Potential major good news on ACA premiums

[zinger1457]

I have been receiving texts and emails suggesting that since I have ACA that I look for a new plan at a discount. Is anyone changing their plans and if you change your plans, does your deductible that you have paid so far start over at $0?

If you already have ACA I don't believe you'll find any 'new' plans being offered, just the same plans that you had to choose from at the end of last year. The big change is the increase in the subsidy most will get and the elimination of the cliff.

 

[MichealKnight]

I think I missed this

I just early-retired 3 months ago. Long story short, as w-2 pay.....

I was paid $260,000 for the year of 2021.

Family of 4.

Am I right in thinking with an income of $260k - - there's no extra help I'm gonna get?

Next year....I've already decided and feel it's very realistic to get $700-800$ per month in subsidy but in 2021 - is it safe bet that $260k income, family of 4, isn't gonna get any subsidy?

 

[SecondCor521]

I just early-retired 3 months ago. Long story short, as w-2 pay.....

I was paid $260,000 for the year of 2021.

Family of 4.

Am I right in thinking with an income of $260k - - there's no extra help I'm gonna get?

Next year....I've already decided and feel it's very realistic to get $700-800$ per month in subsidy but in 2021 - is it safe bet that $260k income, family of 4, isn't gonna get any subsidy?

Probably not, although you can check here with your actual data and see for yourself:

https://www.kff.org/interactive/subsidy-calculator/

It'll depend on the zip code you live in, the ages of the four people, and tobacco use, and maybe another thing or two.

 

[garyt]

I have been receiving texts and emails suggesting that since I have ACA that I look for a new plan at a discount. Is anyone changing their plans and if you change your plans, does your deductible that you have paid so far start over at $0?

I re-applied for the same plan and saved $80 a month and my deductibles didn't reset. i didn't even have to redo my automatic payment.

 

[Eucerin]

Oh wow, THANKS!
I see the publication dated 4/29, its very recent. I will make a call to the state, too "chicken" to go through the process on my own, very afraid I would do something that cause problems.

Went through the process with the rep, and was able to increase the monthly subsidy by $128, the monthly premium dropped to a pleasant level. Kept same plan.

 

[Stormy Kromer]

I'm in the Minnesota exchange, MNSure. I haven't been eligible to apply for assistance since the income is just over the 400% cliff. I received some emails from them telling me I might be eligible and to check their website. I spent a long time on their site and wasn't able to get anywhere.


I made a call this morning and they told me that I had to cancel my current policy effective May 31 and then reapply on their site under the tab "eligible for subsidy" So I did, then I had to call back to confirm it and they had to enter some more information. It took about 1.5 hours. The people were helpful and still learning how to do this. I filled out pages of information online and emailed a copy of my 2020 tax return. They said I'd get a new policy effective June 1st with the new premiums. i'll see how it goes.


As an FYI to anyone who hasn't been eligible for assistance and is now, don't wait for your exchange to do anything for you. Be proactive.

 

[Fishingmn]

Question -

We (59/58) have been paying for a high deductible private bronze/HSA plan for a number of years. Both are pretty healthy. Haven't done ACA before because we are over the cliff. We sold a rental property this year so 2021 will see us well over the cliff based on capital gains.

I'm semi-retired and sell 5-6 houses per year as a Realtor so I'm currently able to deduct the full cost of the $1,050/mo health premiums off my taxes as a business expense.

If we switch to an ACA plan for 2022 does that allow me to still deduct the out of pocket premium as a business expense?

 

[ZachTB]

"Nearly everyone who purchases health insurance under the Affordable Care Act (ACA) Marketplace plans will benefit by the changes enacted as part of the American Rescue Plan Act of 2021. In summary:

Early retirees with an income 100%-150% Federal Poverty Limit (FPL), who already paid little for health insurance premiums, will now pay $0 premiums for Silver Level plans.

Those with incomes from 150%-400% FPL will see substantial reductions in health insurance premium costs.

Those with incomes that exceed 400% FPL will no longer be subject to the ACA “subsidy cliff.” Health insurance premiums costs will be capped at 8.5% of income.

Older early retirees approaching Medicare age will benefit the most because costs rise as we age."


https://www.caniretireyet.com/american-rescue-plan-health-care-early-retirement/

Thanks for sharing, KevinK!

 

[SecondCor521]

Question -

We (59/58) have been paying for a high deductible private bronze/HSA plan for a number of years. Both are pretty healthy. Haven't done ACA before because we are over the cliff. We sold a rental property this year so 2021 will see us well over the cliff based on capital gains.

I'm semi-retired and sell 5-6 houses per year as a Realtor so I'm currently able to deduct the full cost of the $1,050/mo health premiums off my taxes as a business expense.

If we switch to an ACA plan for 2022 does that allow me to still deduct the out of pocket premium as a business expense?

Yes. However, there is an annoying circular loop in the tax laws for people who are self-employed and on ACA insurance. See here for one blog article on the topic:

https://thefinancebuff.com/irs-guid...-obamacare-premium-subsidy-and-deduction.html

(There are plenty out there about the issue; google for more.)

 

[USGrant1962]

Wow, the UI benefit is crazy!

Maryland emailed me this morning about re-applying to adjust my subsidy. Income is well over the old cliff and my current unsubsidized bronze plan is less than 8.5%. Based on that, I had ignored these in the last month or two.

