Why did I get rejected for ACA Subsidy?

[scrabbler1]

It took about 24 hours to finally complete the online application for the New York exchange, but after I finally finished it, I was told I did not qualify for any subsidy. This is despite all of those online subsidy calculators telling me I was eligible for a subsidy between $90 and $100 per month, depending on the income level I entered.

I entered $36,400 for annual income which should have qualified me for a federal subsidy because it was less than 400% of FPL (single, no kids). However, there was this green bar chart which said I was "Greater than 400% Full Pay" whatever that means.

I will call the help line Monday, as it is closed for today about an hour ago. Does anyone here who lives in NY know why someone under 400% of FPL still doesn't qualify for a subsidy?

I am not happy about this.

 

[ziggy29]

I wouldn't rule out a glitch. It's not like there haven't been a lot of them.

Are you sure you didn't accidentally indicate that you were eligible for other employer-sponsored group insurance, perhaps?

 

[MichaelB]

I will call the help line Monday, as it is closed for today about an hour ago. Does anyone here who lives in NY know why someone under 400% of FPL still doesn't qualify for a subsidy?

I am not happy about this.

Breath slowly. Lots more is bound to happen before this is over.

I wouldn't rule out a glitch. It's not like there haven't been a lot of them.

Are you sure you didn't accidentally indicate that you were eligible for other employer-sponsored group insurance, perhaps?

+1

 

[scrabbler1]

I wouldn't rule out a glitch. It's not like there haven't been a lot of them.

Are you sure you didn't accidentally indicate that you were eligible for other employer-sponsored group insurance, perhaps?

Looks like you were right, more or less. There was a question asking me if I had coverage now, and I answered "yes" because I have an individual policy now. But that policy is not ACA-compliant so it will expire next year, making me uninsured. So I changed my answer to "no" and the subsidy appeared.

Thank you for pointing me in he right direction.

That being said, the next question asked me to send documents by 1/8/2014 verifying my income. The choices were not any which apply to me because my income is all investment income, not wage-related which were the 4 choices in the drop-down menu. I would have to fnd and download my Fidelity account statements which show nearly all of my investment income. It is not impossible to do, just tedious and a PITA. And is that what they are looking for to begin with?

At least the due date for that, if they actually want it from me, is in 3 months from now. Why can't they simply access my state income tax return? I'll call them on Monday and ask. You'd think I am the only person in New York who is living off investment income? LOL

 

[modhatter]

Is it year 2013 income they are asking for?

That's kind of scary. If people have to start sending in their brokerage account statements showing $1,000,000 that might create a new look and consideration as far as subsidies are concerned. (If not now, most likely in the future)

 

[tinlizzy]

I posted before that I met a woman in NY that said the exchange subsidies were essentially based on the honor system (for now). She said it was because the IRS wasn't going to allow access to their records - which other posters said was not true.

Maybe she was half right and there are some income scenarios that the exchanges have no way of verifying?

 

[NoMoreJob]

Is it year 2013 income they are asking for?

That's kind of scary. If people have to start sending in their brokerage account statements showing $1,000,000 that might create a new look and consideration as far as subsidies are concerned. (If not now, most likely in the future)

Surely someone thought about this in advance. If a person has savings that is generating income how is that different than a person who has no savings but a nice pension. Using a 'safe' withdrawal rate of 3-4%% the million would only produce a 'safe' $30,000 to $40,000 in annual income - both below 400% FPL for an individual or a couple.

 

[MichaelB]

If you are eligible for the subsidy you will get it in 2015 when you file your 2014 taxes. This process is to get the subsidy in advance. Here’s the CMS FAQ on income verification. (here) The process doesn’t really cover our situation where income is unearned and flexible. (I’d rather they spend their time on the other 99% of applicants, anyway)

According to this, we give the exchange rep our projected income along with an explanation. They could ask for things like account statements as supporting docs. As they will not be able to verify with IRS, SS or Equifax, three months later we get together again and repeat, ask them to extend for the full year. By 2015 we will have established an income level that can be verified via tax records so it should be automatic from there on.

