Potential major good news on ACA premiums

[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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.

 

[scrabbler1]

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 similar, homemade spreadsheet which does the calculations. Having to update it for new tax brackets is fine, it's the tax law and form changes which can be a nuisance, especially the last few years. Having it automatically recalculate my taxes as my estimates change throughout the year is very helpful when it comes to estimated taxes.

 

[explanade]

Called Covered CA this morning.

First person I spoke to, while I was waiting, I tried the calculator again and it said I am NOT likely to be eligible for subsidies.

Turns out I left the age at 21, which is the default.

But didn't make sense, my premiums for a Bronze HSA plan were well over 8.5% of my income, even though my income was xxx % of the federal poverty level, which made it sound bad, a 3-digit percentage.

So I fixed the calculator and it said I WAS likely to be eligible and spoke to another rep.

She said it should have been automatically done April 5th so she escalated and gave me a reference number to call back with if I don't get contacted in 10 days.


Only thing is that while waiting, I noticed the income I entered into my Covered CA application was the same as it was when I first applied 5-6 years ago.

When I used the calculator, I put in current income, which is about 20-25% higher but still my premiums are just over 10% of that higher income.

So I wonder if they will give me a bigger subsidy based on the old income figure.

IN any event I just paid my May premiums the other day.

 

[RetiredAndLovingIt]

Shop and Compare on the Covered California website has been corrected to reflect the new lower pricing. As expected my cost for the second lowest silver plan is $1 monthly but I"m staying with Kaiser so my price went from $168 down to $115 a month. Very pleased.

 

[Texas Proud]

Went in and adjusted my account and premiums dropped by almost $200 per month!!


Now let's hope that the insurance company gets it right on my next bill.

 

[RetiredAndLovingIt]

The American Rescue Plan, the new federal stimulus bill, provides more than $3 Billion for Californians to lower their monthly cost of health insurance. These additional dollars are so important since they may reduce a Covered California enrollee’s monthly health insurance cost by nearly half! As a member, we want to make sure you are aware of this historic amount of financial help – and it’s only available through Covered California!

By the end of April, you will receive an important notice from Covered California detailing your financial help (also known as premium assistance) through the American Rescue Plan. You may receive even more financial help than you currently receive to lower your monthly cost of health insurance!

The amount of financial help your household will receive is based on your household income, where you live and family size on file with Covered California. This new financial help will begin in May, but it may take a few billing cycles before this additional financial help is accurately reflected on your monthly bill – depending on your health insurance company. This additional financial help on your monthly bill will also include financial help for the months you are insured in 2021 prior to May and will last until the end of 2022.

What do you have to do to get this additional savings? Nothing! Since we have your income on file, we will calculate your new financial help automatically! Just watch for the notice from Covered California either in the mail or as an email with instructions to check your online account – you can find the notice in your Secure Mailbox in your online account at CoveredCA.com.

 

[tominboise]

My state just announced that they are auto-adjusting the APTC starting April 1st, no action needed by the subscriber. Nice.

I can't find where Idaho announced this? Have you seen a reduced premium yet?

 

[SecondCor521]

I can't find where Idaho announced this? Have you seen a reduced premium yet?

It was an email from YourHealthIdaho sent on March 30th.

Quoting in relevant part:

"You may qualify for enhanced subsidies!
The American Rescue Plan Act of 2021 was signed into law on March 11, 2021. The plan provides access to affordable health insurance coverage through the Marketplace by increasing eligibility for financial assistance.

Because you are enrolled in a health insurance plan with Your Health Idaho and have been previously approved for an Advanced Premium Tax Credit (APTC), you may see an increase in your prior tax credit eligibility.

What does this mean for you?
Your tax credit will be recalculated by the Idaho Department of Health and Welfare (DHW), which may reduce reducing your monthly premium based on the percentages set in the American Rescue Plan. The updated APTC will be applied to your account directly. No further action is required. However, if you would like to review your APTC, or change the amount you use each month, you can do so via your account at YourHealthIdaho.org.

Your new monthly premium goes into effect on April 1, 2021, although carriers may have already completed the April billing cycle before the updated tax credit amounts were confirmed. If you have specific questions about your account, please work directly with your carrier."

As to your second question, no, I have not seen any adjustment to my premium yet on YourHealthIdaho, although I do have some sort of strange credit on my health insurer's website on my April statement, so that may be it. It's hard to tell because I have had several recent changes and adjustments and refunds completely unrelated to ARPA, so I wasn't in a boring steady state that would make it easy to figure out what was going on. I figure I'll sort things out at tax time on my 8962.

 

[PaunchyPirate]

Pennsylvania's exchange, Pennie.com, was updated today to show the new subsidies, however, it's a little ambiguous about when they will kick in. You can use a provided tool to see what your new subsidy is going to be. It looks like the new subsidy will be immediately reflected for brand new Pennie.com customers just now applying. The FAQ's seem to tell existing customers with existing subsidies to sit tight for now and they will apply the increased subsidies automatically. But there's also a sentence that instructs you to edit your application to see the change reflected on your account. So there's a bit of confusion in the FAQ. I think I'll sit tight for now. My May1 invoice has already been generated by my provider at the old subsidy. I'll see what happens over the next few weeks.

But at least I can now see what Pennie.com thinks my new subsidy is.

 

[explanade]

CoveredCA sent formal letter that I am now eligible for premium assistance in response to my query.

The assistance is almost half my premium now!

Says it will be a tax credit though so I have to wait until I file my tax returns?

But I hadn't touched my CoveredCA profile since 2014 when I first enrolled and the income level they used to calculate the assistance is about 20-25% lower than my likely income this year.

So will I be penalized if I get a bigger assistance than I was entitled to, especially if they reduce my premiums for the rest of the year? Of course I've already paid through May at the full premiums level already.

 

[RunningBum]

But I hadn't touched my CoveredCA profile since 2014 when I first enrolled and the income level they used to calculate the assistance is about 20-25% lower than my likely income this year.

So will I be penalized if I get a bigger assistance than I was entitled to, especially if they reduce my premiums for the rest of the year? Of course I've already paid through May at the full premiums level already.

No, not unless California does something really bizarre.