MAGI for ACA subsidy in a partial year

[outabout]

My DH will probably need to buy a policy via Connect for Health Colorado in Feb, 2016. However, he will only need it through Aug because he will be on Medicare in Sept. We plan on managing our MAGI so he can qualify for a subsidy.

My original thought was we would only need to maintain MAGI for as long as he is on an ACA policy. As soon as he is on Medicare, we should be able to increase MAGI with no impact on the subsidy he already received. But then I looked at IRS form 8962, it appears that my thought was incorrect. We must maintain MAGI throughout the year in order to not having to pay back the premium tax credit.

Has anyone run into this situation? Is my understanding correct?

Thanks for your thoughts.

 

[ziggy29]

Yes, your income for the entire year is what matters. If you crank up the income after going on Medicare, you will likely have to pay some or all of the subsidy back come tax time.

 

[pjm-7]

Are you planning to get the subsidy for the six months that you will be on the ACA policy?
Since this is only part of the year you may just want to consider paying the entire (non-subsidized) premium and squaring everything on your Form 8962 when you file.

I bring this up because for 2015 it took Connect for Health eight months to get my premium tax credit and account correct. So far, it looks like 2016 will be OK. You may just want to save the time dealing with them if something goes wrong.

I do appreciate the ACA but Colorado Connect for Health not so much.

 

[bingybear]

The resulting subsidy is really calculated on your taxes, not on the ACA site. Your income on the 1040 is not divided by month, but listed for the year. Boy it would be great for RE, just realize all your income in one month and get a great subsidy the reset of the year. Nope.

 

[sengsational]

Yep, you need to add-up the income for everyone in the family for the entire year, where "family" is defined by the number of dependents. The form then does a fraction of FPL for that family size calculation.

 

[outabout]

Thanks everyone, it makes sense that the income of entire year is what it counts.

Are you planning to get the subsidy for the six months that you will be on the ACA policy?
Since this is only part of the year you may just want to consider paying the entire (non-subsidized) premium and squaring everything on your Form 8962 when you file.

I bring this up because for 2015 it took Connect for Health eight months to get my premium tax credit and account correct. So far, it looks like 2016 will be OK. You may just want to save the time dealing with them if something goes wrong.

I do appreciate the ACA but Colorado Connect for Health not so much.

@pjm-7, we also want cost sharing so we will need the tax credit up front. What was your issue that caused delay if you don't mind sharing? Thanks!