Couple of ACA newbie questions

[pb4uski]

I would just add after the $60,000... "of pension income" and leave it at that.

Being $2,400 for your wife's pension and $57,600 of tIRA withdrawals... right?

 

[Carpediem]

I would just add after the $60,000... "of pension income" and leave it at that.

Being $2,400 for your wife's pension and $57,600 of tIRA withdrawals... right?

Right but do you think the term "pension income" will confuse them since it's technically not a company pension?

 

[pb4uski]

I dunno, but there's a good chance that they consider tIRA withdrawals as pension income since that is they line that they show up on on your tax return.

I guess you could repharase it as something like "We expect our 2021 tax return income will be solely $60,000 of pension income." You aren't saying it is a pension, just that it is pension income.

 

[SecondCor521]

Right but do you think the term "pension income" will confuse them since it's technically not a company pension?

I really doubt they care or that they will follow up.

All they're trying to do is figure out if you've reasonably understood and estimated your income so that the AGI you calculate is reasonably likely to be in the ballpark when you reconcile on your taxes. They don't want to overpay subsidies for you, because they may not get them all repaid (there are repayment limitations at the bottom of Form 8962). And they want you to get the subsidies you're entitled to during the year to help you out.

Once they have assured themselves of that (which I am 99.9% sure that they will with your letter), they could care less to know any more information, details, backstory, or anything else about your income.

Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

 

[Carpediem]

Sounds good. IYO, is it okay to say what I did about the rental property?

It is currently gutted down to the studs and will not be rentable until mid-year. It's a short-term vacation rental condo. Of course, I don't plan on including any of that info in my letter.

 

[Carpediem]

Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

Your reply makes me feel much better! And yeah, I'm really (overly) concerned about it since it's our first year using ACA. Thank you!

 

[cathy63]

Sounds good. IYO, is it okay to say what I did about the rental property?

It is currently gutted down to the studs and will not be rentable until mid-year. It's a short-term vacation rental condo. Of course, I don't plan on including any of that info in my letter.

You can say whatever you want to say in the letter. However, my recommendation is to assume that the person reading it has a high school diploma and no financial background and 1,000 other letters to read. If you can, avoid saying anything that might be confusing to that person.

"In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income." This is a complete description of your situation. It won't hurt you to explain about rental houses and hurricanes, but you really do not need to.

 

[RetiredAndLovingIt]

The first year, they came back in Feb or March and asked for proof, I sent them a letter saying I was no longer working and would be living off my retirement savings and listed dividend income and estimated Roth conversion amount. I got no response so I then sent them my estimated tax return for the previous year which I had not filed since TurboTax was not ready yet. My coveredca account continued to remind me I needed to submit the proof every time I checked so so I called them and sat in hold forever but once I got a live person she pushed a button on her end and I got an approval e-mail followed by a letter. They don't need much explanation and as long as the numbers come close they won't bug you the next year.

 

[Carpediem]

The first year, they came back in Feb or March and asked for proof, I sent them a letter saying I was no longer working and would be living off my retirement savings and listed dividend income and estimated Roth conversion amount. I got no response so I then sent them my estimated tax return for the previous year which I had not filed since TurboTax was not ready yet. My coveredca account continued to remind me I needed to submit the proof every time I checked so so I called them and sat in hold forever but once I got a live person she pushed a button on her end and I got an approval e-mail followed by a letter. They don't need much explanation and as long as the numbers come close they won't bug you the next year.

In hindsight, do you think sending the estimated tax return was necessary?

 

[Carpediem]

Fyi, I uploaded my letter for income verification today. Below is what I sent them. Will I hear back from them on the status of the verification? Or do I need to keep checking the status online? Right now, it says my application is 'complete' but on the 'Eligibility & appeals' page, it says my eligibility is temporary until March 5 until I submit the verification information.

The following is an explanation of my 2021 annual income estimates:
As of 2020, my wife and I are both fully retired. In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income. In the past we've also received some income from a rental property but that property was destroyed in 2020 by hurricane Sally.

Please let me know if you have questions or need additional information.
Thank you.

 

[SecondCor521]

Fyi, I uploaded my letter for income verification today. Below is what I sent them. Will I hear back from them on the status of the verification? Or do I need to keep checking the status online? Right now, it says my application is 'complete' but on the 'Eligibility & appeals' page, it says my eligibility is temporary until March 5 until I submit the verification information.

