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Leaving jobs - Any ACA advice?
Old 11-19-2021, 10:15 AM   #1
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Leaving jobs - Any ACA advice?

I left my job a few months ago. My higher earning wife is leaving hers at the end of the year. FIRE away! We're planning on going on a California Covered silver plan - which looks great. Assuming neither of us draws a paycheck, our taxable income will drop from $125k+ to about $30k in taxable dividends.

Has anyone had experience or problems with that? I mean, do we have to justify to anyone in the system that our incomes just mostly vanished?
I am sure this has been covered before but was hoping to get the latest stories / advice from people who may have been in a similar situation.

I joined this site 15+ years ago and the advice I got here was invaluable, sane, and way ahead of its time. Thank you as always to the community, particularly the long-timers who created such a great resource.
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Old 11-19-2021, 10:36 AM   #2
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Originally Posted by tricky88 View Post
I left my job a few months ago. My higher earning wife is leaving hers at the end of the year. FIRE away! We're planning on going on a California Covered silver plan - which looks great. Assuming neither of us draws a paycheck, our taxable income will drop from $125k+ to about $30k in taxable dividends.

Has anyone had experience or problems with that? I mean, do we have to justify to anyone in the system that our incomes just mostly vanished?
I am sure this has been covered before but was hoping to get the latest stories / advice from people who may have been in a similar situation.

I joined this site 15+ years ago and the advice I got here was invaluable, sane, and way ahead of its time. Thank you as always to the community, particularly the long-timers who created such a great resource.
It is very possible (perhaps even likely) that you will have to "justify" your estimated income. Especially if it gets you a subsidy, which I'm sure you must be if your income will be $30k. However, it's a formality. You may need to provide a letter indicating that you will not have any earned income next year and that your income will be derived entirely from investment income. They don't have much choice but to accept that. You will be told how to do this during the signup and approval process. You will also be asked to let them have access to your tax returns. At least in PA (where I live) and in states that use the federal exchange this is the case. You don't have to let them have tax return access, but you may have to justify your income in future years as well if you don't.

If you under/over estimate your income during ACA signup, the subsidy will be reconciled at federal tax time and you will either get more subsidy or pay back some subsidy. So they get the money one way or the other if you estimate low.

It should be that easy. There are occasionally people who post about having to supply various documents. But if they don't exist, they don't exist.

Welcome to ACA. 2022 will be the 4th year that I have been doing what you are proposing.

Edited to add: I didn't have to submit any documentation about my estimated income until this year (4th year). It seems to be hit or miss. PA has its own exchange now (and did last year too).
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Old 11-19-2021, 10:40 AM   #3
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When we RE'd in 2016 our financials were similar. We even had an extra boost of capital gains as we sold some taxable stuff to take the income before the ACA.

The first year we weren't really sure what the income would really be, so I estimated a hair under the 4xPL amount of about $64k for two. I wasn't asked for any docs. But either way, if they had said, nah mate, it would balance at tax time. After the first year it's nbd.
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Old 11-19-2021, 11:20 AM   #4
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We had similar numbers when we retired 6 years ago. With an estimated income of only $30k they may make you sign up for MediCal (Medicaid), which you donít want.

I estimate our income at $75k for our family of 3, which safely puts us out of MediCal range during the sign up process and as long as I donít change it, I get no questions. One year I tried decreasing our income estimate and was asked to verify, so I changed it back.

We do Roth conversions in late December to get us somewhere between $55-65k for tax and ACA reconciliation purposes. Itís all good. No problems.

By the way, the first 2 years of retirement we selected silver plans because thatís what we had from Megacorp. We did move from a PPO to Kaiser, though. Eventually, we woke up and switched to a Bronze HDHP. We are generally healthy so even though we pay 100% of our costs (~$5k for 2021) itís still cheaper than the silver plan premiums. We pay an obscenely low premium each month and usually get ALL of it refunded on our tax return.
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Old 11-19-2021, 11:23 AM   #5
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Make sure you declare enough income so they don't put you on Medi-Cal, many here are fine with that and say the coverage is exactly the same. That's what they tried to do with me the first year when i had no idea what I was doing. A quick small Roth Conversion got me over the top. I just personally don't want California coming after my estate when I pass to get back some of that MediCal money.
I also went from over 100K when working to a very low taxable income but I've never been happier.
If interested that income will offer you some other incentives. The gas and electric company CARE program that will give you a 20% reduction on your monthly bills.
They also both offer an Energy Assistance Program which will replace your older heating and a/c system (10 years or older I think) and water heater. they will give you a swamp cooler (they really do work well in California since we're so dry) and window a/c if you want and all installed for free. Great program to save you on your energy bills including sealing (weatherizing) your house which really helps. Don't feel bad using this program, we've all been paying for it via a fee on our bills for many years. I also got smoke/ carbon monoxide alarms installed in every room in my house w/10 year batteries and some other stuff I can't think of right now. I did the gas company one in 2019 and I'm now approved for the HVAC one with SCE so they should install within the next couple of months.
Not sure where you live in our state but here is the Los Angeles area links to check them out.
https://www.swgas.com/en/ca-special-programs

