What counts as "income" for PPACA subsidies?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Maven007
Posts: 1
Joined: Thu Aug 01, 2013 10:31 pm

Re: What counts as "income" for PPACA subsidies?

Post by Maven007 » Fri Aug 02, 2013 12:55 am

I live in Nevada, which is "onboard" with PPACA and Medicaid. Below, I have a link to a YouTube video explaining how one signs up for PPACA in Nevada.

What is interesting is that the system pulls information from the "federal hub", after asking some personal identifying questions (much like a credit bureau does). From there, the system automatically determines eligibility. It seems almost too simple.

What is interesting in this example is that the husband is eligible for Medicaid (due to disability), the children are eligible for CHIP (Nevada Medicaid for children) and the wife is eligible for a subsidy.

Here is the link: http://www.youtube.com/watch?v=nh6-px83 ... e=youtu.be

"MAGI" is what is used to determine income for purposes of PPACA. I am having difficulty finding a .gov source that clearly defines MAGI for the purposes of PPACA. By "clearly defines", I mean a statement that simply states which line numbers on form 1040 one adds and/or subtracts to get to the final number.

Wikipedia defines MAGI as follows: "Certain tax calculations are based on modified versions of AGI. The definition of 'Modified AGI' varies according to the purpose for which the related calculation is being used. These modified versions of AGI may add certain items to AGI that were excluded in computing both gross income and adjusted gross income. Common additions include tax exempt interest and the excluded portion of Social Security benefits." So MAGI seems to vary, depending on what it is being used to calculate.

I have a link, dated October 2011 that may be helpful. Proposals may have changed but it may be useful: http://healthreformgps.org/wp-content/u ... 10-241.pdf

------

PS: I have read some posts that seem to indicate that people are considering "tweaking" the numbers to become Medicaid eligible, and therefore get "free" medical care. Be very careful: your children may lose their inheritance. The Omnibus Reconciliation Act of 1993 (OBRA) mandates, in certain circumstances, that the states recoup costs for Medicaid by placing liens on the assets of a Medicaid beneficiaries' inheritance, upon his/her death. This is especially true if you are over the age of 55 or have long-term care. A couple of weeks in the hospital could wipe out your estate, leaving your heirs looking through their fingers.

Medicaid was originally designed for the indigent, with few assets. PPACA has removed assets from the equation, but it does not rescind OBRA. OBRA was designed to make sure that the government got what little it could from the estate of Medicaid recipients, in order to reduce the deficit. With PPACA there will be Medicaid recipients with estate assets ripe for the taking, especially those retiring in their mid 50's. Here is the link: http://aspe.hhs.gov/daltcp/reports/estaterec.htm

---------
UPDATE 08/05/2013

After researching, it appears that MAGI for the purposes of PPACA is defined as follows:

"...MAGI is defined under section 36B as the taxpayer’s adjusted gross income defined under section 62, increased by three components: (1) any amount excluded from gross income under section 911, (2) any amount of interest received or accrued by the taxpayer during the taxable year that is exempt from tax, and (3) the amount of social security benefits of the taxpayer excluded from gross income under section 86 for the tax year..." This quote is from the top of page 8 of the following link: http://www.irs.gov/pub/irs-drop/reg-119632-11.pdf

It appears MAGI for the purposes of PPACA will be determined as follows:

Adjusted Gross Income (line 37 of form 1040) http://www.irs.gov/pub/irs-pdf/f1040.pdf
+Foreign Earned Income Exclusion (Section 911) http://www.irs.gov/Individuals/Internat ... quirements
+Tax-exempt Interest (line 8b of form 1040) http://www.irs.gov/pub/irs-pdf/f1040.pdf
+Social Security Benefits excluded from AGI (Section 86) http://www.law.cornell.edu/uscode/text/26/86

I hope this is helpful!
:sharebeer

BobS
Posts: 1
Joined: Mon Sep 30, 2013 6:35 pm

Re: What counts as "income" for PPACA subsidies?

Post by BobS » Mon Sep 30, 2013 6:54 pm

My wife, son and I have been covered by a policy I pay for. My wife just qualified for Medicare so she is being dropped from the policy. The policy I have I obtained through a state program for people who were denied coverage because of pre-existing conditions. The carrier will not be offering the same policy so I am off to the Exchange tomorrow. I suspect it will be cheaper to get a separate policy for me and my 13 y/o son. I won't qualify for Medicare for 4 years. My question is this:

All of our income comes from a private disability policy which I paid for with post tax dollars. As such it is not taxable and does not even appear in my tax returns. From what I have been able to determine, private disability payments are not included in MAGI for purposes of subsidies. Is that the case? From discussions on this forum if I apply for a subsidy I may get bumped into Medicaid. I consider Medicaid a safety net program and don't think it is appropriate for someone in our position to receive benefits. What are my options?

