New to ACA Sign Up - Income Discrepancy - Choose "Stopped working at a job"

[kilkoyne]

I did a "dry run" of the ACA application (Massachusetts) and got to an income discrepancy. The income I reported is much less than it was last year and I was given the choice to choose "Stopped working at a job" as to why there is a discrepancy.

Will I need to provide any other information with the income discrepancy? I'm assuming as long as my estimated MAGI matches with next years tax forms I should be ok? Sorry, this is fairly new to me and I want to make sure I am understanding this correctly. Thanks

 

[Livefree]

Stopped working at a job should be enough. I live in Mass too, and seem to remember I had to upload a signed statement that I left my job (I quit in June 2017) They may also need your last paycheck, with year to date totals.



You will probably need to speak with a customer service person.

 

[kilkoyne]

Stopped working at a job should be enough. I live in Mass too, and seem to remember I had to upload a signed statement that I left my job (I quit in June 2017) They may also need your last paycheck, with year to date totals.



You will probably need to speak with a customer service person.

Thanks. Customer service isn't going to tell me to apply for COBRA, are they?

Another "newbie" question. From that point going forward I just need to provide an estimate of the continuing years' projected MAGI and if I'm over or under I will either get a bill or refund when I'm submitting my next years' tax forms?

 

[SecondCor521]

Thanks. Customer service isn't going to tell me to apply for COBRA, are they?

Another "newbie" question. From that point going forward I just need to provide an estimate of the continuing years' projected MAGI and if I'm over or under I will either get a bill or refund when I'm submitting my next years' tax forms?

On COBRA, probably not. I've never heard of it, anyway. ACA marketplaces seem to coordinate with Medicaid, so they might try to figure out if you should be on Medicaid instead. But if you project a high enough MAGI, that shouldn't be an issue either.

As far as the "newbie" question, generally correct. My state carries forward my estimated MAGI and ACA plan from year to year - MA may do similarly or they may require you to provide it each year.

You'll reconcile your subsidy with your taxes each year. The reconciliation is done on Form 8962. The "bill or refund" part is at the bottom on lines 29 and 26, respectively.

 

[jim584672]

Just a heads up, if you want to avoid Medicaid you need to show consistent monthly income above the Medicaid line. If you want Medicaid then show low months and it will put you in.

 

[kilkoyne]

ACA marketplaces seem to coordinate with Medicaid, so they might try to figure out if you should be on Medicaid instead. But if you project a high enough MAGI, that shouldn't be an issue either.

Just a heads up, if you want to avoid Medicaid you need to show consistent monthly income above the Medicaid line. If you want Medicaid then show low months and it will put you in.

At this point I'd be below 133% FPL which would place me in one of the "Medicaid" plans Massachusetts offers. What are the cons for being on Medicaid? Is the reason due to less choices in health plans and care providers? Is there anything else I should be concerned about with having a low MAGI?

 

[xlf11]

I'll be below 133% FPL so it looks like I'd qualify for MassHealth CarePlus which is one of the "Medicaids" Massachusetts offers. I'm not really looking to go on Medicaid but if my MAGI is too low then I guess that's what I'll get unless I raise my MAGI or claim a higher MAGI.

What are the pros/cons for being on Medicaid? I'm assuming less choices for health plans and care providers?

If you can control your income (such as roth conversion) to just above 150% FPL, you can get the best ACA plans with $0 premium with subsidy.

 

[kilkoyne]

If you can control your income (such as roth conversion) to just above 150% FPL, you can get the best ACA plans with $0 premium with subsidy.

Ok, I see. That's what I was assuming from reading through other posts. Thank you

 

[jim584672]

At this point I'd be below 133% FPL which would place me in one of the "Medicaid" plans Massachusetts offers. What are the cons for being on Medicaid? Is the reason due to less choices in health plans and care providers? Is there anything else I should be concerned about with having a low MAGI?

The Medicaid line is $1,677 a month. You would need to check the Provider lists for the Managed care plans in your area. Luckily all my doctors from work are in the plans near me so it was perfect. YMMV.

 

[SecondCor521]

At this point I'd be below 133% FPL which would place me in one of the "Medicaid" plans Massachusetts offers. What are the cons for being on Medicaid? Is the reason due to less choices in health plans and care providers? Is there anything else I should be concerned about with having a low MAGI?

