People who don’t have health insurance from an employer plan can buy health insurance from a marketplace under the Affordable Care Act (ACA), also known as Obamacare. The monthly premiums are made affordable by a premium subsidy in the form of a tax credit calculated off of your household income relative to the Federal Poverty Level (FPL), also known as the federal poverty line, federal poverty guidelines, or HHS poverty guidelines.
The premium subsidy goes by a sliding scale. The higher your income relative to the FPL for your household size, the lower your premium subsidy is.
Modified Adjusted Gross Income (MAGI)
The income to compare against the FPL is the Modified Adjusted Gross Income (MAGI) for your household. It doesn’t matter how many family members in your household need coverage from the ACA health insurance.
There are many different definitions of MAGI in the tax code. MAGI for the purpose of ACA health insurance is basically your Adjusted Gross Income (AGI) plus tax-exempt muni bond interest and untaxed Social Security benefits.
These incomes are included in your AGI, and therefore increase your MAGI for ACA health insurance:
- Wages, salaries, tips, and other employment income
- Business income
- Income from real estate rentals
- Unemployment benefits
- Pension and withdrawals from pre-tax IRAs or annuities
- Social Security benefits
- Interest, dividends, and capital gains
These above-the-line deductions are removed from your AGI and therefore reduce your MAGI for ACA health insurance:
- Pre-tax contributions to workplace retirement plans (pension, 401k, 403b, 457, etc.)
- Deductible contributions to Traditional IRAs
- HSA contributions
- Self-employment health insurance deduction
- One-half of the self-employment tax
- Pre-tax contributions to self-employment retirement plans (solo 401k, SEP-IRA, etc.)
- Student loan interest deduction
- Early withdrawal penalties on CDs
- Educator expenses
In addition, these items aren’t in the AGI but are added back to your MAGI for ACA health insurance:
- Untaxed Social Security benefits (see Calculator: How Much of My Social Security Benefits Is Taxable?)
- Tax-exempt interest from muni bonds
The Maximum Income
Before 2021, you qualified for the premium subsidy only if your MAGI was at 400% of the Federal Poverty Level (FPL) or below. You would lose all the subsidy if your MAGI went above 400% of FPL even by $1. You would have to pay back all the premium subsidy you already received when you file your tax return with the IRS. This was known as the ACA subsidy cliff.
Changes in the law turned the sharp cliff into a gradual slope in 2021. The Inflation Reduction Act extended the change through 2025. You still qualify for a premium subsidy now if your income goes over 400% of FPL. You just qualify for a lower amount as your income goes up. See ACA Premium Subsidy Cliff Turns Into a Slope.
This gradual slope only applies to the years 2021 through 2025. The ACA subsidy cliff is scheduled to return in 2026.
In order to see how much you qualify for the premium subsidy, you have to know where the FPL is.
The Minimum Income
In addition to the maximum income to receive the premium subsidy, there’s also a minimum income to get accepted by the ACA marketplace. If your estimated income is too low, the ACA marketplace won’t accept you. They’ll send you to Medicaid instead.
The minimum income is 138% of FPL in states that expanded Medicaid. In states that didn’t expand Medicaid, the minimum income is 100% of FPL. Most states and the District of Columbia already expaned Medicaid. According to a map from Kaiser Family Foundation, these states haven’t expanded Medicaid:
- Wyoming
- Wisconsin
- South Dakota (adopted but not implemented)
- Kansas
- Texas
- Tennessee
- North Carolina
- South Carolina
- Georgia
- Alabama
- Mississippi
- Flordia
However, unlike the maximum income, the minimum income is only evaluated at the time of open enrollment (or special enrollment), not at the time when you file your tax return with the IRS.
If your estimated income at the time of enrollment is below the minimum, the ACA marketplace won’t accept you, and they will refer you to Medicaid. If your estimated income at the time of enrollment is above the minimum and they accepted you, but your income for the year ended up below the minimum due to unforeseen circumstances, as long as you made the original estimate in good faith, you are not required to pay back the premium subsidy you already received.
The FPL Numbers
Here are the FPL numbers for coverage in 2022, 2023, and 2024. They increase with inflation every year in January. These are applied with a one-year lag. Your eligibility for a premium subsidy for 2023 is based on the FPL numbers announced in 2022. The new numbers announced in 2023 will be used for coverage in 2024.
There are three sets of numbers. FPLs are higher in Alaska and Hawaii than in the lower 48 states and Washington DC.
48 Contiguous States and Washington DC
| Number of persons in household | 2022 coverage | 2023 coverage | 2024 coverage |
|---|---|---|---|
| 1 | $12,880 | $13,590 | $14,580 |
| 2 | $17,420 | $18,310 | $19,720 |
| 3 | $21,960 | $23,030 | $24,860 |
| 4 | $26,500 | $27,750 | $30,000 |
| 5 | $31,040 | $32,470 | $35,140 |
| 6 | $35,580 | $37,190 | $40,280 |
| 7 | $40,120 | $41,910 | $45,420 |
| 8 | $44,660 | $46,630 | $50,560 |
| more | add $4,540 each | add $4,720 each | add $5,140 each |
Alaska
| Number of persons in household | 2022 coverage | 2023 coverage | 2024 coverage |
|---|---|---|---|
| 1 | $16,090 | $16,990 | $18,210 |
| 2 | $21,770 | $22,890 | $24,640 |
| 3 | $27,450 | $28,790 | $31,070 |
| 4 | $33,130 | $34,690 | $37,500 |
| 5 | $38,810 | $40,590 | $43,930 |
| 6 | $44,490 | $46,490 | $50,360 |
| 7 | $50,170 | $52,390 | $56,790 |
| 8 | $55,850 | $58,290 | $63,220 |
| more | add $5,680 each | add $5,900 each | add $6,430 each |
Hawaii
| Number of persons in household | 2022 coverage | 2023 coverage | 2024 coverage |
|---|---|---|---|
| 1 | $14,820 | $15,630 | $16,770 |
| 2 | $20,040 | $21,060 | $22,680 |
| 3 | $25,260 | $26,490 | $28,590 |
| 4 | $30,480 | $31,920 | $34,500 |
| 5 | $35,700 | $37,350 | $40,410 |
| 6 | $40,920 | $42,780 | $46,320 |
| 7 | $46,140 | $48,210 | $52,230 |
| 8 | $51,360 | $53,640 | $58,140 |
| more | add $5,220 each | add $5,430 each | add $5,910 each |
Source:
- Department of Health and Human Services, notice 2021-01969
- Department of Health and Human Services, notice 2022-01166
- Department of Health and Human Services, notice 2023-00885
The Applicable Percentages
The FPL numbers determine one aspect of your eligibility for the premium subsidy. How much you are expected to pay when you qualify for the premium subsidy is also determined by a sliding scale called the Applicable Percentages.
The lower your MAGI is relative to the FPL for your household size, the lower you’re expected to pay as a percentage of your MAGI. This table shows the applicable percentages in years 2022 through 2025:
| Income | 2022 – 2025 |
|---|---|
| < 133% FPL | 0% |
| < 150% FPL | 0% |
| < 200% FPL | 0% – 2% |
| < 250% FPL | 2% – 4% |
| < 300% FPL | 4% – 6% |
| <= 400% FPL | 6% – 8.5% |
| > 400% FPL | 8.5% |
We cover it in more detail in ACA Health Insurance Premium Tax Credit Percentages.
Plan Choice
The ACA marketplace offers many different plan options. They’re categorized into Bronze plans, Silver plans, Gold plan, and Platinum plans. Multiplying your MAGI by the applicable percentage determines your premium contributions toward a benchmark plan — the Second Lowest Cost Silver Plan.
You’ll pay more if you choose a more expensive plan. The annual premium you’ll pay for the plan of your choosing will be:
MAGI * applicable percentage + (annual premium for the plan chosen – annual premium for the Second Lowest Cost Silver Plan)
You’ll pay less if you choose a less expensive Bronze plan.
When your MAGI is lower than 250% of FPL, in addition to having a lower applicable percentage, you also qualify for cost-sharing reductions, which lower your co-pays and out-of-pocket maximum. We cover it in more detail in Cost-Sharing Subsidy Under ACA Health Insurance.
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Steve Treisman says
My adjusted gross income for 2014 is now expected to be in the 46,400 range. I signed up for Obamacare in December, 2013 starting in January 2014 and am receiving a subsidy. My subsidy was based on the 2013 FPL levels which I estimated my MAGI to be $45,000. When I reconcile my 2014 taxes do I reconcile using the 2013 or 2014 Federal Poverty level?
400% of the FPL for 2014 is $46,680 which means I receive a subsidy.
400% of the FPL for 2013 is $45,960 which means no subsidy and must be back the subsidy I received.
Which one is correct? I am receiving conflicting answers. Thank you.
Harry Sit says
It’s 2014 income against 2013 FPL. You are cutting it very close. A dividend payment or year-end capital gains distribution from your investments can throw you over. Please do all you can to manage it down, including making tax-deductible contributions to 401k, IRA, and HSA. See Stay Off the Obamacare Premium Subsidy Cliff.
Barbara says
I have applied for Medicare and they denied me I make about 1000. Or 1200 a month I work part time I had insurance but I quit my job of 15 years to care for my husband who was ill he passed june20 2020 as he got worse I did. Notappl y for fml lost everything I had. I have high blood pressure a d d other things also I need to see a doctor but I am barley making can’t pay cash I just need some help
Kathy Kondrath says
Like Steve, I have been receiving a subsidy since January. In August I made a substantial withdrawal from my IRA to pay for a new home because my home had not sold yet. I notified the marketplace & had my insurance switched to a different plan & subsidy amount. I was figuring I would come in at about the $43,000. income level but now it looks like it might be $46,500. I’m terrified. I was thinking of putting $6500 into a traditional IRA but I’ve seen conflicting info on whether that will lower my MAGI or not. Can you give me any input??? I will greatly appreciate any suggestions. Thank you!!
Harry Sit says
Do you have earned income from working? You can only contribute to Traditional IRA if you have earned income. If you do, it will lower your MAGI.
Sharon Long says
I am 63 years old and am collecting Social Security. I earn about $11,500 per year from my job. How can I find how much of a subsidy I can receive to buy health insurance which I cannot afford without help.
Harry Sit says
Have you tried healthcare.gov?
Rita Thoele says
I was told by connectforhealthco (Colorado) that the poverty level for 2014 dropped to 200% to qualify for health insurance credits. Do you know if this is only applicable to CO or they don’t know the regulations?
Thanks for any information.
MSB says
Are your 2014 FPL numbers $300 high across the board? My 2014 form 8926 says family of 4 FPL is $23,550–not 23,850.
Harry Sit says
Please note the bold part. The numbers are applied with a one-year lag. 2013 numbers determine 2014 eligibility. 2014 numbers determine 2015 eligibility. 2015 numbers determine 2016 eligibility.
Tim Carey says
It is my understanding that $62920 is the max income for 2 people to be eligible for the tax credit for an ACA policy. Can you tell me how to calculate and what factors into the income total i.e. social security.dividends earned income,etc
Harry Sit says
From the second paragraph: “Modified Adjusted Gross Income for Obamacare is basically your gross income minus above-the-line deductions, plus tax-exempt muni bond interest, plus untaxed Social Security benefits.”
JohnInIowa says
I was unaware of how Obamacare worked for early retirees. Thanks for the article, Harry.
I’ve read that in retirement it’s generally attractive to spend down taxable funds first, and then retirement accounts (with Roth funds spent down last). That guidance had the advantage of being simple. However, the health insurance cliff that you mention appears to complicate things.
Do you see any relatively simple rule, Harry, for deciding whether it’s worthwhile to go over the cliff during early retirement instead of taking money out of retirement accounts?
Harry Sit says
It’s complicated. Among other things, it depends on how early is early, how much income you need, and how large a nest egg you have and where you have your assets. If early is 60, you can still go by that simple guidance. A large part of spending down taxable funds isn’t taxable. It’s easier to avoid the cliff. If early is 40, converting tax-deferred money to Roth is more important. The cliff is low when you are young. It isn’t too bad even if you go over it. All all ages, income bunching is also useful if you must go over the cliff.
Brian says
I feel sort of bummed about wanting to do IRA to Roth IRA contributions and not doing them before the ACA and before the value of said IRA went up…but I’m fortunate and that’s in the past…
I’m having a difficult time determining as a one person household whether it’s worth losing a subsidy by doing the conversion versus potentially paying more taxes for even more funds converted in the future.
Ssems like there should be an exemption to pay taxes on the conversion and still get a subsidy but I suppose savers often get hit with taxes for their responsible fiscal management, no?