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Tue Oct 01, 2013 6:48 pm

BobS wrote:My wife, son and I have been covered by a policy I pay for. My wife just qualified for Medicare so she is being dropped from the policy. The policy I have I obtained through a state program for people who were denied coverage because of pre-existing conditions. The carrier will not be offering the same policy so I am off to the Exchange tomorrow. I suspect it will be cheaper to get a separate policy for me and my 13 y/o son. I won't qualify for Medicare for 4 years. My question is this:

All of our income comes from a private disability policy which I paid for with post tax dollars. As such it is not taxable and does not even appear in my tax returns. From what I have been able to determine, private disability payments are not included in MAGI for purposes of subsidies. Is that the case? From discussions on this forum if I apply for a subsidy I may get bumped into Medicaid. I consider Medicaid a safety net program and don't think it is appropriate for someone in our position to receive benefits. What are my options?
Hi BobS,

Welcome to the forum!

Nothing I've seen indicates nontaxable disability insurance payouts are included in MAGI for ACA purposes. Other nontaxable insurance payouts aren't, so I wouldn't expect them to be. I think your concern is a valid one.

With the supreme court ruling changing the underlying nature of the health insurance landscape from what the drafters of the law had intended, there will be states in which some people qualify neither for Medicaid nor for subsidies. How that situation will play out remains to be seen and I won't speculate. Please, anyone reading my post notice I'm not opining on whether that's a good thing or a bad thing. I'm merely trying to help BobS with his question.

So here are some options for you. I think it's a complete list but if not then I'm sure another poster will come along and correct it for us. :happy

1) Do not apply for health insurance and pay the penalty tax. I think it would be bad for almost everybody so I got it out of the way first.

2) Create household taxable income, by, for example, converting traditional IRA assets into Roth. Here's where it gets tricky, because your state of residence and its political choices regarding the ACA come into play.

--2A) If you can get your household MAGI up to 138% but less than 400% of the 2014 federal poverty level for a family of three, and you live in a state which has chosen to expand Medicaid, your income will be in the range that qualifies for subsidies.

--2B) If you can get your household MAGI up to 100% of the poverty level, and you live in a state which has chosen not to expand Medicaid, your income will be in the range that qualifies for subsidies.

--2C) If neither 2A nor 2B are the case you will not be eligible for a subsidy.

3) If you don't qualify for a subsidy and reside in a state which has chosen to expand Medicaid, at least you will be able to access healthcare under that program, whether or not you're comfortable with the idea. If I were on disability and had no better options I would take it.

4) If you don't qualify for a subsidy and reside in a state which has chosen not to expand Medicaid you've fallen through the crack in the system that opened up when the supreme court ruled. There may be states in which, being the parent of a minor, you may yourself qualify for Medicaid, when a childless adult wouldn't. It depends on state laws, both pre-existing and any passed recently in response to the ACA.

5) If you don't qualify for a subsidy and don't qualify for Medicaid, at the very least you should be able to find a state program for your son.

6) Now it gets less pretty. If you don't qualify for Medicaid or for a subsidy you still can purchase a plan on your state's ACA exchange, but you have to pay its full cost.

7) If individual health insurance policies are available to you where you live you can purchase one of those, paying its full cost.

8) If you don't have enough income to afford any of those, you will not be subject to the tax penalty if you fail to purchase health insurance. You'll be where the uninsured are today, relying on free or sliding-scale community clinics and the emergency room.

Hope that helps and best of luck.

PJW

Saving$
Posts: 1630
Joined: Sat Nov 05, 2011 8:33 pm

Re: What counts as "income" for PPACA subsidies?

Post by Saving$ » Tue Oct 01, 2013 7:35 pm

My question regarding BobS's situation is will those whose income is too low to qualify for subsidies be allowed to purchase plans off of the exchange?

It seems like this would be the logical option for BobS; he wrote his current policy is through a state program for people who were denied coverage because of pre-existing conditions. My limited experience with those is that the cost is extraordinary (like $1900/month for a single person). Seems like a non-subsidized exchange policy would be more affordable.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Tue Oct 01, 2013 7:49 pm

Saving$ wrote:My question regarding BobS's situation is will those whose income is too low to qualify for subsidies be allowed to purchase plans off of the exchange?

It seems like this would be the logical option for BobS; he wrote his current policy is through a state program for people who were denied coverage because of pre-existing conditions. My limited experience with those is that the cost is extraordinary (like $1900/month for a single person). Seems like a non-subsidized exchange policy would be more affordable.
Absolutely yes, Saving$. Any legal US resident not barred from the ACA exchanges for another reason (like most with employer-based insurance, or those eligibile for Medicare*) can buy an ACA state exchange policy. They just have to pay full freight if their MAGI is too high or too low.

I think I would dislike being a news reporter from another country trying to explain to my compatriots what's going on. It all happened step by step, each step for its own reason, but how to make the resulting situation clear to someone from elsewhere I don't know. :(

* I have been assuming BobS is not eligible for early Medicare despite being covered by private disability insurance. If he were he probably would have discovered the fact while looking into his state high-risk pool.

