ACA subsidy cliff now going away! Yay!

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LadyGeek
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Re: ACA subsidy cliff now going away! Yay!

Post by LadyGeek »

I merged aprilcpa's thread into the ongoing discussion.
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Rdytoretire
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Re: ACA subsidy cliff now going away! Yay!

Post by Rdytoretire »

Just went to Healthcare.gov and updated from my Bronze plan to a Silver plan at a lower cost due to additional subsidy. Looks like my Bronze plan will expire 4/30 and the Silver will be effective 5/1. I'm not sure if others are aware that they may need to do this to benefit from lower premiums thanks to the American Rescue Plan.
theplayer11
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Re: ACA subsidy cliff now going away! Yay!

Post by theplayer11 »

looks like my state won't allow plan changes. With a much higher tax credit, only makes sense to get a better plan, but not allowed.
fsrph
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Re: ACA subsidy cliff now going away! Yay!

Post by fsrph »

opus360 wrote: Sat Mar 20, 2021 7:53 pm
The COVID-19 relief law makes special considerations for people approved to receive or receiving unemployment compensation at any point in 2021.
In the quote above "receiving unemployment compensation" is easy to understand. But does anyone know how to interpret the term "approved to receive". I've been looking all over for an answer to this. Thanks.

Francis
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Random Poster
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Re: ACA subsidy cliff now going away! Yay!

Post by Random Poster »

fsrph wrote: Wed Apr 07, 2021 7:49 am
opus360 wrote: Sat Mar 20, 2021 7:53 pm
The COVID-19 relief law makes special considerations for people approved to receive or receiving unemployment compensation at any point in 2021.
In the quote above "receiving unemployment compensation" is easy to understand. But does anyone know how to interpret the term "approved to receive". I've been looking all over for an answer to this. Thanks.

Francis
You can apply to receive unemployment and be approved for it, but never file a weekly (or biweekly) request for payment to actually receive unemployment pay. As in, applying for unemployment and being declared eligible for it from the state is a separate process from actually requesting and receiving unemployment payments.

That’s how I interpret it anyway.
fsrph
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Re: ACA subsidy cliff now going away! Yay!

Post by fsrph »

Random Poster wrote: Wed Apr 07, 2021 11:56 am
fsrph wrote: Wed Apr 07, 2021 7:49 am
opus360 wrote: Sat Mar 20, 2021 7:53 pm
The COVID-19 relief law makes special considerations for people approved to receive or receiving unemployment compensation at any point in 2021.
In the quote above "receiving unemployment compensation" is easy to understand. But does anyone know how to interpret the term "approved to receive". I've been looking all over for an answer to this. Thanks.

Francis
You can apply to receive unemployment and be approved for it, but never file a weekly (or biweekly) request for payment to actually receive unemployment pay. As in, applying for unemployment and being declared eligible for it from the state is a separate process from actually requesting and receiving unemployment payments.

That’s how I interpret it anyway.
Thanks R.P., that makes sense.

Francis
"Success is getting what you want. Happiness is wanting what you get." | Dale Carnegie
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Watty
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Important: Check your ACA plan for a possible reduction.

Post by Watty »

[Thread merged into here --admin LadyGeek]

I get a significant subsidy on my ACA healthcare plan and I was just able to get it recalculated with the new law changes to significantly increase the subsidy so I will be paying a lot less out of pocket each month.

On Wednesday I got a short email from Healthcare.Gov that said;
Thanks to the new COVID relief law, more people than ever before will qualify for help paying for health coverage, even those who weren’t eligible in the past.

On average, monthly premiums for coverage through HealthCare.gov will be lower by $50 per person per month.

To receive these additional savings, come back to HealthCare.gov and update your 2021 application to see what savings you qualify for now. You’ll then need to reselect your current plan so that any new savings can take effect for the remainder of the year.

Remember: Come back to HealthCare.gov as soon as you can, submit your application again, and reselect your plan so that you can save on your coverage starting May 1.
I went to the healthcare.gov web site and logged in. (not using the link in the email)

It had these instruction in a big red box.
Need updated savings?

Review your application now to get updated savings. To do this:

Select your 2021 application, then select “Report a life change”.

Step through your application, and make any necessary updates.

Submit your application.

Review your updated eligibility results with new savings.

Continue to enrollment to get the updated savings. You can keep your current plan or select a new one.
I went through these steps which was about 20 screens with my old application already filled out. There were just a few places that I had to check boxes to acknowledge things or to enter my name. Other than the few checkboxes to acknowledge things I did not change any other information.

At the end I reselected my current plan and my subsidy had increased about $160 a month for one person. :beer

I suspect that if I had not gone through this process I would still have gotten the savings next year when I file my tax return but I am not sure of that.

If you did not qualify for a subsidy before it might be good to look at it again to see if you will qualify for it now.
Random Poster
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Re: Important: Check your ACA plan for a possible reduction.

Post by Random Poster »

Thanks for the information.

I updated my plan at the beginning of the month and my subsidy actually decreased, apparently because of my unemployment income.

So now I’m waiting for the “those on unemployment get free health insurance” part of the recent law to get implemented.
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Re: ACA subsidy cliff now going away! Yay!