Harry Sit says
It helps to find out how much of a subsidy you are really losing and how long you will have the subsidy. If you are going to lose it, it’s better to lose it early when the subsidy is low, and lose it in one year out of five versus losing it every year. See Converting to Roth and Harvesting Capital Gains Under Obamacare Premium Subsidy and Income Bunching Under Obamacare.
Eugene Laporte says
I am qualifying for free health insurance due to my low income. My grandmother died and left me as a beneficiary on her IRA and I will receive about $10,000. Will that count in my income and disqualify me for any assistance this year? I am single and have about $8,000 in earned income..
Brian says
Eugene-
Talk to an accountant.
That figure at most would reduce your subsidy, HOWEVER, it may be more like a tax-free GIFT, perhaps, especially if you can roll it into another IRA.
Harry Sit says
If you make the IRA an inherited IRA and only take out the required minimum distribution every year, only the required minimum distribution counts as income. If you destroy the IRA and take it all out, the whole thing counts as income.
Jan says
What happens if your adjusted gross income falls below poverty level when you file your tax return? Based on best estimate in January, I was just above poverty level. I have taken credits each month against my premium. Thanks!
Harry Sit says
Jan – This Q&A answers your question: http://kaiserf.am/1AhGsL5
George Mcculley says
If I lose my job before end of 2016 and have no income coming for 2017 which year income would I use for federal health insurance subsidie
Harry Sit says
Your income in the year for which you are buying insurance. 2017 income if you are buying for 2017. 2016 income if you are buying for the remainder of 2016.
CT says
I’m about to take a contractor job with a company that does not subsidize health insurance. Their family plan will run me 15K (PPO) or 18K (HDHP) for the year. With my income and dependents I would be just under the 250% FPL. Can I get into the ACA for a healthcare plan? It would be far less expensive. Or MUST I take the employer (contract company) plan costing me 15 or 18K for the year?
Harry Sit says
Anybody can buy a policy on the ACA exchange. The question is whether you get a subsidy. You don’t qualify for a subsidy when your employer plan for *employee-only* coverage costs no more than 9.5% of your *household* income. See the flow chart in The most confusing source of premium tax credit eligibility made simple, in one chart.
You gave the number for family coverage but you didn’t say how much it costs to cover only yourself. So do the math and see whether you qualify for a subsidy. If you don’t qualify for a subsidy, you can still pay the full price for a policy on the ACA exchange, which may still come out less than the family coverage your employer offers.
CT says
Thanks for rapid reply! And “wow” this is just insane. Your site is awesome (running a bit slow at times, but the content is awesome).
The employee-only plan is 5.5K (PPO) and 6.5K (HDHP), which are both going to be below the 9.5%.
The ACA does not make it real easy to get those prices unless you select the no employer coverage and then bump up income (more that it really will be) to get you into the ‘no subsidy’ range.
I did try one insurance company’s website direct and that did seem to work. Of course, no one seems to have “released” the 2017 rates just yet. It’s not probably going to be good news, so why rush.
BCBS in-network only, 11K per year
– 6K person / 12K family deductible, no copay after deductible
VS.
Employer in and out of network, 18K per year
– 2K/4K in-network | 4K/8K out-network deductible
Jem Wierenga says
Your figure for additional income per person for 2017 coverage is incorrect. It didn’t change from the 2016 amount ($4,160/person for 100% FPL).
Harry Sit says
A family of 5 in the lower 48 is $28,440. If you do the math, the fifth person is $4,140 extra. It’s $4,160 extra only when you have a family of 7 or more.
Lucille Cook says
A young male friend has had coverage under the ACA for the past year, has worked only sporadically, earning only about $9000. Will he be eligible for subsidy in NC? Thank you.
Harry Sit says
That income is below 100% FPL. I think he’ll be referred to Medicaid unless he expects to make more in the upcoming year.
Maria Martinez says
My income is $49,500 with 3 dependants in Texas, which did not expand Medicaid. Do I qualify for an exemption if coverage for me is $3700 and $150 a month x 3. It exceeds 8.13% of my income, so I was just wondering.
FinancialDave says
Maria,
It is a complex calculation based on your age, whether your employer offers coverage, and if so its cost, as well as the price of the lowest cost bronze plan, and the second lowest cost silver plan on your state exchange. All these numbers as well as if any of your dependents had income go into the calculation. I suggest visiting one of your local health exchanges if one exists near you.
Mrs. Picky Pincher says
Oy, the ACA is so confusing to me. I hope it’s been able to bring care to those who can’t afford it, but I’ve heard a few nightmare stories about high premiums and lack of coverage. I know ideas are floating around about repealing/replacing it, so we’ll see what happens I guess. I just hope the changes bring affordable healthcare to more people.
I opt to get coverage through Mr. Picky Pincher’s employer, so we’re lucky that they offer coverage. If neither of us qualified for benefits it would be tricky navigating the healthcare exchanges.
Alan Drake says
I stay below the ACA cliff with $6,500 deductible IRA (not Roth) contributions and $4,400 HSA contribution plus half of self employment taxes keeping me below 4x $11,880 this year (2017).
I turn 65 in July 2018. This will mean only a half year HSA contribution in 2018 ($2,200 + inflation adjustment) as I go on Medicare in July. I am waiting till age 70 (good health & family history) to apply for Social Security. Note: Anyone in my situation, close to the ACA cliff and turning 65 in 2018, should wait till at least January 2019 to apply for SS since SS is added to AGI to see if you go off the ACA cliff and pay an extra $5,000+ in taxes.
Are there any special rules for ACA subsidies for those that turn 65 during the year ? Or do I have to make sure I stay below 4x $12,080 in 2018 ?
Thanks,
Alan Drake
Harry Sit says
I don’t see any special rules. Going on Medicare would be similar to someone who finds a job with employer group health insurance. You have to stay below 4 x 12,060 in 2018.
Since you mentioned self-employment taxes, if you continue self-employment in 2018, keep in mind the ACA health insurance premiums not covered by the tax credit plus your Medicare premiums in the 2nd half of 2018 are deductible above the line. Those may give you additional room to keep you below 4 x 12,060. See IRS Guidance On Circular Reference in Obamacare Premium Subsidy and Deduction.
Alan Drake says
Two errors in my question. The ACA cliff is 4x $12,060 in 2018. And the ACA cliff in 2018 will be only half as high (turn 65 in July), so an extra $2,500+ in taxes for going $1 over.
Sorry.
FinancialDave says
Alan,
I am not sure where you are getting the $2500 in taxes for 2018 if you go over the “cliff”. I guess it depends on whether you have insurance or not. It sounds like you do not. If you do not have insurance then the ACA cliff really does not exist for you as that terminology is meant to apply to those that are getting a premium tax credit by buying insurance through the marketplace. If that was the case then when you go over the 400% FPL point by $1 then you lose the PTC, which in 2016 for someone age 65 could be about $1800. However, if you do not have insurance in 2016 my tax software is telling me your tax penalty for 2016 would be $880 for a MAGI of $47,080 if you were age 65 and $918 if you were under age 65, provided of course that you could not get an exemption. In Washington State the cost of insurance at age 64 just puts you in the area where you would get an exemption based on the affordibility of the insurance at a MAGI of $47,080.
FinancialDave says
I think many could have a shock to their tax return if they think the only test is 400% of the FPL. This is not a simple go or no go test. It is quite possible that an employer could offer insurance for a cost that is below this threshold, or if your employer offers no insurance then it is even more possible that your state health exchange will offer insurance that is below this level when the premium tax credit is taken into consideration. The health exchange rates are based on age so the younger you are the more chance you will be under the limit and not be able to get an exemption if you are right on the 400% line.
fd
Alan Drake says
I have an HSA health insurance policy through the ACA Marketplace. I get monthly subsidies for this policy.
Without reducing my AGI by $4,400 for HSA contributions and $6,500 for traditional IRA contributions, my AGI would be over 4x $11,880 (I am single) and I would have to repay every penny in ACA subsidies. With HSA + IRA I should be below that threshold and get over $5,000 in premium subsidies.
In 2018, I will turn age 65 in July. I plan to continue from January to June 2018 as I have in 2017. In July 2018, I plan to switch to Medicare. Thus my potential tax liability for exceeding 4x $12.060 in 2018 will be only half of my potential liability for 2017. @ $5,000/2 > @$2 500.
Robert says
Went over the cliff by only $821 , still screaming on my way down ….401%…..Forgot to add and factor my early social security Income along with my full time job ….Be Careful out there …President Biden going to bring bill to floor to set limit cap limit to 8% of your annual income, to be paid back to paid back .!…Just dont jump and you be OK is my advice …My mistake cost me 15k ….Ouch….
FinancialDave says
Alan,
In the case where you DO have a policy thru the marketplace the calculation is slightly different (I mis-read your post thinking you had no policy – my mistake), but still no way it is a $5000 liability at the “ACA cliff.”
Let’s look at the calculation, which you can confirm by actually working out the details on form 8962 or hopefully some tax software that handles this properly.
Example your income is right at the cliff point in 2016 of $47080. From the table the salary multiplier is .0966 for a salary of 400% of the FPL. This multiplication gives $4548 which is the annual contribution amount box 8a on form 8962. This number is subtracted from what is called the Second Lowest Cost Silver Premium (SLCSP) – line 33B on your 1095-A. For my state this number is $6120 for someone of age 62 on Jan 1 of 2016 (which I think was your age then). So subtracting 4548 from this gives you the maximum amount of your premium tax credit, which is $1572. So $1572 is the correct amount of the subsidy you should be getting. What they did give you as a subsidy of course is on column 33C of 1095-A. To the amount that 33C is greater than the $1572 (or your particular number of form 8962 line 11(d) you will need to repay it no matter what your salary. The point of this part is that your total liability is the amount of the premium tax credit or $1572.
However, to finalize this let’s asume the marketplace gave you a subsidy of $1572 in my example, so you neither owed a tax or got a refund on the subsidy. Now you forgot you had $1 of interest income from your bank and it throws you over the cliff! ALL of the $1572 that was your subsidy does need to be repaid, that is the way it works, but there is absolutely no way your liability is close to $5000.
There is however a way you might owe more than the $1572 and that is if you told the marketplace your salary was much lower than it ended up. For example if you told them your salary was going to be $30,000 then it is possible you could have gotten a subsidy approaching $3600, so in that case if you fell over the cliff the damage to your taxes is $3600, but it is not really because you had a liability of $3600, it is just that you did not properly estimate your salary to begin with. I saw this all the time in the first couple years of doing these tax returns when people did have to literally repay thousands of dollars, but it was usually because of an income change during the year.
Dave
Harry Sit says
For your state that number is $6120 but in some other states where insurance is more expensive it can be over $10,000. That’s why the cliff can be $5,000. For example try pricing it for a 64-year-old in California.
FinancialDave says
Harry,
I’ll take your word for that. If Alan would tell us his line 33B amount from the 1095-A, then I guess we would know actually how bad it is. I was also thinking that typically an HSA plan is cheaper, which could also be a limiting factor.
However, since I finally found my way into the CA exchange, I am see Silver plans for less than $400 a month??
Sure maybe you can find insurance for $10k in CA, but the calculation is based on the second lowest cost Silver Plan.
Harry Sit says
The less than $400 a month is after the advanced tax credit. I’m using zip code 95123, income $47,000, single 64-year-old. Second lowest cost Silver plan is $372 after $589 tax credit. The full unsubsidized premium is $11,532 per year.
FinancialDave says
Harry,
Thanks for enlightening me. I did not even realize that there are even places more expensive than CA, such as Alaska. Of course still doesn’t tell us about Alan’s case, but I admit it is at least possible.
Brian says
An issue that we have come across as we’re filing our 2016 taxes is that the second lowest cost silver plan (SLCSP) premium that is shown on our Form 1095-A (Part 3 Column B & on the online tool) is a much lower dollar amount than the SLCSP premium that was shown at the time of enrollment and used to determine our premium tax credit. (We were covered during all months; we had no changes in family status; we had no dental plan; we had none of the exceptional cases the Marketplaces mentions that might cause a different SLCSP on the Form 1095-A.)
The dollar amount on the Form 1095-A is so much less (about $88/mo) that it results in a change in our 2016 tax liability of over $1,000!! (We kept a snapshot of the SLCSP that was provided by the Marketplace during enrollment so that we could compare it to what we would later receive on our Form 1095-A.) This is a problem that will create a huge tax liability for many taxpayers with a too-low SLCSP dollar amount on their Form 1095-A.
Harry Sit says
Anecdotally I heard in some places a low cost provider would submit two similar plans so that one of theirs becomes the second lowest cost Silver plan, which makes the other providers’ plan more costly because the subsidy is now lower.
