ACA question & Medicare

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barryfaetheus
Posts: 2
Joined: Thu May 13, 2021 4:37 pm

ACA question & Medicare

Post by barryfaetheus »

My dad is currently 64. He doesn't have enough US work history to qualify for free Medicare part A, and therefore will be eligible to continue receiving subsidies thru the ACA market place even after reaching 65. I am therefore leaning towards keeping him on an ACA plan..

For 2021, looks like I may have underestimated his income when renewing his marketplace plan. I realize we may have to pay back some of the premium subsidy (APTC) when we file his 2021 taxes (though not as much as prior to Biden's ARPA, as there is now no cliff to fall off). This is totally fine, as he is currently overpaying estimated taxes anyway, so is unlikely to get hit with a tax penalty. I also know that the cost sharing reductions (CSRs) do not get reconciled or need to be paid back.


-Is there any downside to keeping him on the ACA instead of medicare long term? I know that there are late enrollment penalties with medicare, but without free part A, it is not that attractive. The premiums, separate out-of-pocket max for drugs vs care make it seem much more costly than subsidized ACA.
Last edited by barryfaetheus on Thu May 13, 2021 11:18 pm, edited 1 time in total.
water2357
Posts: 129
Joined: Sat Sep 12, 2020 9:24 am

Re: ACA question & Medicare

Post by water2357 »

ACA plans have limited provider networks, some are extremely limited. Have you priced out the premiums for Medicare A + B + D plus a Medigap plan and also looked at the cost sharing for the ACA plan vs this Medicare combo? Cost sharing on this Medicare combo except for Drug is basically zero. As your parent ages and needs more health care, just make sure the ACA limited networks and higher cost sharing can provide it. Frankly, I thought the ACA exchanges were only for those under age 65, I'd need to verify that they are open to those 65+.
Soon2BXProgrammer
Posts: 2227
Joined: Mon Nov 24, 2014 11:30 pm

Re: ACA question & Medicare

Post by Soon2BXProgrammer »

barryfaetheus wrote: Thu May 13, 2021 5:34 pm My dad is currently 64. He doesn't have enough US work history to qualify for free Medicare part A, and therefore will be eligible to continue receiving subsidies thru the ACA market place even after reaching 65. I am therefore leaning towards keeping him on an ACA plan..

For 2021, looks like I may have underestimated his income when renewing his marketplace plan. I realize we may have to pay back some of the premium subsidy (APTC) when we file his 2021 taxes (though not as much as prior to Biden's ARPA, as there is now no cliff to fall off). This is totally fine, as he is currently overpaying estimated taxes anyway, so is unlikely to get hit with a tax penalty. I also know that the cost sharing reductions (CSRs) do not get reconciled or need to be paid back.

-From our side, there appears to be no reason, either now or at renewal time, to proactively increase his income estimate with the marketplace. All this would ultimately do is result in loss of the CSRs. As it is an estimate, which gets reconciled with APTCs at tax time, can it continue to be left low indefinitely? Or will that cause issues? If his income increases, I would assume the marketplace would increase his estimated income themselves, based on tax return info?

-Is there any downside to keeping him on the ACA instead of medicare long term? I know that there are late enrollment penalties with medicare, but without free part A, it is not that attractive. The premiums, separate out-of-pocket max for drugs vs care make it seem much more costly than subsidized ACA.
How close is he to medicare eligibility? it is 10 years of 4 credits... if he is close, could he work a dead end job a couple months of each year to get credits?
CoralReef
Posts: 8
Joined: Wed Apr 14, 2021 9:39 pm
Location: PNW

Re: ACA question & Medicare

Post by CoralReef »

“If his income increases, I would assume the marketplace would increase his estimated income themselves, based on tax return info?”

Neither healthcare.gov (when I used it), nor my current state’s marketplace, has ever changed our income estimate. Our income has fluctuated quite a bit due to unpredicted/involuntary capital gains distributions. I have never adjusted it, because what I initially reported is our expected income, and is also our average income for the years we’ve been on ACA. It is the most accurate good-faith estimate I could give them. We have sometimes gotten further subsidies after filing our taxes, but once fell off the cliff and had to repay everything. They have never changed our income or even questioned it.
marcopolo
Posts: 4319
Joined: Sat Dec 03, 2016 10:22 am

Re: ACA question & Medicare

Post by marcopolo »

barryfaetheus wrote: Thu May 13, 2021 5:34 pm My dad is currently 64. He doesn't have enough US work history to qualify for free Medicare part A, and therefore will be eligible to continue receiving subsidies thru the ACA market place even after reaching 65. I am therefore leaning towards keeping him on an ACA plan..

For 2021, looks like I may have underestimated his income when renewing his marketplace plan. I realize we may have to pay back some of the premium subsidy (APTC) when we file his 2021 taxes (though not as much as prior to Biden's ARPA, as there is now no cliff to fall off). This is totally fine, as he is currently overpaying estimated taxes anyway, so is unlikely to get hit with a tax penalty. I also know that the cost sharing reductions (CSRs) do not get reconciled or need to be paid back.

-From our side, there appears to be no reason, either now or at renewal time, to proactively increase his income estimate with the marketplace. All this would ultimately do is result in loss of the CSRs. As it is an estimate, which gets reconciled with APTCs at tax time, can it continue to be left low indefinitely? Or will that cause issues? If his income increases, I would assume the marketplace would increase his estimated income themselves, based on tax return info?

-Is there any downside to keeping him on the ACA instead of medicare long term? I know that there are late enrollment penalties with medicare, but without free part A, it is not that attractive. The premiums, separate out-of-pocket max for drugs vs care make it seem much more costly than subsidized ACA.
Much of our tax system runs on the honor system.

If you make a good faith estimate of your income and go over, the ACA does not require paying back the CSR. But, if you know your income is going to be higher and you continue to estimate it lower so you can continue to get CSRs, it is not much different than other forms of tax evasion. Will you get caught, maybe, maybe not. But, I would not advise discussing your intent to do this on a message board, as anonymous as it might seem.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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