https://www.sce.com/residential/assi...saving-program

https://www.sce.com/residential/assistance/care-fera
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Old 11-19-2021, 11:36 AM   #6
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Originally Posted by PaunchyPirate View Post
It is very possible (perhaps even likely) that you will have to "justify" your estimated income. Especially if it gets you a subsidy, which I'm sure you must be if your income will be $30k. However, it's a formality. You may need to provide a letter indicating that you will not have any earned income next year and that your income will be derived entirely from investment income. They don't have much choice but to accept that. You will be told how to do this during the signup and approval process. You will also be asked to let them have access to your tax returns. At least in PA (where I live) and in states that use the federal exchange this is the case. You don't have to let them have tax return access, but you may have to justify your income in future years as well if you don't.

If you under/over estimate your income during ACA signup, the subsidy will be reconciled at federal tax time and you will either get more subsidy or pay back some subsidy. So they get the money one way or the other if you estimate low.

It should be that easy. There are occasionally people who post about having to supply various documents. But if they don't exist, they don't exist.

Welcome to ACA. 2022 will be the 4th year that I have been doing what you are proposing.

Edited to add: I didn't have to submit any documentation about my estimated income until this year (4th year). It seems to be hit or miss. PA has its own exchange now (and did last year too).
I have not experienced "justification" of income on healthcare.gov plans, when applying or selecting coverage. The justification comes in the form of filing one's tax return. Tax credits need to be repaid, or not, based on the tax return.
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Old 11-20-2021, 09:47 AM   #7
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I have not experienced "justification" of income on healthcare.gov plans, when applying or selecting coverage. The justification comes in the form of filing one's tax return. Tax credits need to be repaid, or not, based on the tax return.
I was asked to provide income documentation when I first applied for ACA coverage in 2018. I assumed it was because of the precipitous drop in income from our salaried income in 2017 and our new Magi based on a pension and small Roth conversions. We were asked again in 2018 and I resent a letter from my employer that indicated I had severed employment and was receiving a pension. Since then I've had no further requests for documentation and our "income" has basically varied very little as we've always stayed just below the "cliff". We did go slightly over this year since the "cliff" was put on hold for this year and next.
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Old 11-20-2021, 09:56 AM   #8
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As others have said, when you file your taxes, that is the point of reconciliation.
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Old 11-20-2021, 10:03 AM   #9
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Make sure you declare enough income so they don't put you on Medi-Cal, many here are fine with that and say the coverage is exactly the same. That's what they tried to do with me the first year when i had no idea what I was doing. A quick small Roth Conversion got me over the top. I just personally don't want California coming after my estate when I pass to get back some of that MediCal money.
California doesn't do Estate Recovery for MAGI Medicaid, only nursing home expenses.

https://www.dhcs.ca.gov/services/Doc..._January_1.pdf

To the OP, I would check the Provider lists for the available plans to see if your doctors are in those plans before totally ruling out Medicaid.
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Old 11-20-2021, 03:01 PM   #10
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I ended up filling out the Covered California affidavit which is provided on their website for you to download and sign. Since my prior year W2 and income tax returns didnít reflect my much lower retired income, in their comments section, I explained that my earnings were now all dividends and capital gains from my savings. That affidavit and explanation was accepted for enrollment into Covered California and premium subsidies.
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Old 11-22-2021, 12:36 AM   #11
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We had similar numbers when we retired 6 years ago. With an estimated income of only $30k they may make you sign up for MediCal (Medicaid), which you donít want.
.
Can you clarify please? We (similar boat as OP) are going to be near the bottom of the range (around $26k for a couple) and my thought was this clears us out of the Medical territoryÖ How could they ďmake ď you sign up for Medical? Honest question, as I was thinking no problem but your post makes me hesitate.
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Old 11-22-2021, 09:44 AM   #12
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I ended up filling out the Covered California affidavit which is provided on their website for you to download and sign. Since my prior year W2 and income tax returns didnít reflect my much lower retired income, in their comments section, I explained that my earnings were now all dividends and capital gains from my savings. That affidavit and explanation was accepted for enrollment into Covered California and premium subsidies.