PJW
Last edited by Phineas J. Whoopee on Tue Oct 01, 2013 8:37 pm, edited 1 time in total.

Jfet
Posts: 1081
Joined: Tue Dec 21, 2010 7:20 pm

Re: What counts as "income" for PPACA subsidies?

Post by Jfet » Tue Oct 01, 2013 7:54 pm

Saving$ wrote:My question regarding BobS's situation is will those whose income is too low to qualify for subsidies be allowed to purchase plans off of the exchange?

It seems like this would be the logical option for BobS; he wrote his current policy is through a state program for people who were denied coverage because of pre-existing conditions. My limited experience with those is that the cost is extraordinary (like $1900/month for a single person). Seems like a non-subsidized exchange policy would be more affordable.
If you have any income from gambling winnings (bingo, local casino, whatever) you can declare that on your 1040 and I believe it would increase your MAGI to the level where you could get a subsidy. Actually I am pretty sure you are supposed to declare those winnings, even if they are below the level that the casino reports to the IRS and thus really don't have any record.

Although the more I think about it, it is probably not a good idea to gamble just to try and increase your MAGI. If you are lucky though, it could be a way.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Tue Oct 01, 2013 8:31 pm

Brilliant, Jfet! One can choose not to offset their gambling winnings with gambling losses, simply not bringing it up as an issue at all. Gamble enough on random things like lottery tickets, as opposed to skill things like darts, and one is almost certain to have winnings, even if not net winnings!
:happy
PJW

calwatch
Posts: 31
Joined: Wed Oct 02, 2013 1:48 am

Re: What counts as "income" for PPACA subsidies?

Post by calwatch » Wed Oct 02, 2013 2:02 am

My reading of the regulations states that, as long as you estimate at the time of enrollment that your MAGI is between 100% and 400% of FPL, that you are still eligible for subsidies, even though your actual income falls below 100% of FPL. This could happen, for instance, if one lost their job in the middle of the year, which takes them below 100% of FPL. Even if they had to pay back subsidies, an additional provision in regulations limits that to $300 for singles, and $600 for other taxpayers.

http://www.gpo.gov/fdsys/pkg/FR-2012-05 ... -12421.pdf

§ 1.36B–2 Eligibility for premium tax
credit.

[...]
(b) Applicable taxpayer—(1) In
general. Except as otherwise provided
in this paragraph (b), an applicable
taxpayer is a taxpayer whose household
income is at least 100 percent but not
more than 400 percent of the Federal
poverty line for the taxpayer’s family
size for the taxable year.

[...]

(6) Special rule for taxpayers with
household income below 100 percent of
the Federal poverty line for the taxable
year. A taxpayer (other than a taxpayer
described in paragraph (b)(5) of this
section) whose household income for a
taxable year is less than 100 percent of
the Federal poverty line for the
taxpayer’s family size is treated as an
applicable taxpayer if—
(i) The taxpayer or a family member
enrolls in a qualified health plan
through an Exchange;
(ii) An Exchange estimates at the time
of enrollment that the taxpayer’s
household income will be between 100
and 400 percent of the Federal poverty
line for the taxable year;

(iii) Advance credit payments are
authorized and paid for one or more
months during the taxable year; and
(iv) The taxpayer would be an
applicable taxpayer if the taxpayer’s
household income for the taxable year
was between 100 and 400 percent of the
Federal poverty line for the taxpayer’s
family size.
(7) Computation of premium
assistance amounts for taxpayers with
household income below 100 percent of
the Federal poverty line. If a taxpayer is
treated as an applicable taxpayer under
paragraph (b)(5) or (b)(6) of this section,
the taxpayer’s actual household income
for the taxable year is used to compute
the premium assistance amounts under
§ 1.36B–3(d).

1.36B–3 Computing the premium
assistance credit amount.

[...]
(d) Premium assistance amount. The
premium assistance amount for a
coverage month is the lesser of—
(1) The premiums for the month for
one or more qualified health plans in
which a taxpayer or a member of the
taxpayer’s family enrolls; or
(2) The excess of the adjusted
monthly premium for the applicable
benchmark plan over 1/12 of the
product of a taxpayer’s household
income and the applicable percentage
for the taxable year.

That "applicable percentage" is defined in 1.36B-3(g) and is 2.0% of household income (MAGI) for those under 200% of FPL.

Also, for those making under 400%, a "repayment" clause applies further limiting the actual tax subsidy repayment to $300 for singles, $600 for all other taxpayers.

§ 1.36B–4 Reconciling the premium tax
credit with advance credit payments.
(a) Reconciliation—(1) Coordination
of premium tax credit with advance
credit payments—(i) In general. A
taxpayer must reconcile the amount of
credit allowed under section 36B with
advance credit payments on the
taxpayer’s income tax return for a
taxable year. A taxpayer whose
premium tax credit for the taxable year
exceeds the taxpayer’s advance credit
payments may receive the excess as an
income tax refund. A taxpayer whose
advance credit payments for the taxable
year exceed the taxpayer’s premium tax
credit owes the excess as an additional
income tax liability.

