Possible legislation re: ACA cliff

[Fermion]

Quote:

Originally Posted by SecondCor521 Well it's not a penalty, but if your Form 8962 shows that you received too much APTC, then you are entitled to get back your repayment based on the new tax law. I think this will be the amount on line 29 of Form 8962. The details of how and when you'll get the money back are still being worked out by the IRS. They're asking you to wait and not do anything yet: https://www.irs.gov/newsroom/irs-sta...an-act-of-2021

It is all such a mess now and confusing. I think it would be a lot easier just to say nobody has to pay tax in 2020, call it a muligan.

[Looking4Ward]

Quote:

Originally Posted by SecondCor521 Well it's not a penalty, but if your Form 8962 shows that you received too much APTC, then you are entitled to get back your repayment based on the new tax law. I think this will be the amount on line 29 of Form 8962. The details of how and when you'll get the money back are still being worked out by the IRS. They're asking you to wait and not do anything yet: https://www.irs.gov/newsroom/irs-sta...an-act-of-2021

Thanks! That's great!

And you are correct - not a penalty, but a repayment that is capped at $2700.

[teejayevans]

Quote:

Originally Posted by Fermion It is all such a mess now and confusing. I think it would be a lot easier just to say nobody has to pay tax in 2020, call it a muligan.

I like the way you think.[emoji2]

[FANOFJESUS]

My guess is that the government will extend the tax deadline to June 15th.

[explanade]

What is the 8.5% cap, if your premiums end up over 8.5% of AGI, you get some rebate at the end of the year?

Or would it include out of pocket payments you made towards your deductible as well?

[scrabbler1]

Quote:

Originally Posted by SecondCor521 Well it's not a penalty, but if your Form 8962 shows that you received too much APTC, then you are entitled to get back your repayment based on the new tax law. I think this will be the amount on line 29 of Form 8962. The details of how and when you'll get the money back are still being worked out by the IRS. They're asking you to wait and not do anything yet: https://www.irs.gov/newsroom/irs-sta...an-act-of-2021

Speaking of Form 8962, I was trying to figure out how that form will change for 2021, compared to 2020.

form: https://www.irs.gov/pub/irs-pdf/f8962.pdf
instructions: https://www.irs.gov/pub/irs-pdf/i8962.pdf

Line 6 determines eligibility based on % of FPL. That test should disappear.

Line 7 gets a % of MAGI from a chart (based on where you live) in the instructions. I expect that chart to change based on the newer, lower percentages in the new law. For example, 200 (% of FPL) would be 0.0200 instead of something in the 0.0640 range. Then 250 would be 0.0400 instead of something in the 0.0820 range. I assume straight-line interpolation would cover the percentages in between (which is where my 2021 MAGI should be).

The rest of the form through Line 29 (Part III) should operate the same as before. I don't know about later sections because they are not relevant to me.

Could it be this simple?

[RunningBum]

Quote:

Originally Posted by explanade What is the 8.5% cap, if your premiums end up over 8.5% of AGI, you get some rebate at the end of the year? Or would it include out of pocket payments you made towards your deductible as well?

No, if 8.5% of your AGI is less then the SLCSP, you'll get a subsidy for the difference. If you are under 400%FPL, a lower % than 8.5% is used. Other medical payments you made have nothing to do with this.

[explanade]

Quote:

Originally Posted by RunningBum No, if 8.5% of your AGI is less then the SLCSP, you'll get a subsidy for the difference. If you are under 400%FPL, a lower % than 8.5% is used. Other medical payments you made have nothing to do with this.

What is SLCSP?

And when does it get determined if your premiums are over 8.5% of whatever measure they're using?

When you file taxes?

So for instance when you file your 2021 taxes and you ended up paying over 8.5% of your 2021 AGI, they would give you a tax credit or a deduction to claim on your return?

[erkevin]

SLCSP second lowest cost silver plan
You apply at healthcare.gov and estimate your income for the year. The govt uses that for the 8.5%. At tax time, your true income is known. If it was lower than your estimate, you get a tax credit. If higher, additional tax is owed.

[explanade]

Hmm, when can you apply for this?

So does it matter if you pay for the Bronze plan?

As long as the Silver plan for your market is above 8.5%, you'd get a credit?

[EastWest Gal]

Quote:

Originally Posted by Fermion It is all such a mess now and confusing. I think it would be a lot easier just to say nobody has to pay tax in 2020, call it a muligan.

Forgive me, but I have felt that way (a mess and confusing) since my first 1040EZ return in the 1970s.

But I do think we should pay tax.

[erkevin]

Changes for the new law will be available on the healthcare.gov website beginning April 1. That is when you would apply. Normally, applications have to be done in the previous years, but COVID and the new law is allowing people to enroll this spring. Explanade- if the silver plan is above 8.5% of your MAGI, you would receive a subsidy for the difference.

[SecondCor521]

Quote:

Originally Posted by scrabbler1 Speaking of Form 8962, I was trying to figure out how that form will change for 2021, compared to 2020. form: https://www.irs.gov/pub/irs-pdf/f8962.pdf instructions: https://www.irs.gov/pub/irs-pdf/i8962.pdf Line 6 determines eligibility based on % of FPL. That test should disappear. Line 7 gets a % of MAGI from a chart (based on where you live) in the instructions. I expect that chart to change based on the newer, lower percentages in the new law. For example, 200 (% of FPL) would be 0.0200 instead of something in the 0.0640 range. Then 250 would be 0.0400 instead of something in the 0.0820 range. I assume straight-line interpolation would cover the percentages in between (which is where my 2021 MAGI should be). The rest of the form through Line 29 (Part III) should operate the same as before. I don't know about later sections because they are not relevant to me. Could it be this simple?

