What happens if you make substantially less income than MAGI/ACA estimate?

[rahaparta]

Example: MFJ, retired, living off savings, not on Social Security, on ACA with subsidy until Medicare age.
State does not enforce Medicaid based on income so target income is just a little over 100% Federal Poverty limit.

What happens if you come way under with actual income?

Estimated MAGI for ACA application was 17,500 but income may turn out less than 10,000 for this year.

There is no punishment/penalty for making less income but is there some other issue to be aware of when filing next time for ACA come November 2019 for healthcare insurance in 2020 ?

[terran]

According to https://www.healthcare.com/info/obamacare/aca-subsidy-calculator "To get Obamacare subsidies, your household must make at least 100 percent of the federal poverty level."

Do you have any traditional IRA balances you could convert to Roth to get above 100% of the FPL?

[rahaparta]

Yes, of course I am aware of the required income. That was NOT the question.

The ACA application works based on an honest self-estimate of income. We did not cheat lie or steal to apply. For the last application year we are simply not having enough income.

The original question remains ?

[secondcor521]

Nothing happens, at least for now.

I do think at some point in the future they will try to "close the loop" somehow, but for now, people can be bad estimators of future income without repercussion.

[seattlecyclone]

From the instructions for Form 8962:

Household income below 100% of the federal poverty line.
If the amount on line 5 is less than 100%, you can take the PTC if you meet the requirements under Estimated household income at least 100% of the federal poverty line next or Alien lawfully present in the United States below.

Estimated household income at least 100% of the federal poverty line.
You may qualify for the PTC if your household income is less than 100% of the federal poverty line and you meet all of the following requirements.

• You or an individual in your tax family enrolled in a qualified health plan through a Marketplace.
• The Marketplace estimated at the time of enrollment that your household income would be at least 100% but not more than 400% of the federal poverty line for your family size for 2018.
• APTC was paid for the coverage for one or more months during 2018.
• You otherwise qualify as an applicable taxpayer (except for the federal poverty line percentage).

You do not meet the requirements under Estimated household income at least 100% of the federal poverty line if:

• No APTC was paid for your or your family's coverage; or
• You, with intentional or reckless disregard for the facts, provided incorrect information to a Marketplace for the year of coverage. See Pub. 974 for more information.

My takeaway from this: if you report an honest estimate to the exchange, they take your word for it and give you advance premium tax credits based on that estimate, and your actual income ends up being below the poverty line, you don't lose your subsidy for that year.

In fact you will end up getting a bit extra back at the end of the year when you file your taxes because you had a lower income than you estimated, therefore you're now eligible for a greater subsidy.

Now, if you have a $10k income after estimating $17k, and you go ahead and estimate $17k again for next year, the exchange may not be as likely to accept your estimate this time without an explanation of why you expect a higher income.