Author Topic: ACA subsidy if only working part of next year, then Medicare starts  (Read 2527 times)

prudent_one

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My brother works part-time W-2. He'll be 65 next October. This year he made too much to qualify for a healthcare subsidy, but if he stops working next October, his 2020 income would qualify for a subsidy since he'll only be working 9 months.  He'll only need a marketplace plan until he goes on Medicare in October. 

Can he legit say his 2020 expected income is under the cutoff for a subsidy even though he's only working 9 months intentionally, then will go on Medicare? Neither of us could find anything online addressing this specific situation.


Paul der Krake

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #1 on: November 04, 2019, 07:16:14 AM »
When signing up through healthcare.gov, he can give his income as a yearly estimate. If it's significantly lower than what the system has on file for him, he will get a message to the tune of:
"hey looks like you usually earn more than that, what's up"
and there is an option to say
"yeah my situation is changing, trust me on this".

Have him go through the signup process, there's no obligation to actually pick a plan.

secondcor521

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #2 on: November 04, 2019, 10:20:13 AM »
And in some state exchanges that don't use HC.gov, it's similar:

"How much will you make next year?"
"$X"
"Prove it!"
"Blarg blarg."
"Oh, OK."

seattlecyclone

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #3 on: November 04, 2019, 10:39:27 AM »
Yeah I'm on the "prove it" step with my state exchange. I'll write a letter, assemble a couple of old tax returns and investment account statements, and see if they like it.

At least for the premium subsidies, you should be able to get the money when you file your taxes if your income ends up being in the correct range, even if the exchange doesn't believe you plan to retire. But I'd think that a 65-year-old saying they plan to retire partway through the year should be a pretty uncontroversial thing.

Paul der Krake

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #4 on: November 04, 2019, 05:39:23 PM »
Interesting (but unsurprising) that exchanges would have different "prove it" thresholds. The federal marketplace let me enter 1/10th of the previous year's income without requesting any additional documentation.

Cali4en

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #5 on: November 04, 2019, 07:26:40 PM »
The federal exchange had me submit a brief statement with the details of our retirement and our planned income streams in the future.  It was maybe 4-5 sentences.  That's it.

I found the customer service staff of Healthcare.gov to be exceedingly nice and helpful.  Probably the best federal customer service I've ever had.
« Last Edit: November 04, 2019, 09:33:00 PM by Cali4en »

secondcor521

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #6 on: November 04, 2019, 09:21:20 PM »
Interesting (but unsurprising) that exchanges would have different "prove it" thresholds. The federal marketplace let me enter 1/10th of the previous year's income without requesting any additional documentation.

I'm such an odd case for them that my "blarg blarg" quote in my previous comment alludes to that fact.  Most of my taxable income comes from Roth conversions every December, which are impossible to prove in the way they would like.  But they know they have to have some proof, so each year it's sort of a surprise to find out what they want from me.  This year it was, "Uh, OK, go ahead and send us an email saying that it's your intention to withdraw $X from your account.  Oh, and I guess show that you have that much money in the account."  Uh, OK.  It's all a game for me now.

jpdx

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #7 on: November 04, 2019, 09:51:11 PM »
I would love to know the threshold at which Healthcare.gov requests documentation for a change in income. Anyone know?

Paul der Krake

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #8 on: November 04, 2019, 10:23:12 PM »
I would love to know the threshold at which Healthcare.gov requests documentation for a change in income. Anyone know?
It must be more complicated than that, because I set my income to be within a hundred bucks of 138% FPL and didn't have to do anything.

jim555

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #9 on: November 05, 2019, 04:22:05 AM »
I've never been asked for docs.  I'm thinking they have a way to electronically verify info.

Cali4en

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #10 on: November 05, 2019, 09:20:31 AM »
It seems like the first year transition from high pre-FIRE income to lower post-FIRE income is the only real sticking point for income verification.  They are supposed to match your application against your IRS records once you have a year of post-FIRE tax returns on file.

secondcor521

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #11 on: November 05, 2019, 04:32:23 PM »
It seems like the first year transition from high pre-FIRE income to lower post-FIRE income is the only real sticking point for income verification.  They are supposed to match your application against your IRS records once you have a year of post-FIRE tax returns on file.

My state exchange asks me every year for verification.

For your comment about IRS matching, that may be true with healthcare.gov, but is not accurate for state-run exchanges.

Cali4en

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #12 on: November 05, 2019, 05:11:01 PM »
Quote
My state exchange asks me every year for verification.

For your comment about IRS matching, that may be true with healthcare.gov, but is not accurate for state-run exchanges.

That's unfortunate.  You would think it would be far more efficient to match against your established 1040 records.  Then again, policies often are formulated with goals other than efficiency in mind.

secondcor521

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #13 on: November 05, 2019, 06:01:12 PM »
Quote
My state exchange asks me every year for verification.

For your comment about IRS matching, that may be true with healthcare.gov, but is not accurate for state-run exchanges.

That's unfortunate.  You would think it would be far more efficient to match against your established 1040 records.  Then again, policies often are formulated with goals other than efficiency in mind.

Perhaps.  There is also the issue of privacy.  IRS records are not releasable without taxpayer consent.  (Generally.  I'm aware of the lawsuit in New York.)

Monkey Uncle

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #14 on: November 05, 2019, 06:14:12 PM »
It seems like the first year transition from high pre-FIRE income to lower post-FIRE income is the only real sticking point for income verification.  They are supposed to match your application against your IRS records once you have a year of post-FIRE tax returns on file.

My first year of FIRE, my AGI dropped from over 100k to under 30k.  Healthcare.gov didn't ask for any verification.

prudent_one

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Re: ACA subsidy if only working part of next year, then Medicare starts
« Reply #15 on: November 06, 2019, 02:54:49 PM »
Thanks to all for the comments. Sounds to me as though you can legit qualify for a subsidy by only working part of a year then going on Medicare. Reporting 9 months' income as your "next year's income" is fine and unrelated to how much of the year one is working and unrelated to going on Medicare. My brother is going to be quite pleased to know this. :)