(3) Limitation on additional tax—(i)
In general. The additional tax imposed
under paragraph (a)(1) of this section on
a taxpayer whose household income is
less than 400 percent of the Federal
poverty line is limited to the amounts
provided in the table in paragraph
(a)(3)(ii) of this section (or successor
tables). For taxable years beginning after
December 31, 2014, the limitation
amounts may be adjusted in published
guidance, see § 601.601(d)(2) of this
chapter, to reflect changes in the
consumer price index.


This refers to a table which shows the maximum subsidy repayment for single taxpayers ("determined under section 1(c)") with MAGI under 200% FPL at $300, or $600 for other taxpayers.

So no manufacturing of income is required should your estimate be off. At most you will repay $600 of the unearned subsidy.

User avatar
neurosphere
Posts: 2985
Joined: Sun Jan 17, 2010 1:55 pm

Re: What counts as "income" for PPACA subsidies?

Post by neurosphere » Wed Oct 02, 2013 7:40 am

Phineas J. Whoopee wrote:Brilliant, Jfet! One can choose not to offset their gambling winnings with gambling losses, simply not bringing it up as an issue at all. Gamble enough on random things like lottery tickets, as opposed to skill things like darts, and one is almost certain to have winnings, even if not net winnings!
:happy
PJW
Hmmm. Suppose I go to a casino and play roulette. Suppose I play "black" each roll. I'll win about half, I'll lose a little more than half. But suppose I keep track of every roll in which I win. And suppose I "forget" the rolls in which I lose. Could I legitimately report the winning rolls, but not the losing ones? I'm not advocating this, but wondering about the letter of the law vs. the spirit of the law.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

pshonore
Posts: 6423
Joined: Sun Jun 28, 2009 2:21 pm

Re: What counts as "income" for PPACA subsidies?

Post by pshonore » Wed Oct 02, 2013 7:58 am

Not much different than individuals who claim SE income, but forget to deduct SE expenses so they can get a bigger EIC. Sounds like tax fraud to me.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Wed Oct 02, 2013 12:45 pm

pshonore wrote:Not much different than individuals who claim SE income, but forget to deduct SE expenses so they can get a bigger EIC. Sounds like tax fraud to me.
That's a good point, pshonore.

I had been thinking along the lines of people using the standard deduction rather than itemizing higher legitimate deductions, but what you've written is certainly an important factor.

PJW

Jfet
Posts: 1081
Joined: Tue Dec 21, 2010 7:20 pm

Re: What counts as "income" for PPACA subsidies?

Post by Jfet » Wed Oct 02, 2013 1:07 pm

Actually reading this, I would get the impression that you are supposed to add gambling winnings to your income but you can only deduct gambling losses if you itemize, and even then only up to the amount of winnings and only if it exceeds the 2% misc. deduction limit.

http://www.irs.gov/taxtopics/tc419.html

So if you use the standard deduction, you can add gambling winnings to your MAGI and you are not allowed to deduct gambling losses?

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Wed Oct 02, 2013 1:17 pm

Jfet wrote:Actually reading this, I would get the impression that you are supposed to add gambling winnings to your income but you can only deduct gambling losses if you itemize, and even then only up to the amount of winnings and only if it exceeds the 2% misc. deduction limit.

http://www.irs.gov/taxtopics/tc419.html

So if you use the standard deduction, you can add gambling winnings to your MAGI and you are not allowed to deduct gambling losses?
Nobody is required to use schedule A for itemized deductions if they'd prefer to claim the standard deduction, whether or not itemizing would make their tax smaller. In most circumstances it might be foolish, but it is not illegal.

Anyhow, I thought the gambling winnings suggestion was meant to be humorous. Yes, certainly when a (domestic) casino reports to the IRS it probably takes losses into account as a service to its sugar parent customer, but one can gamble in other ways; for example in my neck of the woods by buying any of many instant and non-instant state and multistate lottery tickets. If one does so early and often and uses the smaller-size games it's even possible to roughly predict the winnings and therefore the stake one would need.

PJW

Jfet
Posts: 1081
Joined: Tue Dec 21, 2010 7:20 pm

Re: What counts as "income" for PPACA subsidies?

Post by Jfet » Wed Oct 02, 2013 1:23 pm

It was meant to be a bit humorous, but I do like examining flaws in laws. If for some reason it makes a $10,000 difference in a subsidy to increase your MAGI, then it falls into the more serious discussion area.

It looks like as long as you predict you will have above FPL income the next year, you get the subsidy and don't pay it back, so this is maybe a non-issue and we are just humoring ourselves.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Wed Oct 02, 2013 1:48 pm

Jfet wrote:It was meant to be a bit humorous, but I do like examining flaws in laws. If for some reason it makes a $10,000 difference in a subsidy to increase your MAGI, then it falls into the more serious discussion area.