Brian says
What we have found, having been on the ACA since its inception, is that the SLCSP (aka, the “benchmark plan”), is just the benchmark used to determine the subsidy. Once the subsidy is determined for the enrollee, the subsidy is the same no matter which plan is chosen (no matter the metal or type of plan).
So if an enrollee chooses to select a plan that is more expensive than the benchmark plan, the enrollee pays the additional out-of-pocket premium cost.
Since the SLCSP is determined and provided to the enrollee early in the enrollment process, the enrollee can project what the impact on his/her federal taxes will be (due to the plan selected) even before completing the enrollment process – SLCSP, premium subsidy, premium of plan selected, projected income, family size, etc.
Having been provided the SLCSP at the time of enrollment, we know that the SLCSP shown on our 1095-A is incorrect (just like hundreds of thousands of them were back in 2015). Getting the Marketplace, the CMS, and/or the IRS, to admit it though, is like pulling teeth.
Jack ben says
My. 1095 a was incorrect
FinancialDave says
Jack,
That is quite possible for a number of reasons – what is your particular issue on the 1095-A?
karen Polzin says
I had bad health problems all of 2017 so did not work. I was on Obamacare for
2016 and had health coverage. I took out $13,000. from my conventional IRA in 2017.
Will this be enough to get subsidies? What else can I do?
Brian says
You can get an estimate by using the Healthcare.gov plan & preview site: https://www.healthcare.gov/see-plans/#/
Just enter your data and see what it gives you.
Alan Drake says
When you apply on Healthcare.gov, you are asked for your expected income for 2018. If it does match your recent tax returns, you get your claimed subsidy (based on your expected 2018 income) for just January.
Marketplace then asks you to send in (electronically is an option) old tax returns etc and an explanation.
If they accept your reasoning (I suspect they will) then you will get your claimed subsidy for the next 11 months.
If your 2018 income is higher than you expected, there is a cap of $750 or $1,250 you have to pay back of the subsidy.
I had the same problem after my father passed and some one time “forced” income – including one of his IRAs going to his estate that was distributed as taxable cash. I said I expected much lower income in 2018 than in 2016 and gave the reasons why. I am waiting on a response.
I hope this helps.
karen Polzin says
Doesn’t someone have a yes or no answer? I am 61 years old and had a brain tumor removed in 2017. I wasn’t able to work at all in 2017 but I had Obamacare because I had said I expected to work and make $20,000. but I didn’t work at all. I used to work for myself so did not have an employer. I took out $13,000. of my traditional IRA. I live alone and have no other income. I live in Northern Virginia. PLEASE tell me if I need to take out more to get Obama Care.
Alan Drake says
I claimed $16,800 in expected 2018 income. I sent in letter and front page of my 2016 1040. I explained that I would convert money from Traditional IRA to Roth if need be to get to $16,800 (just over 138% of FPL, thus keeping me off Medicaid). Converting to Roth has same effect as taking cash out.
Today, my explanation was approved and my Marketplace coverage is effective as of 1/1/2018.
Contact me at AlanSDrake at gmail dot conn if you have more questions.
Harry Sit says
The answer depends on whether your state expanded Medicaid or not. Virginia has not. In Virginia you need 100% of FPL to have health insurance from ACA/Obamacare. For a single person in 2018 that number is $12,060. It’s tracked to the current year’s income, not previous year’s income. You need to have/estimate that much income in 2018.
Alan Drake says
However, based on last night’s votes & personal discussions with Mary Margaret Whipple (retired State senator & lobbyist for expanded Medicaid), expanded Medicaid should go into effect July 1, 2018 in Virginia. This will raise the bar to 138% of FPL to stay out of Medicaid (and quality of care is generally better with private insurance – one reason to perhaps choose to stay out of Medicaid).
In Louisiana, when we expanded Medicaid on July 1, 2016, everyone in Marketplace with 101% to 138% of FPL was automatically placed on Medicaid & premium subsidies stopped. Too soon to say about Virginia.
Note: I assume above that you do not want to be enrolled in Medicaid. Quality of care is a legitimate reason to chose not to do so. There are other reasons as well – but Medicaid is free.
Harry Sit says
Good point. It would be safer to make it 138% FPL, which comes out to $16,643 for a single person household in 2018.
Brian says
Here in Ohio we have expanded Medicaid; in the County I reside in, the only 3 ACA insurance companies are those same Medicaid providers (the largest one being Caresource). So here, there is no way to “stay out of Medicaid”, when choosing the ACA for insurance.
Alan Drake says
The level of care for private insurance vs Medicaid from the sane insurance provider can vary significantly.
Three examples: Cure for Hepatitis C is covered by private insurance in Louisiana (all policies AFAIK). Medicaid only covers a cure after near fatal liver damage. Louisiana Medicaid only pays for about 100 Hep C cures a year.
Opoid addiction treatment is available at almost every treatment center with private insurance. With Medicaid, only a couple of rehab centers accept Medicaid.
Private insurance allows a choice of artificial knees. Louisiana Medicaid requires that you take the least expensive one offered.
So different policies administered by the same insurance company can provide different levels of care.
I am age 64, coming off 3+ years caring for my elderly father & trying to re-establish my engineering consulting income. I could have qualified for Medicaid in 2016 but chose not to due to the reduced Standard of Care.
Susan Allen says
I fell and was hurt on my job in late Feb. Been drawing workers comp since and will probably return to work Dec 1st if doctor releases me. I never thought to check on my subsidy for my insurance until 2 weeks ago and discovered I will not make enough this year to get it since the workers comp does not count as income. My income (single widow household of 1), by the best of my calculations will be $8700 plus another $200 in premium payments from life insurance. If I draw money out of my IRA to make up the difference for my income, will it count as income so I do not have to repay subsidy of 892.00 per month. I will gladly pull out money to save paying that back.
Harry Sit says
If your income is lower than expected you are not asked to repay the subsidy. You need to be able to explain why your income won’t be that low again for the following year.
Anonymous by requirement, not by desire says
When it comes to figuring out what documents are useable for verifying complex income situations (or any ACA-related data matching issues) there is a NEW number you can call. 1-844-477-7500. This number started taking calls during the end of the summer of 2017. It is not the same as the number on the healthcaredotgov website, that number is 1-800-318-2596. If you get a voicemail stating you may need to send additional, or different, documentation to verify your data matching issue, call the 844 number. DO
NOT KEEP SENDING THE SAME DOCUMENTS TO THEM. IF THEY WORKED THE FIRST TIME, YOU WOULD NOT BE GETTING CALLS, instead, call them ASAP.
They are available between 7am EST and 8pm EST Mon-Sat. They are open on sundays but I think they only work during the middle of the day until around 6ish EST.
If you need help navigating the website or asking about coverage, call the 800 number. They handle the entering of info. The people at 844 handle info that’s already been entered into applications.
The people at that 844 number are the actual people who deal directly with the documents you send in. Thy can help
You figure out what document to send to resolve nearly any issue you have, including how to turn a hand-written letter into a legally binding verification document.
They do not, and will not, give advice on subsidies because they aren’t trained on them. They are trained to explain what documents are needed so that if you have a “data matching issue” with your ACA application, you can figure out what to send to get it resolved… thus helping you keep your subsidy or coverage, depending upon the issue.
Also, if you have a question about what to send to qualify for an exemption, you can call the 844 number and ask for a member of the “Exemptions team” and get direct help from someone with the instructions directly in front of them. Be honest with all of these people, though. They aren’t paid to help the government. They are specifically in place to help us, the consumers, and actually WANT to help us.
Also, please be nice to them. They aren’t the little old ladies at the DMV. They are regular people like us who are paid to help solve problems. You may be surprised at how much FREE, useful, help is available, if you know where to find it.
For some unknown reason, that 844 number is “not allowed” to be broadcast like the Marketplace call center’s is. It is the single best kept information secret of the ACA.
Alan Drake says
However, this may be a very good year to create income by converting some of your Traditional IRA to a Roth IRA.
*IF* I was in your situation, I would fill up the zero bracket amount and the 10% bracket with Roth conversions (if you have cash to pay the 10% taxes).
If you are not subject to the 10% early withdrawal penalty, I might withdraw enough cash from the Traditional IRA to pay those 10% income taxes.
Also, my understanding is that insurance payments for disability (even on a life insurance policy with a disability rider) are not taxable income.
Note: I am not a tax professional, but worth asking your agent.
Judith says
THis is so f’d up…you cannot even live under a roof for under 12k a year in Seattle. Hmmm…do I eat and have a flip phi=one and insurance OR a roof…choices, choices…isn’t America great?
lynn says
i have been unemployed so exempt from mandatory health care. i now have a job part time that will just barely make me eligible for coverage. if i miss work any time during the year or my hours fluctuate i will fall below the required income. could i do odd jobs to make up the difference like pet or baby sitting.? since these jobs dont have a w2 usually would i just keep a record of how much i make?
Alan Drake says
Yes, a W-2 or 1099 is not required to declare income. It is also not required to declare all valid deductions to produce income.
You will have to pay social security taxes on this otherwise undocumented self employed income. $14.13 in social security taxes on every $100 in self employed income.
And, AFAIK, the IRS is not very concerned on self reported self employed income that you declare – especially from a low income person. Declare the income, pay the taxes and they are happy.
Kit Grady says
My husband passed several weeks ago and I rushed to sign up for ACA before the deadline.
I have no income now but plan to use his life insurance to live on. The navigator directed me to use dividends as a taxable income now and I said I make $24,000 to at least get signed up now.
She said I could go back and adjust this number next month when I know more.
Is this possible? How much is required at what percent to get 2,000 per month. Would I ask for dividends and keep the rest with the company? Is this a good solution or am I being foolish?
I’m so worried and confused and would appreciate any help offered.
Brian says
First, I’d like to offer my condolences on the loss of your husband.
For the ACA, your modified adjusted gross income (MAGI) is used to determine whether or not you qualify for ACA subsidized coverage.
Since you have various sources of income to withdraw from to live off of – life insurance, dividends, stocks, cash, etc. You have complete control over where you withdraw your money from to maintain the lifestyle you’re used to. At the same time, you have complete control over what your MAGI will be. As your income changes you can always go back to #Healthcare.gov and adjust this number when you know more.
Yes, this can be a good solution. My wife and I are doing this same thing. We’re retired with various sources of income to live off off – small pensions, IRAs, non-qualified investments, and cash. Just like you, we have complete control over where we withdraw money from to maintain the lifestyle we’re used to. At the same time we ensure our withdrawals are tax-efficient so that we keep our MAGI right on mark.
You need to make sure that as you withdraw your money from the various sources that you withdraw it in a way that your MAGI does not go too low (or too high) that you lose your ACA subsidy. If you can do this yourself, great! (We do this.). Otherwise, you should seek tax-related assistance.
Alan Drake says
You have two ways to go.
Sign up for Medicaid *IF* your dividend income will be below $12,060 in 2017 and you live in a state that has not expanded Medicaid (Texas is the largest state). Or below $16,643 if you live in a state that has expanded Medicaid. Google your state and “expand Medicaid” to find out which one you are in. The Marketplace can also tell you.
Medicaid is free but the quality of care is often not as good as Marketplace insurance.
The other path is to sign up for a health insurance policy under the Marketplace, where subsidies will make insurance much more affordable.
Cash and stock you inherit is not income – interest and dividends are income.
You need to contact “the company” or trustee to find out how much dividends on your inherited stock will be.
Since you have signed up through Marketplace already, you are not under the December 15th deadline to resolve this – BUT it is wise to find out.
I hope this helps. There are too few details to give much advice beyond the basics.
Jason L says
Hi, If my business is a sole proprietor set up as an S Corp, and I am taxed on the salary I draw separately from the corporate tax return, is my ACA eligibility benefit calculated based on my salary, or my salary plus the net income of the business? Thanks
Alan Drake says
ACA subsidies are calculated on all taxable income from all sources, passive & active – plus tax free interest. Then “above the line” deductions are subtracted.
ACA subsidies are meant to help those that would have difficulty paying health insurance premiums out of current income without the subsidies.
However, all “above the line” deductions (lines 23 to 34 from memory) except tax exempt interest are deducted from income before calculating income for an ACA subsidy. Under current law that would include HSA & IRA contributions, student loan interest up to $2,500, moving expenses, up to $250 worth of supplies by teachers, alimony, 1/2 self employed employment taxes, etc.
The above list is “subject to change” with the likely new tax bill.
Carolyn says
My income in 2018, mostly from retirement savings, will be about $24K , but my Obamacare health insurance premiums alone will cost nearly $17,000, and those along with other uncovered medical expenses nearly wipe out my income – making me subsidy-ineligible. And my state did not expand Medicaid. Am I REQUIRED to take the deductions? Would I be better off not taking them?
