Verification of 2022 income

[PageTwo]

I just signed up for 2022 health coverage. I'm in Washington State so used the state's exchange. I estimated my income for the year based on dividends and some capital gains that I expect, and qualified for a nice subsidy.

Now they want to see "Proof of Household Income" and I have a deadline to submit documentation by March 6th.

I'm at a loss as to what to submit to document my estimations... The site lists, as examples:

• Payroll statements for the last 60 days
• The first 2 pages your most recent tax return
• Self-employment Profit and Loss document for the past 3 months

Needless to say, the above don't quite work for a recent FIRE situation. This year through November I have been employed, so my 2020 (and 2021) tax returns won't be anywhere similar to 2022.

They also have a form with a big blank field where you can explain your situation. I guess I may have to resort to that?

Thanks for any suggestions!

 

[pb4uski]

I think what you might be able to do is to provide the first two pages of your 2020 tax return and then in the big blank field letter explain that you retired in late 2021 so your 2022 income will not include any wages.

You could include a table with a summary of your 2020 tax return income numbers, your projected 2021 tax return income numbers and your projected 2022 modified adjusted gross income with rows for wages (zero in 2022), interest, dividends, pension income, etc.

They should then be able to see that your 2022 income will be what you claim.

You could also include a copy of your resignation letter or perhaps correspondence from your former employer confirming that you resigned or retired.

 

[PaunchyPirate]

State's will likely differ in how they process things, but here in Pennsylvania, when I was asked to document my income for next year, I sent my most recent federal tax return and included a statement that indicated I am no longer employed and that my income next year will be provided by dividend income which I estimate will be $xxxx. They approved it right away.

They really just need you to prove that you've given some thought to your estimate. If your estimate is wrong, it will be reconciled at tax time.

 

[Aerides]

If you explain that you are now retired and will not have W2 income in 2022, that should work. Again, some states are a little different. Absolute worst case is they don't accept your claim of lower income, refuse the subsidy now, and then you true-up with a big refund at taxtime.

But I've literally never heard anyone here say that happened to them. Every thread I've read on this worked out that they were able to get the subsidies after jumping the extra first-time hoop.

 

[scrabbler1]

In early 2020, I had to provide proof of income because I had entered an estimated income amount which was much lower than it had been in 2018 (the latest year my state's exchange - New York - had income tax returns) or 2019.

I had first tried to upload a Word file explaining the income decrease but it got rejected. Eager to get my explanation through, I uploaded a pair of 1099s (2019 year) along with a copy of a sale order from the very end of December 2019 showing I had sold off all of my shares in a stock fund which had generated a lot of cap gain distributions.

I then added many notes to the main 1099 form, adjusting the 2019 income to what I believed it would be in 2020 (i.e. the same notes from the rejected Word file). The main difference was, of course, removing the cap gain distributions from the sold-off stock fund's shares. I then retotaled the remaining income, including some small estimates of the stock index fund I bought at the end of 2019 with the proceeds of that big sale, and used that as my 2020 estimated income.

After uploading the documents as 1099s, I then had to hope that someone at the receiving end could read and actually understand what I sent and wrote on them. To my surprise, it worked!

Then, in early 2021, I had to reapply for technical reasons, including an income verification. This was in early January, so I hadn't received any 2020 tax forms. So, I simply uploaded the same forms I uploaded in early 2020. It worked again!

I will have to send in more proof of income this time, again for technical reasons. Knowing that this method can work, I will add notes to pages from the annual statements from my investment company, forms which show the same income amounts as the 1099s. (The 1099s won't come out until very close to the due date for a response.) It's a little cumbersome to get this done, but it is doable.

 

[fh2000]

We are in California and started using ACA in 2019. For the first year, I attached a Word document with prior year tax return, and screenshots of prior year interests/dividends from brokerage firms. I explained that we were retired with no earned income. They accepted that.

For subsequent years, I only upload an affidavit that my income will be X dollars, which is the same as last year. They accepted that.

 

[PageTwo]

Thanks all for the great insights! I'll try some of these and will report back

 

[PageTwo]

Update -

I submitted my last 2 paystubs (the last one showing the payout of my remaining vacation - thinking it would serve as "proof" that I left MC), and my 2020 brokerage statement showing dividend income. Using the comment field available for each document I provided my rough estimate of my 2022 income.

I haven't heard back at all from them - my pending action on the portal was "cleared" but I didn't receive a yay or nay about whether they agree with my estimates. It looks like my subsidies have been applied based on the payment due showing on the site.

I also haven't heard from the insurance companies (medical and dental). It looks like payments have to be submitted via the State portal? I'm waiting just a few more days to see if anything shows up in the mail, if not I'll be sure to pay later in December to ensure that coverage starts on Jan 1st.

 

[jim584672]

I uploaded last year's 1099s forms.

 

[FLSUnFIRE]

I submitted my final SF-50 showing I resigned and was unemployed and had no issue (not WA). It was one of the suggested documents, another was the letter from your employer showing you were being dropped from your coverage (By law, I believe they are required to notify you of your COBRA options and loss of coverage).


FWIW, I signed up for 2022 early Nov and just yesterday got my bill (showing cost-subsidy) and notice that I am good to go (already showed on my insurer's portal as I am on the insurance this year but with no subsidy).

 

[Aerides]

Update -

I submitted my last 2 paystubs (the last one showing the payout of my remaining vacation - thinking it would serve as "proof" that I left MC), and my 2020 brokerage statement showing dividend income. Using the comment field available for each document I provided my rough estimate of my 2022 income.

I haven't heard back at all from them - my pending action on the portal was "cleared" but I didn't receive a yay or nay about whether they agree with my estimates. It looks like my subsidies have been applied based on the payment due showing on the site.

I also haven't heard from the insurance companies (medical and dental). It looks like payments have to be submitted via the State portal? I'm waiting just a few more days to see if anything shows up in the mail, if not I'll be sure to pay later in December to ensure that coverage starts on Jan 1st.

A lot of the mechanics are state-specific. I'm FL, so I don't have a state portal, and my billing comes directly from the insurance co.

 

[PaunchyPirate]

In Pennsylvania, there is a big button to "Pay Now" on our states exchange portal after you sign up. It actually launches out to the insurance company site where you "try" to pay. I switched insurance companies this year so I had to be set up with the new company. In my case, that payment button didn't work immediately because the insurance company had not yet set up me up in their billing system. Of course, there was no message telling me that.

Within a day or two, the insurance company contacted me via email, instructing me to set up my online account on their own website and instructing to pay my bill there. Of course, that also didn't work immediately.

It took a couple more days before they generated an invoice and sent me another email telling me how to pay. This time it worked since there was an invoice to match up to.

None of this we obvious, but eventually worked and set me up fine. In PA, all billing and payment is done directly through the insurance company. But the insurer then notifies the PA exchange that payment has been made. This is an important step because it tells the exchange to continue processing the subsidies and appropriate tax forms at year end.

I've also already been sent my new insurance card.

I would certainly contact the insurance company directly by the 14th or 15th to make sure they have you in process if you have not heard from them by then. If your portal offers a way to pay it, I would attempt to do that.