probably very easy ACA question

[Mongoose]

DH has insurance available through his job and we are currently on it as a family (DH, I and two young kids). The cheapest plan is costing around a $400 per month reduction in his take home pay (take home dropped from $400 to $300 per week when we added coverage). I work part time until the end of June with no insurance available. We have no other income (temporarily living off DH's salary and some savings). We are in Missouri.

My Question
 Do all of us have to use his plan since his work plan allows family coverage? In other words, can the kids and I get a subsidized ACA plan if he has the option of including us on his.

If we can get on a subsidized plan it might help our take home pay considerably (although we'd have to investigate how much since DH would still need to have coverage through work). I've been digging through the information but either haven't found or missed this particular bit.

[Paul der Krake]

It's not an easy question, and you are not going to like the answer.

You may want to read this publication, specically starting at the bottom of page 9 "Employer Sponsored Plans":

https://www.irs.gov/pub/irs-pdf/p974.pdf

Basically if your husband's premium for your husband only is considered affordable (and it most likely is), then it doesn't matter how much more they charge to add dependents, it will still be considered Minimum Essential Coverage, which makes you ineligible for the ACA tax credit.

Example 2 on page 11 is similar to your situation.

[FINate]

Of course you don't have to use DH's healthcare, you are free to shop around. However, because of the ace coverage mandate you must carry the minimum coverage or pay a fine tax.

Whether or not you can get the subsidy depends on the cost relative to your income to cover only DH through his work provided plan. If he can be covered for less than 9.56% of your family's income then this is considered "affordable," which means you and your family are not eligible for the subsidy on the exchanges. The fact that "affordability" is determined using just DH and not your entire family is asinine, but that's the way the law is written, which is why legislators should read these things before voting. In any case, search for "aca family glitch" to read more about it.

[Mongoose]

Ugh. Thanks for the link and search strategy. We're under the threshold for family coverage but I need to find out how much we would pay for just DH.

[Mongoose]

We've been glitched. Damn. DH would be making $33,200 gross after his recent promotion (if he had it for all of 2016). We are paying 15% of that for family coverage. Our take home for a year at this salary would only be $22,080. Humph! This is neither affordable or enough to live on...grumble. The promised promotion and "big raise" isn't turning out to be much. 33.5% off the top for taxes and insurance with lousy coverage. I wouldn't mind if it was out of a larger starting pool.

As a cute aside, if we didn't have the employer coverage but still made that salary, we would have to be uninsured or pay 43% for coverage since we're also in a state that didn't expand Medicaid. Explaining this to DH this morning was interesting.

[Paul der Krake]

Are you sure you have your tax withholding set up right? After that heinous premium and 4 exemptions, there really shouldn't be much to tax. Throw in the child tax credit (x2), and your tax burden should be pretty much just the 7% or so from FICA. So a total of about 22% reduction from gross to take home.

But you are right, either way this is not a comfortable position to be in. You are not in the poor house, but stretched pretty thin. As silly as it sounds, you would be better off if your husband had a job, everything else equal, with no health coverage.

[Mongoose]

Are you sure you have your tax withholding set up right? After that heinous premium and 4 exemptions, there really shouldn't be much to tax. Throw in the child tax credit (x2), and your tax burden should be pretty much just the 7% or so from FICA. So a total of about 22% reduction from gross to take home.

But you are right, either way this is not a comfortable position to be in. You are not in the poor house, but stretched pretty thin. As silly as it sounds, you would be better off if your husband had a job, everything else equal, with no health coverage.

No, I'm not sure at all. It's possible we have it set for zero exemptions. We got bit once when we first started out with a huge tax bill by claiming the "correct" (at that time 2) number of exemptions. So we've given the government a lot of no interest loans by always putting zero on the W4. Ok, scratch the "not sure it's correct" and change that to nearly certain it's wrong. I don't want to adjust it incorrectly and get a huge bill next April. We always seem to owe state tax to the tune of ~$500 with it set at zero exemptions (Missouri). I don't understand that at all. We owed the state $240 last year but got a large federal return.

Maybe you could help?

1 week snapshot for DH (he is paid weekly and we don't get pay stubs). I can get more information if it's needed to figure it out. Family of four.
~$690 gross
~$100 health insurance
$461.76 take home (should be around $607 from your calculation)

I will have 6 months of salary this year. I think I'm also at zero exemptions.
$2083.33 gross/month
$1706.05 net/month (I think they take out $100 for parking from this somewhere)

If we had the 22% reduction you mentioned, we'd have $700 extra per month in take home. At a 28% reduction to account for state taxes (and I don't understand Missouri taxes at all) we'd have an extra $150 per month.

Our business is set to pay $750 in take home per month (with plenty left over for taxes...that part is calculated by our business accountant. We have $1250 in profit to pay out $750 in payroll...rest set aside for taxes). This will start probably in July after my 6-month contract ends. Adjusting mine won't help since I have only one paycheck left at the end of June.

Should we change our W4s? I'm nervous about putting them to 4 exemptions. I'd hate to get hit with a $2k plus tax bill (either state or federal or combined) come next April.

[Paul der Krake]

Just to clarify, I was only speaking of exemptions purely from a year-end perspective, aka the number of exemptions claimed on line 6 of your 1040 that is then multiplied by $4,000 and deducted on line 42. The number of exemptions on your W-4 may be different.

Without all the details in hand, I don't think anyone on this board should advise you as to what to do. There simply are too many unknowns (especially now that you mention a business) to make blanket recommendations.

[Mongoose]

Fair. Any advice on how to go about figuring that out? It's all based on the W4 for how much gets taken out when working a regular, not personal business job. I've never figured out how to adjust things to make them better.