Alan Drake says
Yes. Estimate your income (even if you are wrong) up to where you get subsidies to help pay your health insurance premiums.
You are not legally required to take deductions when applying for Marketplace health insurance – or even filing your 1040 return.
If you live in a state that has not expanded Medicaid, you need to get your income above $12,060 !
Brian says
So, what did you finally decide to do, now that the enrollment deadline has passed?
FinancialDave says
Carolyn,
What state do you live in where your ACA insurance is $17,000 a year?
My assumption is you file your taxes as a Single person?
I am also not sure of what deductions you are talking about taking or not taking?
The ACA / IRS subsidy calculation rules are in most cases based on your line 37 AGI on your 1040 for the year in question (in this case 2018). As far as I know no rules are changing about that calculation. The other variables are the LCBP and the Silver plan which determine what your subsidy will be.
Drake,
I don’t know what you mean by saying some deductions are optional — certainly it is optional if you take the standard deduction or you itemize on page 2 of the 1040, but this does not change any of the ACA calculations.
Dave
Carolyn says
I had already applied when I asked my question, but if I understand correctly, you can (and are even required?) to go back in and change your income numbers if there’s a change in your expected income. So if I change my mind about what deductions I’ll take, am I correct in assuming I can legally change my income numbers to reflect that, and thereby qualify?
Also, I’ve already paid the first premium without the subsidy. If my income changes as described above, will I get a refund of the subsidy amount I could/should have received if I’d disclaimed the deductions from the start?
FinancialDave says
carolyn,
If you buy insurance from the marketplace, you will (as of current IRS rules) always need to reconcile the subsidy with the IRS on your 1040. You will either get some back if you overpaid or have to pay more (to the IRS) if you guessed wrong about your income in the other direction.
Dave
Carolyn says
Dave, thank you; very helpful!
Alan Drake says
Near the bottom of these IRS instructions are “Less than 100% of Federal Poverty Level”.
My reading is that you can take the premium subsidy – and keep it- if you apply for a Marketplace policy expecting to make between 100% & 400% of FPL.
My suggestion is to go back in now and “expect” to make > $12,060 in 2018 and seek a subsidy for every month in 2018 (you will end up with an excess premium credit refunded at the end of the year).
Since the tax bill is likely to pass – the first $12,000 in taxable income will be within the standard deduction.
Personally, I would plan on failing to claim enough deductions to get to about $12,200 or so in taxable income – pay 10% on $200 or so ($20) and claim the maximum health insurance premium subsidy.
So go back in now & change your estimated income for 2018 to just over $12,060. In 2019, decide just how many deductions to claim when filing.
PS: My 2018 expected income is much lower than my 2016 reported income, so I had to send a letter explaining why. The letter was accepted quickly.
Best Hopes & Merry Christmas ?
Alan Drake
Alan Drake says
Dave,
One can have a perfectly legitimate deduction – say moving expenses, paying interest on a student loan, an HSA contribution for “above the line” deductions – and elect not to claim those deductions.
There are severe penalties for failing to report taxable income, but none for failing to claim legitimate deductions. One is not even required pro forma to do so. It is quite legal to not claim a deduction to which one is entitled.
Example: I know several people with legitimate home office deductions who elect not to claim this deduction due to increased audit risk.
FinancialDave says
Alan,
I suggest maybe your tax advice is slightly mis-guided at least to some degree. If you knowingly change your income – either up or down to affect your 1040 bottom line, then this is fraud on your tax return, which legally does not even have the 3 year audit protection.
Let me give you an example where not taking a deduction actually causes you to owe back taxes and a penalty when you are audited. Let’s say you forget to mark down a deduction on your schedule C, let’s say it’s the office deduction, and this increases your Sch. C income. For a low income married family with a couple of qualifying kids this increased income could very well give them a higher EIC payment and a larger refund check from the IRS, if the income is in the right part of the EIC curve.
I think to keep you out of trouble your best bet is to report your income and deductions as they exist and not try to “game” the system.
Carolyn says
I’m in a major city in TX. Very few providers here. The policy will be the best one I can get, because I’m fairly “senior” and might really need it. Fwiw, the best plan available is an HMO with a network so tiny that it’s a struggle to find doctors accepting the plan and there’s no hospital you can go to that will have all the needed services in-network (lab, radiology, etc.).
Needless to say, I did not plan for this in calculating what I’d need during retirement.
Carolyn says
“Few providers here” – to clarify, few docs accepting the plan, yes; but also very few insurers willing to sell through the Marketplace.
Carolyn says
Sorry, didn’t answer all the questions. My understanding is that deductions could include the cost of healthcare insurance premiums – so that’s a big chunk right there. Then there’s all the medical expenses not covered by said insurance.
It would be ironic, to say the least, if the cost of medical insurance and uninsured medical care could render one ineligible for assistance in paying for medical insurance.
FinancialDave says
Carolyn,
If you are talking about deductions on a Schedule A, then yes out of pocket expenses for insurance and other medical expenses, to the extent they are over 10% of your income are all ways to lower your taxes if you are able to itemize, but these deductions have no affect on your ACA subsidy, which is what I thought we were talking about.
Alan is wrong when he states you can just go in and under-estimate your income so you can get a bigger subsidy and you won’t have to pay it back because you will when you file your 1040 for 2018 in 2019, that is why they want you to esitmate your income correctly.
The income for your subsidy estimate is basically your income items from page 1 on the 1040, such as your taxable IRA distributions, interest income, dividend income, taxable portion of pensions, etc. You do not get to deduct any expenses from this income such as your medical, if that was what you were thinking. If you put the right numbers in on your marketplace submittal they will do the rest of the math for you.
What happens is they have a table based on your age and what is called the second lowest cost silver plan (SLCSP) — let’s say as an example that number is $6000. That is what they consider a reasonable plan for your area. From that number they are going to calculate what you can afford based on your income number — let’s say for a single person with $25,000 income this is going to be $1700. The difference 6000-1700, which is $4,300 is the credit that they will pay you for any plan you buy, up to the price of the plan. So let’s say you could have bought a plan for $6000, which would have been the second lowest cost silver plan, they would give you $4,300 credit towards that plan and you would essentially owe $141.67 a month for your insurance.
Now let’s say instead you decide you want to buy a much more expensive plan costing $17,000 a year, you will still get the $4,300 credit, but because the plan costs more you will now owe $1,058.33 a month for this insurance.
Final notes — as your income goes up the credit you get is less. As your age goes up the price of insurance goes up, which increases your credit. For instance the $6000 cost of SLCSP insurance in Smith County Texas was for someone born in 1958 calculating the Premium Tax Credit in 2016. If you were born in 1956 that cost was roughly $6500 in 2016.
I hope that makes some sense.
Alan Drake says
Dear Dave,
Per my tax accounting course professor at the University of Texas over three decades ago (before EIC BTW), reporting deductions was optional. Not reporting a deduction was not making a false statement per him quoting Tax Court case law.
He gave a few examples, one of which is not taking a home office deduction. Another where a patriotic taxpayer just wanted to pay more taxes.
Alan
FinancialDave says
Alan,
I understand your point, and the home office deduction is probably a bad example, as it’s rarely something that can be proved as you must take it. However, in the world of EIC I do know of people that have lost their ability to take it, by increasing their income – not specifically by taking a deduction, but it could happen.
Anyway, I think we are well off the track of this conversation, because I don’t understand what at all this has to do with our poster Carolyn’s plight. ACA calculations are not affected by any deductions that I know of.
Carolyn says
When you actually do the application, it specifically asks about gross income and deductions, and asks you to subtract the deductions from your income. I think it does this because subtracting legit expenses probably helps many people into the subsidy window, who might be deemed to make too much if the deductions aren’t taken into account (when it asks about income, it basically asks for your gross income). I can’t remember if the language asks if I COULD take said deductions, or if I WILL take them. I’ll look at that when I go back into the application, but I’d rather not do that until I’ve decided on a course of action, because every time you touch it, you risk having to re-do the whole thing and/or messing something up.
I really appreciate everyone’s efforts to help me figure this out!
Harry Sit says
There are different types of “deductions.” A pre-tax contribution to a 401k plan would be a “deduction” that affects income. ACA premiums or out of pocket medical expenses are not that type of deductions.
FinancialDave says
Carolyn,
I think there is some confusion here from their use of the term deductions. As Harry and Alan point out the only “deductions” are things that reduce your Gross income.
A better way to look at it is what is your taxable income, which since you are not working, this would basically be your gross income minus any contributions you make to your HSA. If you look at last years 1040, this is basically the number represented by the bottom of page 1, so you might just consider what will have changed from last year from this number. With your low income and high expenses I wonder if you are really going to have any money left over to contribute to an HSA anyway.
You don’t get to deduct any costs for the insurance itself or other “expenses” you might have.
Alan Drake says
Likewise, HSA contributions reduce income for ACA calculations.
One year, my HSA contribution reduced my income below 400% of FPL and saved me from the “ACA cliff” and about $5,000 in extra taxes. I just paid a $1,250 penalty for underestimating my income.
This is a major reason I chose high deductible HSA eligible health insurance plans. I get a larger premium subsidy by contributing to my HSA every year (typically my premium subsidy increases by about 15% of my HSA contribution, on top of the increased income tax deduction).
That year I also made contributions to a Traditional IRA instead of a Roth & opened a SEP IRA. All three – HSA, Traditional IRA & SEP IRA (employer contribution as self employed) – reduced my income for ACA health insurance premium subsidies. I squeaked under the 400% FPL after my father’s death forced IRA distributions from his IRAs I inherited.
My calculation is that my annual HSA contribution has reduced my federal income taxes by 15% most years (soon 12% ?), state income taxes by 4% and increased my ACA health insurance premium by about 15%. Combined, my out-of-pocket cost for HSA constributions is 66% of every dollar.
I plan to use my HSA surplus balance to pay Medicare premiums when I get older.
Carolyn says
Ok, I got busy with something else but I hope some of you might still respond. To clarify, I am not talking about doing anything to change my income for any purpose, and certainly not trying to “game” the system. It’s just that, on the ACA application, first it asks for your income, then it asks for your deductions. In past years, for tax and other purposes, I’ve been deducting costs for my health insurance along with other medical expenses to the extent they exceed 10% of my income, so my initial answer was to include those deductions. That said, I don’t think they specifically ask you to take those particular deductions by name, and if they’re optional, maybe I don’t have to for subsidy eligibility purposes? That’s what I’m trying to figure out. Because my income is too low for the deductions to significantly reduce my taxes, AND if I have to deduct them in order to calculate my MAGI for subsidy purposes, they take my income from > $24K down to very little, and I lose the subsidy.
I don’t know if all that helps, but I welcome any further thoughts/clarification. I certainly haven’t found anything saying I MUST take the deductions for purposes of calculating my MAGI; but I also haven’t really found anything directly addressing my situation.
You all sound more like you know more about what I’m talking about than most other sources seem to, so thank you for any further thoughts!
Harry Sit says
See my reply under #48. The deductions you are talking about are not the ones the ACA application asked about. You can still take them on your taxes. They don’t affect your MAGI or your eligibility for the subsidy. It appears you don’t have the type of deductions the ACA application asked about. So don’t worry about it.
Alan Drakr says
Dear Carolyn,
The only deductions that reduce your income for purposes of calculating MAGI & your ACA health insurance subsidy are on lines 23 to 35 of Form 1040.
Amongst these deductions are two health insurance ones. Self employed health insurance premiums & HSA contributions. It is wise to contribute the maximum allowed to your HSA (if you select that type of high deductible policy) but not mandatory.
Also half of employment taxes paid by self-employed are deductible.
Other deductions are traditional IRA contributions (Roth contributions are not deductible) plus SEP & SIMPLE IRAs. Few other deductions apply to most people unless you have outstanding student loans, but review the list anyway.
Other deductions do not affect your MAGI, which is used to calculate your ACA health insurance premium subsidy.
I hope this helps.
Carolyn says
Alan & Harry, duly noted that you’ve reached opposite conclusions; but thanks for trying to help.
FinancialDave says
Carolyn,
If you need a tie-breaker, I’ll side with Harry. It is also the safer option to not take any deductions that you don’t absolutely know are appropriate. If you do you may likely owe a much bigger tax bill than you expect.
It is sad to say but in the first few years I was seeing many people with huge tax bills, many times because employees helping people at the exchanges didn’t really understand the details.
Safer is better in this case — just use your gross income with no deductions.
Dave
Carolyn says
Dave, thank you! But I’m afraid there’s still a misunderstanding. I don’t need to get my income down, I need to get it UP. Otherwise I’m too POOR to qualify for the subsidy! But it’s the cost of the dang insurance that’s impoverishing me!
