ACA - prove you don't have income

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
michaeljc70
Posts: 5322
Joined: Thu Oct 15, 2015 3:53 pm

ACA - prove you don't have income

Post by michaeljc70 » Sat Dec 08, 2018 8:37 pm

I quit my job in August. I won't be eligible for ACA premium credits for 2018. In 2019, I may be eligible. I could just forgo the credits and if eligible get them back in 2020 when I file my 2019 return. But since there is no penalty or interest if you get the credits and then make too much, I'd rather get them upfront. My question is how do you prove a negative (that I don't have a job)? Since I quit I have no unemployment letters or anything like that. The last time this happened they asked for documentation and cut me off since I didn't know what to give them. My spouse works so we wouldn't be so low that we'd fall into the Medicaid level.

JGoneRiding
Posts: 1737
Joined: Tue Jul 15, 2014 3:26 pm

Re: ACA - prove you don't have income

Post by JGoneRiding » Sat Dec 08, 2018 8:40 pm

You show them your spouses income. You do file jointly right?

Not Law
Posts: 197
Joined: Sun Sep 14, 2014 8:05 am

Re: ACA - prove you don't have income

Post by Not Law » Sat Dec 08, 2018 8:45 pm

I have used ACA since 2014. I have only had to state my expected income with no evidence to take advantage of the subsidies. Careful management of withdrawals from IRA, Roth and Traditional accounts, along with a heightened awareness of passive income through the end of the year have kept me in the sweet zone for ACA subsidies.

Topic Author
michaeljc70
Posts: 5322
Joined: Thu Oct 15, 2015 3:53 pm

Re: ACA - prove you don't have income

Post by michaeljc70 » Sat Dec 08, 2018 8:52 pm

Not Law wrote:
Sat Dec 08, 2018 8:45 pm
I have used ACA since 2014. I have only had to state my expected income with no evidence to take advantage of the subsidies. Careful management of withdrawals from IRA, Roth and Traditional accounts, along with a heightened awareness of passive income through the end of the year have kept me in the sweet zone for ACA subsidies.
But you were eligible all those years, right? They have no reason to think you won't be eligible for subsidies again. The issue is I wasn't eligible for subsidies. Now they ask for proof that I am eligible. It happened a couple of years ago. They cut off the subsidies. If your income is the same every year they don't question it.

I guess I'll put in our estimated income and hope they don't ask for proof.
Last edited by michaeljc70 on Sat Dec 08, 2018 9:09 pm, edited 1 time in total.

User avatar
munemaker
Posts: 4144
Joined: Sat Jan 18, 2014 6:14 pm

Re: ACA - prove you don't have income

Post by munemaker » Sat Dec 08, 2018 8:55 pm

michaeljc70 wrote:
Sat Dec 08, 2018 8:37 pm
My question is how do you prove a negative (that I don't have a job)?
When I retired, I asked our HR Manager to provide me with a letter congratulating me on my retirement (including the effective date, and stating the date on which my employer provided insurance ended) which she did, just for this purpose. I was never asked for it though.

JoeRetire
Posts: 2806
Joined: Tue Jan 16, 2018 2:44 pm

Re: ACA - prove you don't have income

Post by JoeRetire » Sat Dec 08, 2018 8:56 pm

michaeljc70 wrote:
Sat Dec 08, 2018 8:37 pm
I quit my job in August. I won't be eligible for ACA premium credits for 2018. In 2019, I may be eligible. I could just forgo the credits and if eligible get them back in 2020 when I file my 2019 return. But since there is no penalty or interest if you get the credits and then make too much, I'd rather get them upfront. My question is how do you prove a negative (that I don't have a job)? Since I quit I have no unemployment letters or anything like that. The last time this happened they asked for documentation and cut me off since I didn't know what to give them. My spouse works so we wouldn't be so low that we'd fall into the Medicaid level.
Did you "quit" or "retire"? To me, and perhaps to the ACA folks, "quit" means you are looking for a new job, where "retire" does not.

When I applied for ACA premium credits, it took a few rounds of phone calls and letters to convince them that I had indeed retired. Not a huge deal, just time and a few letters.

