Potential major good news on ACA premiums

[Aerides]

I went thru the "life event" change process on the .gov site, and received a reduced premium - saving about $160 per month for DH and I. I'll be sure to add that to the BTD budget so the money goes back into the economy.

[Ramen]

Another update on the new unemployment income rules discussed above. After some more digging around here and here, I found that the healthcare.gov site will not incorporate the changes until July. So anyone receiving UI benefits this year can stand by and wait for the ACA system to catch up with the legislation this summer. The changes will be retroactive to January. This is good news indeed.

[Markola]

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Originally Posted by Ramen Another update on the new unemployment income rules discussed above. After some more digging around here and here, I found that the healthcare.gov site will not incorporate the changes until July. So anyone receiving UI benefits this year can stand by and wait for the ACA system to catch up with the legislation this summer. The changes will be retroactive to January. This is good news indeed.

Thank you. Very helpful.

[almosttime]

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Originally Posted by SecondCor521 Glad to help. I think that is a provision that only applies to 2021 and 2022 at the moment.

I believe the UI provision is valid for 2031 only.

[Ramen]

Right, the UI provision is just for this year.

[Patricia Lyn]

My husband and I are taking our living expenses out of various “buckets” in order to manipulate our MAGI for ACA subsidy purposes, as I’m sure a lot of people on this site are. So as I understand from reading this thread, the cliff no longer applies and we can increase our MAGI over the 68,700 (or whatever it is this year) and pay 8.5% of our MAGI at the most towards our insurance premiums. Is that correct?
So hypothetically, if we wanted to have a MAGI of 100,000, our cap would be
8,500/12 = 708.00 per month at the most?
Would this change take place this year as I understand the OP to indicate? We are struggling to keep our MAGI below the 68,700 this year because we have some spending we need to do and this would really be awesome!

[zinger1457]

Quote:

Originally Posted by Patricia Lyn So as I understand from reading this thread, the cliff no longer applies and we can increase our MAGI over the 68,700 (or whatever it is this year) and pay 8.5% of our MAGI at the most towards our insurance premiums. Is that correct? So hypothetically, if we wanted to have a MAGI of 100,000, our cap would be 8,500/12 = 708.00 per month at the most? Would this change take place this year as I understand the OP to indicate? We are struggling to keep our MAGI below the 68,700 this year because we have some spending we need to do and this would really be awesome!

The subsidy calculated is based on the second lowest cost silver plan available to you. You would pay no more than 8.5% of MAGI as long as you select the second lowest cost silver plan or a cheaper plan like a bronze plan. You will pay more than 8.5% if you select a higher priced silver plan or a gold plan.

[Markola]

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Originally Posted by zinger1457 The subsidy calculated is based on the second lowest cost silver plan available to you. You would pay no more than 8.5% of MAGI as long as you select the second lowest cost silver plan or a cheaper plan like a bronze plan. You will pay more than 8.5% if you select a higher priced silver plan or a gold plan.

This gives me some pause, because we need certain doctors to be in-network. We like HealthPartners. What if we choose a plan, then it’s a different second-to-lowest-cost plan in 2022? Or maybe the solution is to always buy a Bronze plan? Some kinks need to be worked out here.

[explanade]

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Originally Posted by cathy63 Covered CA has already said they are trying to automatically adjust premiums starting in May. You would have to get the additional Jan-Apr credits when you file your 2021 tax return.

I just went through the premiums subsidy calculator on the Covered CA website.

But I don't see a way to apply for the subsidy?

Would it be automatic?

[SecondCor521]

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Originally Posted by Markola This gives me some pause, because we need certain doctors to be in-network. We like HealthPartners. What if we choose a plan, then it’s a different second-to-lowest-cost plan in 2022? Or maybe the solution is to always buy a Bronze plan? Some kinks need to be worked out here.

Your premium subsidy is based on your income and the SLCSP in your area for your situation for the current year.

Your subsidy is applied to whatever plan you choose (as long as the plan you choose is from the marketplace). If the premium is more than your subsidy, then your OOP premium will be zero. Otherwise, your OOP premium will be the premium minus your subsidy.

The SLCSP can change in theory during the year but in my experience it doesn't change in practice. It can change from year to year, but then all that does is change the amount of your subsidy.

You should buy the plan that works best for you given whatever subsidy amount you'll be getting. You can change every year if you like, or more often if you have a qualifying life event.

[SecondCor521]

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Originally Posted by explanade I just went through the premiums subsidy calculator on the Covered CA website. But I don't see a way to apply for the subsidy? Would it be automatic?

