ACA subsidy question

[MustardTiger]

Figured I would post this here as it is related to magi.  Thanks to the birth of my wonderful daughter, we are now a family of 3 for the first time.  I want to know how if will affect ACA.  This year I have my own insurance through work, and my wife/daughter have an ACA plan at around 470$/month.  This is going up to 690$/month so we are going to be shopping around.  In 2016 we will make ~80k total.  60k from me and 20k from wife's self employed part-time work.  I know that is right at the limit but it is based on income after all your deductions right?

My one concern is I have a plan through work that has a family option.  I pay around 150$/month but it jumps up to 1k/month if I want to add my family.  This is way over the "affordability" level but I am not sure how all that works with subsidies.

Anyone have any experience with subsidies when you have an option that is way over the 10% level or whatever it is?

[seattlecyclone]

Unfortunately, the "affordability" requirement is only applied to the cost of employee-only coverage. The cost of the family coverage through your employer (or if it's even offered) is irrelevant; if you can personally get "affordable" single-person insurance, the rest of your family has to pay full price if they go through the exchange.

Search for "family glitch" to read more about this.

[MustardTiger]

Read a little about that.  Wish I could add more than "wow that sucks."

[MidWestLove]

It does, we are in the same boat. Part time employee family coverage amounts to be almost 25% of DW pa but to ACA formulas we get no subsidies

[meerkat]

Yup, "family glitch" we're in the same boat. Thankfully the new premiums are still cheaper than adding our kid to our insurance, but I'm not looking forward to having the spend that much more starting January.

[MustardTiger]

We are completely healthy and in our early 30's, and our insurance premiums will be our largest expense, wtf.

[woopwoop]

We are completely healthy and in our early 30's, and our insurance premiums will be our largest expense, wtf.

Same, with one daughter our insurance is now $12,000 annually. That's like 2/3 of our mortgage expenses. Fuck America. I almost can't wait to not be making money anymore so I don't have to pay so much =/

[Cycling Stache]

Read a little about that.  Wish I could add more than "wow that sucks."

I just learned about this recently as well.

How did you not have the family glitch problem last year when your wife got an ACA plan?  Wasn't she able to get insurance through your employment?  If so, doesn't the same family glitch analysis apply?

[secondcor521]

Regarding the family glitch, which I'm just learning about today and appears to affect my son:

Letter from his employer states they are offering him coverage "at an affordable monthly cost of approximately 9.5% of [his] monthly wage, before taxes".

So I think this means:

1.  Because they're offering him ACA compliant coverage, he doesn't qualify for subsidies on the exchange, which is too bad because he could have chosen several bronze plans for free after subsidies.
2.  Because it's > 8%, he qualifies for an exemption and could go uninsured and not pay the ACA penalty tax.
3.  Because of his exemption and he's under 30, he could buy a catastrophic plan (again, without subsidies).

Our state did not expand Medicaid, and he's probably going to end up in 2017 around 110% of FPL.

Right?

[seattlecyclone]

The employer coverage needs to be less than 9.66% of household income to be considered "affordable." (https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/)

If the coverage costs 9.5% of his gross wages, it would count as "affordable" if your son doesn't have any deductions to push his income down. Could he contribute some money to a traditional IRA or something? If so, that could easily push his MAGI down enough that the employer's premium would now be too high a percentage of his MAGI to qualify as "affordable," making him eligible for whatever subsidies.

However you mention that he'll be around 110% of the FPL, so if he does reduce his income in this way he would likely end up below 100% of FPL and would not be eligible for exchange subsidies anymore.

[secondcor521]

The employer coverage needs to be less than 9.66% of household income to be considered "affordable." (https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/)

If the coverage costs 9.5% of his gross wages, it would count as "affordable" if your son doesn't have any deductions to push his income down. Could he contribute some money to a traditional IRA or something? If so, that could easily push his MAGI down enough that the employer's premium would now be too high a percentage of his MAGI to qualify as "affordable," making him eligible for whatever subsidies.

However you mention that he'll be around 110% of the FPL, so if he does reduce his income in this way he would likely end up below 100% of FPL and would not be eligible for exchange subsidies anymore.

Thanks, seattlecyclone, I appreciate your reply, since it opens up an option to him.

Yes, he could contribute to an IRA...given the AGI>100%FPL and premium>9.66% criteria, he might be threading a needle a little.

He's a great young guy, but not particularly motivated, so he's working for a temp agency.  His assignments and pay vary, so he could end up any where between 60% and 150% of FPL depending on what he does.

If he's on the higher end of the scale, then even a max trad IRA contribution wouldn't save him.  Although in that case I don't know how it works if one predicts one's income incorrectly (a problem I have also)...?  I mean suppose he aims for the sweet spot and then either (a) makes too much and his t-IRA can't get his AGI down low enough for the work insurance to be unaffordable, or (b) makes too little and in retrospect does not qualify for subsidies?  (I think in the latter case he has to pay them back, but there are limits for low AGI folks IIRC.)

I hope he doesn't have to figure out this mess on a month by month basis either.  That would be annoying.

Thanks again...