Help with ACA problem

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willybiggs
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Joined: Fri Aug 30, 2013 4:21 pm

Help with ACA problem

Post by willybiggs »

Daughter received ACA subsidy this year (2017). Income will be below minimum threshold for receiving subsidy. There are no penalties even though she made below minimum and got the subsidy.
Question: What if she estimates her income for next year (2018) to be just above the minimum to qualify receiving a subsidy for ACA and again does not make the necessary income?? Has anyone had experience with this dilemma? Are there risks and can this be done with no consequences?
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munemaker
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Re: Help with ACA problem

Post by munemaker »

Is she intentionally misrepresenting her income?
Silk McCue
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Re: Help with ACA problem

Post by Silk McCue »

How about planning to pick up some extra hours or get a seasonal side job to ensure that it happens.
rec7
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Re: Help with ACA problem

Post by rec7 »

Buy a fund with large capital gains just before they pay out. I did that one year to get my income up. OAKBX is great for that. You can also buy and hold the fund it is a good one.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack
Topic Author
willybiggs
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Joined: Fri Aug 30, 2013 4:21 pm

Re: Help with ACA problem

Post by willybiggs »

She is not intentionally misrepresenting her income. Due to circumstances too lengthy to describe here are the reasons she won't make the minimum necessary. If she applies for ACA with a subsidy for next year and yet again overestimates her income, are there consequences? There are no penalties assessed for not reaching income the first time. What about the second time? Or does the system then require some sort of verification etc...?
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dwickenh
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Re: Help with ACA problem

Post by dwickenh »

willybiggs wrote: Sun Dec 10, 2017 1:00 pm She is not intentionally misrepresenting her income. Due to circumstances too lengthy to describe here are the reasons she won't make the minimum necessary. If she applies for ACA with a subsidy for next year and yet again overestimates her income, are there consequences? There are no penalties assessed for not reaching income the first time. What about the second time? Or does the system then require some sort of verification etc...?
This would be a good question for Healthcare.gov. Explain that this year she thinks she will be over the income thresh hold, but what happens if she comes up short again. In my state, they recommend Medicaid. Not sure about your state.
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Not Law
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Re: Help with ACA problem

Post by Not Law »

I spent a lot of time studying the threshold issues in 2013. One "qualifies" for subsidies between 138% and 400% of poverty. The penalty for exceeding 400% is the repayment of all subsidies received. At the lower end, the ACA was designed for those below 138% to be eligible for medicaid and therefore everyone below 400% would have access to subsidized insurance. The Supreme court decided that the federal government could not force the expansion of state medicaid, and, I think that 19 states have not expanded their medicaid to reach 138%, leaving a gap at the lower end.

I specifically inquired back then as to this issue - ending up on the wrong side of the 138% from the benefit I received. No one had a rational answer, I suspect because that had not been considered a possibility since the legislation required the medicaid expansion. Because of the inability of Congress to do any corrective legislation, which is always required on something as expansive as the ACA, there appears to be nothing relating to this issue. So there is no consequence that I could find for the described situation.

If you are concerned about a repeat next year, you can boost her income by gifting to a traditional IRA on her behalf this year (further reduces her AGI in 2017) and having her convert enough of it to a Roth next December, which will increase her AGI accordingly.
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Epsilon Delta
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Re: Help with ACA problem

Post by Epsilon Delta »

Not Law wrote: Sun Dec 10, 2017 2:35 pm If you are concerned about a repeat next year, you can boost her income by gifting to a traditional IRA on her behalf this year (further reduces her AGI in 2017) and having her convert enough of it to a Roth next December, which will increase her AGI accordingly.
Assuming she is eligible for an IRA.
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munemaker
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Re: Help with ACA problem

Post by munemaker »

willybiggs wrote: Sat Dec 09, 2017 10:15 pm Daughter received ACA subsidy this year (2017). Income will be below minimum threshold for receiving subsidy. There are no penalties even though she made below minimum and got the subsidy.
Question: What if she estimates her income for next year (2018) to be just above the minimum to qualify receiving a subsidy for ACA and again does not make the necessary income?? Has anyone had experience with this dilemma? Are there risks and can this be done with no consequences?
I did a little research on this.

When she realizes she overestimated her income, she should notify healthcare.gov of the change in income. She agreed to do this during the sign up process.

Also, you can read this yourself, but the way I read it on ObamaCare Facts, she will not have to repay the premium subsidy, even if she doesn't have enough income to qualify.
How Repaying ObamaCare’s Premium Tax Credits Works
If your income changes, you may have to pay back Advanced Premium Tax Credit Payments up to the Advanced Tax Credit Repayment Limit based on your income. If you don’t claim enough money to qualify for tax credits, then you won’t owe back anything.

TIP: “Income” is household income calculated as MAGI. Once you know your household income you can compare it to the Federal Poverty Level guidelines for the year you had coverage.
reference: https://obamacarefacts.com/advanced-tax ... nt-limits/

and also this:
If you estimated your income to qualify for subsidies, but didn't make enough, you don't owe back any money and can keep the tax credits you got in advance. You can learn more about repayment limits on advanced tax credits here.

As long as you are making a reasonable estimate of income you won't get in trouble for falling short.
reference: https://obamacarefacts.com/questions/wh ... x-credits/

Not sure how reputable this is, but this guy claims they may ask you to prove your income in the future:
Clawback of subsidy only applies if you make more than you estimated. If you make less, they just ask you to prove your income at renewal.
reference: https://www.reddit.com/r/Insurance/comm ... timate_my/

In short, I would just have her keep an eye on her income next year and notify the exchange as soon as she realizes it is going to be less than she claimed, if that happens.
donall
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Re: Help with ACA problem

Post by donall »

When you sign up for ACA coverage for 2018 you may asked to send in documents from 2017 to verify projected income. Why not employ your daughter to help your family for the last weeks in 2017 if she cannot get a temporary job?
book lover
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Re: Help with ACA problem

Post by book lover »

My suggestions would be for her to track her income from the beginning of year so as know where she stands at all times. Perhaps she could pick up some other work in the beginning of the year to supplement what she is already doing and get ahead of the number that she will need to meet the income requirement.
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