Mid-year ACA enrollment and income estimate question

[surprising]

Planning on moving to ACA Jun 1st after retiring but will have 4 months of high income up to that point (and very low income after). In estimating income for subsidy consideration, do I need to include the months of the year that I was not covered by ACA? If so, I will not qualify for subsidies.

 

[jim584672]

Planning on moving to ACA Jun 1st after retiring but will have 4 months of high income up to that point (and very low income after). In estimating income for subsidy consideration, do I need to include the months of the year that I was not covered by ACA? If so, I will not qualify for subsidies.

It is calendar year based for ACA subsidies, so you should include the 4 high months in the estimate. If your state has Medicaid expansion it is monthly based and previous months do not count at all.

 

[RetiredAndLovingIt]

It is calendar year based for ACA subsidies, so you should include the 4 high months in the estimate. If your state has Medicaid expansion it is monthly based and previous months do not count at all.

Jim 584672, can you expand on your answer a little more. I move to Medicare for the last 3 months of this year and I'm in California which is a Medicaid expansion state. So will the ACA use my total income for the 12 months or just 9 and how would that work for reconcilliation purposes?
I was thinking about doing a larger than normal Roth Conversion in December since I was no longer on the ACA but don't want to screw anything up and can certainly wait till the beginning of 2024 to make the conversion.

 

[jim584672]

Jim 584672, can you expand on your answer a little more. I move to Medicare for the last 3 months of this year and I'm in California which is a Medicaid expansion state. So will the ACA use my total income for the 12 months or just 9 and how would that work for reconcilliation purposes?
I was thinking about doing a larger than normal Roth Conversion in December since I was no longer on the ACA but don't want to screw anything up and can certainly wait till the beginning of 2024 to make the conversion.

ACA uses the whole 12 month calendar year for income. Doing a large Roth conversion in Dec will lower your subsides in the 9 months you are on ACA.

 

[Aerides]

If so, I will not qualify for subsidies.

Correct, you probably won't. (but do check current rules as the cliff changed in the past couple of years). This is why a lot of folks stay on Cobra to round out the first year - the costs might work out the same, but you get the added benefits:

Not having to change plans/providers in the middle of retiring
Continuing on the same deductible - a switch mid year starts you at zero paid in, even if you stay with the same insurer.

 

[aaronc879]

It's already been said but i'll say it again. ACA subsidies are based on total MAGI for the entire year not just the time you are on ACA. Whatever you expect your total MAGI for the year to be is what you put in as income for the year. Make sure to add in any income from dividends, interest, capital gains, ect in addition to your regular wage income.

 

[cathy63]

Jim 584672, can you expand on your answer a little more. I move to Medicare for the last 3 months of this year and I'm in California which is a Medicaid expansion state. So will the ACA use my total income for the 12 months or just 9 and how would that work for reconcilliation purposes?
I was thinking about doing a larger than normal Roth Conversion in December since I was no longer on the ACA but don't want to screw anything up and can certainly wait till the beginning of 2024 to make the conversion.

If you only need insurance for a 5 month gap between work and Medicare it's most likely cheaper and easier to use COBRA. If you go on ACA, your deductible will reset, and ACA premiums for a 64 yr old will be high. Your COBRA premiums may well be cheaper, even though you have to pay the full amount plus the 2% admin fee.

 

[RetiredAndLovingIt]

I'm on the ACA already and I'm very happy with so I'll just wait till next year to do that larger Roth Conversion so as not to mess anything up. I misunderstood what Jim was saying my bad...

 

[cathy63]

I'm on the ACA already and I'm very happy with so I'll just wait till next year to do that larger Roth Conversion so as not to mess anything up. I misunderstood what Jim was saying my bad...

Oh sorry, I misread too. For some reason I thought you were the OP adding more info.

 

[jim584672]

Sorry if I wasn't clearer. My point was if you had a large income and it suddenly stopped and now income is low, Medicaid only cares about going forward current monthly income. Also it is possible to drop into Medicaid mid-year, say your unemployment runs out mid year, report the new low number and drop in (assuming you are under the limit).

 

[surprising]

If you only need insurance for a 5 month gap between work and Medicare it's most likely cheaper and easier to use COBRA. If you go on ACA, your deductible will reset, and ACA premiums for a 64 yr old will be high. Your COBRA premiums may well be cheaper, even though you have to pay the full amount plus the 2% admin fee.

COBRA for me and family is over $2K/month, so perhaps I just find the cheapest ACA plan for remainder of 2023 and then re-enroll in a better subsidized plan for 2024.

 

[Montecfo]

COBRA for me and family is over $2K/month, so perhaps I just find the cheapest ACA plan for remainder of 2023 and then re-enroll in a better subsidized plan for 2024.

It depends. Most ACA plans in my area have high deductibles and are expensive without subsidies. Also depends if you have met deductibles on your old and how the coverages compare.

Healthsherpa. com has some good estimation tools.

I just signed up for ACA myself, after COBRA ran out.