What I want is to NOT deduct my insurance premiums, so my MAGI will NOT be reduced so far that I’m too poor to qualify for the subsidy.
You all have definitely educated me a bit, and inspired me to read everything I could find online. I cannot find my particular situation addressed. However, I also cannot find anything stating that I’m REQUIRED to deduct my insurance premiums or other medical expenses from my income for MAGI purposes of the subsidy, so long as I’m not deducting them on my tax return (which I won’t).
So at this point, I’m leaning toward NOT taking the deductions, thereby qualifying for the subsidy.
Harry Sit says
Alan and I are in agreement. No tie breaker is needed. The insurance premiums and out of pocket medical expenses don’t reduce your MAGI. The ‘G’ in MAGI stands for Gross. That’s before the insurance premiums and out of pocket medical expenses. You don’t have the option to use them to lower your MAGI even if you wanted to. The insurance premiums and out of pocket medical expenses only reduce your taxable income, which comes after the AGI. Taking those deductions after the AGI on your tax return does not affect your subsidy. AGI and taxable income are two separate concepts.
FinancialDave says
Carolyn,
That is not making sense to me – the lower your income the more ACA subsidy you get.
From your data (if you are single), which you stated your income was $24,000, you are at roughly 200% of the FPL (Federal Poverty Level) which is right in the middle of the subsidy range which goes up to 400%, where you have to repay any subsidy you got.
What am I missing here in your explanation?
Alan Drake says
Dear Carolyn,
Health insurance premiums for the self employed are deducted to determine MAGI (Line 29 of Form 1040).
I could see where there are two solutions that work mathematically.
Assume income before Line 29 deduction is $24,000 and unsubsidized premiums are $1,000/month.
Solution 1 – No subsidy, MAGI is $12,000 ($60 below 100% FPL)
Solution 2 – Subsidy is $850/month ($10,000/year). Line 29 is $1,800 (12x ($1,000 -$850) & MAGI is $22,200.
Both solutions work mathematically.
I suggest getting the subsidy during 2018 to “force” Solution 2.
Alan
Harry Sit says
Alan – Self-employed involves a whole set of complex circular calculations. You don’t have a choice to force one way or another. You have to follow the IRS prescribed methods. I lost track. Did Carolyn say she’s self-employed? If not, why confuse her?
Carolyn says
I AM self-employed, but not so you’d notice it, income-wise. I’m an artist, and my earnings don’t even pay for my costs as an artist (so I don’t try to deduct those).
I have savings from my previous employment for many years, and that’s the source of my $24K in income.
So I don’t know whether I’m “self-employed” from the IRS’s point of view.
Carolyn says
Dave, if your income is too little, you get no subsidy. I understand the floor is $12,060. Perhaps because if you make too little, you owe no taxes, and the subsidy is structured as a tax credit?
SO, yes, just looking at my income, I should be an ideal candidate for the subsidy; BUT since my health insurance premiums will cost nearly $17K in 2018, IF I am REQUIRED to deduct them from my income for purposes of calculating subsidy eligibility, the premiums alone will disqualify me for the subsidy that was supposed to help me afford them!
FinancialDave says
Carolyn,
You can only deduct the premiums to the extent they exceed your self-employment income, which you said is minimal. If you file a Sch C then your net income (which you said is small) is all that would be deducted from your gross income, which I then assume will make little difference to the calculation.
So once again I say your best estimate is to just use your gross income of $24k and don’t deduct anything. Or a closer approximation is to use your gross taxable income from your retirement accounts and forget about the SE income, since it gets subtracted anyway.
According to the IRS you are self-employed if you file a Sch C with a positive net income, but as I stated above the SE income is the only thing that can be offset with the health insurance premiums, so it sounds like this is a relatively small amount. What ever is offset here against your SE income cannot be used later if you itemize, but next year I think it will be very hard for you to itemize.
Dave
Carolyn says
Thank you, Dave. Fwiw, the info at the following link seems to say that “[p]ayments for insurance premiums you paid for policies that cover medical care” are deductible, regardless of whether one is self-employed: https://www.irs.gov/taxtopics/tc502 .
Harry Sit says
Deductible to arrive at a Gross Income and deductible to arrive at a taxable income are two different things. Please stop worrying and enjoy the holidays.
james says
Alan or anyone who can help pls,
I live in FL where medicaid was not expanded. I applied for ACA for 2018. My expected income is under 12k. If I make less, will I be required to payback the subsidy I will have received? Please let me know, thanks.
Alan Drake says
Dear James,
On the bottom left of page 8 of Instructions for Form 8962 it says, basically, that you get to keep the ACA Marketplace Premium subsidy that the Govt pays through the year if you applied in good faith.
My personal interpretation is if there was a reasonable chance that you could make more than $12,060 in 2018, you get to keep any subsidies paid to you through Marketplace.
Also, I do not foresee rigorous enforcement by the IRS of whether income projections by low income people were reasonable & made in good faith.
Auditing people that projected $12,500 in 2018 income in November 2017, but actually only made $9,000 in 2018 (as an example), are not an efficient use of IRS resources. The premium subsidy is only refundable if the IRS can show that the income projection was made in bad faith or you are not legally present in the USA.
https://www.irs.gov/pub/irs-pdf/i8962.pdf
TRL says
I live in Maryland. I receive $1069 in SSDI and $2974 in veterans disability. I have medicare and am wondering if I am “dual eligible” for medicaid. I get conflicting answers about whether to include my veterans disability as income.
Alan Drake says
My father passed away last year. I was forced to take an IRA distribution & converted my share of his 403b into an Inherited Roth account. This unexpectedly increased my 2016 income.
I explained this in a letter to Marketplace and how I estimated my income for 2018. They accepted this after a couple (three ?) weeks.
My impression is that they are inclined to say yes to your estimated 2018 income. This is not an IRS audit on your estimated income.
Just write down, with some specifics, your estimated 2018 income.
BTW, if you are in good health you may want to wait till age 70 to collect Social Security retirement.
Kit Grady says
Dear Dave,
My husband passed away last year and then we were using his S.S. for income as I was on the ACA. Now I just signed up for the ACA and will use his life insurance as investment income. I do not want to use spouse S.S. because I’m not 65.
Since there is now an income difference on my application this year, I have been asked to submit documentation to show this new income I plan to make with investments. What kind of documentation can I send? Can my financial advisor send something that satisfies the ACA folks. Thank you for your help in advance.
FinancialDave says
Kit,
In most cases life insurance is not taxable income, so would not be applicable since it does not show up on your 1040 as income. If you are over 60 then it is possible to file for Widow’s SS benefits on your husband’s record and postpone claiming on your own record, but your Widow’s benefit would be reduced because you are less than FRA. Seek guidance from your financial advisor.
Alan & Kit,
In any case whatever is done will have to be reconciled with your real income and subsidy during next years tax season. In other words you may either have to pay some of it back if your income estimate is low or you will get a tax refund if the income estimate is high for 2018.
Alan Drake says
There is a cap on how much you must repay if you underestimate your future income (as I discovered in the year my father passed and my income was higher than expected).
As a broadly general rule of thumb, if you are in your 50s or 60s, the cap will limit your liability for receiving excessive premium subsidies due to significantly underestimating income.
For young people, the subsidies are much smaller and Marketplace insured taxpayers may find that the excessive premium subsidy is below the caps listed below. So they will just pay back the excessive subsidy.
The caps are based on your reported AGI. In 2018, if your AGI income is below 200% FPL, you will pay back no more than $300.
Below 300% FPL & above 200% FOL, there is a $750 cap on excessive premium subsidy payback.
Below 400% FPL but above 300% FPL, the payback cap is $1275.
If your reported income in 2018 is above 400% FPL ($48,240 for a single person), there is no cap on the premium subsidy payback. You must pay back every dollar of subsidy.
FinancialDave says
Alan,
Thanks for stating the limits on the repayment side of the equation. This will all be reconciled on the 8962 during next years tax season (unless some tax law changes). In most cases “some” amount will either be repaid to the IRS up to possibly a limit, or all of the amount due you will be credited to your tax bill.
lynn says
alan do you know what happens if you overestimate and end up falling below the $12,060 minimum requirement?
Alan Drake says
Bottom left of page 8
https://www.irs.gov/pub/irs-pdf/i8962.pdf
Basically, unless the IRS can show you predicted your future income in bad faith (hard to do) or are not legally present in the US, you get to keep the premium subsidy. No premium subsidy refund if your income falls below 100% FPL in a non-expansion of Medicaid state (or 138% FPL in a Medicaid expansion state) without bad faith or being an illegal immigrant.
Liz says
On the other side of this; if I am a sub chapter S can I start (in february2018) a solo 401k to increase my IRA deduction and lower AGI?
Harry Sit says
Pre-tax contributions to a solo 401k lower your AGI, yes. They are not the same as IRA deduction though. You can do both if the lowered income allows a deduction for the traditional IRA contribution.
Liz says
Thanks for the response! My goal is to lower income and stay under 400% of FPL. I will be a few K over after T IRAand HSA contributions. I can skip the T IRA contrib if a larger SOLO 401k contrib will reduce income for the ACA. I haven’t had much guidance from my accountant and need to be prepared with a plan. This will be my first year on ACA. Thanks again
Amy says
Ok, so I am being told that if you didnt have insurance and you are over the federal poverty line than there is still a way for the insurance to be considered unaffordable. I was told that if you take your income and mulitply it by the percentage set by the IRS which I think I was told was 8.16% (this changes every year) this is the amount to go by. If the cost of insurance is over that amount than it technically is considered unaffordable and you can take the exception A to not pay the fine. Any clarification on this and if this is actually correct?
Harry Sit says
The gist of it is true. Here’s more info from healthcare.gov:
https://www.healthcare.gov/exemptions-tool/#/results/2017/details/marketplace-affordability
There are other exemptions as well. This tool by healthcare.gov asks a number of questions to see if you qualify for an exemption:
https://www.healthcare.gov/exemptions-tool/#/
Mario Serrano says
Question
hello
I lose my job on November 2016
I collected 6 months in unemployment in 2017….19 K
I withdrawal 75 K from my 401K ( 30% penalty) to pay my condo and car….54K
I apply for credits in market place ..health connector MA
I started collecting my work pension in August 2017 ..$1850 monthly
I started doing my income tax and shows that I need to repay $1600 from health insurance
How can clarify to the IRS that the $75k was used to pay my condo and car leaving me with barely $1000.00 and still in low income (single)
Thank you
FinancialDave says
Mario,
What I see (from way far away) is you spent $82,000 on “stuff” last year ($19k +$54k + $9k) so I don’t see how you are going to get into any low income bracket.
Anyway it doesn’t really matter how much you spent or have, it’s the taxable income number that makes the difference. Even unemployment is income and obviously the $75k withdrawn (less the 10% penalty – rest was regular income tax) is also taxable income used to pay your living expenses, along with the $9k in pension. Therefore your taxable income is something like $95,000, just on the surface given what you have said.
Kim says
Thank you for your really helpful article! I have been unemployed/under employed for all of 2017, earning a grand total of $18,208 for the year. In addition to that, I received $5,395 in ACA subsidies for 2017 (per my 1095A form). I also decided to roll my 401k IRA over into a Roth IRA in 2017 because I saw that I’d be in the lowest tax bracket and wanted the taxes due to be as low as possible. That rollover amount was $28,244. After the rollover, I took and early disbursement ( I am only 54) in the amount of $17,930. In preparing my own taxes for 2017, the rollover amount of $28,244 is showing as income and incorrectly inflating my AGI, which is triggering a total repayment of all of the ACA subsidy. Per your article, my MAGI number is based on $47,520 ($11,880 x 400%), right? And currently, the 1040 form that I’m working on shows my AGI as $46,472. What do recommend I do, so that I am able to keep my ACA subsidy (because I truly had a low income year) and also properly include the rollover amount (which is taxable because it went from a tax deferred IRA to a taxable Roth IRA)? Any help you can offer would be much appreciated!
FinancialDave says
Kim,
Please clarify — “I also decided to roll my 401k IRA over into a Roth IRA in 2017 because I saw that I’d be in the lowest tax bracket and wanted the taxes due to be as low as possible. ”
If you truly did move your traditional 401k (not Roth 401k) into a Roth IRA in 2017 that is a taxable event. You should have by now gotten (or can get on-line) your 1099-R for this rollover — if so what is the distribution code in box 7?
Dave
Harry Sit says
Rolling over a Traditional account to Roth is taxable, which correctly increased your AGI. Yes the MAGI limit for a single person in lower 48 for 2017 coverage is $47,520. If your $46,472 AGI triggers a total repayment you must have something else that put your MAGI over the limit. To reduce your MAGI, see if you are eligible for a deductible contribution to a Traditional IRA for 2017 or a contribution to HSA. If so, make such contribution before April 15.