It should be automatic if you enroll through your ACA marketplace and provide them with an income estimate.

If you're already enrolled and are hoping for the lower subsidy due to ARPA, many states are doing it automatically, but if your state doesn't you'll get it back on your taxes about a year from now via Form 8962.

[cathy63]

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Originally Posted by explanade I just went through the premiums subsidy calculator on the Covered CA website. But I don't see a way to apply for the subsidy? Would it be automatic?

They said they were going to do it automatically, but I don't know if they actually did or not. We don't have an advance subsidy this year because we are expecting to sell a rental property and will hopefully end up having too much income as a result.

[zinger1457]

Quote:

Originally Posted by Markola This gives me some pause, because we need certain doctors to be in-network. We like HealthPartners. What if we choose a plan, then it’s a different second-to-lowest-cost plan in 2022? Or maybe the solution is to always buy a Bronze plan? Some kinks need to be worked out here.

There is no guarantee with ACA that any of the health insurers or plans available to you this year will be available next year, I had some years where I only had one insurer offering ACA plans in my area. It does seem to have stabilized in recent years and I have more offerings. I've always gone with the lowest cost HSA Bronze plan to get the most from my subsidy, rarely use any medical care except for yearly checkups.

[RetiredAndLovingIt]

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Originally Posted by explanade I just went through the premiums subsidy calculator on the Covered CA website. But I don't see a way to apply for the subsidy? Would it be automatic?

I already have a subsidy which will be increasing due to the new law. I checked the calculate your savings calculator they they just added a few days ago and I'm happy with the results. i think it will be automatic for them to reduce my premium so I'm not going to call and bug them about it yet. If you don't already get a subsidy maybe you should give them a call.

[explanade]

Well I've never gotten ACA subsidies so any subsidy would be a new thing.

I just paid the May premium so if they're doing it automatically, then my insurer didn't get the memo.

Yeah my Covered CA profile should have even less income than the figure I tried with their calculator.

I guess I will give them a call Monday.

[Z3Dreamer]

Any body have a better (more accurate) way to calculate various income options in 2021? I put my 2021 income and other data in Turbotax 2020 to calculate Federal and State income tax. I use the updated KFF calculator to calculate the subsidy. At this point I subtract the subsidy from my premiums. Add this repayment of PTC to the Turbotax result to come up with marginal tax on various options.

Of course, I hope Turbotax 2021 will be out and functioning before I squeeze the trigger on IRA distributions.

[zinger1457]

Quote:

Originally Posted by Z3Dreamer Any body have a better (more accurate) way to calculate various income options in 2021? I put my 2021 income and other data in Turbotax 2020 to calculate Federal and State income tax. I use the updated KFF calculator to calculate the subsidy. At this point I subtract the subsidy from my premiums. Add this repayment of PTC to the Turbotax result to come up with marginal tax on various options.

I've been using a tax spreadsheet (Excel) for years that makes it easy to check various income and tax options. Takes some time to initially setup but once done it's easy to update from one year to the next for changes in tax brackets/rates, MAGI limits, etc. Like the ability to see a side by side comparison from one year to the next.

[flintnational]

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Originally Posted by Z3Dreamer Any body have a better (more accurate) way to calculate various income options in 2021? I put my 2021 income and other data in Turbotax 2020 to calculate Federal and State income tax. I use the updated KFF calculator to calculate the subsidy. At this point I subtract the subsidy from my premiums. Add this repayment of PTC to the Turbotax result to come up with marginal tax on various options. Of course, I hope Turbotax 2021 will be out and functioning before I squeeze the trigger on IRA distributions.

To model various options, I use Dinkytown's 1040 calculator.

ETA: I use it more as a blunt tool to model various income scenarios. Turbotax will be more accurate for your final run.

[Z3Dreamer]

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Originally Posted by zinger1457 I've been using a tax spreadsheet (Excel) for years that makes it easy to check various income and tax options. Takes some time to initially setup but once done it's easy to update from one year to the next for changes in tax brackets/rates, MAGI limits, etc. Like the ability to see a side by side comparison from one year to the next.

I have a multi-year spreadsheet too, but it does not recalculate the taxable amount of SS. Yes, I opted for SS at 62.

[Z3Dreamer]

Quote:

Originally Posted by flintnational To model various options, I use Dinkytown's 1040 calculator. ETA: I use it more as a blunt tool to model various income scenarios. Turbotax will be more accurate for your final run.

Thanks. Will give it a spin.