At this point I'd be below 133% FPL which would place me in one of the "Medicaid" plans Massachusetts offers. What are the cons for being on Medicaid? Is the reason due to less choices in health plans and care providers? Is there anything else I should be concerned about with having a low MAGI?

It apparently varies by state.

My state is pretty good, but some states the doctors tend to be younger/newer which may be viewed as a good thing (more recent training, more energy and enthusiasm) or a bad thing (less experience).

Also availability can be a thing. The wait to see a Medicaid doctor isn't really any different than using other health insurance. But if you want to see a Medicaid dentist, they have no availability for the next 9-12 months.

I'd ask friends in your state with experience being on Medicaid.

...

Not a health care thing, but if you're going to have more income later, it might make sense to level out your income to the extent you can. This will usually produce the lowest lifetime income taxes.

If you can control your income (such as roth conversion) to just above 150% FPL, you can get the best ACA plans with $0 premium with subsidy.

You want to be just under 150% FPL, not just over. You'll get the best subsidies at 149% FPL, and those will be better than the subsidy at 151% FPL.

It's possible to get $0 subsidized premiums at any FPL, depending on the cost of the plan, your age and tobacco use, the state you live in, etc. I've seen it done with FPL in the 275% range, for example.

 

[MC Rider]

We ended up with Medi Cal which uses the same doctors here as any other insurance. Took 2 months to get into the Clinic and see a Nurse Practitioner for routine care. Took a week or 2 to see the dentist, same with the eye doctor.

 

[teej1985]

We ended up with Medi Cal which uses the same doctors here as any other insurance. Took 2 months to get into the Clinic and see a Nurse Practitioner for routine care. Took a week or 2 to see the dentist, same with the eye doctor.

I have regular insurance, and it's giving me a January date to get a new patient appointment with a PCP. lol

 

[kilkoyne]

If you can control your income (such as roth conversion) to just above 150% FPL, you can get the best ACA plans with $0 premium with subsidy.

You want to be just under 150% FPL, not just over.

If Roth Conversions need to be performed before the end of the year, how can you get within 133% and 150% FPL without knowing your end of year dividends (1099DIV) from a brokerage account?

Could I just look at my November's brokerage account statement and estimate what end of year will be?

 

[xlf11]

If Roth Conversions need to be performed before the end of the year, how can you get within 133% and 150% FPL without knowing your end of year dividends (1099DIV) from a brokerage account?

Could I just look at my November's brokerage account statement and estimate what end of year will be?

I don't think you need that precise about %FPL level as there are other variables as well. As long as you are close enough to be on the low part of your income level to avoid 133%FPL for Mediaid as this is just an estimate and it will be reconciled at the tax time anyway. But in general, it's better to be on the low side than the high side for the estimation unless during the year you have major increase of income level. Plus, the lower income level not only has a higher subsidy/lower premium, it also qualifies you for a better plan otherwise won't be even available for higher income levels. You can actually play with your income level with your info for what-if on Healthcare.gov. One more thing that if you need further help, I would recommend to find a local ACA agent as there might be some local plans more suitable for your need (it's free).

 

[SecondCor521]

Plus, the lower income level not only has a higher subsidy/lower premium, it also qualifies you for a better plan otherwise won't be even available for higher income levels.

I don't think there is any connection between subsidies and available plans.

Said another way, if a plan is available in your ZIP code, you can buy it no matter what your subsidy ends up being.

The plan's subsidized premium may be more than what you want or are willing to pay. Perhaps that's what you meant and I misunderstood what you wrote.

 

[SecondCor521]

If Roth Conversions need to be performed before the end of the year, how can you get within 133% and 150% FPL without knowing your end of year dividends (1099DIV) from a brokerage account?

Could I just look at my November's brokerage account statement and estimate what end of year will be?

You can estimate. Just remember that December sometimes comes with bigger than usual dividend distributions. Looking at prior year patterns or asking the brokerage company for estimates can both help.

The nice thing about 150% FPL is that it matters for the subsidies and the Silver plan CSRs, but the Silver plan CSRs are not reconciled at tax time; only the subsidies are.

So one can estimate 149% FPL, get the best Silver CSR (which comes with very good OOP maximums and deductibles), end up at 151% of FPL at tax time, and nothing happens with respect to the CSRs, deductibles, and OOP maximmum. (You would have to pay back a tiny bit of the subsidies.)