According to 45 CFR 155.320(c)(3), Marketplaces will always use data from tax filings and
Social Security data to verify household income information provided on an application, and in many cases, will also use current wage information that is available electronically. The multi-step process begins when an application filer applies for insurance affordability programs (including advance
payments of the premium tax credit and cost-sharing reductions) through the Marketplace and affirms or inputs their projected annual household income. The applicant’s inputted projected annual household income is then compared with information available from the Internal Revenue Service (IRS) and Social Security Administration (SSA). If the data submitted as part of the application cannot be verified using IRS and SSA data, then the information is compared with wage information from employers provided by Equifax. If Equifax data does not substantiate the inputted information, the Marketplace will request an explanation or additional documentation to substantiate the applicant’s household income.

When documentation is requested, the Affordable Care Act and implementing regulations specify that if the applicant meets all other eligibility requirements, he or she will be provided with eligibility for advance payments of the premium tax credit and cost-sharing reductions based on the inputted projected annual household income for 90 days (which may be extended based on good faith), provided that the tax filer attests to the Marketplace that he or she understands that any advance payments of the premium tax credit paid on his or her behalf are subject to reconciliation. If documentation is requested and is not provided within the specified timeframe, regulations specify that the Marketplace will base its eligibility determination on IRS and SSA data, unless IRS data is unavailable, in which case the Marketplace will discontinue any advance payments of the premium tax credit and cost-sharing reductions.

If I have a face to face with an exchange person I am not going to talk about withdrawal rates. That'll just confuse them.

 

[ziggy29]

According to 45 CFR 155.320(c)(3), Marketplaces will always use data from tax filings and Social Security data to verify household income information provided on an application, and in many cases, will also use current wage information that is available electronically. The multi-step process begins when an application filer applies for insurance affordability programs (including advance payments of the premium tax credit and cost-sharing reductions) through the Marketplace and affirms or inputs their projected annual household income.

And when they can look at recent payroll history (I assume from current Social Security and Medicare earnings info), they do. When I was asked about my income on the web application, they are only asking about my (tiny) current USPS income of less than $200 a month on average. They didn't ask about my 2012 income from the tax return, which would have put us well over 400% of FPL.

 

[NoMoreJob]

If I have a face to face with an exchange person I am not going to talk about withdrawal rates. That'll just confuse them.

I completely agree. In fairness it took me awhile to figure it out and I had a good reason to (that is much of my income).

I can't wait to have the discussion about Roth conversions done in previous years that will not be done in subsequent ones. I'm thinking (hopefully imagining) that that is not likely to be quick and easy.

 

[pb4uski]

I'm leaning towards not applying for the subsidy, paying the full premium ($700-$800/month depending on what plan I chose) and then getting a refund in 2015 if I decide to manage my income to get the subsidy. Given I'm only earning ~0.8% on my savings it seems like much less hassle, I won't have to provide any documentation and much more flexibility. It seems to me the lower hassle is worth the minimal cost (~$65 if I have calculated it correctly).

 

[scrabbler1]

I was wondering, and I am not sure if anyone has asked about this: If I were to forgo having the subsidy apply to my monthly premiums, could I have it apply to my income tax bill? That is, use it as a form of income tax withholding instead of making quarterly estimated income tax payments. That would make forgoing the subsidy on a monthly basis more palatable and avoid having to provide documentation.

I'd hate to have to forgo the subsidy yet still make estimated income tax payments, thereby having to apply for a refund (subsidy) and make a payment for taxes owed at the same time.

 

[rbmrtn]

From this IRS documents it seems you do either Affordable Care Act Tax Provisions

The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums

It doesn't say how it is selected. I guess there is a check box someplace.

