Healthcare.gov might sign you up for medicaid unexpectedly

[beege]

I'm pretty new to the healthcare.gov portal, having been covered by employer-sponsored healthcare plans up until mid 2023. I was able to sign my spouse and I up for coverage mid-year this year and that process was surprisingly straightforward. However open enrollment season has begun and I went ahead and started our application for 2024 healthcare coverage.

The pitfall I ran into is that the monthly income estimates you are instructed to enter are misused. As an early retiree couple our income is highly variable from month to month. As I have gotten a feel for the process of optimizing taxes, like many early retirees I take a large capital gains toward the end of the year once other income sources are accounted for and to pay for the next year. This means that for some months we happen to have no actual income, but our yearly income can still be quite high. So this month for the ACA application I put in zeroes for our estimated month income for the month but checked the box that our income is hard to predict. I also filled out our estimated yearly income with those numbers (around $80K to get a good subsidy). I thought that would be sufficient, however the algorithm seems to use only the monthly income as a check for medicaid and so when I submitted I found that I couldn't pick coverage because healthcare.gov suddenly decided I was covered by medicaid. I went to our state medicaid website to look at the income limits for coverage and they were around $40k for our situation - so there's no way we'd be covered since I'm targeting around $80k this year.

I ended up having to resubmit the application and just make up numbers for this month's income that would get us above the $40k if multiplied out by 12 months (still less than the $80k I estimated our yearly income to be) and that seemed to work, but now I probably need to follow up with our state because it automatically forwarded our info there to enroll us in medicaid. Pretty annoying. Anyway I hope this helps others avoid this issue.

[beege]

Well I read around and found another thread that explains things more. It seems that's by design that medicaid checks your monthly income and the ACA subsidy is only available if you aren't covered by anything else (and Medicaid counts as coverage) so now I have to do more research to see if what I did is going to cause problems. I hope not because if I have to take medicaid this month, it is going to be awkward to have to switch between the ACA subsidy and medicaid depending on if I'm taking a capital gains distribution or dividends in a given month.

Early retirement is nice but it seems there are a bunch of quirks that you have to learn to work your way though when the system is designed mostly for 9-5 workers.

[lhamo]

If your state still has Healthcare Navigators I highly recommend you connect with one.  They can explain the rules of the program and help you adjust your application in real time.

FWIW, the way Medicaid works in my state (Washington, and presumably most others) is that once you are approved to enroll in the program based on current monthly income, temporary bumps in income that do not continue for over two months in a row do NOT bump you off the program -- even if they are WAAAY above the annual income thresholds.  If you have two consecutive months of income that exceed program limits right before the point of re-enrollment, then you will no longer qualify for Medicaid and will be shifted to the ACA plan of your choice.

I learned all this because we had a large capital gain from a property sale that I thought would kick us off Medicaid -- it did not since it was a one time thing that occurred in only one month.  My healthcare navigator called the state office to verify. 

[Fire1018]

On the Medicaid verification form for annual renewal there is a box stating “Does anyone’s income change from month to month?”  Does anyone know what happens when you check that box?  What else do they do for verification?

Thanks!

[seattlecyclone]

On the Medicaid verification form for annual renewal there is a box stating “Does anyone’s income change from month to month?”  Does anyone know what happens when you check that box?  What else do they do for verification?

I don't know, but I do think it's a bit silly that the form treats this as something other than a default situation. I would guess the majority of people should be clicking that box if they're being truthful. Anyone who works hourly and occasionally works more or less than their typical amount should be clicking that box. Anyone who gets commissions or bonuses or is self-employed should be clicking that box. Anyone who owns stock paying quarterly dividends should be clicking that box. Anyone on a salary who is paid weekly or bi-weekly should be clicking that box (since some months you get more paychecks than others). Anyone who contributes to a retirement account, but not the same amount every month, should be clicking that box. Anyone who works in schools and isn't paid during the summer should be clicking that box. And on and on...

Really, the people whose income is exactly the same every month are the weird ones.