It looks like as long as you predict you will have above FPL income the next year, you get the subsidy and don't pay it back, so this is maybe a non-issue and we are just humoring ourselves.
That's incorrect. If it turns out your income was higher you most certainly do have to pay any ineligible premium subsidy back with your tax return. I'm pretty sure it would count for underwithholding penalties. It's only that if it turns out your income was much lower, you can't be forced onto Medicaid during the year. You also can't be forced off, at least in the states that are expanding Medicaid. There are more complex rules around the cost-sharing reductions, which I've posted about earlier.

For 2014 I think there will be a lot of reliance on personal estimates followed by 2014 tax year tax returns. For future years more enforcement mechanisms will be in place. Then, one would certainly be subject to scrutiny if projecting a much lower income than one has historically enjoyed. What would happen if a person projects a much higher one, I don't know. I don't know if anybody knows.

In the final analysis there will probably have to be case law, as with everything legally complex, before we understand most of the answers.

PJW

Jfet
Posts: 1081
Joined: Tue Dec 21, 2010 7:20 pm

Re: What counts as "income" for PPACA subsidies?

Post by Jfet » Wed Oct 02, 2013 1:57 pm

Well I meant that if you projected in 2014 that you would have $25,000 of income from stocks sales and interest for a married couple but then the market tanked and you only ended up with $15,000 of income, then you would not owe any of the subsidy back even though you were below 100% of FPL. It might be more difficult the next year to convince them that you will have $25,000 of income.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Wed Oct 02, 2013 2:00 pm

Jfet wrote:Well I meant that if you projected in 2014 that you would have $25,000 of income from stocks sales and interest for a married couple but then the market tanked and you only ended up with $15,000 of income, then you would not owe any of the subsidy back even though you were below 100% of FPL. It might be more difficult the next year to convince them that you will have $25,000 of income.
In that case you were correct, and my apologies if I overgeneralized what you wrote.
PJW

calwatch
Posts: 31
Joined: Wed Oct 02, 2013 1:48 am

Re: What counts as "income" for PPACA subsidies?

Post by calwatch » Wed Oct 02, 2013 2:09 pm

[Article link and comments related to "gaming" the health care system removed by admin LadyGeek]

gerrym51
Posts: 1679
Joined: Sat Apr 27, 2013 1:44 pm

Re: What counts as "income" for PPACA subsidies?

Post by gerrym51 » Wed Oct 02, 2013 2:21 pm

i a'm eligible for a small subsidy as my wife and i can manipulate our income to about 54,000. max is 62,500. she is on medicare and the subsidy will be on line-however i downloaded the paper copy of the subsidy form because you cannot fill it out online unless you give total info to get a subsidy quote. because we had already planned to pay full price and it's only 2 more years she does not want to mess with the IRS(her words not mine). it's a good thing it's not a bigger subsidy

User avatar
LadyGeek
Site Admin
Posts: 49160
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: What counts as "income" for PPACA subsidies?

Post by LadyGeek » Wed Oct 02, 2013 3:39 pm

I removed some comments. Discussions which suggest dishonest behavior or bypassing the law are totally unacceptable.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
frugaltype
Posts: 1952
Joined: Wed Apr 24, 2013 9:07 am

Re: What counts as "income" for PPACA subsidies?

Post by frugaltype » Wed Oct 02, 2013 4:01 pm

gerrym51 wrote:I don't think the PPACA was originally conceived to facilitate people who wan't to early retire. Never the less is has eliminated one hurdle for sure-the ability to get insurance at anytime regardless of your health.
I suspect it will be very helpful to older people who get laid off and are not able to find new jobs because of their age, but are not yet old enough to qualify for Medicare. I was one of those "retirees."

As to the name Obamacare (I wonder if this paragraph will get deleted), it was originally invented by one political party as a derogatory term [Political comments removed by admin LadyGeek]. Plus I can never remember the real name.

User avatar
Flobes
Posts: 996
Joined: Tue Feb 16, 2010 12:40 am

Re: What counts as "income" for PPACA subsidies?

Post by Flobes » Wed Oct 02, 2013 4:12 pm

frugaltype wrote:
gerrym51 wrote:I don't think the PPACA was originally conceived to facilitate people who wan't to early retire. Never the less is has eliminated one hurdle for sure-the ability to get insurance at anytime regardless of your health.
I suspect it will be very helpful to older people who get laid off and are not able to find new jobs because of their age, but are not yet old enough to qualify for Medicare. I was one of those "retirees."

As to the name Obamacare (I wonder if this paragraph will get deleted), it was originally invented by one political party as a derogatory term [Political comments removed by admin LadyGeek]. Plus I can never remember the real name.
+1 I'm another who has transitioned from surprise unemployed (and age-discrimination unemployable) to prematurely retired. This was so not THE plan. My current mediocre private insurance has gone up 80% in 4 years, and it's my largest expense. Obamacare will afford me an opportunity to get from here to Medicare with good health care.

