ACA Subsidy Eligibility Notice--how to prove income

[RunningBum]

I'm sure this has been asked and answered, but I spent at least 10 minutes searching and browsing threads and didn't find anything. Point me to a thread if that's convenient.

I'm ER'd, so no paycheck, other regular income, SS, pension or RMDs. My income is all dividends, cap gains, and Roth conversions. In 2015 my income was well above 400%FPL due to high capital gains and Roth conversions. I didn't try to claim a subsidy for 2016, but now that I've done some tax loss harvesting I've decided to limit my Roth conversions to be able to get a subsidy. I understand that I will get the subsidy back with my refund when I file 2016 taxes. That's fine.

For 2017, I listed my income as being just under the 400% FPL level. I applied on Nov 9. I just got a notice that they need proof of that income so that I can get the subsidy all year long, and that failure to do so could result in no subsidy, or even lose coverage. I doubt the latter would happen but don't like to risk health care coverage. I have 90 days to send them doc. Examples of doc that would apply to me are a tax return and/or 1099s.

The problem is, I don't know that I'll get any of that stuff by early February to comply. Can I do a "close enough" run of my 2016 1040 then and send them that? I can probably cobble that together from Vanguard info available online even if I don't have the 1099s yet, but I doubt they'd be exact since I don't know that I'd have qualified vs unqualified dividend breakdown on the total international index, for example.

I now know it would've been easier if I'd have waited a month to apply to be much more likely to have my 2016 taxes done by the end of 90 days, but I didn't wait and this is the situation I have to deal with.

How have others dealt with their first year of dropping their income to a subsidy level, and answering the "Eligibility Notice"?

 

[MBSC]

You may be interested in these threads.
http://www.early-retirement.org/for...age-inconsistency-big-drop-in-magi-74843.html

http://www.early-retirement.org/forums/f38/aca-additional-info-required-80417.html

http://www.early-retirement.org/forums/f28/healthcare-gov-and-inconsistencies-81526.html

 

[RunningBum]

Thanks, MBSC! Those threads have the kind of information and actual experiences I was looking for. I may start with my 2015 return along with a letter explaining that I won't have cap gains and will limit Roth conversions, or I may wait and give them an early draft of my 2016 return. The key thing I've taken from this is they seem to accept letters of explanation along with backing data and don't just require official forms only.

 

[HadEnuff]

In NY State, the website asks you to list your projected sources of income for 2017, and if largely different from 2016 (my case), it asks you to explain why your income will be so much less. In my case I explained, "retired", or "stopped working".

When I contacted my insurance agent from whom I bought my medical insurance in 2016, and told her I would be buying insurance for 2017 through the ACA, she told me her company no longer handled ACA policies, and she referred me the local "navigator" for the exchange. I don't know if "navigator" is just a NY State term, but when I had my appointment with him, he basically just got on the website and walked me through what I could have done myself, which was create the account on the NY State website for ACA Exchange policies. It was in that process that I was asked about income etc.

I was able to apply my "projected" monthly subsidy to the premium, and I get billed only for the balance. If I screw up, and have a higher MAGI than I project, I am going to owe somebody some money.

 

[jcretire77]

We are going through a similar process. Newly retired, 2017 AGI will be very low so we applied and were approved for the ACA. There was a note asking for 2017 income information so we called to ask what that meant. The two people I spoke to were not overly helpful, but it basically came down to writing an email explaining what our income plan would be for 2017. Dividends/Interest based on history and LTCG estimates is the best that we can do.

 

[wmc1000]

I had to do this and uploaded a pdf letter of why my income was changing so dramatically. Took less than 1 week for them to review and verify my income letter.

 

[scrabbler1]

I am also in New York State. Back in late 2013 and early 2014, after I first enrolled in the NY Marketplace (Exchange), I was asked for proof of income. I sent them pdf files of my brokerage account statement along with an explanation stating that this was nearly all of my income. I received many replies telling me this was not sufficient proof.


My MAGI income was near the top end of the limit to receive subsidies so paying the entire premium every month wasn't a big deal. I treated this overpayment as a backhanded tax withholding because I had no taxes withheld from my regular investment income. When I filed my 2014 federal income tax return, the subsidy canceled out part of my tax liability.


The same thing happened in 2015 although I was able to get the NY Marketplace folks to stop sending me those annoying letters. In a phone call to them, they told me my subsidy was in no gander and what I was doing was okay. I still received a Form 1095-A so I use its data to file the form to claim the subsidy.


