Both Inheritance and a death benefit from Mom’s death life insurance will likely be received this year. How does it count in income calculation, and what can I expect?
I was named a a beneficiary on my Mom’s life insurance policy. While my month to month income remains steadily as low as it’s been, and would reflect my normal expected income throughout the course of the year, this year, it looks like I will, unusually, be in receipt of both an additional life insurance benefit, as well as some inherited proceeds from the sale of her house, probably during the year 2015. The one time life insurance benefit approximates 18,000, and the estimated inheritance payment may be close to 20,000.
Can you please let me know how those unusual monetary occurrences will be considered in my insurance rate calculations, if at all, so that I may plan accordingly. Thanks so much for your kind attention.
Death benefits received from life insurance are typically non-taxable and thus won't impact the household MAGI ObamaCare's subsidies are based on. As a rule of thumb non-taxable lump sum income like life insurance death benefits payments don't count as taxable income and therefore have no affect on Medicaid or Marketplace subsidies. The same can be true for "cash value". As a rule of thumb any money that is taxable is going to affect your Modified Adjusted Gross Income (MAGI) and that is going to affect your cost assistance eligibility and amounts you must repay in advanced tax credits. If you do get benefits that are taxable then you can end up owing back some or all tax credits.
See more information on repayment limits.
Learn more about life insurance death benefits.