The following is an explanation of my 2021 annual income estimates:
As of 2020, my wife and I are both fully retired. In 2021, we will withdraw $57,600 from our IRAs and we will receive $2400 in pension income for a total of $60,000. We will have no other income. In the past we've also received some income from a rental property but that property was destroyed in 2020 by hurricane Sally.

Please let me know if you have questions or need additional information.
Thank you.

It's been a few years since I went through what you're going through, but my recollection is that the state ACA people sent me a letter saying I was approved for a subsidy of $X per month.

I also had to send in the first month's (net of subsidy) premium to the insurance company.

Shortly after that point, I was able to set up autopay with the insurance company and it was smooth sailing from there.

Each year my AGI estimate and my insurance policy renew and I don't have to do anything unless I want to make a change.

 

[Carpediem]

It's been a few years since I went through what you're going through, but my recollection is that the state ACA people sent me a letter saying I was approved for a subsidy of $X per month.

I also had to send in the first month's (net of subsidy) premium to the insurance company.

Shortly after that point, I was able to set up autopay with the insurance company and it was smooth sailing from there.

Each year my AGI estimate and my insurance policy renew and I don't have to do anything unless I want to make a change.

Thanks, I hope mine is that easy!

 

[Carpediem]

Here's an update to my signing up for ACA for the first time:

As mentioned in my last post, I uploaded a letter of explanation for income verification on Dec 8th. Based on others' comments I wasn't expecting to hear anything for awhile and figured I'd have to call them about it. But yesterday I received the email below and it looks like I'm all set. Thank you all very much for helping me through this.

Carpediem

You recently submitted one or more documents to verify information in your application for coverage through the Health Insurance Marketplace.

We reviewed what you sent. Your documents verify the following information in your application:

What We Needed to Verify: Annual Household Income

Applicant Name: Carpediem

Status: HCGOV Green x icon VERIFIED

You don’t need to take any further action to resolve the issue listed above.

 

[pb4uski]

Well done! Congratulations!

 

[SecondCor521]

Everyone I've ever heard talk about this gets worried about it the first year they sign up, gets encouraged to write a simple letter, does so, gets approved, and says, "Wow, that wasn't that bad" or something, and then moves on with life. You're on step 3 of 6.

Here's an update to my signing up for ACA for the first time:

As mentioned in my last post, I uploaded a letter of explanation for income verification on Dec 8th. Based on others' comments I wasn't expecting to hear anything for awhile and figured I'd have to call them about it. But yesterday I received the email below and it looks like I'm all set. Thank you all very much for helping me through this.

Congratulations, you just completed steps 4, 5, and 6.

 

[EastWest Gal]

This was my first time to be eligible for a subsidy. They were fine with my application, but wanted verification of my husband’s self-employment income. He’s a musician, so no income from March, and until the end of next year.

There was a list of documents: schedule C and 1040, so I sent those. Not good enough. So DH produced a spreadsheet with his income and mileage deduction. He printed it, signed it, and they accepted it. It only took 48 hours for them to review the documents each time.

It was quicker than I expected.

 

[2retireearly]

How would I answer if I just plan on withdrawing less money in 2021?

I don't think they ask. They never asked me when I did ACA a few years ago. I withdrew the smallest amount I could (that didn't made it look like Medicaid) as I had lots of cash. The year before I was working and had a big income. Unless you are audited (which is rare) the ACA website doesn't look at your incomes and wonder why it is changing.

 

[Canoeboy]

2020 was our first year on ACA plan after retiring in Jan 2019 and we signed up again last month for 2021. We had absolutely no issues and provided ZERO income documentation/explanation on 2019 and prior years (when we were well over the ACA subsidy cliff) when signing up for ACA plans in late 2019/2020. We simply stated an expected income for 2020/2021 that were just under the subsidy cliff for our size family - all on the healthcare.gov website.

The key is managing you MAGI to definitely stay under the cliff and/or to a level that is reasonably close to what you stated on your application. This can be a little challenging if you have significant after tax investments that pay out somewhat unpredictable dividends in the last days of the year. Much more simple to manage if your income is coming exclusively from pre-tax retirement accounts, pensions, simple interest. Also, don’t forget about income that others in your household may have, such as summer jobs by dependent kids.

 

[meleana]

Just an FYI- some states have ACA Health Care Navigators that can assist you and if your state does not there are brokers out there that can handle the application process for you.

After some frustration trying to do it on my own I tracked down a broker to do it and he did so in no time flat. I’m going to use him when I have to go over to Medicare when I turn 65 this upcoming year.