But in 2016, without doing anything new or special, my new insurance company has been reducing my monthly premium by the amount of a monthly subsidy. Go figure! When I file my 2016 income tax forms, I will have to include both the 2015 subsidy (claimed in 2016) and 2016 subsidy (taken in 2016) in it, and in different places.

 

[gauss]

I am also in New York State. ......

....
But in 2016, without doing anything new or special, my new insurance company has been reducing my monthly premium by the amount of a monthly subsidy. Go figure! When I file my 2016 income tax forms, I will have to include both the 2015 subsidy (claimed in 2016) and 2016 subsidy (taken in 2016) in it, and in different places.

Where are you planning to include your 2015 subsidy on your 2016 return?

I don't think Premium Tax Credits (PTC's) are considered taxable income.

-gauss

 

[Lisa99]

We're in the same situation.

I was passed to a supervisor who told me that they needed a bank statement showing my small pension and our quarterly dividends.

Think I'll take the letter route first though since I won't have the bank statement showing the dividend until late December (don't want to send them the September statement since we had some consulting income that we won't have next year. Sure don't want to confuse them!!)

 

[scrabbler1]

Where are you planning to include your 2015 subsidy on your 2016 return?

I don't think Premium Tax Credits (PTC's) are considered taxable income.

-gauss

I will apply the 2015 subsidy as a reduction to the medical expense deductions shown on Schedule A.

 

[gauss]

Thanks Scrabbler1 -- That makes sense now.

-gauss

 

[Fermion]

I just created an official looking excel spreadsheet showing how I get a monthly payment of $1916.66 from dividends, capital gains and interest. The people running the exchange are too stupid to realize those items don't come in exactly monthly, so they accept it with no problem.

 

[boaski]

They kept sending me that notice last year and each time I sent them my 1040 from the year before happened about 4 times between Dec. and march finally when I got my 1040 for 2015 sent them that and I quit getting notices so I would just disreguard them until you have your 2016 1040

 

[broadway]

I am waiting for my 1099 for this year. The amount is roughly what I estimated for next year.

 

[GTFan]

I had to do this and uploaded a pdf letter of why my income was changing so dramatically. Took less than 1 week for them to review and verify my income letter.

Did same and thought I would get a response like you but no such luck so far - applied Nov 2, uploaded 2015 1040 and a letter on Nov 8.

Still haven't heard anything from them and status still shows that I need to submit proof of income for 2017.

 

[wmc1000]

They actually called me because they initially looked at only my 2016 income verification and it showed more than twice what I was stating for 2017.

I asked them if they had looked at my letter I uploaded and the lady had to go to my file and open that pdf file. She then said she would send that back through for verification and a few days later my account status was changed to verified.

 

[RunningBum]

I sent in my 1040 from 2015, and a note explaining that I was retired with no pension or SS yet, have cap losses that will carry over into 2017 and will limit my Roth conversions. I laid out the math at how that will change my 2015 numbers and keep me under 400% FPL. I said that if this isn't enough that I'd show my 2016 return when I have it, as I'm going to get that under 400% as well, but I'd probably need a 30 day extension since I probably wouldn't have all the info by their deadline. Actually I'd probably have enough for the front side of 1040 except for maybe how much of my dividends are qualified, but I won't have filed it yet.

I'll post when I hear back on whether that was enough.

 

[RunningBum]

That was quick. They accepted my explanation.

We received your yearly household income documents, and we’ve verified your information. Your eligibility as described in your eligibility determination notice will continue unchanged. You don’t need to take any further action at this time.

 

[GTFan]

They responded quickly to your upload?

 

[RockyMtn]

first year it took three upload attempts and finally a mail in to get verification for GF's plan. Last year two upload attempts and two weeks before verification. This year one upload and verification the next day! Progress!

 

[RunningBum]

Yep. Of course, today I got an email that my application is at risk and has action required, though when I login all looks fine. I guess their email system is running a bit behind. I'll recheck in January that all is still fine.

 

[GTFan]

Man, I did the upload three weeks ago and still no update. Will try again with same docs I guess.

 

[wmc1000]

GTFan what file format were the uploads submitted in? In my example I uploaded my files in pdf format.

 

[LRDave]

Good luck - THWG!

 

[Taxman59]

I uploaded a letter explaining the income for 2017 along with a brokerage summary showing taxable dividends. This was Wednesday evening. This morning I got the confirmation that my letter was accepted and I am good to go!!!