Topic Author
michaeljc70
Posts: 5322
Joined: Thu Oct 15, 2015 3:53 pm

Re: ACA - prove you don't have income

Post by michaeljc70 » Sat Dec 08, 2018 9:11 pm

JoeRetire wrote:
Sat Dec 08, 2018 8:56 pm
michaeljc70 wrote:
Sat Dec 08, 2018 8:37 pm
I quit my job in August. I won't be eligible for ACA premium credits for 2018. In 2019, I may be eligible. I could just forgo the credits and if eligible get them back in 2020 when I file my 2019 return. But since there is no penalty or interest if you get the credits and then make too much, I'd rather get them upfront. My question is how do you prove a negative (that I don't have a job)? Since I quit I have no unemployment letters or anything like that. The last time this happened they asked for documentation and cut me off since I didn't know what to give them. My spouse works so we wouldn't be so low that we'd fall into the Medicaid level.
Did you "quit" or "retire"? To me, and perhaps to the ACA folks, "quit" means you are looking for a new job, where "retire" does not.
I haven't decided yet :D. That is why I may be eligible (if I don't go back to work). I do contract work so if I work just a few months in 2019 I'd also be eligible.

pdavi21
Posts: 1115
Joined: Sat Jan 30, 2016 4:04 pm

Re: ACA - prove you don't have income

Post by pdavi21 » Sat Dec 08, 2018 9:15 pm

1. Proof of employment from your last employer (has end date)
2. Social Security Wages record from ssa.gov
3. Federal Tax return
4. Unemployment insurance records (if applicable)
5. A letter from your last boss.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

User avatar
dwickenh
Posts: 1698
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: ACA - prove you don't have income

Post by dwickenh » Sat Dec 08, 2018 9:41 pm

You could just go to a "no cost" agent and have him/her do all the work, including what verification is needed.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

quantAndHold
Posts: 3438
Joined: Thu Sep 17, 2015 10:39 pm

Re: ACA - prove you don't have income

Post by quantAndHold » Sat Dec 08, 2018 11:46 pm

The only verification they (California) asked for was verification that I had enough income to qualify for ACA instead of Medicaid. They seemed to take my word for the subsidy part. I think I sent them a brokerage statement showing a traditional IRA withdrawal. Then when I went to send them proof of the rest of my income, they didn’t want it anymore.

But yeah, the agent was a huge help. I’m college educated and worked as an engineer for 30 years, and couldn’t fill out he forms correctly by myself. The agent fixed my mistakes and answered all of my questions about how things work.

User avatar
FGal
Posts: 54
Joined: Thu Apr 05, 2018 4:57 pm

Re: ACA - prove you don't have income

Post by FGal » Sun Dec 09, 2018 5:38 am

I was asked to provide proof or documentation of my reported income for the ACA after my husband stopped working. I had already quit the year before. Up to that point, our combined salary had been reported, and even with the loss of mine we still had the husband's income. So once he also quit, the drop in reportable income when I filled out our application for the ACA was significant enough that I assume it triggered an official inquiry.

I did a simple word doc, put in that I'd quit working in YEAR, husband quit working in OTHER YEAR, and our income going forward for COMING YEAR was based off of retirement account withdrawals and as of this time, we believed we would have no further earned income from any employment. I stated further that I believed the amount was estimated at or below $XXXXXX as the yearly reportable income. I then stated that this was all true to the best of my knowledge.

This was accepted and I've not had any issues since.
FIREd as of March 2015!

Retired2013
Posts: 172
Joined: Sat Dec 12, 2015 2:53 pm

Re: ACA - prove you don't have income

Post by Retired2013 » Sun Dec 09, 2018 6:57 am

I was asked to up-date my application this year for the income portion. I only have two items. Once per year I withdrawal from my 401(k) and then interest income. The annual 401(k) withdrawal was done in October so I had the exact figure for 2018. I then calculated the expected value for the interest and used that figure in the application.

After I up-dated the application, the system said I needed to provide proof of income by January 14th 2019 or I could be denied coverage. The only acceptable proof was 1099-R, 1099-INT or my tax return. I figured they had my last year tax return information and the amounts I entered were for 2018.

Luckily, the administrator of the 401(k) sends a 1099-R with the check that I received in October so I up-loaded a copy of the 1099-R to the system. However, since 1099-INT are not required until January 31, 2019, I did nothing with the interest proof. I figure I would wait until January 13th and see if I had received the 1099-INT. My option B plan would be to upload the December bank statements showing YTD interest. The next day, the system kicked-off a letter saying I didn’t provide enough documentation.