 

[scrabbler1]

Thanks for the link, rbmrtn. It looks like the subsidy will be part of the income tax return. It is not clear whether it will be applied as a subtraction from total taxes due or as an addition to total taxes paid (like the Making Work Pay tax credit from a few years ago). Either way, it will lower the difference between the two and either lower the net taxes owed or increase the net refund.

I think I will forgo having the subsidy being applied to my monthly payment and have it applied indirectly to final tax bill the next year. I will run the numbers in my budget spreadsheet to make sure my cash flow is okay from month to month.

 

[pb4uski]

I was wondering, and I am not sure if anyone has asked about this: If I were to forgo having the subsidy apply to my monthly premiums, could I have it apply to my income tax bill? That is, use it as a form of income tax withholding instead of making quarterly estimated income tax payments. That would make forgoing the subsidy on a monthly basis more palatable and avoid having to provide documentation.

I'd hate to have to forgo the subsidy yet still make estimated income tax payments, thereby having to apply for a refund (subsidy) and make a payment for taxes owed at the same time.

That's what i'm planning to do - though my tax is minimal I'll get a big refund. Seems like it will be less hassle than providing documentation and any potential questions and with today's low interest rates the time value of money isn't real significant.

 

[NoMoreJob]

That's what i'm planning to do - though my tax is minimal I'll get a big refund. Seems like it will be less hassle than providing documentation and any potential questions and with today's low interest rates the time value of money isn't real significant.

I considered that but like the idea of reducing my cash flow.

 

[homebody]

I was wondering, and I am not sure if anyone has asked about this: If I were to forgo having the subsidy apply to my monthly premiums, could I have it apply to my income tax bill?

This strategy may differ depending on whether your FPL is above or below 250%. If lower than 250%, you can recovery the subsidy on an exchange purchased policy, but AFAIK you will not retroactively get copay and out of pocket assistance. This does not seem to be recoverable at year end should your medical expenses go that high even if your income was lower. This can be a difference lost of up to about $10k annually.

So at 250 or lower, it may be worth documenting as needed to get the 73% AV version of the health plan. Then it becomes even more worthwhile at 200% or lower levels on the exchange in order to get the 87% - 94% AV versions going down to near zero deductibles and $1k out of pocket.

 

[homestead]

I already went through this process in 2009 and 2010 with HCTC and the fact
I was laid off under the trade act & during the stimulus. You have the choice to get reimbursed monthly or when you file. I chose when I filed taxes and you have to keep receipts for all you payments (images of front and back of checks) to the insurance company and proof of insurance from the insurance company plus a couple other docs.
It was very complicated ended up with about 30 pages to send in to the irs. The (hctc) docs had to be sent a different irs office for verification. Worked ok in 2009 but in 2010 they said my documentation was incomplete (after 4 months of waiting) So called irs and in talking to them about what docs were missing they said they didn't know since they were stored in another location. So I had to resend them all 30 pages of docs again and after 9 months they sent my refund and interest. If I go with obamacare I think I will go with the monthly plan.

 

[scrabbler1]

That's what i'm planning to do - though my tax is minimal I'll get a big refund. Seems like it will be less hassle than providing documentation and any potential questions and with today's low interest rates the time value of money isn't real significant.

Yup, and I thank you for your post (#11) which made me ask the question in #12 rbmrtn answered in #13 with that good link to the IRS website, giving me a sufficient answer to cause me to change my mind about how to handle the subsidy. Along the way, I went about choosing the Silver plan I was leaning toward. The NY health exchange website was working more quickly (finally!) so I was able to change my existing selections on the subsidy and pick the plan I wanted, thereby completing my work there. I also found some more info in the IRS website about how the subsidy interacts with one's tax return, further aiding me in my decision.

I then ran the numbers through my 2014 ER budget (and cash flow) spreadsheet which were okay. I eliminated the first federal estimated income tax payment which was about the same as the exchange's premium subsidy.

I am feeling better now.