Kim Tanzer says
Hi Dave. Yes, I received (2) 1099-Gs.
One is for the actual roll-over of $28,244 and the code is: G.
The second 1099-G is for early distribution of $17,929 and that is code: J.
FYI – I used the $17,929 to purchase a used RV, which is now my primary residence ( I mention that in case it can be leveraged in any way to help my situation.) Thanks for your speedy response.
Show quoted text
Rick Brown says
I work only part time…but I have the availability to contribute to a 403(b). Will this reduce my MAGI?
Alan Drake says
Dear Rick,
I assume that you do not need to worry about any upper income limitations for retirement contributions.
Contributing to a 403b now will reduce your 2018 AGI.
If you contribute to a Traditional IRA before April 15, 2018, you can designate whether it will reduce your 2017 AGI or 2018 AGI (assuming you had earned income in 2017).
The upper limits of retirement contributions vary depending on your circumstances. Lower of earned income (minus 403b contribution) or $5,500 if you are under age 55. $6,500 if 55 to 70.5.
Alan
Michael says
I’m 65 and seeking assistance via SSA Extra Help with costs of Medicare Part D Perscription Drug Plan(s). Just spoke with a SSA rep who quoted the 2018 FPL for a H.H. size of 1 person to be $12,140.00 as opposed to the $12,060.00 listed in the table above.
It’s a slight difference but could make the difference to someone right on the margin, depending on which amount is used.
Turns out I’m not qualified but perhaps someone from staff at Finance Buff could inquire of SSA which is correct .
Harry Sit says
This post is specifically for Affordable Care Act, not for Medicare or Medicaid. Affordable Care Act uses the FPL with one-year lag. The 2018 FPL is used for 2019 coverage. Therefore you see $12,060 listed under 2018 coverage and $12,140 listed under 2019 coverage. I don’t know how Medicare or Medicaid does it.
Nina says
It’s wonderful that there are some financially secure people asking financial questions which honestly is helpful. I must ask, it’s showing 12,060 as the FPL for 2018 so I have 12.546 a yr as income my question is after rent electric and my scripts there is nothing left. I don’t get a tax break for having to pay for my insurance. What do I do or did I miss something?
calwatch says
You have to buy insurance on the marketplace, or claim Medicaid if you are in an eligible state. The credits only apply to health insurance on the marketplace, not employer sponsored healthcare or other individual plans. Many employers charge an arm and a leg for poor (60% minimum value coverage) plans but otherwise make you ineligible. In your situation, that might be a high deductible health plan charging $95 a month, below the 9.5% threshold. It is worthless to you but still “counts” as employer provided insurance. https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/
M Taylor says
Annual Household Income for our family of five is $79,000. Four members are covered under Employer Covered Healthcare, but one is not – so we are applying for CoveredCA for that person. Will that one person be eligible for for Premium Assistance to help with the monthly health insurance payment? Looks like our family’s household income is about 280% of FPL.
Harry Sit says
Unfortunately no. You can use the “Shop and Compare” section on coveredca.com to verify. Why is this person in the household not able to be covered under the employer plan as the other four?
M Taylor says
I am covered under my employer. It is $500/month to cover my RDP. Not affordable. The other three are children covered under their father’s employer.
We updated CoveredCA with new income (she was eligible before with less income and one less dependent), and it states “Household Income IS in the APTC program Limits”. But it is “under review” because there was a qualifying event, so I cannot see the Premium Tax Credit amount.
Charts online show a family of “four” receives APTC if income is <$97K. We are a family of five and earn less than that. Why would we lose the Premium Tax Credit? Thoughts?
Harry Sit says
Because that household of four have to cover four people with that income and you only need to cover one. RDPs still file separate federal income tax returns, right? See if she can qualify with income from her own federal income tax return as a separate household.
M Taylor says
Oh, I understand.
Yes, we file separate federal returns. When completing the CoveredCA application online, the income (line 37) was split $35K each. (The additional $10K was for an adult dependent child who works PT). That said, I am hoping they take her line 37 and she receives a PTC on that income alone.
(I am guessing that is how it was calculated when we applied previously and she qualified for a decent PTC. The income for 2017 was only $5K less (each).
BTW… I’m so grateful I stumbled upon your site. You have been incredibly helpful!
Harry Sit says
The “household” in the application corresponds to each federal income tax return, not people living under one roof. Two single people living together are two households in the eyes of ACA. So just apply separately. You won’t be able to split like this if you marry though. Married filing separately don’t get premium tax credit unless under special situations (separated, domestic abuse, …).
Mario Serrano says
I was 54 yo in November when I lose my job, in January 22 after I was 55 yo and have some money withdrawal from my company 401k … I will have to pay a 10% penalty next year besides the already taxes paid?
Thanks
Mister K says
When you referred to the states that expanded Medicaid, you stated that the minimum income is 138% of FPL; 138% of FPL is the MAXIMUM income, not the minimum.
Harry Sit says
The minimum to qualify for health insurance from ACA marketplace.
Mister K says
The minimum income rule applies only to the APTC with ACA Marketplace plans.
In states that have expanded Medicaid, a person qualifes for Medicaid if one earns UP TO 138 percent of the FPL. For a single individual in 2017, the upper income limit for Medicaid eligibility was $16,642, and for a family of four, the upper income limit was $33,948.
Source: https://www.healthinsurance.org/faqs/my-eligibility-for-medicaid-depends-on-whether-im-133-percent-of-the-federal-poverty-level-can-you-spell-out-what-that-means-in-dollars/
Follow us: @EyeOnInsurance on Twitter | healthinsurance.org on Facebook
People should know what they’re talking about before publishing wrong information.
Harry Sit says
That’s what this whole article is about. Look at the title.
Mario Serrano says
Situation
I was 54 years old in November when I was terminated from my job, in January at 55 years old I withdrawal like 15 K from my company savings 401k …
Question
Do I will pay the 10% penalty next year?. Or the 55 rule apply?
Thanks
Harry Sit says
You will pay the 10% penalty unless you turned 55 by December 31. See Age 55 No-Penalty Withdrawals From 401k Plan.
Melanie says
I see where you have answered that you do not have to pay back subsidies if you fall below poverty level for your 2017 taxes (I’m barely below.) But do you know what that means for qualifying for 2018 subsidies? Will I still qualify if I believe my income will be better or will I be taken off ACA and subsidies without proof? (Obviously, I’m already in ACA and claimed my income would be better, but I didn’t know that I was below poverty in 2017 until now.)
Rob says
What happens if you are over by a small amount on the ACA, do you have to pay all the subsidies back, or just what you are over?
Harry Sit says
If your MAGI is over 400% FPL, you are not eligible for the premium tax credit. If you received advance credit, you will have to pay all of it back when you file your taxes.
Rob says
What if you qualify for tax credit, but maybe a smaller amount than you are receiving, at end of year, if your income is little higher and you still qualify for a credit, but got to much credit, do you pay back all it or the difference?
Harry Sit says
You pay back the difference. At some low income levels there is a cap on the difference you have to pay back.
Margie says
Hi and thanks for this article. I work for myself and make some income off of investments (that are taxable). Last year (2017) – I unexpectedly made way more money that I thought I would in my business – and I also made more than I thought I would in capital gains and dividends – so I went over the Obamacare “cliff” (only by a few thousand $$). Ugh. I paid a HUGE tax bill because of it (and yes, I did all the tricks to reduce my MAGI – by contributing to my HSA and IRA). I doubt I will make that much money in 2018. I just saw my state’s health care exchange has me down as “pending” for whether or not I am eligible to sign up again (I am on Obamacare currently). Does going “over the cliff” once disqualify you for Obamacare going forward?! I’m terrified. That wouldn’t seem right as my income can vary wildly from year to year. Thanks for your help!
Harry Sit says
It doesn’t disqualify you. You just pay more when you don’t get a subsidy. By the way since your work for yourself, did you contribute to a SEP-IRA? That would’ve reduced your MAGI. It can be useful if you ever make more money again.
Margie says
Hi Harry. Thanks so much for your VERY quick response! I was seriously having a panic attack (not kidding)! There was some reason why we (myself and my accountant) didn’t do a SEP-IRA. But, I can’t remember what it was. Actually, this year if I get that close again, I am just going to invest in a new work computer and printer (which I could use). Thanks again, really appreciate it!
Bill Bright says
Household of two, my wife and I, have a projected adjusted gross of $58,700 based on my self-employment. However my wife just started receiving social security. She also qualified for disability. Between the two that is about $500 month. In addition she received a surprise disability check for $7700 backpay, a one time occurrence. Completely unexpected. Between that check and what will be about 5 months of her monthly payments we’re looking at about $10,200 over my adjusted gross. Is this pushing us over the cliff? That is absolutely frightening as we were receiving about a $2200 mo subsidy.
Harry Sit says
When you are at risk of going over the cliff, look for all opportunities to defer income: suspend Social Security retirement benefit, contribute to traditional 401k and IRA (including SEP-IRA for self-employed), contribute to HSA if the health insurance is HSA eligible.
Carl Eberspacher says
What is the current income level max, for a family of 4, to qualify for the whole subsidy with Obamacare?? I was told it was either $98000 or $100,400. Quoted $93.50 per month as long as keep my AGI below about 100K – insuring only 3 since one of our adopted children is covered by Medicaid until age 19. Does this sound correct???
Carl Eberspacher says
I think I was told correct. At $98,000 AGI with my wife and 2 dependent children I would receive $2426 per month subsidy to get the bronze plan for only $93.50 out of pocket cost. Even with one already covered by Medicaid from adoption.
Got this from the healthcare.gov website. Not sure I still get it since one part of the site showed only a $8000 annual subsidy. Is this because it is a tax credit or something??? Is Nebraska coming out better than most other states. It all looks to good to be true.
Never thought I would be able to find something for us late in life adopters that was this affordable. This may my wife’s ticket out of her stressful job and more time for golf and fun with her husband. My business pays well after 30+ yrs and will probably be just under the income limit. I can use def comp and sep contributions to keep us out of the higher limits.
Now my only pickle is possibly losing a dependent before medicare age. My children are 9 and 10 so in about 10yrs it may get sticky. I turn 55 in April so really shouldn’t be a concern. I was also told that any income above $100,400 in 2019 goes basically right to these premiums up to about $30,000. Just need to keep the AGI pretty low.
Do the #’s sound correct????
Thanks is advance!!!
Kay says
I need help: when calculating MAGI to determine marketplace eligibility, does the standard deduction lower the MAGI? I read somewhere that it is calculated differently with respect to marketplace. I’m trying to determine if I should take deductions or not because I don’t want to risk lowering my AGI/MAGI such that I fall under the eligibility income.
If it makes a difference, I am in NC (so Medicaid is not an option.)
Also, I am self-employed.
…Or, am I required to take deduction?
I’m finishing my 2017 taxes now ( got an extension) , so I’m hoping for a reply as soon as possible!
Thanks in advance.
Harry Sit says
It doesn’t. However, adjustments do (traditional deductible IRA contributions, HSA contributions, 1/2 of self-employment tax, etc.).
Linda says
Does my son’s income combine with mine for MAGI he’s turning 19 in nov and made 6000.00
Does a 401k qualify as “above the line deductions”? So if your income is say 40k and you put in 2k into a 401k or Ira it will be deducted from your MAGI?
I am worried I made about 5k over what stated. I also read you only have to pay back max iof 600.00 help!
Harry Sit says
“Income is counted for you, your spouse, and everyone you’ll claim as a tax dependent on your federal tax return (if the dependents are required to file).”
https://www.healthcare.gov/income-and-household-information/
Contribution to a traditional/pre-tax 401k reduces your W-2 gross income. It technically isn’t an “above-the-line deduction” but it still reduces your MAGI. Contribution to a traditional IRA also reduces your MAGI if you are eligible for a deduction for such contribution (see income limits).
Linda says
Also one more thing
Is a Roth IRA considered traditional
Harry Sit says
No. Contributing to a Roth IRA does not reduce your MAGI.
Linda says
Your 401k contributions don’t get added into my income on my w-2 from what I read so if I deduct more out of my paycheck would that help keep my income lower or does it not work like that?
Also my son is a full time student, almost 19 made 6k this year
Harry Sit says
Only if you choose the traditional/pre-tax option, not the Roth option in 401k (some employers offer both options). See reply to comment #86.
CE in Omaha says
What is the current income level max, for a family of 4, to qualify for the whole subsidy with Obamacare?? I was told it was either $98000 or $100,400. Quoted $93.50 per month as long as keep my AGI below about 100K – insuring only 3 since one of our adopted children is covered by Medicaid until age 19. Does this sound correct??
