ACA Income Level estimate

[jpeter1093]

When we bought our health plan for 2020, we estimated our income as $36k for 2020 and received a subsidy. I understand that below about 36k (in NYS) would put us on Medicaid. We have control over our reportable income; ie, can pull from pre or post taxable accounts. Is there any consequence to having a 2020 year end MAGI of much less than 36k? Like 1k?

 

[SecondCor521]

Not any bad one.

If your income is below your estimate, then you should have received more of a premium tax credit than you did. This will be reconciled on Form 8962, and the difference between what you should have received and what you did receive will become a credit on your tax return. With a $1K income difference, the credit should be negligible - maybe $100 or so.

You won't be forced on to Medicaid. Your actual income in 2020 will have no bearing on your estimated income for 2021 and no bearing on whether you can continue ACA coverage in 2021.

 

[jpeter1093]

I wasn't clear, I was going from a 36k income to a 1k income. I like your second paragraph; don't want to go on Medicaid. Thanks!

 

[jim584672]

In NY a 4 person household Medicaid level is $35,535. NY has its own special quirks when it comes to the ACA.

0-138% FPL Medicaid $0 per month premium
138-150% FPL Essential Plan $0 per month premium. all ages
150-200% FPL Essential Plan $20 per month, per person premium, all ages
200-400% FPL ACA "metal plans" with subsidies
Over 400% FPL ACA "metal plans" with without subsidies

138% FPL levels by household size:
1-$17,237
2-$23,336
3-$29,436
4-$35,535

If you estimate your income at 139% you will get the Essential Plan for free without being in Medicaid.

 

[cathy63]

If you misstate your income and fall significantly below the Medicaid cutoff, then the exchange can deny you advance subsidies in future year(s) until you've provided enough documentation to show that you really will be in range for that year. I don't know if they can prevent you from buying a plan on the exchange, but if they do, and you go on Medicaid or pay full price for a private plan, you would not be eligible to claim a subsidy on form 8962 during that year.

Theoretically, if they believe you deliberately understated your income or deliberately failed to report updates, they could also prosecute you since you did attest to that information under penalty of perjury. I don't think that's happened yet though.

If you have tax deferred money that you can roll into a Roth IRA or Cap Gains that you can realize, it's better to do it and make your income fall above the 138% line. Long Term Cap Gains are in the 0% bracket at those income levels.

 

[jim584672]

Reporting changes to income is required:

"Over the next year, you are obligated to report to NY State of Health any changes that would affect your eligibility for enrollment in health insurance within 30 days of such a change. You need to tell us if:

• You move;
• Your income changes (only if you are receiving financial assistance);..."

 

[pb4uski]

When we bought our health plan for 2020, we estimated our income as $36k for 2020 and received a subsidy. I understand that below about 36k (in NYS) would put us on Medicaid. We have control over our reportable income; ie, can pull from pre or post taxable accounts. Is there any consequence to having a 2020 year end MAGI of much less than 36k? Like 1k?

Why would you want to do that? You can pull $36k from pre-tax accounts and pay only a bit more than $1k on the $35k taken out.... about 3.3%.

If anything, I would be looking to pull as much as I could at a low-tax rate while at the same time factoring in the second-order impact on ACA subsidies.

YMMV and you would need to consider NYS income taxes as well.