User avatar
LadyGeek
Site Admin
Posts: 49160
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: What counts as "income" for PPACA subsidies?

Post by LadyGeek » Wed Oct 02, 2013 4:29 pm

As a reminder, political opinions are off-topic. Please stay on-topic, which is "what counts as "income" for calculating eligibility for these subsidies?"
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

MRBEAN
Posts: 2
Joined: Thu Oct 24, 2013 12:44 am

Re: What counts as "income" for PPACA subsidies?

Post by MRBEAN » Fri Oct 25, 2013 3:13 am

We have significant NOLs carryforwards. This makes our AGI and MAGI negative. We
live in Tennessee, which has not expanded Medicaid. Our assets disqualify us from Medicaid. My understanding is that I would be able to purchase insurance on the State exchange, but NOT qualify for subsidies. Is this correct?

User avatar
FrugalInvestor
Posts: 4927
Joined: Fri Nov 07, 2008 12:20 am

Re: What counts as "income" for PPACA subsidies?

Post by FrugalInvestor » Fri Oct 25, 2013 10:50 am

MRBEAN wrote:We have significant NOLs carryforwards. This makes our AGI and MAGI negative. We
live in Tennessee, which has not expanded Medicaid. Our assets disqualify us from Medicaid. My understanding is that I would be able to purchase insurance on the State exchange, but NOT qualify for subsidies. Is this correct?
Are you sure about the asset test? I have read articles like the following indicating that the asset test will be largely done away with in 2014. It doesn't apply to me so I haven't bothered to research in detail.

http://theincidentaleconomist.com/wordp ... sset-test/
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

gerrym51
Posts: 1679
Joined: Sat Apr 27, 2013 1:44 pm

Re: What counts as "income" for PPACA subsidies?

Post by gerrym51 » Fri Oct 25, 2013 10:07 pm

FrugalInvestor wrote:
MRBEAN wrote:We have significant NOLs carryforwards. This makes our AGI and MAGI negative. We
live in Tennessee, which has not expanded Medicaid. Our assets disqualify us from Medicaid. My understanding is that I would be able to purchase insurance on the State exchange, but NOT qualify for subsidies. Is this correct?
Are you sure about the asset test? I have read articles like the following indicating that the asset test will be largely done away with in 2014. It doesn't apply to me so I haven't bothered to research in detail.

http://theincidentaleconomist.com/wordp ... sset-test/

the asset test is done away with ONLY for medicaid resulting from Obamacare eligibility. it does not work with says long term care coverage asset tests.i looked into it.

MRBEAN
Posts: 2
Joined: Thu Oct 24, 2013 12:44 am

Re: What counts as "income" for PPACA subsidies?

Post by MRBEAN » Fri Oct 25, 2013 10:42 pm

My understanding is that the asset test for Medicaid is only being eliminated in the states that chose to expand Medicaid. Those states increased the Medicaid eligibility to 138% of the federal poverty level and eliminated the asset test. Tennessee has not expanded Medicaid.

Here is a link:
http://kff.org/health-reform/issue-brie ... -medicaid/

linuxizer
Posts: 1553
Joined: Wed Jan 02, 2008 7:55 am

Re: What counts as "income" for PPACA subsidies?

Post by linuxizer » Sat Oct 26, 2013 5:55 am

Josh Fangmeier just posted this to Twitter and claimed it was the definitive guide to MAGI estimation:
http://healthlaw.org/images/stories/201 ... AGMAGI.pdf

User avatar
FrugalInvestor
Posts: 4927
Joined: Fri Nov 07, 2008 12:20 am

Re: What counts as "income" for PPACA subsidies?

Post by FrugalInvestor » Sat Oct 26, 2013 11:28 am

linuxizer wrote:Josh Fangmeier just posted this to Twitter and claimed it was the definitive guide to MAGI estimation:
http://healthlaw.org/images/stories/201 ... AGMAGI.pdf
I see no mention of HSA contributions in this document.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

winger
Posts: 12
Joined: Fri May 23, 2008 11:13 am

Re: What counts as "income" for PPACA subsidies?

Post by winger » Sat Oct 26, 2013 10:52 pm

FrugalInvestor wrote:I see no mention of HSA contributions in this document.
HSA contributions are reported on Form 8889.

The Healthlaw document (pg 29 of the pdf) says that AGI is based on Form 1040. Refer to Appendix D for the 1040 form. Form 8889 would be used to determine if there is a HSA deduction allowed for the contributions. If so, the deduction (adjustment for the HSA contribution) would be entered on line 25 of form 1040. This would be considered an above the line adjustment so would be reflected in the AGI calculated for line 37.

stannius
Posts: 13
Joined: Fri Apr 23, 2010 11:15 am

Re: What counts as "income" for PPACA subsidies?

