is 'complete' but on the 'Eligibility & appeals' page, it says my eligibility is temporary until March 5 until I submit the verification information.

The following is an explanation of my 2021 annual income estimates:
As of 2020, my wife and I are both fully retired. In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income. In the past we've also received some income from a rental property but that property was destroyed in 2020 by hurricane Sally.

Please let me know if you have questions or need additional information.
Thank you.

[SecondCor521]

Quote:

Originally Posted by Carpediem Fyi, I uploaded my letter for income verification today. Below is what I sent them. Will I hear back from them on the status of the verification? Or do I need to keep checking the status online? Right now, it says my application is 'complete' but on the 'Eligibility & appeals' page, it says my eligibility is temporary until March 5 until I submit the verification information. The following is an explanation of my 2021 annual income estimates: As of 2020, my wife and I are both fully retired. In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income. In the past we've also received some income from a rental property but that property was destroyed in 2020 by hurricane Sally. Please let me know if you have questions or need additional information. Thank you.

It's been a few years since I went through what you're going through, but my recollection is that the state ACA people sent me a letter saying I was approved for a subsidy of $X per month.

I also had to send in the first month's (net of subsidy) premium to the insurance company.

Shortly after that point, I was able to set up autopay with the insurance company and it was smooth sailing from there.

Each year my AGI estimate and my insurance policy renew and I don't have to do anything unless I want to make a change.

[Carpediem]

Quote:

Originally Posted by SecondCor521 It's been a few years since I went through what you're going through, but my recollection is that the state ACA people sent me a letter saying I was approved for a subsidy of $X per month. I also had to send in the first month's (net of subsidy) premium to the insurance company. Shortly after that point, I was able to set up autopay with the insurance company and it was smooth sailing from there. Each year my AGI estimate and my insurance policy renew and I don't have to do anything unless I want to make a change.

Thanks, I hope mine is that easy!

[Carpediem]

Here's an update to my signing up for ACA for the first time:

As mentioned in my last post, I uploaded a letter of explanation for income verification on Dec 8th. Based on others' comments I wasn't expecting to hear anything for awhile and figured I'd have to call them about it. But yesterday I received the email below and it looks like I'm all set. Thank you all very much for helping me through this.

Quote:

Carpediem You recently submitted one or more documents to verify information in your application for coverage through the Health Insurance Marketplace. We reviewed what you sent. Your documents verify the following information in your application: What We Needed to Verify: Annual Household Income Applicant Name: Carpediem Status: HCGOV Green x icon VERIFIED You don’t need to take any further action to resolve the issue listed above.

[pb4uski]

Well done! Congratulations!

[SecondCor521]

Quote:

Originally Posted by SecondCor521 Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

Quote:

Originally Posted by Carpediem Here's an update to my signing up for ACA for the first time: As mentioned in my last post, I uploaded a letter of explanation for income verification on Dec 8th. Based on others' comments I wasn't expecting to hear anything for awhile and figured I'd have to call them about it. But yesterday I received the email below and it looks like I'm all set. Thank you all very much for helping me through this.

Congratulations, you just completed steps 4, 5, and 6.