 

[donheff]

This added thread added more confusion to me for the medicaid gap thread. It seems like ERers with low MAGI need to go for the subsidy in advance since if they apply for reimbursement they will get stuck with insufficient earning. Many could get caught below the "gap" in regular Medicaid territory but with too much in assets to get Medicaid. Either way it seems like projecting sufficient earnings to qualify for the advance subsidy would be the way to go. I have a feeling this may not turn out well for low income ERs.

 

[tinlizzy]

Many could get caught below the "gap" in regular Medicaid territory but with too much in assets to get Medicaid.

I believe qualifying for Medicaid under PPACA is strictly based on MAGI now and no longer includes assets.

 

[rbmrtn]

I believe qualifying for Medicaid under PPACA is strictly based on MAGI now and no longer includes assets.

Only if your state expands medicaid. If they don't the old rules are in place.

 

[NW-Reader]

This strategy may differ depending on whether your FPL is above or below 250%. If lower than 250%, you can recovery the subsidy on an exchange purchased policy, but AFAIK you will not retroactively get copay and out of pocket assistance. This does not seem to be recoverable at year end should your medical expenses go that high even if your income was lower. This can be a difference lost of up to about $10k annually.

So at 250 or lower, it may be worth documenting as needed to get the 73% AV version of the health plan. Then it becomes even more worthwhile at 200% or lower levels on the exchange in order to get the 87% - 94% AV versions going down to near zero deductibles and $1k out of pocket.

Hi, I've been lurking but this thread got me to register at last. I *thought* I was pretty up on ACA stuff, through here and other sources, but this is the first time I've heard about the copay and out of pocket assistance under 250% of FPL. I am planning to pull the plug at work in December, based on being able to get insurance on the exchange. Hubby and I both have pre-existing conditions, and have been waiting for this moment.

We are planning to control MAGI through Roth conversions, and want to get it just above 138% FPL to stay out of Medicaid (expanded in WA state.) I was ready sign up for the Bronze plan, but this means I need to take a second look. Can anyone explain how this assistance works? I can't find anything on the exchange website. I can start a new thread on it if appropriate... Thanks for all the help given here!

 

[donheff]

Hi, I've been lurking but this thread got me to register at last. I *thought* I was pretty up on ACA stuff, through here and other sources, but this is the first time I've heard about the copay and out of pocket assistance under 250% of FPL. I am planning to pull the plug at work in December, based on being able to get insurance on the exchange. Hubby and I both have pre-existing conditions, and have been waiting for this moment.

We are planning to control MAGI through Roth conversions, and want to get it just above 138% FPL to stay out of Medicaid (expanded in WA state.) I was ready sign up for the Bronze plan, but this means I need to take a second look. Can anyone explain how this assistance works? I can't find anything on the exchange website. I can start a new thread on it if appropriate... Thanks for all the help given here!

+1 New concept to me as well. This is all academic to me but I have friends to whom it may matter. The Federal Health Benefits Program also hides opportunities and pitfalls that can be very hard to analyze. It would be so much easier if you knew exactly what health resources you would use in the coming year.

Oh -- and welcome to the forum NW-Reader.

 

[MichaelB]

We are planning to control MAGI through Roth conversions, and want to get it just above 138% FPL to stay out of Medicaid (expanded in WA state.) I was ready sign up for the Bronze plan, but this means I need to take a second look. Can anyone explain how this assistance works? I can't find anything on the exchange website. I can start a new thread on it if appropriate... Thanks for all the help given here!

Look at this link, pages 13 & 14 http://www.healthreformgps.org/wp-content/uploads/crs-premium-credit-7-18.pdf . It details cost sharing subsidies, why and how they work.

The idea behind cost sharing is simple. People below 250% of the FPL can't afford a policy, even which subsidies, because the deductible and copays are too high for their level of income. To make it affordable, in addition to premium assistance the copays and deductible need to be reduced. This is what cost share does. To simplify the process, one silver level policy on the exchange is designed for that purpose.