Post by stannius » Mon Oct 28, 2013 5:06 pm

Jfet wrote:Actually reading this, I would get the impression that you are supposed to add gambling winnings to your income but you can only deduct gambling losses if you itemize, and even then only up to the amount of winnings and only if it exceeds the 2% misc. deduction limit.

http://www.irs.gov/taxtopics/tc419.html

So if you use the standard deduction, you can add gambling winnings to your MAGI and you are not allowed to deduct gambling losses?
You got it! Back when I played online poker I recall there was some confusion/discussion about the definition of a "session," the granularity in which gamblers are required to track their wins and losses. Nevertheless, for the purposes of this discussion, one could indeed play multiple sessions of a near-break-even (almost as likely to win as to lose, as small a house edge as possible), preferably high volatility (likely to lose or gain a lot) gambling game, if it's legal to do so in your state or a nearby state (technically, you can use illegal gambling proceeds for this purpose, but I wouldn't recommend it). The wins would be income and the losses would be only partially deductible.

dachoppa
Posts: 11
Joined: Tue Jul 09, 2013 2:10 pm

Re: What counts as "income" for PPACA subsidies?

Post by dachoppa » Mon Aug 04, 2014 1:43 pm

deleted
Last edited by dachoppa on Wed Aug 06, 2014 1:45 pm, edited 2 times in total.

dolphinsaremammals
Posts: 2094
Joined: Tue Jul 22, 2014 4:18 pm

Re: What counts as "income" for PPACA (Obamacare) subsidies?

Post by dolphinsaremammals » Mon Aug 04, 2014 1:55 pm

freebeer wrote: BTW re: your final point - whether or not using term "Obamacare" is deemed political on this forum, discussing potential future changes to taxes and other laws on this forum definitely seems to have been ruled political by the mods. I think we are allowed only to hypothesize based on a steady-state assumption relative to same. This does seem a bit silly to me but it's not my site and it does make for more focused discussions.
I don't think Obamacare is a political term any more. It was originally, used in a derogatory sense by one political party (note feeble attempt to escape moderator erasure), but is now also used by the other political party because they feel that the program is successful.

Dianne
Posts: 125
Joined: Mon Nov 16, 2009 4:35 pm

Re: What counts as "income" for PPACA (Obamacare) subsidies?

Post by Dianne » Mon Aug 04, 2014 3:33 pm

dolphinsaremammals wrote:
freebeer wrote: BTW re: your final point - whether or not using term "Obamacare" is deemed political on this forum, discussing potential future changes to taxes and other laws on this forum definitely seems to have been ruled political by the mods. I think we are allowed only to hypothesize based on a steady-state assumption relative to same. This does seem a bit silly to me but it's not my site and it does make for more focused discussions.
I don't think Obamacare is a political term any more. It was originally, used in a derogatory sense by one political party (note feeble attempt to escape moderator erasure), but is now also used by the other political party because they feel that the program is successful.
Yes, Obama himself has said he likes the term.

http://www.nytimes.com/2012/08/04/healt ... .html?_r=0

User avatar
LadyGeek
Site Admin
Posts: 49160
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: What counts as "income" for PPACA subsidies?

Post by LadyGeek » Mon Aug 04, 2014 3:34 pm

^^^ For perspective, freebeer's post was from Feb 04, 2013 (last year). At that time ObamaCare was just coming into common usage. "Obamacare" is now permitted in the forum.

Let's stay focused on the OP's question.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: What counts as "income" for PPACA subsidies?

Post by jeffyscott » Mon Aug 04, 2014 4:45 pm

dachoppa wrote: Found this site:

http://www.healthinsurance.org/quotes/e ... ubsidy.php

seems that depending on the state you retire in, or live in currently ? your tax credit vs income dollar amount changes.

you can see the sliding scale in this link. Plug in your state, amount of income, and the plan costs are laid out as well as the level you quilify for subsidies.

Is this acvcurate?
No, based on entering my son'e info, it is not accurate. The estimate was far higher than what he is paying.

You can find all the options, costs and subsidies by starting at the official site: healthcare.gov
press on, regardless - John C. Bogle

dachoppa
Posts: 11
Joined: Tue Jul 09, 2013 2:10 pm

Re: What counts as "income" for PPACA subsidies?

Post by dachoppa » Tue Aug 05, 2014 12:14 pm

deleted
Last edited by dachoppa on Wed Aug 06, 2014 1:45 pm, edited 3 times in total.

User avatar
magellan
Posts: 3469
Joined: Fri Mar 09, 2007 4:12 pm

Re: What counts as "income" for PPACA subsidies?

Post by magellan » Tue Aug 05, 2014 12:24 pm

dachoppa wrote: So, what would I do in my case? Anyone have an idea?
I could be mistaken, but I think you could do ROTH IRA conversions each year, in an amount sufficient to increase your income just above the medicaid limit.

