LAST years income too low for ACA...

[Spock]

I planned my 2017 MAGI income to qualify for ACA for the last half of 2017 (COBRA for the 1st 5 months).
While doing my 2017 taxes I found out, since I was on a high deductible COBRA plan for the first half of 2017, I'm eligible to contribute to an HSA for those COBRA months.
If I contribute that amount to the HSA, my 2017 will now be below the ACA MAGI minimums for 2017. If I don't contribute to the HSA, I have to pay ~$300 in fed income taxes.

Just to complicate things, while the wide variety of info sites say HSA contributions are subtracted to determine MAGA income, the official ACA site says NOT to include the HSA deductions:
https://www.healthcare.gov/reporting-deductions/
but I'm sure that info will magically disappear should I need to rely on it in an audit.

The question is: Has anybody had their income fall short of ACA minimums at year end (in this case only on paper) and jeopardized their subsidies for that year?

 

[Texas Proud]

No, but for $300 I would not take a chance of losing it...

How much is it worth to you? Me, it is a lot of money....

 

[ivinsfan]

This is interesting in my state MN they have MN Care, or expanded Medicare.. this is my first year on ACA and my broker made a huge point of telling me if I came in under the ACA MAGI might have to pay all my subsidy back. He kept saying I'm never know anyone who had to pay it back, but in theory they could ask you to pay it all back.

I wont let that happen we have tax deferred money, run our own business and control our salaries so I'm going to know my number for certain before the end of 2018

 

[Spock]

This is interesting in my state MN they have MN Care, or expanded Medicare.. this is my first year on ACA and my broker made a huge point of telling me if I came in under the ACA MAGI might have to pay all my subsidy back. He kept saying I'm never know anyone who had to pay it back, but in theory they could ask you to pay it all back.

I wont let that happen we have tax deferred money, run our own business and control our salaries so I'm going to know my number for certain before the end of 2018

That is true for going OVER your income and not longer qualifying for a subsidy... but I've not seen anything about having too little income at the end of the year.
And there are caps on the payback:
If you're a family of four and your 2017 income...

- was less than $48,500, you won't pay back more than $600.
- fell between $48,500 and $72,750, you won't pay back more than $1,500.
- fell between $72,750 and $95,400, you won't pay back more than $2,550
- was more than $98,000, you will have to pay back all of any premium tax credit you received in advance.

 

[ivinsfan]

That is true for going OVER your income and not longer qualifying for a subsidy... but I've not seen anything about having too little income at the end of the year.
And there are caps on the payback:
If you're a family of four and your 2017 income...

- was less than $48,500, you won't pay back more than $600.
- fell between $48,500 and $72,750, you won't pay back more than $1,500.
- fell between $72,750 and $95,400, you won't pay back more than $2,550
- was more than $98,000, you will have to pay back all of any premium tax credit you received in advance.

I know, but he made a point of telling us it was due to the fact that a lower income meant we should should have been on MNSure and not an ACA plan. He pressed us mightily to declare a lower income and just go directly to the state run plan. Made me wonder if he got more commission money that way.

 

[jim584672]

As long as they accepted the estimate you should be good, even if the final number is under.

 

[Dtail]

As long as they accepted the estimate you should be good, even if the final number is under.

+1
You can even get a small refund if your estimate was too high.

 

[MBSC]

The question is: Has anybody had their income fall short of ACA minimums at year end (in this case only on paper) and jeopardized their subsidies for that year?

You keep the APTC if actual income ends up below the 100% FPL threshold.

From IRS Form 8962 Instructions, line 6: If the amount on line 5 is less than 100%, see "Household income below 100% of the federal poverty line" next to determine if you qualify for the PTC.

From "Household income below 100% of the federal poverty line":

You may qualify for the PTC if your household income is less than 100% of the federal poverty line and you meet all of the following requirements.
*You or an individual in your tax family enrolled in a qualified health plan through a Marketplace.
*The Marketplace estimated at the time of enrollment that your household income would be at least 100% but not more than 400% of the federal poverty line for your family size for 2017.
*APTC was paid for the coverage for one or more months during 2017.

 

[ArkTinkerer]

Can you do a partial rollover to a ROTH to generate taxable income?

 

[pb4uski]

Your 2018 subsidy will be based on your projected 2018 income, which you self declare.... the reality is that it will be only slightly more than your 2017 actual income so I don't see where your 2017 income being slightly under the ACA lower limit should be a problem.

