Author Topic: ACA or CHIP for kids?  (Read 2767 times)

woodnut

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ACA or CHIP for kids?
« on: April 24, 2016, 07:07:49 PM »
Sorry for the 1,000,000th question on ACA, but the forum search keeps giving me database errors.  Here's my question and dilemma.  I'm marginally FIRE and I'm going to take a sabbatical and/or trial run at FIRE.  I've been looking at ACA and CHIP plans for when I lose my employer plan.  If I don't make another dime the rest of the year I'm roughly around 200% of FPL.  So I'm well above the Medicaid level.  I'm in the range for the kids to qualify for CHIP (it's called CHP+ here in Colorado).  However I don't know what my total income for the year will be.  I plan to test out part time contract work so I may go over the 260% FPL for the kids to qualify for CHIP.  My understanding is if the kids qualify for CHIP but I choose a marketplace plan instead, I cannot get a subsidy.  Is this just for the kids portion or everyone?  What happens if I choose CHIP but go over 260% FPL at the end of the year?  Should I just put everyone on an ACA marketplace plan and "fabricate" some income with Roth conversions to get above the 260% level and still get subsidies?

Thanks in advance.

jim555

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Re: ACA or CHIP for kids?
« Reply #1 on: April 25, 2016, 09:00:06 AM »
CHIP is like Medicaid for children so subsidy doesn't apply, it is not insurance it is coverage. 

forummm

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Re: ACA or CHIP for kids?
« Reply #2 on: April 25, 2016, 10:07:05 AM »
If your kids are eligible for CHIP and you decline to take it, then you lose the subsidy for their coverage. In practice, because of the way the tax credits work, it means you are probably paying for their insurance something like 100% out of pocket when it would have been free. You could create more income by doing IRA conversions if that is preferable to you.

If CO decides that your kids are eligible for CHIP and you enroll them, then they can stay enrolled as long as they remain eligible. I don't know the rules for CO regarding how often they want to be updated on your income changes. But if you follow those rules you should be OK. If you report more income and they say the kids are no longer eligible then you can just add them to your Marketplace plan. The subsidies will be prorated for the months they were eligible for CHIP vs not. You reconcile this on your 1040.

woodnut

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Re: ACA or CHIP for kids?
« Reply #3 on: April 25, 2016, 11:19:08 AM »
If CO decides that your kids are eligible for CHIP and you enroll them, then they can stay enrolled as long as they remain eligible. I don't know the rules for CO regarding how often they want to be updated on your income changes. But if you follow those rules you should be OK. If you report more income and they say the kids are no longer eligible then you can just add them to your Marketplace plan. The subsidies will be prorated for the months they were eligible for CHIP vs not. You reconcile this on your 1040.

Thanks forummm.  This is exactly what I was looking for.  I guess the devil is in the details of how CO determines and verifies income.  I'll be going from W-2 income to zero/spotty income part way through the year.  I'll dig more into this.  Maybe the easy thing for the rest of the year is do Roth conversions to stay above 260% and put everyone on a Marketplace plan and then figure out what to do Jan 2017 when I'm starting with a clean slate.

forummm

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Re: ACA or CHIP for kids?
« Reply #4 on: April 27, 2016, 08:09:05 AM »
If CO decides that your kids are eligible for CHIP and you enroll them, then they can stay enrolled as long as they remain eligible. I don't know the rules for CO regarding how often they want to be updated on your income changes. But if you follow those rules you should be OK. If you report more income and they say the kids are no longer eligible then you can just add them to your Marketplace plan. The subsidies will be prorated for the months they were eligible for CHIP vs not. You reconcile this on your 1040.

Thanks forummm.  This is exactly what I was looking for.  I guess the devil is in the details of how CO determines and verifies income.  I'll be going from W-2 income to zero/spotty income part way through the year.  I'll dig more into this.  Maybe the easy thing for the rest of the year is do Roth conversions to stay above 260% and put everyone on a Marketplace plan and then figure out what to do Jan 2017 when I'm starting with a clean slate.

If you do this, you'll still need to know what CO's standards are before January. Perhaps the easiest way to do this is to apply for the kids and go through the process and see what happens. Find out what notification they need from you when your income changes, and then follow through with that. If the kids become ineligible and get dropped from CHIP, you will be notified and that will let you enroll in a Marketplace plan in the middle of the year. So it's not really any risk and just some hassle and uncertainty. But it will let you learn how the system works.