With such a low income, the tax on the roth conversions should be smaller than the value of the subsidy, plus the roth conversion will allow you to spend those funds tax free later.

Jim

dachoppa
Posts: 11
Joined: Tue Jul 09, 2013 2:10 pm

Re: What counts as "income" for PPACA subsidies?

Post by dachoppa » Tue Aug 05, 2014 12:48 pm

deleted
Last edited by dachoppa on Wed Aug 06, 2014 1:44 pm, edited 1 time in total.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Tue Aug 05, 2014 8:26 pm

dachoppa wrote:...
So, I read Mr. Woppees response to BobS:
"6) Now it gets less pretty. If you don't qualify for Medicaid or for a subsidy you still can purchase a plan on your state's ACA exchange, but you have to pay its full cost."
THIS is where I am confused.

So, for an example.... I claim, or my tax return says I made 35K. I can quailify for a subsidy.
BUT.

If I make, or show, so much less, like under 15K, I DO NOT qualify for a subsidy, YET have to pay the entire cost of the insurance premium?

that makes so little sense.

Is this designed for the individule claiming so little income that they MUST be forced into some welfare, or medicaid? type of insurance??

...

So, what would I do in my case? Anyone have an idea?

I would be paying the FULL premium with no chance of subsidy when its all said and done UNLESS I come up with the minimum amount of "income" to report?

so strange to me..how does it work..
Allow me to explain. The effect you're asking about was not foreseen by the people who wrote the legislation. It's a result of the 28 June 2012 US Supreme Court decision upholding most of the law, but striking down the part which penalized those states choosing not to expand Medicaid.

It doesn't make sense, was never meant to make sense, and more fundamentally, was never designed at all. It's simply the sort of thing which happens when a load bearing component is removed from an interconnected structure.

As stated in another response to you, yes, IRA conversions count as income for ACA purposes. I think you should go back and read the thread, rather than expect us to rehash it for you, your not having visited in a while. The answers you desire about what counts as income are thoroughly documented.

Hope that helps.

PJW

Jack
Posts: 3254
Joined: Tue Feb 27, 2007 2:24 am

Re: What counts as "income" for PPACA subsidies?

Post by Jack » Wed Aug 06, 2014 10:34 am

As PJW explained, some states have chosen not to provide all of the planned features of the ACA. In particular, they have chosen not to perform Medicaid expansion for low income households. This means that some households with low income will receive no assistance in getting health insurance.

You can see which states are and are not expanding Medicaid in this map:

http://familiesusa.org/product/50-state ... nsion-2014

dachoppa
Posts: 11
Joined: Tue Jul 09, 2013 2:10 pm

Re: What counts as "income" for PPACA subsidies?

Post by dachoppa » Wed Aug 06, 2014 1:04 pm

deleted
Last edited by dachoppa on Wed Aug 06, 2014 2:21 pm, edited 1 time in total.

User avatar
Phineas J. Whoopee
Posts: 7691
Joined: Sun Dec 18, 2011 6:18 pm

Re: What counts as "income" for PPACA subsidies?

Post by Phineas J. Whoopee » Wed Aug 06, 2014 1:26 pm

I for one am not "upset," but I think it's not that great for somebody to say they couldn't be bothered to keep up with what's already been posted in this very thread so could somebody post it again just for them please.

As a token of my non-upsetness, I've done a search for you, using the search box in the upper right corner of this site. The terms were:
affordable care act income

The first hit is the following thread:
Affordable Care Act....household income

The second post in that thread contains a link to this document:
Modified Adjusted Gross Income under the Affordable Care Act

The document will tell you all you need to know, in response to your first question about what counts as income.

Just to be clear, I didn't know that's what would come up at the top of the results from the search, nor did I try a number of different search terms to find it. I just typed:
affordable care act income

and there it was.

I think you'll find people are generally helpful, but not all of us will respond well to "I haven't been here in a while so somebody should explain what they've already posted for everybody else all over again for me," and especially not when it's apparent the poster didn't try even the most obvious ways to find out for themselves.

I'll help people with their homework, but I'm resistant to doing peoples' homework for them.

PJW

dachoppa
Posts: 11
Joined: Tue Jul 09, 2013 2:10 pm

Re: What counts as "income" for PPACA subsidies?

Post by dachoppa » Wed Aug 06, 2014 1:35 pm

uhm... thank you again?

I did for the record read the posts, but I guess in my anxiousness I must have missed what I initially seeked for an answer. Or didnt see it as the answer to what I asked...Heck I dont even know the "lingo"' and acrynonms you all use like another language, but I am learning slowly. I dont know about all the sites out there..I just dont.

Its obvious that the frequent contributors here to this site are well versed, learned and otherwise quite far ahead of me in my knowledge of all these things.

I am not afraid to say I am not so well versed, but hoping to learn more. again, ill try not to ask too many questions...

Post Reply