No RMD in 2020 means Changes my ACA

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Topic Author
willift
Posts: 90
Joined: Wed Apr 28, 2010 4:25 pm

No RMD in 2020 means Changes my ACA

Post by willift »

With the "Covid19 Emergency" elimination of the RMD for 2020 I have an opportunity to have a "qualifying life event" Without my wife's RMD our income puts us into a much better pricing bracket for my existing ACA Insurance.

The Governments, understandably, wants me to prove my revised income. How do I go about proving I won't have income? Past tax returns included RMDs, Social Security, and minor amounts of DIV/INT. My Tax Return for 2020 will only have Social Security, and minimal CAP Gains. Can I just put that info in writing? Should I create some type of PROFORMA 2020 Tax Return.

I know how to keep my MAGI at the level I want, I'm just not sure how to prove it to the ACA Dept Health & Human Services. (they're probably pretty busy now anyway)

Any suggestions or guidance will be appreciated
Willift
FishTaco
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Joined: Sat Jun 08, 2019 7:49 am

Re: No RMD in 2020 means Changes my ACA

Post by FishTaco »

I'm not sure if the Qualifying Life Event is for the purpose of changing your coverage or if its for the purpose of re figuring your premium tax credit for your coverage. If its simply for the premium tax credit, that should all shake out when you file your 2020 taxes, assuming you can manage the cash flow until then. If its for changing your coverage, then I don't know.
Topic Author
willift
Posts: 90
Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

I'm planning on changing my coverage. I am able to lower my MAGI into the "Cost Sharing" brackets so I am going to pickup a Zero Deductible kind of policy. I've got 8 months till Medicare and I figured I change away from the crazy $7,000 deductible that probably has prevented me from any kind of proper medical care.

Any ideas about reporting
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Watty
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Re: No RMD in 2020 means Changes my ACA

Post by Watty »

You can only change your plan at will during the next open enrolment period in November/December for 2021.

You would need some sort of qualifying life event to allow you to change plans in the middle of the year.
Topic Author
willift
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Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

My Qualifying Life Event is the reduction in income by not taking our RMD (actually it's my wife's RMD) Filled out the information on the Marketplace Website and I have been approved for a Special Enrollment, now I'm concerned about the reporting issues that they request.
J295
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Joined: Sun Jan 01, 2012 11:40 pm

Re: No RMD in 2020 means Changes my ACA

Post by J295 »

Simply report on the website. Maybe attach an explanation as you describe it here. If that’s not satisfactory, you can then follow up. It’s a fluid process
DSInvestor
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Re: No RMD in 2020 means Changes my ACA

Post by DSInvestor »

It has been a few years since I used my state's health care exchange. I just stated what my income would be for the year. Once that had been entered, they project the amount of the credit I'd get and then gave me the option of taking that credit monthly in the form of a reduced monthly premium, or simply to pay full premium. In either case, it all comes together when your file your tax return. At that point, the tax return calculates the premium tax credit (PTC) you qualify for and you will get it in the form of a tax refund. I chose the reduced monthly premium and when my actual income came in a little lower, I qualified for a larger credit and I got some money back. Had my income increased to a point where I became ineligible for any premium tax , I believe I would have to pay back all of the monthly credits I had received.

BTW, you don't want your income to drop too low as that could make you ineligible for Premium Tax Credit. If you suspect that your income may drop too low, you can use Roth conversion to increase your AGI and make you eligible. Just make sure to do the Roth conversion during the calendar year before DEC 31, 2020. Run your numbers carefully. Tax software will be very helpful given your situation of social security income, capital gains, dividends and interest.
Last edited by DSInvestor on Sat Apr 04, 2020 10:11 am, edited 1 time in total.
Wiki
Topic Author
willift
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Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

MAGI includes all of the Social Security not just the Federally Taxable amount, and the total Social Security keeps me above the 138% Medicaid Cliff.

Hopefully the $1,200 COVID Checks will not be included in MAGI (I'm pretty sure they're a credit against 2020 taxes)

My challenge is that when I applied for the change that trigger a request for documentation by June 24th (I've got some time to figure out the best response) But none of the requested documentation reflects the lack of an RMD. They're asking for W2s, Social Security Statements, 1099INT /DIV 1099Rs, 2019 1040s all of 2019 documentation will reflect higher income than I will have for 2020.
Thanks
DSInvestor
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Re: No RMD in 2020 means Changes my ACA

Post by DSInvestor »

Willift, Yes MAGI for Premium Tax Credit purposes includes non-taxable social security. I will amend my post above. Thank you.

https://www.healthcare.gov/glossary/mod ... come-magi/
Healthcare.gov MAGI for Premium Tax Credit wrote: Modified Adjusted Gross Income (MAGI)
The figure used to determine eligibility for premium tax credits and other savings for Marketplace health insurance plans and for Medicaid and the Children's Health Insurance Program (CHIP). MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.