Sounds about right. It is straight line interpolation, BTW. Or at least it was before, and all that has changed is the endpoints of the line segments. (Well, and their slope, and "elevation", of course.)

[sengsational]

Quote:

Originally Posted by niven I can push up to 463% FPL without reducing my subsidy below what pays for the bronze plan.

I didn't put that fine of a point on it, but I think you're on to something. I'll find out in 8 months when the tax software for 2021 comes out and I can iterate my conversion amount.

[meridiver]

I buy my insurance through the California state exchange, Covered CA. Has anyone heard whether they are going to follow the same timeline as Healthcare.gov and open up for recalculation of subsidies on 4/1/21?

By my calculations, my premium is going to drop from $900/mo to about $150/mo, so I'd much rather get my premium reduced ASAP instead of paying the higher amount all year, then applying for a rebate next year.

[explanade]

Quote:

Originally Posted by meridiver I buy my insurance through the California state exchange, Covered CA. Has anyone heard whether they are going to follow the same timeline as Healthcare.gov and open up for recalculation of subsidies on 4/1/21? By my calculations, my premium is going to drop from $900/mo to about $150/mo, so I'd much rather get my premium reduced ASAP instead of paying the higher amount all year, then applying for a rebate next year.

How is it dropping that much?

[meridiver]

According to the KFF subsidy calculator link, the SLSCP in my area is $2,100/mo. I'm currently enrolled in the lowest cost bronze plan in my area, which has a premium of $1400/mo (I "only" pay $900/mo thanks to a state health care subsidy).

When I apply the subsidy I'll be eligible for to my Bronze plan, it reduces my monthly cost to around $150/mo. If I instead had a Silver plan, my premiums would be around $700/mo.

The numbers are all a little cuckoo crazy and I'm not counting on anything until I actually get a quote from Covered CA.

[cathy63]

Quote:

Originally Posted by meridiver I buy my insurance through the California state exchange, Covered CA. Has anyone heard whether they are going to follow the same timeline as Healthcare.gov and open up for recalculation of subsidies on 4/1/21? By my calculations, my premium is going to drop from $900/mo to about $150/mo, so I'd much rather get my premium reduced ASAP instead of paying the higher amount all year, then applying for a rebate next year.

They haven't said yet. The marketplace is still open for enrollment until May 15 though, so you can always use the Shop & Compare tool in April to see if it shows the new subsidies.

[Freedom56]

We bought our Bronze Circle EPO through OSCAR directly off-exchange since we did not qualify for subsidies. We have been buying insurance directly since retirement in 2015 since we saw no point previously in involving a third party exchange. We wanted access to UCLA and Cedars-Sinai health care systems and only Blue Shield of CA offers a PPO that covers those two systems on Covered CA. The bronze PPO through Blue Shield would cost $1497 per month for myself and my wife. Our current OSCAR Circle EPO costs us $1304 per month. So I contacted Covered CA to find out what the second lowest cost silver plan was, and the representative did not have an answer. I did find that the second lowest cost silver HMO would cost $1356 per month for both myself and my wife. However nobody at Covered CA could tell me if that plan was the basis for subsidies. The silver PPO on the exchange is $1958 per month. The only thing that is certain (from the IRS rules) is that you have to buy your insurance from the exchanges in your state to qualify for subsidies. I contacted OSCAR and they appeared to be caught off-guard by this change. The representative from OSCAR stated that many of their customers that were purchasing off-exchange have now started to switch. Maybe the information will flow down in a few months.

[cathy63]

Quote:

Originally Posted by Freedom56 We bought our Bronze Circle EPO through OSCAR directly off-exchange since we did not qualify for subsidies. We have been buying insurance directly since retirement in 2015 since we saw no point previously in involving a third party exchange. We wanted access to UCLA and Cedars-Sinai health care systems and only Blue Shield of CA offers a PPO that covers those two systems on Covered CA. The bronze PPO through Blue Shield would cost $1497 per month for myself and my wife. Our current OSCAR Circle EPO costs us $1304 per month. So I contacted Covered CA to find out what the second lowest cost silver plan was, and the representative did not have an answer. I did find that the second lowest cost silver HMO would cost $1356 per month for both myself and my wife. However nobody at Covered CA could tell me if that plan was the basis for subsidies. The silver PPO on the exchange is $1958 per month. The only thing that is certain (from the IRS rules) is that you have to buy your insurance from the exchanges in your state to qualify for subsidies. I contacted OSCAR and they appeared to be caught off-guard by this change. The representative from OSCAR stated that many of their customers that were purchasing off-exchange have now started to switch. Maybe the information will flow down in a few months.

This page has instructions for finding your 2nd lowest cost Silver Plan on Covered CA: https://www.coveredca.com/learning-c...ility-penalty/

People who don't buy insurance need that info for filling out CA tax form 3853, so it's readily available. The only tricky part is to make sure you enter your ages as of January 1, not the current date (in case you already had a birthday this year). It doesn't matter whether the 2nd lowest Silver plan is an HMO or PPO or if it includes your preferred providers -- that's the one the subsidy is based on.