I then prepared an Excel spreadsheet showing the YTD interest and how I calculated the end-of-year interest. With my report, I then up-loaded copies of the bank statements to support my spreadsheet report. The next day, the system kicked-off a letter saying I was all set and nothing more was required.

furwut
Posts: 1481
Joined: Tue Jun 05, 2012 8:54 pm

Re: ACA - prove you don't have income

Post by furwut » Sun Dec 09, 2018 8:04 am

Retired2013 wrote:
Sun Dec 09, 2018 6:57 am
I was asked to up-date my application this year for the income portion. ...
The exchange is required to verify income when seeking a subsidy but how diligent they are seems to vary state to state. In my state, as I’m retired with only investment income, the verification process practically reached IRS full audit levels. Add to this the fact that my exchange is used by the state as a jobs training program and the situation becomes kafkaesque.

So, to keep my sanity, I pay the full premium each month (with a Cash Rewards credit card) and claim the tax credit when I file.

YMMV.

Topic Author
michaeljc70
Posts: 5322
Joined: Thu Oct 15, 2015 3:53 pm

Re: ACA - prove you don't have income

Post by michaeljc70 » Sun Dec 09, 2018 8:16 am

FGal wrote:
Sun Dec 09, 2018 5:38 am
I was asked to provide proof or documentation of my reported income for the ACA after my husband stopped working. I had already quit the year before. Up to that point, our combined salary had been reported, and even with the loss of mine we still had the husband's income. So once he also quit, the drop in reportable income when I filled out our application for the ACA was significant enough that I assume it triggered an official inquiry.

I did a simple word doc, put in that I'd quit working in YEAR, husband quit working in OTHER YEAR, and our income going forward for COMING YEAR was based off of retirement account withdrawals and as of this time, we believed we would have no further earned income from any employment. I stated further that I believed the amount was estimated at or below $XXXXXX as the yearly reportable income. I then stated that this was all true to the best of my knowledge.

This was accepted and I've not had any issues since.
Thanks. This is along the lines of what I was thinking if they question it. A letter explaining when I stopped working and how I arrived at the projected income for 2019.

rantk81
Posts: 236
Joined: Tue Apr 18, 2017 8:12 am

Re: ACA - prove you don't have income

Post by rantk81 » Sun Dec 09, 2018 9:02 am

I've got a somewhat related question -- simply for curiosity sake (since I'm not on any ACA plan... yet...)

For the premium/subsidy part of this discussion, I understand that it doesn't make that big of a difference if you get the subsidy monthly, by paying a lower monthly premium each month, OR getting all of the subsidy amount back when you file your taxes after the end of the year.

But, there's another part of ACA plans that reduces your cost based on your income (if you pick a Silver plan) -- where you have lower out of pocket costs -- lower deductibles and lower out of pocket maximums -- based on your income. Can these also be retroactively re-calculated at the end of the tax year? How is that part handled in the cases where you aren't able to accurately predict your income? (Or aren't able to satisfactorily convince them of your expected income?)

fh2000
Posts: 103
Joined: Thu Sep 02, 2010 7:18 pm

Re: ACA - prove you don't have income

Post by fh2000 » Sun Dec 09, 2018 10:02 am

quantAndHold wrote:
Sat Dec 08, 2018 11:46 pm
The only verification they (California) asked for was verification that I had enough income to qualify for ACA instead of Medicaid. They seemed to take my word for the subsidy part. I think I sent them a brokerage statement showing a traditional IRA withdrawal. Then when I went to send them proof of the rest of my income, they didn’t want it anymore.

But yeah, the agent was a huge help. I’m college educated and worked as an engineer for 30 years, and couldn’t fill out he forms correctly by myself. The agent fixed my mistakes and answered all of my questions about how things work.
quantAndHold,
I will be signing up on CoveredCA soon with similar situation like you, and wonder what sort of challenge you had filling out the online application. Was it the part submitting income proof, or simply the fact that some of the questions on the online application were confusing/ambiguous?

snowman
Posts: 904
Joined: Thu Jan 31, 2013 12:59 pm

Re: ACA - prove you don't have income

Post by snowman » Sun Dec 09, 2018 10:30 am

rantk81 wrote:
Sun Dec 09, 2018 9:02 am
I've got a somewhat related question -- simply for curiosity sake (since I'm not on any ACA plan... yet...)