For many people, MAGI is identical or very close to adjusted gross income.
MAGI doesn’t include Supplemental Security Income (SSI).
MAGI does not appear as a line on your tax return.
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J295
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Re: No RMD in 2020 means Changes my ACA

Post by J295 »

willift wrote: Sat Apr 04, 2020 10:04 am MAGI includes all of the Social Security not just the Federally Taxable amount, and the total Social Security keeps me above the 138% Medicaid Cliff.

Hopefully the $1,200 COVID Checks will not be included in MAGI (I'm pretty sure they're a credit against 2020 taxes)

My challenge is that when I applied for the change that trigger a request for documentation by June 24th (I've got some time to figure out the best response) But none of the requested documentation reflects the lack of an RMD. They're asking for W2s, Social Security Statements, 1099INT /DIV 1099Rs, 2019 1040s all of 2019 documentation will reflect higher income than I will have for 2020.
Thanks
I know this is repeating my brief suggestion above… But don’t let the tail wag the dog here… It’s a government format and it won’t fit all situations perfectly… There will be plenty of unique circumstances that will impact income going forward, like a sole proprietor not working anymore which he or she will just reflect by a personal statement… If it were me, I would simply write out a statement briefly describing what you are experiencing and spell out why your income will now be lower than initially projected, sign it, dated, and submit it as an attachment.
Topic Author
willift
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Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

Thanks for the input. I think you're on the right path about a simple descriptive letter.
Willift
monty
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Re: No RMD in 2020 means Changes my ACA

Post by monty »

I personally wouldn't try to get it reduced now. When you file taxes for this year you would get the credit.
Topic Author
willift
Posts: 90
Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

I want to change to a Cost Sharing plan. Zero deductible vs. $7,150 deductible. Basically the same Medical Groups. If I stayed with the high deductible I’d just sort it out at tax time in 2021 but the plan change triggers the information request by the Government
mnnice
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Re: No RMD in 2020 means Changes my ACA

Post by mnnice »

Have you gotten confirmation that this is indeed a qualifying life event?

I think at either income your choices of plans are the same for your zip code?

I says this only because if anyone with variable income could change at will all year long and it would be a mess of people changing constantly.
Topic Author
willift
Posts: 90
Joined: Wed Apr 28, 2010 4:25 pm

Re: No RMD in 2020 means Changes my ACA

Post by willift »

Yes, I was issued a "Special Enrollment Period"

I was able to change my Income (MAGI) from approx. 375% FPL down to approx. 180% FPL. That change driven by removing our RMD from the income equation opened up the 'Cost Sharing Plans" to me. So if I shift over to a Silver plan I can take advantage of that. I figure total premium expense for me will rise about $1000 annually but I move my "Risk" exposure on the deductible side from $7000 down to Zero, total out of pocket from $8,150 to $2,700

Now if I have some type of doctoring is needed my 1st thought won't be "oh boy here comes the deductible expense" I know I shouldn't have that type of thought process but I'm stuck with it, so paying the extra premium will eliminate that tendency to postpone needed attention to good health. Jan 2021 I start Medicare
NoblesvilleIN
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Location: Noblesville IN

Re: No RMD in 2020 means Changes my ACA

Post by NoblesvilleIN »

Last year I had something similar (not RMD). I retired at the end of 2018 and went on ACA for the first time. I estimated my income from dividends in my taxable account as we were not planning on touching the tIRA yet. I received a letter asking for documentation of my income and I just put together a letter of explanation with a table showing my wife's W2 income (she was still working), estimated income from taxable, estimated HSA contribution, and estimated IRA contribution (to DW's tIRA). The net was what I had estimated our 2019 income. I uploaded this letter (I think there was an "other" category) and a couple months later received a notice that my explanation was approved. I was sweating the approval because it came quite a bit after the deadline for submitting documentation. I had submitted the letter weeks before the deadline but had heard nothing. I actually called the 800 number the week of the deadline and talked to a helpful person who saw that I had submitted documentation and extended my deadline by a month or so.

My suggestion is to submit a letter explaining your expected income for this year. It worked for me last year.
michaeljc70
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Re: No RMD in 2020 means Changes my ACA

Post by michaeljc70 »

I had something similar a couple years ago. I was getting the credit for a few months as I was not working (but not on unemployment). They asked for proof of income. I didn't know how to prove I was not working (how do you prove a negative?) They cut me off. I suppose I could have sent a letter explaining it and maybe that would have worked. In the end, since I was not getting CSRs, it was all settled up on my tax return.

The CSRs cannot be clawed back so it seems that there could be abuse there. If the cutoff is $40k and you think you might make between $35k and $45k and claim the $35k it seems you would get the CSRs and if wrong there would be no penalty on them (though I think the premium credit would be clawed back). Please correct me if I am wrong on this.
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