Bobby C says
For determining MAGI, how is student loan interest deducted? Is it the same as federal taxes with a $2500 yearly maximum? FWIW, my 2018 student loan interest paid was close to $10,000. I work full time, have 2 kids and a low income. I was eligible for Medicaid in 2017 while self employed when my business died. I took a job in late 2017 and stayed on. For awhile they required quarterly earnings statements and moved me (wrongly, I believe, because they never asked about deductions at all) to Transitional Medical Assistance Medicaid for a 6 Month maximum. Then when I did my yearly re-application I included my base pay and my student loan interest. They moved me to regular Medicaid and haven’t asked since. I’m trying to stay on Medicaid because it’s the only practical solution. I would have to spend around $6000 more without it. Also, do you see any issues with adjusting 401(k) or IRA contributions, if needed, in order to stay below the Medicaid income line? I think I am right under 138% right now after $2500 student loan deduction and small 401(k). I had mandatory overtime and bonuses during the last quarter and increased my 401(k) contributions significantly to lower my AGI. I wonder if they would count all the student loan interest on the monthly or yearly income eligibility. I wish I made much more money but this is reality.
Harry Sit says
For ACA, as far as student loan interest is concerned, the MAGI calculation is the same as AGI calculation, where only up to $2,500 in student loan interest is deducted from income. In a state that expanded Medicaid to 138% FPL, if your MAGI is under 138% FPL you qualify for Medicaid. If it’s over, the state may have additional ways to qualify you. You will have to ask the state agency. No issues with adjusting 401(k) or IRA contributions, if needed, in order to stay below the Medicaid income line.
Alan Drake says
I am not sure if the IRS MAGI is exactly what is used for other programs. It is for ACA I know.
For Medicaid, they MIGHT count all student loan payments, not just interest.
The IRS phases out the student loan deduction $70.000 to $85,000 this year, and only $2,500 can be deducted from income for AGI.
I also used an HSA to reduce AGI (I am in good health) which then increased my ACA subsidy and kept me below 400% of FPL ; the “ACA cliff”.
Peter says
How would a one time long-term capital gain affect the subsidy I receive in the current year, and my income estimate? The details: I’m single, self employed and on an Obamacare plan in a non-medicaid-expansion state, and my AGI is pretty consistent around $15k/year and I get a healthy subsidy for my health plan.
Now the catch, I also have a market investment (not IRA) that has been slowly growing over the past many years, and has about $40k in net profit. I am thinking of selling it all later this year, but have no specific timing yet, and maybe I won’t even end up selling this year, but the next. But when I do sell, I assume that the profit as income would push my AGI for that year over the subsidy cliff.
Once I do sell it during a given year, say in June, must I then report that profit to the health exchange as an amended annual income estimate, and lose my subsidy and CSR going forward that year? Or do you not have to report a stock sale this way? Or say I sell it Dec. 30, after all the year’s premium subsidy payments have been already paid, would I then simply owe back my whole subsidy for that year, without it affecting the upcoming year’s income estimate (or would it trigger that income disparity warning)? Or would you recommend judiciously taking out only enough profit to keep within some annual AGI threshold to keep some subsidy?
After selling, I’d then again have a $15k income estimate going forward.
Alan Drake says
I would consider selling your investment over at least two years. If you keep your MAGI under 400% of the Federal Poverty Level $(48,560 this year) then you pay a maximum penalty of $1,300 (2018) in subsidies back – not all the ACA subsidy. Go one dollar over that, and you pay ALL the ACA subsidy back !
Having an HSA (good idea if you are in good health) allows you to deduct $3,500 from your AGI this year ($4,500 if over age 50 or 55) if you take some of your profits & put them in an HSA.
I did not take any money out of my HSA till I got on Medicare. Now it can pay for a dozen years of Medicare premiums from my HSA if I want to.
Also, note that if you are in the 10% or 12% income tax bracket that long term capital gains are federal tax free 🙂 So stay in the 12% bracket !
Note also, that as self employed, your health care premiums and ACA penalty (see $1,300 above) are deducted from your income.
Harry Sit says
You do have to report income from stock sale. Even if you wait to sell on December 30, if it makes your income go above 400% FPL, you will have to pay back all the advance premium tax credit. So don’t sell it all in one year. Stay under 400% FPL.
Mister K says
The way it was: If the advance credit payments are more than the amount of the premium tax credit you are allowed, you will add all or a portion of the excess advance credit payments made on your behalf to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return. This will result in either a smaller refund or a larger balance due.
Verify this with your accountant or tax attorney.
Alan Drake says
Unfortunately, tax exempt interest is included in income.
See https://www.healthcare.gov/income-and-household-information/income/
However, self employed income allows you to deduct business related expenses such as transportation . I would suggest being as aggressive as possible there.
CW Wong says
Your FPL numbers seem to be a bit off. Can you verify they are correct?
Harry Sit says
The sources are linked. Please note the one year offset. 2019 ACA coverage uses FPL numbers published in 2018. 2020 coverage uses numbers published in 2019.
Mary says
I live in Ohio, a expanded Medicaid state. I am self employed and My husband does not work. Over the last 4 years my AGI from my business and a bit of investment income has consistantly been below 138% of the FPL so we have qualified for Ohio Expanded Medicaid and have been very satisfied with our healthcare. Every two years in November I need to re-apply with Ohio Jobs and Family services and provide my tax return from the previous year in order to be approved for the next 2 years. In 2018 I made substantially more money than in the 4 previous years and we are now over the 138% of FPL that would qualify us. Midway through the year I anticipated this might be a problem and I moved some of my taxable interest accounts into OhioMuniciple Bond funds that were tax excempt because I thought they would not contribute to my AGI. My accountant suggested that I open a SEP account and contribute the max to it but that’s not enough to do the job So I plan on converting my 2018 Roth to an traditional IRA. Between the two of these I can reduce my AGI enough to qualify for Ohio Expanded medicaid. Am I right so far in what I am doing? Finally, I am concerned that my non-taxable income from the mini bonds will be calculated into my AGI and take me over the income limit again. I know this the case with subsidies for the marketplace but is it also the case for determining eligibility for Ohio Expanded Medicaid? Please advise.
Harry Sit says
In terms of reducing your MAGI, yes, recharacterizing a Roth IRA contribution as a Traditional IRA contribution will help if you qualify for a deduction for contributing to a Traditional IRA. Ohio appears to use the same MAGI definition as federal ACA for its Medicaid qualification.
https://www.medicaid.ohio.gov/INITIATIVES/Modernizing-Eligibility/Frequently-Asked-Questions#3.1
Mary says
Thank you for the info and the link. Very helpful. Since I am self employed I am never certain of my income for the year until my tax return is prepared in March. If for some reason you make more money one year than the allowed amount to qualify for Ohio Expanded Medicaid and you don’t report it because you haven’t received your tax return what are the limits of penalty and payback involved? Theoretically I could be on Medicare for all of 2018 and the first 3 months of 2019 and not qualify. I know once reported you have 60 days to apply to the marketplace. How soon are you cancelled and most importantly are you required to payback premiums of some type and /or the cost of the medical care you received during that year? Best and worst case scenario? THANK YOU!
Alan Drake says
Medicaid is administered by the states but under federal guidelines. So all states are similar but not exactly the same.
I was under Medicaid in Kentucky for two years while caring for my elderly father. Unless there is fraud, there is no “claw back” provision (unless Trump recently added one, see proposed $1 trillion cuts to Medicare & Medicaid). Your case is clearly not fraud.
Under ACA, past year’s income is a guide but not an absolute prediction of future income. When I moved to Kentucky to care for my father, my prior income was far too high to qualify for Medicaid. So I had to write a letter explaining the change in income going forward. After a month, the letter was accepted.
You could explain that your income was unusually high last year (give Income from several years before 2018 to show this) and why you expect your 2019 Income to be lower. This would work in Kentucky.
Kathy says
In applying for market place insurance for the upcoming 2020 yr. in the State of NC what is the minimum amount of yearly income you can make as a single person and still qualify for MPI?
Lisa says
I have the same question that Kathy asked above, but regarding Texas. Like NC, Texas is also a state that has not adopted the Medicaid expansion.
In applying for market place insurance for 2020 what is the MINIMUM yearly income you can make as a single person and still qualify for a subsidy under the Affordable Care Act?
Harry Sit says
In states that haven’t expanded Medicaid, the minimum income to qualify for the premium tax credit is 100% FPL. For 2020 coverage, it’s $12,490 for a household of one person, $16,910 for a household of two persons, etc. This is shown on this web page on healthcare.gov:
https://www.healthcare.gov/lower-costs/
Choose the number of people in your household and your state. The income ranges will show in the dropdown.
John says
Harry,
1) My work had an option for deferred compensation. So I opted for it. The deferred compensation would technically pay starting at age 50. I might not stick there till 50 so when my employment ends and the deferred compensation is given to me (prior to age 50 in my salary) I assume that would cause me to go above the cliff. Any way to avoid it?
2) Also is unemployment received included when calculating MAGI?
3) I assume rental income is added only after deduction of depreciation and expenses or is all of it excluded since rental is technically passive income?
Harry Sit says
1) When the deferred comp is added to your W-2, it becomes part of your income. No way to avoid it.
2) You get a 1099 for the unemployment benefits. It’s also part of your income.
3) Rental income after depreciation, expenses, and any previous loss carryovers is also included as part of your income. Passive income is still income.
Basically anything you can think of as income is part of MAGI. MAGI includes more things than normal AGI, not less.
Thomas Horstmann says
Hello,
I’m confused. As Oregon just advised me that I am not eligible for subsidies becomes my income is too high. Seriously, have they tried surviving on an adjusted income of $1600 a month as a single person with a home?
Any suggestions?
Harry Sit says
When I go to Oregon’s website and I click on “Window Shopping” I see they say “If you earn less than $49,960, you are likely to qualify for a lower monthly price.” When I give a random zip code in Portland and $19,000 as my annual income, it says I would get $510/month in subsidies plus “Extra Savings with Silver Cost-Sharing Reductions.” What did you tell them?
Charlie says
Is there a reliable way to figure out (in advance) what 2020 premiums/subsidies would be for a married couple where one person is going on to Medicare middle of 2020? I haven’t come across any resource.
Harry Sit says
Go to the exchange, enter your joint income and ages, and get separate quotes for needing insurance for two and needing insurance for one. You annual net premium after subsidies will be the blend of the two quotes, for example the price for two times 3 months plus the price for one times 9 months. Depending on the plan you choose, you may find the price for one is higher, the same, or lower than the price for two.
Charlie says
Best idea yet, thanks.
In our case, it may be better for me applying for Medicare up to three months after my birthday in order to maximize time with two-person subsidy. As I am not collecting SS, I would not be automatically enrolled in Medicare.
Agent initially said I can’t keep Marketplace plan that long. When pressed she said I could keep Plan, but my part of subsidy would cease in my birthday month. Marketplace rep said I could keep plan and subsidies until my Medicare effective date, even if that was 3-4 months after my birthday. I am trying to get this in writing from them. Any thoughts?
Alan S. Drake says
Medicare Part A is retroactive for 6 months before you are enrolled up to and including your birth month when you turn 65. Just Medicare Part A (Hospitalization) qualifies as health insurance and ends your ACA subsidy. De facto, I ended my ACA coverage a day before the end of my age 65 birth month and the government gave me an ACA subsidy for 30 of the 31 days of July (my birth month). This may be just slack built in to accommodate people.
I was able to delay Medicare Part B (Doctor Visits etc) and D (Prescriptions) for five months after my age 65 birth month without a lifetime penalty. But I am quite healthy with a large balance in my HSA. If anything developed medically in those five months, I would have immediately signed up (note delay before Medicare Part B starts, 3 months after I did sign up).
I think I could have delayed six months but I chose to start Parts B & D on January 1, 2019. My medical costs during those five uninsured months, a flu shot (FluBlok is the most effective one) and a $3/ month prescription, I paid out of pocket (& kept receipts for my HSA).
Mister K says
Once you’re eligible for Part A, you can still keep the Marketplace plan, BUT you will NOT be eligible for a APTC (tax credit) or other cost savings reductions (CSR). In other words, you’ll have to pay full price.
Charlie says
Thank you, after reading more, I agree with comments from Mister K and Alan. I didn’t realize Part A would be retroactive. I will not be delaying enrollment.
Interestingly our net premium for 2019 is only $120/mo. By comparison in 2020, we are looking at the following (using the same estimated income both years, same ACA plan which is a Bronze HSA plan and one year older)…
Both of Us (until I switch to Medicare) $229
Wife by herself under ACA $334
My Medicare Part B $145
My Medicare Part D $35 (est)
My Medicare Supp (high ded) $85 (est)
So once I’m on Medicare our monthly premiums will be $599 versus $120 this year! Wife is 6 years younger, so this will continue for a long time.