But this email pointed out the unemployment benefit. DW has been unemployed since March 2020 and her employer has since closed the gym where she works.

I went into our exchange told them DW was unemployed, and our $920/mo premium became $6.49! Retroactive! It is raining money as someone said upthread.

I could have chosen a Gold plan for $7.50/month, but the bronze is the only HSA plan on our exchange and I already contributed for 2021, so decided to stick with that.

Also, best I can figure the $6-8/month is for abortion coverage so no actual zero cost plans, in MD anyway.

 

[SecondCor521]

Wow, the UI benefit is crazy!

Maryland emailed me this morning about re-applying to adjust my subsidy. Income is well over the old cliff and my current unsubsidized bronze plan is less than 8.5%. Based on that, I had ignored these in the last month or two.

But this email pointed out the unemployment benefit. DW has been unemployed since March 2020 and her employer has since closed the gym where she works.

I went into our exchange told them DW was unemployed, and our $920/mo premium became $6.49! Retroactive! It is raining money as someone said upthread.

I could have chosen a Gold plan for $7.50/month, but the bronze is the only HSA plan on our exchange and I already contributed for 2021, so decided to stick with that.

Also, best I can figure the $6-8/month is for abortion coverage so no actual zero cost plans, in MD anyway.

Someone can double check me on this, but I think to qualify for this aspect of the ACA changes in the ARPA law, your wife must have received at least one week of unemployment benefits. Merely being unemployed is a necessary but not sufficient criteria to qualify.

 

[RetiredAt55.5]

Someone can double check me on this, but I think to qualify for this aspect of the ACA changes in the ARPA law, your wife must have received at least one week of unemployment benefits. Merely being unemployed is a necessary but not sufficient criteria to qualify.

Yes, this is the verbage -

"SEC. 9663. APPLICATION OF PREMIUM TAX CREDIT IN CASE OF INDIVIDUALS RECEIVING UNEMPLOYMENT COMPENSATION DURING 2021.
(a) In General.—Section 36B of the Internal Revenue Code of 1986 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:


“(g) Special Rule For Individuals Who Receive Unemployment Compensation During 2021.—

“(1) IN GENERAL.—For purposes of this section, in the case of a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for the taxable year in which such week begins—

“(A) such taxpayer shall be treated as an applicable taxpayer, and

“(B) there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved."

This is from -
https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc-HC3BE8E8D4B884A46953A56AAEA72EF32


I guess at tax time next year, any unemployment compensation would have to be listed as income, so the IRS could adjust the ACA credits accordingly.

 

[USGrant1962]

Someone can double check me on this, but I think to qualify for this aspect of the ACA changes in the ARPA law, your wife must have received at least one week of unemployment benefits. Merely being unemployed is a necessary but not sufficient criteria to qualify.

Yes, she has been on (enhanced) unemployment benefits for over a year and has not been asked to come back to work. Her location closed permanently, but the company has another location in town. Merging two into one, they have plenty of instructors for the limited classes that they can run these days. Gyms are not yet rehiring group fitness instructors.

 

[SecondCor521]

Yes, she has been on (enhanced) unemployment benefits for over a year and has not been asked to come back to work. Her location closed permanently, but the company has another location in town. Merging two into one, they have plenty of instructors for the limited classes that they can run these days. Gyms are not yet rehiring group fitness instructors.

Sounds like you're OK then. Just didn't want you to face a $914 x 12 repayment issue (subject to repayment cap if you're under 400% FPL and it ends up existing this year) and get surprised.

 

[USGrant1962]

Sounds like you're OK then. Just didn't want you to face a $914 x 12 repayment issue (subject to repayment cap if you're under 400% FPL and it ends up existing this year) and get surprised.

Thanks for reassuring me.

I was kind of shocked when I went through the questionnaire on the MD ACA site and it came out that way. I actually cancelled my application and re-entered everything to make sure it didn't switch monthly for annual income or something. But as RetiredAt55.5 posted, if you qualify:

there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved.

So our six-digit consulting+investment+unemployment income is not "taken into account".

Crazy but as DW says, "we're rule followers." So for example, I report consulting income below $600 from a client even though they don't issue a 1099. I pay plenty of taxes and in this case I'm just following the rules Congress promulgated to get a modest tax break for one year.

EDIT - I wonder how tax software is going to handle this next year. I think it will be ugly.

 

[SecondCor521]

^ Yeah, it's good to double check everything when there's a law like that which is passed and has some people (like you) ending up with surprising results.

The folks on ACA insurance that exceeded the 400% FPL limit last year but then were excused from the APTC repayment were in similar shoes.

Tax software can handle it just fine I think since there is plenty of advance notice on this particular change. It's far more difficult for them when tax laws get changed late in the year or even into the filing season as happened this year, both because there is time pressure to get the change made, tested, and deployed and because it introduces complexity - you have at least four test cases at least to deal with: {affected TP, not affected TP} x {filed already, haven't filed}.

 

[PaunchyPirate]

My Pennsylvania-based health insurance company just generated the invoice for my June coverage and it now reflects the increased subsidy that I qualify for due to the new legislation. I called the PA health exchange on May 2nd or so to initiate the update. PA's exchange is supposed to do the updates automatically, but so far they have not notified anyone that they have completed that step, so I'm thinking they may not get it done for the June premiums.

My premium for a Gold HMO policy dropped from $325 to $220 per month. I'll take it.