Health care for DD question

[hpnutty]

DD, age 28, recently divorced, living with us, est income 2021 about $10,000. What would you do for health insurance? Company offer is BCBSTX HMO at $176/mo which would take a good portion of her take home. ACA options found so far are more expensive with less coverage. ACA says she is not eligible for premium tax credit. Please no preaching about her situation, I've done that many times already. Thank you.

[SecondCor521]

I'd look to see if she qualifies for Medicaid. Might be good in TX, might be bad, but it's probably better than nothing.

[PaunchyPirate]

I assume the reason she isn't eligible for ACA subsidy is because her income is so low that they expect her to use Medicaid. If she is healthy, you could probably investigate the Catastrophic Plans that are sold in your county and then purchase them directly from the insurance company instead of through the ACA. You should be able to find them by using the ACA website and just pretend her income is something like $30,000. Also, have you priced plans from other companies directly (i.e. NOT on the ACA website)? You're free to buy directly from them if you aren't getting a subsidy. Same as above, you can find which companies sell in your county by using the ACA site by pretending to have a higher income while you research.

[RunningBum]

Can't she qualify for an ACA subsidy?

[jim584672]

Roth Conversion to generate income and get over the Medicaid gap? Assuming that is the problem.

[MissMolly]

Why can't she find a better job that pays a little more and includes health insurance? Even full-time at McDonald's would pay better than this.

[hpnutty]

running - That is correct. You need to be 100% - 400% of poverty ($16,xxx) to qualify for subsidies. Crazy, huh?

[hpnutty]

Quote:

Originally Posted by SecondCor521 I'd look to see if she qualifies for Medicaid. Might be good in TX, might be bad, but it's probably better than nothing.

I will check into it.

[hpnutty]

Quote:

Originally Posted by PaunchyPirate I assume the reason she isn't eligible for ACA subsidy is because her income is so low that they expect her to use Medicaid. If she is healthy, you could probably investigate the Catastrophic Plans that are sold in your county and then purchase them directly from the insurance company instead of through the ACA. You should be able to find them by using the ACA website and just pretend her income is something like $30,000. Also, have you priced plans from other companies directly (i.e. NOT on the ACA website)? You're free to buy directly from them if you aren't getting a subsidy. Same as above, you can find which companies sell in your county by using the ACA site by pretending to have a higher income while you research.

Thanks! Yes, she does qualify for a catastrophic plan (under 30, no spouse, etc.) Started looking at those. I jacked income to $30,000 on ACA and found the cheapest cat with $8,000+ deductible at $201 per month. Based on your advice and others I will start the cat search at Anthem and Blue Cross.

[RunningBum]

Quote:

Originally Posted by hpnutty running - That is correct. You need to be 100% - 400% of poverty ($16,xxx) to qualify for subsidies. Crazy, huh?

OK. You said "est income 2021 about $10,000." What is here 2020 income going to be? I'm fuzzy about how to stay off of medicaid and qualify for an exemption, but I'd guess you can use 2020 income, or something between 2020 and 2021 income, to get her into an ACA subsidized plan. If her income indeed winds up being $10K, I don't think they will penalize her for overestimating it. She might run into issues for 2022 though.

Maybe what I'm suggesting is fraud. I don't know. I don't mean to go there. But isn't it reasonable to predict she might get a better paying job in 2021?

[hpnutty]

Quote:

Originally Posted by RunningBum OK. You said "est income 2021 about $10,000." What is here 2020 income going to be? I'm fuzzy about how to stay off of medicaid and qualify for an exemption, but I'd guess you can use 2020 income, or something between 2020 and 2021 income, to get her into an ACA subsidized plan. If her income indeed winds up being $10K, I don't think they will penalize her for overestimating it. She might run into issues for 2022 though. Maybe what I'm suggesting is fraud. I don't know. I don't mean to go there. But isn't it reasonable to predict she might get a better paying job in 2021?

2020 income was less than $10k. It could be reasonable to think that she would get her hours increased to make more than 16K in 2021. Also to add a second job. (remember my original post). Not sure what the penalty if we did estimate incorrectly.

Also, I think there is another qualifying factor in getting premium tax credits. You can't be eligible for affordable coverage through an eligible employer-sponsored plan that provides minimum value. With the company offered $176/mo HMO plan I believe disqualifies her.

[SecondCor521]

Quote:

Originally Posted by hpnutty 2020 income was less than $10k. It could be reasonable to think that she would get her hours increased to make more than 16K in 2021. Also to add a second job. (remember my original post). Not sure what the penalty if we did estimate incorrectly.

It sounds like it might be reasonable to estimate high enough to qualify for the subsidy.

If she estimates high enough to get the subsidy, but then ends up below that number, there likely will be no penalty. Read the details in the instructions for Form 8962, line 6, section "Household income below 100% of the federal poverty line" on page 8 left column of https://www.irs.gov/pub/irs-pdf/i8962.pdf.

If her actual income is higher or lower than what she estimated, then the subsidy she received will be reconciled with the subsidy she should have received on Form 8962, and she'll end up with either a credit or an additional tax depending on whether her income was lower or higher than her estimate.

