What If Income Is Just Under ObamaCare Threshold?
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..
Answer
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.
TIP: Assistance programs are based on household income which includes MAGI income. You'll need to understand MAGI income and the Federal Poverty Level to be in control of what assistance you get.
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 |
| 1 | $12,060 | $16,643 | $30,150 | $48,240 |
| 2 | $16,240 | $22,412 | $40,600 | $64,960 |
| 3 | $20,420 | $28,180 | $51,050 | $81,680 |
| 4 | $24,600 | $33,948 | $61,500 | $98,400 |
| 5 | $28,780 | $39,717 | $71,950 | $115,120 |
| 6 | $32,960 | $45,485 | $82,400 | $131,840 |
| 7 | $37,140 | $51,254 | $92,850 | $148,560 |
| 8 | $41,320 | $57,022 | $103,300 | $165,280 |
| 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.
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We may need to avoid some deductions on our 4/15/16 1040 depending on whether we are a 2 or 3 person household. My wife and I live alone except for our daughter who is in school, 23 years old, and out of state. We cover her with our ACA policy and pay an increased premium as a result, but we do not claim her as a dependent on our taxes. [She is not eligible for a separate ACA policy because her income is too low.] ARE WE A 2 PERSON HOUSEHOLD OR A 3 PERSON HOUSEHOLD FOR THE MINIMUM INCOME REQUIREMENTS OF THE ACA?
The household size is based on filing status. If you file for 3 then your household income is for 3 and you are responsible for ensuring everyone has coverage (or paying the fee).
what if your income gos up due to one member of the family which can now collect ss#. will you be subject to fees or fines. for example you now get 1000, month from ss#. but when you applied you did not collect the ss.
I received Obama care after being layed off in 2015 after I found a gob in 2016 I have been there three months and am eligible for company insurance which is very expensive. I make well under 25k do I need to take it or can I stay on Obama care
https://obamacarefacts.com/affordable-employer-sponsored-coverage/
If you meet the exemption requirements then you can get cost assistance, either way you can opt to use the marketplace instead or opt to have no coverage.
Large employers must offer, employees don’t have to accept.
When I got my 2016 coverage, I planned to be over the 100% level. I also did not take a credit because I feared having to pay back money if my income went up. Well, my income went down and is now below the poverty level for the year. The way I am now understanding this is that I have paid $2600 in insurance, made less than $10K this year, and will get no premium tax credit. Please tell me this is wrong. The healthcare.gov folks were no help.
I’m self employed and had Pre-paid Obamacare tax credits for 2016 but ended up making about 50% of the federal poverty level for a single person. Will I have to pay back those tax credits? Thanks
No, if you go under (not over) you only owe the fee up to the repayment limit… unless Trump changes this. The GOP has suggested changing in the past (so you would owe more). I feel like people don’t always get what their actual plan is, or focus more on “not liking Democrats”. I get that. But some of their actual plans are pretty nasty, that is one.
But yea, for now, it works like this: https://obamacarefacts.com/advanced-tax-credit-repayment-limits/
Thanks for your time and explanation.
What if pass through business losses (S Corp) bring personal AGI below the ACA/Medicaid threshold? Is there a penalty or do subsidies need to be repaid?
Businesses can’t use the individual marketplace, if you are an individual with individual insurance and a passthrough, then your assistance is based off your MAGI. Your MAGI is tallied up after your pass through income is accounted for, so any tax breaks you get lower your AGI/MAGI. How that effects you is dependent on your MAGI compared to the poverty level, your family size, and what if any assistance you are currently getting.
That is how it should work. You would want to verify that all with a professional.
I applied for Marketplace plan. I am single with a 19 year old full time student that works part time. I claim him as a dependent even though he fills out a 1040 for self-employment. The application automatically says he will not file a 1040. I cannot change it online. However, it does not add his income to mine. It goes only be my income of 11,600 and says we don’t qualify. Jointly we have a little over 17,000 for the household. Why didn’t they combine the incomes? Neither of us qualify and our state did not opt to expand Medicaid for low income homes.
If you claim him as you dependent for tax purposes, then I would think that you would file 1040 as a family and he wouldn’t file on his own. If you file taxes together, then you can get coverage together as a family. Something seems to be not right here, it is I think either in the way you are filing or in what the marketplace is saying. You may want to call again or check with a local accountant or accounting service for advice here.