For the premium/subsidy part of this discussion, I understand that it doesn't make that big of a difference if you get the subsidy monthly, by paying a lower monthly premium each month, OR getting all of the subsidy amount back when you file your taxes after the end of the year.

But, there's another part of ACA plans that reduces your cost based on your income (if you pick a Silver plan) -- where you have lower out of pocket costs -- lower deductibles and lower out of pocket maximums -- based on your income. Can these also be retroactively re-calculated at the end of the tax year? How is that part handled in the cases where you aren't able to accurately predict your income? (Or aren't able to satisfactorily convince them of your expected income?)
No, cost sharing subsidies do not get refunded retroactively. Only monthly premium subsidies can be refunded at tax time.

quantAndHold
Posts: 3438
Joined: Thu Sep 17, 2015 10:39 pm

Re: ACA - prove you don't have income

Post by quantAndHold » Sun Dec 09, 2018 10:48 am

fh2000 wrote:
Sun Dec 09, 2018 10:02 am
quantAndHold wrote:
Sat Dec 08, 2018 11:46 pm
The only verification they (California) asked for was verification that I had enough income to qualify for ACA instead of Medicaid. They seemed to take my word for the subsidy part. I think I sent them a brokerage statement showing a traditional IRA withdrawal. Then when I went to send them proof of the rest of my income, they didn’t want it anymore.

But yeah, the agent was a huge help. I’m college educated and worked as an engineer for 30 years, and couldn’t fill out he forms correctly by myself. The agent fixed my mistakes and answered all of my questions about how things work.
quantAndHold,
I will be signing up on CoveredCA soon with similar situation like you, and wonder what sort of challenge you had filling out the online application. Was it the part submitting income proof, or simply the fact that some of the questions on the online application were confusing/ambiguous?
It was b), ambiguous questions. There were questions about income tax status that I got wrong, which triggered the system to try to sign me up for MediCal instead of allowing me to purchase an ACA plan. The verification part was both easy and incomplete. The impression I got from both their messaging and how it worked is that if they already know about certain sources of income, you don’t need to send verification. I listed four or five income sources in the application, but only sent a single brokerage statement, which made them happy.

Pretty much I filled it out as best I could, then clicked the link to have an agent call me. He called me back, fixed the problem, verified that everything else was correct, and we both went on with our lives.

User avatar
Phineas J. Whoopee
Posts: 8490
Joined: Sun Dec 18, 2011 6:18 pm

Re: ACA - prove you don't have income

Post by Phineas J. Whoopee » Sun Dec 09, 2018 11:09 am

snowman wrote:
Sun Dec 09, 2018 10:30 am
rantk81 wrote:
Sun Dec 09, 2018 9:02 am
I've got a somewhat related question -- simply for curiosity sake (since I'm not on any ACA plan... yet...)

For the premium/subsidy part of this discussion, I understand that it doesn't make that big of a difference if you get the subsidy monthly, by paying a lower monthly premium each month, OR getting all of the subsidy amount back when you file your taxes after the end of the year.

But, there's another part of ACA plans that reduces your cost based on your income (if you pick a Silver plan) -- where you have lower out of pocket costs -- lower deductibles and lower out of pocket maximums -- based on your income. Can these also be retroactively re-calculated at the end of the tax year? How is that part handled in the cases where you aren't able to accurately predict your income? (Or aren't able to satisfactorily convince them of your expected income?)
No, cost sharing subsidies do not get refunded retroactively. Only monthly premium subsidies can be refunded at tax time.
That's correct, but it gets all confusing to many people because the word subsidy is being used in two different contexts.

The cost sharing reduction is not reconciled at the end of the tax year. Your following year's eligibility for it will be determined, but there is no claw back nor refund of the benefit.

The premium tax credit is reconciled at tax time. If you were provided too much you pay it back (with some statutory limitations). If you were provided too little it's refunded to you.

That's the way Congress wrote the law. If anybody doesn't like it, another election is scheduled for 3 November 2020.

PJW

Ron Ronnerson
Posts: 1170
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: ACA - prove you don't have income

Post by Ron Ronnerson » Sun Dec 09, 2018 3:46 pm

We received a request for documentation of income as well in California. An agent was very helpful in navigating the process and advised us to enroll as early as possible to allow enough time to deal with whatever issues that might arise.