 

[N02L84ER]

Usually between the end of October and the first week of December, you can check this website to find out what capital gains and dividends are going to be declared in December for many different houses. I do this every year in December to decide how much to withdraw from a beneficiary IRA and/or how much of a Roth conversion to do.

https://www.capgainsvalet.com/search/

 

[RetiredAndLovingIt]

Ok, I see. That's what I was assuming from reading through other posts. Thank you

For 2023, as long as your MAGI stays under 200% of the FPL, your maximum PTC repayment will be $350 for a single person so you have some room for error.
200% of FPL will be $29,150 this year.

https://www.irs.gov/pub/irs-drop/rp-22-38.pdf

see section .07 on page 11

 

[xlf11]

I don't think there is any connection between subsidies and available plans.

Said another way, if a plan is available in your ZIP code, you can buy it no matter what your subsidy ends up being.

The plan's subsidized premium may be more than what you want or are willing to pay. Perhaps that's what you meant and I misunderstood what you wrote.

What I mean is your plan might change due to higher income at least in my case or in my State. I had a lower deductible plan with ~200%FPL. During the year I had an unexpected Capital gain of $20k, which pushed me to a higher income. After I reported a change on Healthcare.gov, the original plan was replaced with a much higher deductible different plan (offered by the same company, but a worse plan as they offered several plans under ACA). So basically I paid higher premium with the same company for a worse plan than before for the rest of the year.

 

[SecondCor521]

What I mean is your plan might change due to higher income at least in my case or in my State. I had a lower deductible plan with ~200%FPL. During the year I had an unexpected Capital gain of $20k, which pushed me to a higher income. After I reported a change on Healthcare.gov, the original plan was replaced with a much higher deductible different plan (offered by the same company, but a worse plan as they offered several plans under ACA). So basically I paid higher premium with the same company for a worse plan than before for the rest of the year.

Ah, that sounds like you lost CSRs as a result of reporting a higher income to the exchange.

CSRs are sort of an odd beast because it's sorta the same plan but the deductibles and OOP maximums (usually) vary based on whether you're under 250%, 200%, or 150% of FPL.

One is supposed to report income changes as they occur so that the subsidy can be adjusted, but if you tripped over one of those CSR levels it would affect that as well.

Thanks for the reply!

 

[RetiredAndLovingIt]

What I mean is your plan might change due to higher income at least in my case or in my State. I had a lower deductible plan with ~200%FPL. During the year I had an unexpected Capital gain of $20k, which pushed me to a higher income. After I reported a change on Healthcare.gov, the original plan was replaced with a much higher deductible different plan (offered by the same company, but a worse plan as they offered several plans under ACA). So basically I paid higher premium with the same company for a worse plan than before for the rest of the year.

What happened to you is why I've never reported the income changes but in my case the amount is only a few thousand All I have to pay back is the monthly subsidy difference between my original estimate and the lesser subsidy amount due to the increased income, they don't mess with trying to figure out copay and deductible changes. The amount is so small that there is no penalty and I stay on the same plan level all year.

 

[kilkoyne]

Usually between the end of October and the first week of December, you can check this website to find out what capital gains and dividends are going to be declared in December for many different houses. I do this every year in December to decide how much to withdraw from a beneficiary IRA and/or how much of a Roth conversion to do.

https://www.capgainsvalet.com/search/

I'll have to give this a look, thanks

As long as you are close enough to be on the low part of your income level to avoid 133%FPL for Medicaid as this is just an estimate and it will be reconciled at the tax time anyway.

Gotcha, thanks

For 2023, as long as your MAGI stays under 200% of the FPL, your maximum PTC repayment will be $350 for a single person so you have some room for error.
200% of FPL will be $29,150 this year.

https://www.irs.gov/pub/irs-drop/rp-22-38.pdf

see section .07 on page 11

Great, if I overestimate a bit it's not the end of the world

You can estimate. Just remember that December sometimes comes with bigger than usual dividend distributions. Looking at prior year patterns or asking the brokerage company for estimates can both help.

I noticed the larger dividend distribution in my Dec/2022 statement, thanks for the heads up.


I'm going to do more homework but I have a much better understanding of this now. I don't think I have any more immediate questions right now. I'm going to review more posts throughout the board here to make sure I have a solid plan going forward.

Thanks everyone