Taxable Income / Medi-Cal Question

[TromboneAl]

I normally make a Roth conversion in December to bring our income to around $25,000. That's advantageous for Obamacare. For example, last year I converted $22,000.

For some reason, last December I only converted $9,000. As a result, our income is much lower and it will put us in Medi-Cal.

Here are three questions:

1. How will being on Medi-Cal be different from what we're on now (CoveredCA via Anthem Blue Cross)?

2. When will we change to Medi-cal (2019)?

3. Is there any way to increase my 2017 income at this point?

Thanks.

 

[MichaelB]

Al, MediCal is California implementation of Medicaid. It is managed, which means the state contracts with insurers to administer the benefit. It’s difficult to comoare with your current insurance plan without knowing who the provider would be, but the biggest difference is likely to be a smaller network of providers, which translates into longer wait times for access and fewer providers nearby. Without additional info, my guess would be you would prefer to continue with your current plan and not make this change.

You may not have to make this change. Access to current year ACA exchange insurance is based on estimated current year income, and you should be able to provide an estimate that satisfies the exchange income requirement.

 

[Another Reader]

Medi-Cal works differently. I have a friend that just went through this. IIRC, your income is evaluated monthly. You can be on for a couple of months and off as soon as you hit the limit. Not fun for those with varying income.

Your bigger problem may be paying back the subsidy for 2017, as you did not qualify for it in retrospect. I do not know how that works.

 

[MichaelB]

My understanding is when income is below the minimum for eligibility, there is no requirement to repay the tax credit.

 

[ivinsfan]

This won't help you for 17 but for 18 if you want to stay with BC, you might set up quarterly or monthly conversions for you Roth so that forgetting one won't be such a big deal. I'm a little curious why you only go to 25K and don't milk a little more of the lower tax brackets. Once you hit SS and RMD, you rate is going to rise. From what I know of subsidies for two people at 25K you are probably leaving a little subsidy money on the table.

 

[Sunset]

OP - you could claim unsubstantiated income , and pay the taxes due on it, I'm sure the IRS would like to get more.

 

[jennykay]

One challenge of Medi-cal is that they do offer managed care but it varies by county and can take multipe months to get on a managed care plan (I know this because it happened with my kids last year). It is painful to deal with the slowness of the process and the value of various providers varies greatly. We are avoiding the kids dental care through Medi-cal because the providers are terrible - it's better for us to pay cash.

We carefully manage our income so we remain above the income threshold (for us adults) for maximum choices. As long as you document that your estimated income for 2018 is higher than the cutoff, they will allow you to enroll on Covered CA. It just may take some time for them to process the change.

 

[TromboneAl]

This won't help you for 17 but for 18 if you want to stay with BC, you might set up quarterly or monthly conversions for you Roth so that forgetting one won't be such a big deal. I'm a little curious why you only go to 25K and don't milk a little more of the lower tax brackets. Once you hit SS and RMD, you rate is going to rise. From what I know of subsidies for two people at 25K you are probably leaving a little subsidy money on the table.

We only paid $64 a month for insurance.

My computer reminds me, so I don't forget. Last year I remembered but miscalculated. I've been trying to figure out what happened. I had the flu and I wasn't at home, but it's simple math.

My guess is that I looked at income from a retirement account, and mistook it for taxable income. There was an account with 16K of income, so that might explain it.

Our GP takes medicaid so we're set there.

First world problems!

Thanks for the help.

 

[jim584672]

1. How will being on Medi-Cal be different from what we're on now (CoveredCA via Anthem Blue Cross)?

No premiums, $1-$3 Rx, $200 MaxOOP year.

2. When will we change to Medi-cal (2019)?

You can change to it next month. Report your income drop and you will qualify. I dropped in when my UI ran out mid year, even though the yearly total was way over.

3. Is there any way to increase my 2017 income at this point?

No PTC to reconcile since it is not considered insurance, no need to worry about yearly income.