ACA Cliff / College grad with income for 1/2 year

[daylatedollarshort]

I have a question some of you may have been through already or could point me towards a good resource.

2015 - Family on a health insurance exchange plan qualifying for ACA tax credits, including low income college student in total household income.

2016 - College students goes to college spring semester, graduates, hopefully gets a good job with insurance, but who knows, maybe stays unemployed or low income.

I'm wondering if we should get an individual plan for one of the kids who will likely be working at least one semester next year, or should we keep him on our subsidized plan until he actually graduates and gets a job. The potential problem with keeping him on our plan is I don't want his fulltime income to push our family income over the ACA cliff, if his salary for the entire year will count toward our household O-MAGI.

Will his income be prorated on our ACA tax credits since he was only on our plan part of the year, or will all his income count and push us over the cliff? Should we get an individual plan for him for 2016 or keep him on our ACA plan until graduation and a job actually happen?

DH will have to run some model taxes for 2016, but I thought maybe some of you who have been through this might have some advice.

 

[GTFan]

If he's part of your ACA household (i.e. you claim him as dependent in 2016) his full income will count. If he makes enough to get his own plan (at least 100% FPL) you might want to not claim him on your taxes so he can get his own cheap plan. It will save you money on your plan btw. Even if he's close but not over the FPL to qualify you can always have him tell the marketplace that he's got enough to qualify (it's just an estimate). The tax benefits do not go away even if he falls below FPL at end of year, people are not penalized for losing jobs etc. as long as the estimate was semi-accurate.

But the tradeoff is that you can't then claim his education expense tax credits, assuming you're paying for school.

You can also put him on your plan then update your marketplace info to drop him from your coverage if he gets his own via employer in second half of year (and not claim him as a dependent).

https://www.irs.gov/Affordable-Care-Act/Changes-in-Circumstances-can-Affect-your-Premium-Tax-Credit

Also, you don't have to count his income if he's below the fed tax filing floor ($6200 in earned income or $1k unearned as of 2014). It's only counted if he has to file a return.

https://www.healthcare.gov/income-and-household-information/income/

I'm in the same boat and had my son go on his own plan for this year and next, but he's paying for his own school right now. He's also close enough to FPL to be ok and he's also on track to graduate next year.