We ended up getting a request for income verification for each of our three family members (including our four-year-old). It seemed as if they wanted documents verifying income submitted for each family member and I was thinking of loading my one document under each family member’s name. Instead of sending in anything, I contacted our agent. He advised us to send the document to him and he’d handle it. He told us that if we’d loaded the one document under each name, their system would interpret that as us having triple the income that we actually do. So, instead, he loaded the one document under just my name and the request for income verification dropped off for all of us a couple of weeks later. The Covered California system was unclear to us so it was good to have some hand-holding.

They also wanted documentation showing that our child didn’t have insurance through Medi-cal or my employer (though they didn’t want this information from my wife or me). Our daughter has never had insurance through my work or Medi-cal so we had no idea how to prove a negative. The request for this documentation just disappeared from their system a couple of weeks later.

You’d think after so many years of ACA, these types of issues would have been worked out but looks like that’s not the case. I’d find an agent to help. We dealt with ours only over the phone and there was no cost involved.

rantk81
Posts: 236
Joined: Tue Apr 18, 2017 8:12 am

Re: ACA - prove you don't have income

Post by rantk81 » Mon Dec 10, 2018 10:28 am

Phineas J. Whoopee wrote:
Sun Dec 09, 2018 11:09 am
snowman wrote:
Sun Dec 09, 2018 10:30 am
rantk81 wrote:
Sun Dec 09, 2018 9:02 am
I've got a somewhat related question -- simply for curiosity sake (since I'm not on any ACA plan... yet...)

For the premium/subsidy part of this discussion, I understand that it doesn't make that big of a difference if you get the subsidy monthly, by paying a lower monthly premium each month, OR getting all of the subsidy amount back when you file your taxes after the end of the year.

But, there's another part of ACA plans that reduces your cost based on your income (if you pick a Silver plan) -- where you have lower out of pocket costs -- lower deductibles and lower out of pocket maximums -- based on your income. Can these also be retroactively re-calculated at the end of the tax year? How is that part handled in the cases where you aren't able to accurately predict your income? (Or aren't able to satisfactorily convince them of your expected income?)
No, cost sharing subsidies do not get refunded retroactively. Only monthly premium subsidies can be refunded at tax time.
That's correct, but it gets all confusing to many people because the word subsidy is being used in two different contexts.

The cost sharing reduction is not reconciled at the end of the tax year. Your following year's eligibility for it will be determined, but there is no claw back nor refund of the benefit.

The premium tax credit is reconciled at tax time. If you were provided too much you pay it back (with some statutory limitations). If you were provided too little it's refunded to you.

That's the way Congress wrote the law. If anybody doesn't like it, another election is scheduled for 3 November 2020.

PJW
Thanks for the info!

When playing with various numbers and scenarios on the ACA Exchange website, the cost-sharing difference in out-of-pocket-maximums on the Silver plans could be over $10,000 at times for an individual! A much bigger difference than the differences in premiums even! This is an even bigger incentive to make sure you don't "err" on the side of estimating too much income!

fh2000
Posts: 103
Joined: Thu Sep 02, 2010 7:18 pm

Re: ACA - prove you don't have income

Post by fh2000 » Mon Dec 10, 2018 8:51 pm

Ron Ronnerson wrote:
Sun Dec 09, 2018 3:46 pm
So, instead, he loaded the one document under just my name and the request for income verification dropped off for all of us a couple of weeks later. The Covered California system was unclear to us so it was good to have some hand-holding.
Ron,

On that one document, did you list your and your spouse's income, along with every other types of income such as interest and dividend?

Ron Ronnerson
Posts: 1170
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: ACA - prove you don't have income

Post by Ron Ronnerson » Mon Dec 10, 2018 11:03 pm

fh2000 wrote:
Mon Dec 10, 2018 8:51 pm
Ron Ronnerson wrote:
Sun Dec 09, 2018 3:46 pm
So, instead, he loaded the one document under just my name and the request for income verification dropped off for all of us a couple of weeks later. The Covered California system was unclear to us so it was good to have some hand-holding.
Ron,

On that one document, did you list your and your spouse's income, along with every other types of income such as interest and dividend?
Our situation is fairly simple. In terms of income, my paycheck is pretty much all we have except for a small amount of interest. All investments are in retirement accounts and my spouse doesn’t work. It seems like they are not too difficult to satisfy in California. That might not be the case everywhere, though.

Post Reply