Author Topic: ACA and mid-year changes  (Read 1184 times)

secondcor521

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ACA and mid-year changes
« on: November 07, 2016, 05:33:23 PM »
Asking on my son's behalf.

He lives in a state which did not expand Medicaid.  He is single with no dependents.  He is working for a temp agency that offers him health insurance at about 9.5% of his wages.  The temp agency has estimated his wages at about $13K for 2017, which disqualifies him for Medicaid.

Someone pointed out that he could make a traditional IRA contribution to reduce his AGI enough to where the work health insurance is not affordable, and he could qualify to get insurance through the exchange using this "hardship exemption".  At his income level, he qualifies for a $250 per month APTC.  There are 10 plans on his state ACA exchange that cost less than $250 so these plans would be free to him in terms of monthly premiums.

So let us suppose, for a moment, that he files for a hardship exemption, gets the APTC and a "free" bronze plan, and is merrily working at the temp agency for the first six months of 2017 making basically about what the temp agency estimated.  What happens if...

A) He gets a "real job" with "real insurance", which would probably come with a higher AGI.  Would this mean that he might have to retroactively pay for the free bronze plan he was getting, because his higher AGI would mean his temp agency insurance would have been affordable?

B)  He decides to go back to school or something and doesn't earn any money for the second half of the year, thus ending below 100% of FPL and not qualifying for subsidies.  Would he have to retroactively pay for the free bronze plan he was getting?

Axecleaver

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Re: ACA and mid-year changes
« Reply #1 on: November 08, 2016, 10:19:55 AM »
Up to 200% of FPL, there is no penalty for estimating your income incorrectly. There is a cap on the clawback amount, which varies by income compared to FPL. If he's under 200% FPL, the clawback maximum amount is $0. See instructions link below and search for "repayment limitation."

To reconcile the APTC at the end of the year, you fill out a Form 8962. Link. Instructions.

You have the option of calculating your APTC monthly. Assuming he promptly reported his change of circumstances to his state's Insurance Exchange, then if your son's circumstances do change, he can calculate the APTC he was eligible for on a monthly basis, and wouldn't end up owing anything, regardless of his final income for the year.