We filled it all out this weekend, and we did the same thing - explained all future income would be from investment dividends. Thanks again to everyone for their advice and input. I'll post again later to let you know if we experienced any roadblocks.
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Old 11-22-2021, 10:06 AM   #13
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Can you clarify please? We (similar boat as OP) are going to be near the bottom of the range (around $26k for a couple) and my thought was this clears us out of the Medical territoryÖ How could they ďmake ď you sign up for Medical? Honest question, as I was thinking no problem but your post makes me hesitate.
Here is the FPL chart for 2022.
You need to be above 138% of the FPL which for 2 people is $24040. When you shop and compare in the Covered California website, it will tell you what program you are eligible for, Medi-Cal or Covered California depending on your income.

https://www.coveredca.com/pdfs/FPL-chart.pdf
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Old 11-22-2021, 10:42 AM   #14
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Can you clarify please? .

@RetiredandLovingIt provided good info. If you donít have minor kids on your plan you can skip the next paragraph.

Iíll just add that in our situation we were also covering our teen son. The Medi-Cal threshold for minors is higher, so CoveredCA would say the adults were eligible for ACA plans at our estimated low income, but our son would only be eligible for Medi-Cal plans. As a result I always estimated high enough to get all 3 of us on the same plan.
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Old 11-22-2021, 12:50 PM   #15
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@RetiredandLovingIt provided good info. If you donít have minor kids on your plan you can skip the next paragraph.

Iíll just add that in our situation we were also covering our teen son. The Medi-Cal threshold for minors is higher, so CoveredCA would say the adults were eligible for ACA plans at our estimated low income, but our son would only be eligible for Medi-Cal plans. As a result I always estimated high enough to get all 3 of us on the same plan.
We have been on Covered California for 3 years. We always make sure we are above the income level, so not get into Medi-cal. The only proof is the affidavit document that we upload.

Sorry for a side-track. I have been looking into Medi-cal for a friend since he won't have much income to qualify for ACA. Looks like one way to get it, is to go in Covered California, and claim no income, so it will send you to Medi-cal.

I see that Kaiser accepts Medi-cal, so I wonder if Kaiser treats Medi-cal patients the same as their Browse/Silver plan patients. In other words, what is the experience with those who actually uses Medi-cal with Kaeser?
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Old 11-22-2021, 02:18 PM   #16
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Just wanted to add that the CoveredCA ďshop and compareĒ tool is really easy to use and doesnít require you to login. I would suggest you play with this, entering different income levels to see whatís available in your zip code and how the premiums and plans change at different incomes.

https://apply.coveredca.com/lw-shopandcompare/
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Old 11-22-2021, 02:27 PM   #17
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We have been on Covered California for 3 years. We always make sure we are above the income level, so not get into Medi-cal. The only proof is the affidavit document that we upload.

Sorry for a side-track. I have been looking into Medi-cal for a friend since he won't have much income to qualify for ACA. Looks like one way to get it, is to go in Covered California, and claim no income, so it will send you to Medi-cal.

I see that Kaiser accepts Medi-cal, so I wonder if Kaiser treats Medi-cal patients the same as their Browse/Silver plan patients. In other words, what is the experience with those who actually uses Medi-cal with Kaeser?
From 3rd party experience (family member), Kaiser treats Medi-cal patients the same as non-Medi-cal patients.
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Old 11-22-2021, 04:33 PM   #18
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From 3rd party experience (family member), Kaiser treats Medi-cal patients the same as non-Medi-cal patients.
That is very reassuring. Thanks for the feedback.
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Old 11-26-2021, 01:38 PM   #19
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I just read this post on a local Facebook page regarding someone wanting to get their Medi-Cal through Kaiser. I have no way of telling if it's true or not but others did agree it's not that simple. In this case they had been assigned to another medical group and wanted to be moved over to Kaiser.
Be sure to do your due diligence as to how Medi-Cal works in your area.

Just an FYI - Kaiser is not open to Medi-Cal enrollment unless you meet certain criteria. Either an active Kaiser member within the last 6 months or an immediate family member (for your daughter this would be her parents or siblings residing in same household) already a Kaiser member.
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Old 11-26-2021, 03:55 PM   #20
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The first year you apply for the ACA with a subsidy, you have to provide some documentation of income. It is not a problem with previous income just vanishing, as the ACA is designed for people who are no longer on company health insurance.

In our case, after the ARP passed, state system charged us less for premiums, which was too low. I tried and failed to adjust our premium, so I just added it to our quarterly tax payment. We decided to sell some additional equities from our taxable and do some much needed work on the house.

Another thing to consider regarding income, is that you are estimating $30K dividend income as your only income. If you have any taxable equities in your portfolio, rebalancing will generate some capital gains. Will you be selling any funds to cover expenses? That will also generate some capital gains income that will show up in your MAGI.

BTW, 138% of the FPL in California for 2022 is $24,040, so you should be able to stay off of Medi-Cal, regardless.
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