For anyone else transitioning to Medicare, you may want to run your numbers and see how you’ll fare. Those who received larger subsidies may also see large increases.
Howard.H says
My retirement will be $2000/mo.
My Medicare Part B about $145.
My Medicare Part D about $35.
Would I receive a check $1820(2000-145-35)/mo from the government?
What is my income [2000/1820]?
Thank you
lynn says
i read that as long as your income reported when you sign up is in good faith you will not be required to pay it back if you fall below. i usually just break the minimum threshold. i have just discovered i have a heart condition and will not be able to work until they figure out what is causing it and try to fix it. i live in a state without expanded medicaid and right now have not been proven to be officially disabled. i did report my expected income correctly and it would be above the min if i only end up missing a month or so. my question is i thought if you end up starting to have income discrepancies you were required to update your income information. what if i dont and make thousands less? if i need surgery i need this insurance because if i loose it i will end up possibly dead or living in a box over a steam vent.
Gia cooper says
Im y household is 3 and when I qualified for The market place the minimum the application would take for me to qualify was 24k butt the income of the 3 of us is only 20k this year. I see the minimum is 20800 per the table above. Should I report the 4K more since I told them I would make more or should I leave it as 20k?
Thomas H says
Hello, I am confused. As I keep receiving notifications from Heath Insurance Marketplace indicating I am missing things from my 2020 subsidy coverage. From what I see, I’m in fine shape as my 2018 adjusted gross income was a meager $16,164.
From what I can tell, the minimum income for a 1 person household in 2020 is $12,490. Nor can I see $16,164 being too high. So what is happening, and how do I deal with this situation? As I need coverage.
Thanks,
Tom
Mister K says
The Marketplace may be looking for other documents; for example, verification of income, proof of citizenship, or other requirements. It should have been explained in your Eligibility Notice. Call 800-318-2596, and ask the representative to tell you exactly what they need.
Sarah says
I’m a 25 year old college student that just got my own health insurance plan. I was wondering any idea if there will be an exception for 2020 minimum income requirements due to Covid-19? My insurance agent said that good faith excuse would only work once or twice. I would hate for my first strike to be wasted on the pandemic. I’ve been working but not the 4-days a week I calculated I would need to be at the proverity line.
Joanna says
If you were honest when you applied and something happened so you don’t make the minimum you should be okay. That is how it worked even before the pandemic.
Carolyn says
I would also urge everyone to contact their elected representatives about the lower threshhold for the subsidy. In states that did not expand Medicare, the effect has been to deny the subsidy to many people who need it the most.
charles edward King says
my total income for 2 is 32000. last year was the same, last year my tax credit for obamacare was 1635.00. this year 1612, next year 1204.00. can you tell me why?
Harry Sit says
The premium tax credit is calculated by the difference between the full premium of the second lowest-cost Silver plan in your area and a percentage of your income. If the number of people you’re covering isn’t changing and your premium tax credit is lower substantially in 2021, it sounds like the full premium of the second lowest-cost Silver plan in your area is lower.
Kevin Albertina says
I live in Illinois and have been on Obamacare for over 3 years. I estimated that my income for 2021 would be roughly the same as in 2020 (around $28000/yr). After I went through the application, it showed my subsidy (tax credit) for this year to be $737/mo, while it around $1000/mo in 2020, meaning the same plan this year is going to cost me over $430/mo, while it only cost about $180/mo last year. My premium per month will more than double for the same plan this year based on the same income. Does that sound right? How does that happen? I seriously don’t think I will be able to afford the same plan if this is correct.
Harry Sit says
First you want to double-check and make sure you entered everything correctly. The subsidy (tax credit) is calculated as the difference between the full price of the Second-Lowest Cost Silver Plan (SLCSP) and a percentage of your income. When a new insurance company enters your area with a lower cost plan, it can bring down your tax credit. If you don’t choose a lower cost plan from this new company, your net cost will increase.
Zan Rose says
Kevin, a new insurance carrier did enter the market in Illinois– Bright Health. They are the SLCSP now– they are the three lowest premium silver plans
Dee Lively says
I live in WV. My 2021 income estimate is $17,700. I thought a persons expected contribution for health care was a little over 3% or around $550 in my case. That would be less than $50/month for my share. The second lowest silver plan here is $1441/month and Healthcare.gov shows me paying $319/month and they kick in $1122/month.
If I pay $319 x 12 months = $3828 or nearly 22% of my income. Can you explain please?
Harry Sit says
What’s your zip code? The second lowest cost Silver plan you saw must not be the true Second Lowest Cost Silver Plan used in calculating the subsidy. When the premium also covers other benefits such as dental and vision, only the portion for medical benefits is considered.
Harry Sit says
Dee – Tobacco users pay a higher premium than non-users. The extra charge is not included in calculating the subsidy. For a single non-tobacco user with $17,700 income, a Silver plan without dental or vision coverage does indeed cost about $50/month in WV.
Jeff N says
I have a family of four. I make $669 per week on unemployment, my wife has no income, our 19 year old daughter is a full-time student and makes $324 working 24 hours per week, and our 13 year old daughter has no income. I signed up for Obamacare but no plan was offered, instead I was referred to the State of Illinois for Medicaid. Illinois let me know today that my daughters were eligible but my wife and I were not because we had too much income. I’m confused how that can be because Obamacare only submits those who are below 138% of FPL to state Medicaid. How can I be both above and below 138% of FPL? What do I do next?
Harry Sit says
Reapply for ACA/Obamacare and only request insurance for you and your wife? If you expect $669 unemployment for at least 30 weeks and your daughter working 50 weeks, your household income will be above 138% of FPL for a household of four.
Zan Rose says
1. When you go back to the application you will see a question asking, for each person, if that person has recently been turned down for Medicaid. When you answer that should let you move forward.
2. I think there was some kind of bug or problem with the application in that they first asked how much income each person had for this month and then moved on to next year. If those numbers were very different there were some problems. Example: My daughter, 25 and not my dependent, just started a new job (with no employer insurance). Her expected income this month was only half of what it will be (because she started mid-month). Based on that number the application sent her to our state’s Medicaid program even though her full monthly number will be about 2.3 FPL. Not wanting to go through a futile process she tried to delete her app and start over. Marketplace doesn’t let you do that this year, and told her to just immediately report a life change. So she said checked off the change in income box and restated her December income in conformity with what her monthly income will be in the future.
SusanB says
“Alan Drake says
JANUARY 31, 2019 AT 7:56 AM
Note also, that as self employed, your health care premiums and ACA penalty (see $1,300 above) are deducted from your income.”
Dear Alan, if you paid the ACA penalty – in my case $1,000 – what year do you deduct it from your income? I paid $1,000 penalty in the last two years as I made more than I had estimated but I did not deduct it from my income, as I did not know if this was allowed and where it would go on the tax return form. If I am able to revise my tax return from 2019 by adding this deduction, I may be to again qualify for a lower premium via the ACA. I do my own taxes. Thank you.
Eric Gold says
My son is leaving his job in March. He was notified by the company that they no longer wish to employ him, but I don’t think he is “fired.” He agreed to a mutual parting of ways to protect his reputation.
Once he is unemployed, how will his income collected in the first 3 months of the year be considered for ACA or Medicaid ? Does it become his annual income if none further comes in ? Or does he fit into the group that has no income from March until his circumstances change ?
Harry Sit says
ACA uses the annual income. Income earned in the first three months becomes part of it. Medicaid in general uses the current/prospective monthly income. It doesn’t consider income earned in the past. Medicaid rules vary by state. Look up information from the state Medicaid agency for specifics.
Bill says
News reports indicate the relief bill in Congress may suspend the 4FPL limit for the premium tax credit for 2021-2022. Looking forward to your insights on this if the bill becomes law.
James Joseph says
Thank you for this article. Most publications are vague on the changes of the March 2021 act, minimum FPL, MAGI, and ACA eligibility. It’s not clear if waiving taxes on $10,200 on unemployment makes you ineligible for ACA while the same time it means one’s MAGI is such that you’re not eligible for Medicaid. At the end of the day, it sounds you’re forgiven because you thought your income was to be $10,200 more in 2020. Only, folks don’t know until mid-March 2021.
James Joseph says
Glad for so many who were paid unemployment in 2020 that $10,200 of unemployment is tax exempt, but it appears to create a problem or at least confusion with 2020 ACA while doing 2020 taxes. I had significant income from unemployment in 2020. Prior to passage of the American Rescue Plan in March 2021, I was at 166% of the FPL. With passage of the American rescue plan, $10,200 of my unemployment pay in 2020 is taken off my AGI and now I’m at 88% FPL. Of course, you had to have a Modified Adjusted Gross Income (MAGI) between 100% -400% FPL to be eligible for ACA. I couldn’t have possibly known I was going to be at 88% FPL in 2020 until March 2021! Had I known, I would’ve gotten off ACA and moved over to Medicaid – except that Medicaid Would not consider me because they would consider the $10,200 of unemployment as part of my MAGI. Will ACA and/or the IRS/treasury forgive me for being under 100% FPL? Or will I be fined heavily?
Harry Sit says
Please read the paragraphs under the heading “The Minimum Income.” If your income dropped below 100% of FPL, whether it’s due to the unemployment benefits being untaxed or because you simply didn’t make as much as your thought, as long as the exchange accepted you into an ACA plan and it paid a subsidy to the insurance company for at least one month, you’ll be forgiven for missing the estimate. You’ll use your lower income to calculate your subsidy and maybe you’ll qualify for more subsidy than the exchange originally estimated.
James Joseph says
Thank you, Mr. Sit.
Alan S. Drake says
Federal tax law does not require you to take all credits or deductions that you are legally entitled to. Unusual, but there is no penalty for not taking a tax break you are entitled to.
I would take just enough of the $10,200 so that your FPL is 101% AND include a seperate page explaining why you did so.
Hopefully, the IRS will process as filed. If not, you have a solid & sympathetic position for taking only part of the available credit.
James Joseph says
Thank you for your comment and perspective. I appreciate it.
lynn says
i am only able to work part time due to illness and have always made a little more than the minimum to keep my aca insurance. its to the point where i need heart surgery soon. if i get surgery i will fall well below the minimum. even calling healthcare.gov gave me no answers on what happens if i fall below the minimum. most of the published info is about what happens if income goes over. this article made me feel a bit better. i reported my income correctly when i applied so i shouldnt be worried if i must have heart surgery this year. if i can wait till the beginning of next year it would be even better since after i heal i should be able to work more and make up for the 2 months healing time. the last thing i need is worrying about if i will have to pay back a lot of money!
Zee Ganat says
In May 2022 we sold a rental property and had a Capital Gain of approx. $100,000 on it. I called and reported this change to MP and now my premium goes up to 1,075/month and subsidy to $192/month and out of pocket cost and deductible up also to $8,600@, if I keep this coverage! This is a high premium and deductible for me to stay on this plan, so I have cancelled my coverage from 5/4/2022.
If I stay on the plan will I have to pay the IRS back for Jan.-April the amount of $1,075/month?
Harry Sit says
You will have to pay back some for January through April. The tax software will calculate the exact amount when you file your taxes.
roger says
Looks like your numbers are off by a year?
Harry Sit says
See comment #94.
Jonathan says
I have been on ACA coverage with full subsidies, but I recently became eligible for Medicare (not premium-free though as I don’t have the work credits). Can I choose ACA coverage over Medicare?
Harry Sit says
You can but you won’t be eligible for any subsidy. Medicare may also charge you a late enrollment penalty when you join in the future.
Robert Holloway says
I am currently under ACA coverage in NJ but my income may fall below 138% (or even 100% FPL) this year. However, I will not be eligible for Mediciaid because of the asset limit. Will I be out of coverage?
Robert Holloway says
I am currently under ACA coverage in NJ but my income may fall below 138% (or even 100% FPL) this year. However, I will not be eligible for Mediciaid because of the asset limit. Will I be out of coverage?
Rosel says
The asset limit does not apply. There is an asset limit for long-term care (nursing home) Medicaid, not for Medicaid for health insurance under the ACA.
Robert Holloway says
Sorry, I meant to clarify. Since I am 65+, the asset limit is required for me to get Medicaid.
calwatch says
That’s because most 65+ are on Medicare. The Medicaid acts as a supplement to reduce co-pays and/or provide premium support.
Kevin says
Harry, in your first table, “48 Contiguous States and Washington DC”, I think the FPL amount for 1 Person for 2023 coverage should be $13,590 (not $13,880).
Reference:
https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references
Harry Sit says
Thank you for the catch. Fixed.