We have reported that our joint income will be 25,000 for this tax year. If our income falls slightly below this amount, will we still be eligible for Obama Care or would this negatively affect us? I understand that the limit to be eligible is 12500 per person..
If you are just under the threshold for ObamaCare's tax credits or cost sharing reduction subsidies you have a few options for free or low cost coverage. Let's take a look at some tips and tricks for avoiding subsidy cliffs and navigating other important subsidy thresholds to ensure you get the cost assistance you want and deserve.
1. Temp work and odd jobs. If you are just under the limit doing a side job or temp work can give you that little extra taxable income to help you qualify for cost assistance. For instance if you are making 95% of the Federal Poverty Level bumping your income up to 100% could be a matter of $1,000 or less. Taken in the wrong light we can scoff at this and say, "oh sure, just make more money, great solution" but the truth is temp agencies and seasonal work are great resources for controlling income. They can offer flexibility to get household income right on the mark where you want it for assistance programs.
2. Avoid deductions. If you are just under the household income limit or close consider avoiding tax deductions. You'll pay a little more in taxes, but you'll get way more in tax credits.
3. Project high. You can project that you will avoid deductions and take temp work and than not succeed. If you project 100% FPL and then actualize 95%, you won't owe money back. This isn't saying you should lie, but if a reasonable estimate is off and your income is lower than expected you won't get punished at the end of the year. If you update the Marketplace mid way through the year you could lose tax credits though. So keep this in mind. You may want to take a look at tax credit repayment limits.
TIP: Never update the Marketplace mid-year with income below 100% FPL unless you plan to transition to Medicaid for the rest of the year.
4. Get Medicaid. If you aren't going to make the subsidy threshold for the ACA consider going with Medicaid / CHIP if your state expanded. Medicaid and CHIP are free or low cost coverage offered to all adults and children under a 138% FPL in 30 states as of July 2015.
Bottom line. Be aware of the Federal Poverty Level and how it relates to subsidies. As you can see from the chart below at your income you qualify for generous tax credits and cost sharing subsidies. If you keep the basics in mind throughout the year you can ensure you get the assistance you want and deserve and avoid potential pitfalls that could come with having an income near some of the subsidy thresholds.
Use the following Federal Poverty Guideline when you file your taxes due April 15, 2019, apply for cost assistance in 2018, or apply for Medicaid / CHIP in 2017 and early 2018.
|2017 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA|
|Persons in Family/Household||100% FPL: Minimum to Qualify for ACA Assistance||138% FPL: Medicaid Cap (in States that Expanded)||250% FPL: CSR Subsidies Cap||400% FPL: Premium Tax Credit Cap|
|For families/households with more than 8 persons, add $4,180 for each additional person|
IMPORTANT: See the 2017 POVERTY GUIDELINES FOR ALASKA AND HAWAII from HHS. See the most recent Federal Register notice of the 2017 poverty guidelines, published January 31, 2017. The Federal Register is where the guidelines are posted every year.