Quote:

Originally Posted by hpnutty Also, I think there is another qualifying factor in getting premium tax credits. You can't be eligible for affordable coverage through an eligible employer-sponsored plan that provides minimum value. With the company offered $176/mo HMO plan I believe disqualifies her.

This is true, but there are some ways around this.

First, she should check to see if her company's offering qualifies as providing MEC. If not, she can buy an ACA plan and get subsidies.

Second, the definition of affordability is based on ACA MAGI and is 9.83% for 2021 (See https://www.irs.gov/pub/irs-drop/rp-20-36.pdf). Your DD can lower her MAGI by contributing to a deductible IRA, which will increase the percentage cost of the HMO plan. If she contributes enough (and it might be very little), she can probably raise that cost to above 9.83% of her MAGI, thus making her employer coverage unaffordable and qualifying her to buy an individual ACA plan and get subsidies.

As a side note, if she's in that income range you should see if she qualifies for the Retirement Contributions Savings Tax Credit and/or the Earned Income Tax Credit for 2021.

[RunningBum]

Quote:

Originally Posted by hpnutty Also, I think there is another qualifying factor in getting premium tax credits. You can't be eligible for affordable coverage through an eligible employer-sponsored plan that provides minimum value. With the company offered $176/mo HMO plan I believe disqualifies her.

Yes, I'm pretty sure you are correct. My son ran into this a few years ago. He had enough income to qualify for an ACA subsidy that would've made his insurance super cheap, but with a company plan available he couldn't get a subsidized plan. I glossed over the detail in your first post that this was a company plan. Sorry for going offtrack on an unavailable option.

[hpnutty]

Quote:

Originally Posted by RunningBum Yes, I'm pretty sure you are correct. My son ran into this a few years ago. He had enough income to qualify for an ACA subsidy that would've made his insurance super cheap, but with a company plan available he couldn't get a subsidized plan. I glossed over the detail in your first post that this was a company plan. Sorry for going offtrack on an unavailable option.

No worries. I so appreciate the fast responses from everyone. I really love this forum and I'm looking forward to being retired in 2021!

[wolf]

If she were in California, she would qualify for Kaiser. (excellent care), under Obama Care.
She would qualify under Medical. ( California's version of Medicaid).

Your State may have a similar program. Check it out.

[jim584672]

It depends on whether your state expanded Medicaid on the amount.

No expansion = 0-100% - Coverage gap, 100-400 ACA with subsidies.
Expansion = 0-138% Medicaid, 138-400 ACA with subsidies.

100% FPL = $12,760
138% FPL = 1,468 per month (Medicaid goes by monthly income.)

[hpnutty]

Quote:

Second, the definition of affordability is based on ACA MAGI and is 9.83% for 2021 (See https://www.irs.gov/pub/irs-drop/rp-20-36.pdf). Your DD can lower her MAGI by contributing to a deductible IRA, which will increase the percentage cost of the HMO plan. If she contributes enough (and it might be very little), she can probably raise that cost to above 9.83% of her MAGI, thus making her employer coverage unaffordable and qualifying her to buy an individual ACA plan and get subsidies.

The effective federal poverty level for Texas is $12,760 in 2021. Yearly premium from company plan is $2,112. If MAGI is under $20,760 then the premium will exceed 9.83%. Seems like estimating 2021 MAGI above $12,760 and under $20,760 would qualify for the credit. Do I have that correct?

[SecondCor521]

Quote:

Originally Posted by hpnutty The effective federal poverty level for Texas is $12,760 in 2021. Yearly premium from company plan is $2,112. If MAGI is under $20,760 then the premium will exceed 9.83%. Seems like estimating 2021 MAGI above $12,760 and under $20,760 would qualify for the credit. Do I have that correct?

Mostly.

Yes, she needs to estimate an income above $12,760 for 2021.

For the upper bound, she needs an AGI under $2112 / 9.83%, which is $21,485 on my calculator. I'd probably estimate a little under that number just to be safe. Maybe $2112 / 9.84% = $21,463.

In that range she can also get CSRs (Cost Sharing Reductions) if she chooses a Silver plan. Silver plans with CSRs are really nice, but she might have a monthly premium on the order of $20-$50 depending on where in Texas y'all (*) are at. Bronze plans for her are probably free. If she chooses a Bronze HSA qualified plan, she could set up and contribute to an HSA. Any contribution to an HSA would lower her AGI.

(*) I can do this; I was born in Bexar County, TX and I still therefore claim Texas citizenship.

[jim584672]

Just be aware that the IRS has a regulation about income estimates...

"In the new final regulation, the IRS says it will take ACA premium tax credit help away from an individual who “with intentional or reckless disregard for the facts, provides incorrect information to an exchange for the year of coverage.”"

https://www.federalregister.gov/docu...-regulation-vi

[Bamaman]

In our state, Medicaid is reserved for 40% of the children in our state, those on SSI (disability), and pregnant low income unmarried women. Normally low income adults mostly remain uninsured and not on ACA because of high deductibles and co-pays.

I have the last of the Cadillac Blue Cross conventional insurances on my 33 year old daughter and it's just under $400 a month including dental. BCBS tells me all the time that if it's ever cancelled, a healthcare policy will be much, much more expensive.