ACA Subsidy Issue

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Topic Author
toasty
Posts: 13
Joined: Mon Jul 02, 2007 11:08 pm

ACA Subsidy Issue

Post by toasty »

As for many early retirees on this board, the ACA has been a godsend in making my early retirement affordable. I have been utilizing the ACA since it began and absolutely love the security and (relative) affordability it provides. The recently passed American Rescue Plan has increased subsidies for most enrollees retroactive to 1/1/2021 and continuing through 12/31/2022. The act also created a new special enrollment period that extends through 8/15/2021. The increased subsidies have allowed me to affordably switch from a Bronze plan to a Silver plan.

I signed up for my new Silver plan in April 2021 that was effective May 1, 2021. It so happens that my birthday was in February. During the special enrollment process, my subsidy was based on my age BEFORE my birthday, but my plan premium was based on my age AFTER my birthday. This means I have to pay an extra $32 per month and doesn’t seem correct to me. I would think that both the premium and subsidy should be based on the SAME age. FYI, I determined my plan premium at both ages by looking at the health plan document provided by the insurer. I determined my subsidy at both ages by using the “Preview 2021 plans & prices” tool on the ACA website.

I called the Health Insurance Marketplace hotline concerning the above issue and spoke with both a representative and a manager. Both agreed that it seem off, but that there was nothing they could do. The manager suggested that I file an appeal, which I did. Unfortunately, my appeal was denied without any substantive explanation. I now have the right to a hearing concerning this issue, which I have scheduled for June.

I have done a lot of Googling to try to find the formula/algorithm they use for determining the enrollee’s age when calculating the subsidy and premium. I haven’t found anything. Does anyone have any documentation regarding this that I could use as “proof” during my hearing?

Thanks in advance for any help or direction you can provide.
mhalley
Posts: 9011
Joined: Tue Nov 20, 2007 6:02 am

Re: ACA Subsidy Issue

Post by mhalley »

If there is any discrepancy on the amount of subsidy you should receive it will be fixed when you file your taxes next year.
Katietsu
Posts: 5083
Joined: Sun Sep 22, 2013 1:48 am

Re: ACA Subsidy Issue

Post by Katietsu »

mhalley wrote: Tue May 11, 2021 10:07 pm If there is any discrepancy on the amount of subsidy you should receive it will be fixed when you file your taxes next year.
I am not sure this is true for the OP. I think that the premium listed on the 1095-A for the SLCSP will be based on the lower age while the premium being paid is based on the higher age. So the same discrepancy will carry onto the tax form calculations. However, it seems like the total the OP could be out is only going to be about $250 so not large consequences either way.
Topic Author
toasty
Posts: 13
Joined: Mon Jul 02, 2007 11:08 pm

Re: ACA Subsidy Issue

Post by toasty »

Katietsu wrote: Wed May 12, 2021 12:12 am
mhalley wrote: Tue May 11, 2021 10:07 pm If there is any discrepancy on the amount of subsidy you should receive it will be fixed when you file your taxes next year.
I am not sure this is true for the OP. I think that the premium listed on the 1095-A for the SLCSP will be based on the lower age while the premium being paid is based on the higher age. So the same discrepancy will carry onto the tax form calculations. However, it seems like the total the OP could be out is only going to be about $250 so not large consequences either way.
Thank you both so much for the replies! At first, I agreed with Katietsu and figured that the SLCSP premiums would be wrong on my 1095-A. But, I found a tax tool on the ACA Marketplace (www.healthcare.gov/tax-tool) that calculates your SLCSP premiums. Since I will have had two plans for 2021, I will be getting two 1095-A's. The first one will be based on my lower age and the second one will be based on my higher age. When I input my birthday and the applicable months for each 1095-A, the tool returned the correct lower SLCSP premium for the first 1095-A and the correct higher SLCSP premium for the second 1095-A.

Plus, on the off chance that the SLCSP premium on the second 1095-A is wrong, the instructions for Form 8962 say that I can just use the correct amount without having to request a corrected 1095-A. So, it sounds like I should be okay and the incorrect subsidies will be reconciled when I file my 2021 taxes next year.

Based on all this, it looks like I can just cancel my hearing. It's not worth the time or effort to try to get the subsidy amounts increased now since they will be corrected and refunded when I file my taxes next year.
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Devil's Advocate
Posts: 436
Joined: Thu Feb 16, 2012 5:18 pm

Re: ACA Subsidy Issue

Post by Devil's Advocate »

Since you are retired perhaps your time is not as valuable as it once was. If I were you in this situation I would probably just pay the additional $384 and spend my time doing something else, especially if this is just a one year issue.

DA
PaunchyPirate
Posts: 498
Joined: Sun Nov 30, 2014 7:58 pm

Re: ACA Subsidy Issue

Post by PaunchyPirate »

It's an interesting situation that has, unfortunately, arisen due to the legislation. I would not expect the ACA exchange automated systems to be set up to deal with it since they weren't required to do so by the law changes. I think you'll likely just have to live with how it works. Perhaps you'll get lucky and it will resolve itself with the 1095-A, but I would not count on it happening. There are multiple loopholes in the ACA implementation due to its many moving pieces.
GTBuzz
Posts: 117
Joined: Wed Apr 01, 2015 2:06 pm

Re: ACA Subsidy Issue

Post by GTBuzz »

While it probably does make more sense to use your age as of January 1st to determine your premium since all policies are calendar year based, I believe the premium calculated on your newly attained age is consistent with the law/regulations.

From 45 CFR § 147.102 - Fair health insurance premiums:

(iii) Age, except that the rate may not vary by more than 3:1 for like individuals of different age who are age 21 and older and that the variation in rate must be actuarially justified for individuals under age 21, consistent with the uniform age rating curve under paragraph (e) of this section. For purposes of identifying the appropriate age adjustment under this paragraph and the age band under paragraph (d) of this section applicable to a specific enrollee, the enrollee's age as of the date of policy issuance or renewal must be used. (Emphasis mine)

Your 1095-A should have the SLCSP of your new age for the months that you were enrolled in your new plan, but I don't know if it will. At that point, you may have to decide whether to accept the SLCSP amounts on your 1095-A, or adjust them with a statement of explanation.
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