While I guess that technically it might make sense that they could go after your 2017 subsidy if your income is too low, I've never heard of it. If he had a notice of something that was issued that is the cause for his caution then that might make sense, but if it is just an anecdotal fear and he has never heard of them doing it I don't see much cause for concern.

ETA: MBSC's post above makes it clear that they can't revoke the PTC so sleep soundly.

 

[pb4uski]

Can you do a partial rollover to a ROTH to generate taxable income?

Not now... had to be done before the end of 2017... but if the OP made a deductible tIRA contribution in 2017 that put them over the limit and decided that they preferred HSA to tIRA, they could make a HSA contribution and then recharacterize a portion of the tIRA contribution.

 

[rbmrtn]

The IRS instructions for form 8962 start with the AGI calculated on the tax return and adds back certain income. The tax software follows this also. Following the IRS instructions should cover any audit issues.

 

[gauss]

I planned my 2017 MAGI income to qualify for ACA for the last half of 2017 (COBRA for the 1st 5 months).
While doing my 2017 taxes I found out, since I was on a high deductible COBRA plan for the first half of 2017, I'm eligible to contribute to an HSA for those COBRA months.
If I contribute that amount to the HSA, my 2017 will now be below the ACA MAGI minimums for 2017. If I don't contribute to the HSA, I have to pay ~$300 in fed income taxes.

Just to complicate things, while the wide variety of info sites say HSA contributions are subtracted to determine MAGA income, the official ACA site says NOT to include the HSA deductions:
https://www.healthcare.gov/reporting-deductions/
but I'm sure that info will magically disappear should I need to rely on it in an audit.

The question is: Has anybody had their income fall short of ACA minimums at year end (in this case only on paper) and jeopardized their subsidies for that year?

Spock,
As others have correctly pointed out, if you the Marketplace granted you APTC credits on the information that you provided to them in good-faith then you will not be required to repay the APTC if your income comes in low. This assumes that you meet the other PTC requirements (ie lawfully present, etc.).

If you live in a Medicaid expansion state and the Marketplace estimates that you income would be too low for APTC, then you would be enrolled into a Medicaid plan with very low premiums/copays etc.

-gauss

 

[ivinsfan]

OP go ahead and fill out your taxes with the HSA contributions and see if anything happens on 8962..if not your're good.All signs point to the fact that you are good.

Another option would be to just partially fund the HSA until you hit the income number you were looking for. You are paying taxes at pretty much the bottom of the tax scale anyway.

 

[wmc1000]

We are in the same scenario coming in just slightly lower than estimates income for 2017 and there will not be an issue at tax time.

In fact we got an extra $55 PTC credit even though "technically" the income level would have been below the threshold for ACA qualification.

 

[ArkTinkerer]

Not now... had to be done before the end of 2017... but if the OP made a deductible tIRA contribution in 2017 that put them over the limit and decided that they preferred HSA to tIRA, they could make a HSA contribution and then recharacterize a portion of the tIRA contribution.

Will that be possible going forward? I thought one of the new tax changes was no more recharacterizations?

 

[Spock]

You keep the APTC if actual income ends up below the 100% FPL threshold.

From IRS Form 8962 Instructions, line 6: If the amount on line 5 is less than 100%, see "Household income below 100% of the federal poverty line" next to determine if you qualify for the PTC.

From "Household income below 100% of the federal poverty line":

You may qualify for the PTC if your household income is less than 100% of the federal poverty line and you meet all of the following requirements.
*You or an individual in your tax family enrolled in a qualified health plan through a Marketplace.
*The Marketplace estimated at the time of enrollment that your household income would be at least 100% but not more than 400% of the federal poverty line for your family size for 2017.
*APTC was paid for the coverage for one or more months during 2017.

This is gold. I'd been plugging through this with TaxAct (being in significantly lower brackets TA found me a boat load of credits I wasn't aware of last year). By going back to the DIY forms and slogging through it looks like a $600 premium repay might turn into a $238 PTC.

MSBC: I owe you a bacon cheeseburger!

 

[gauss]

This is gold. I'd been plugging through this with TaxAct (being in significantly lower brackets TA found me a boat load of credits I wasn't aware of last year). By going back to the DIY forms and slogging through it looks like a $600 premium repay might turn into a $238 PTC.

MSBC: I owe you a bacon cheeseburger!

The trick may be getting the Marketplace to sell you a policy with APTC in subsequent years. They wont be allowed to grant APTC (ie subsidies) if they believe your income is low enogh to be Medicaid Elgible for states that didnt opt out of the expansion. If you are in a nonexpansion state then you will have a bit of a pickel to deal with.