Post by LadyGeek »

I merged Watty's thread into the ongoing discussion.

(Thanks to the member who reported the post and supplied the link.)
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Re: ACA subsidy cliff now going away! Yay!

Post by iamblessed »

I suspect that if I had not gone through this process I would still have gotten the savings next year when I file my tax return but I am not sure of that.

That's what I am thinking but do not know if it is right?
michaeljc70
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Re: ACA subsidy cliff now going away! Yay!

Post by michaeljc70 »

Since I have little idea what our income will be this year (spouse unemployed, my income can be controlled via investments/withdrawals) I thought I would jump start the increase in premium tax credit (due to being unemployed in 2021) by updating our income. The federal poverty level is ~$17k for two people. I put our estimated income in as $30k. I got an eligibility letter saying they are passing it on to my state's Medicaid office due to $1033/mo in income. Well, that is not what I put as our income. I tried this twice. We are not eligible for Medicaid at $30k income in my state. I am not sure how it is calculating income and how/if I should do something about this or wait and see what happens.
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Re: ACA subsidy cliff now going away! Yay!

Post by Ron Ronnerson »

iamblessed wrote: Sat Apr 17, 2021 2:50 pm I suspect that if I had not gone through this process I would still have gotten the savings next year when I file my tax return but I am not sure of that.

That's what I am thinking but do not know if it is right?
I believe that is how it works on the federal exchange. I’m on Covered California and here the savings are set to be applied automatically beginning next month. Regardless of that, it is likely a good idea for people to take a look at their options, though I am not sure if all states are allowing people to change their plans at this time.

Our family is made up of two people in their mid-40s and a kid. We are currently on a silver plan with a reported AGI of $65k. We’ve been paying about $120/month and getting subsidies (primarily from federal but also a small amount from the state of California) totaling $1300/month. After the new legislation, we can now get the same silver plan for $3/month and the entire subsidy is provided by the federal government (no more state subsidy). This is what would happen if we take no action.

However, we plan to switch to a gold plan. With an income of $65k, our new subsidy amount would exceed the cost of our silver plan. If we switch to a gold plan, we can continue to pay roughly $120/month but get we’d be getting a gold plan instead of a silver, meaning not having any deductibles any longer.

Also, for each $1,000 of income that we reduce below our stated AGI of $65k, we get roughly an additional $170 in premium tax credit for the year. We’re in the 12% federal bracket and 2% state bracket. All combined, our marginal tax bracket becomes 31% (17+12+2). This is high enough that instead of doing things like converting traditional accounts to Roth, we'd instead prefer to go the other direction and fund traditional accounts in order to save 31% in the present. The premium tax credit basically turns our 12% federal bracket into a 29% bracket when our AGI is in the $60k-$70k range. This is a little bit simplified because we'd also lose $400 in Saver's Credit if income is above $66k. Due primarily to the loss of the various credits, we'd basically pay 70% in taxes on an income of $66k vs. $65k.

Anyhow, I found playing with the calculator to be quite useful. I’m going to try to get our AGI down to about $60k for the year so that a gold plan costs us about $50/month and our subsidy increases to about $1530/month.
cnc449
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Re: ACA subsidy cliff now going away! Yay!

Post by cnc449 »

Since the ACA cliff is more like a hill this year, what strategies are folks using to take advantage of this change?
We are considering a Roth conversion up to a certain income limit.
mkc
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Re: ACA subsidy cliff now going away! Yay!

Post by mkc »

cnc449 wrote: Wed Apr 21, 2021 8:16 pm Since the ACA cliff is more like a hill this year, what strategies are folks using to take advantage of this change?
We are considering a Roth conversion up to a certain income limit.
We upgraded (yes, it actually had higher initial premiums) to a HDHP HSA bronze plan from a seriously crappy bronze plan, both of which ended up a 0 cost to us. We will contribute monthly to our HSAs, watching at this fall's open enrollment to see if we can take advantage of the "last month" rule (and do an HDHP/HSA plan for next year) to fully fund the HSAs for 2021. Then we are taking the monthly premium savings and paying down the mortgage even faster.
Cpadave
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Re: ACA subsidy cliff now going away! Yay!

Post by Cpadave »

Just wanted to confirm my understanding of how it works. If our modified agi is 100k in 2021, our cost for silver plan is limited to $8,500 a year. However if we choose the bronze plan that costs $10,000 less in annual premium, our net cost for the bronze plan would be 0.
Thanks
cryingshame
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Re: ACA subsidy cliff now going away! Yay!

Post by cryingshame »

cnc449 wrote: Wed Apr 21, 2021 8:16 pm Since the ACA cliff is more like a hill this year, what strategies are folks using to take advantage of this change?
We are considering a Roth conversion up to a certain income limit.
I had mentioned this in another post...but we have some mutual funds in taxable with high er's and more risk(mistakes made a long time ago) that were going to sell some shares over the next two years. This will most likely put us over the cliff some but we feel bigger picture will save more in the long run.

Hopefully, the more I'm on boglehead's the more I realize there is a pro and con to everything. :D
mkc
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Re: ACA subsidy cliff now going away! Yay!

Post by mkc »

Cpadave wrote: Sat Apr 24, 2021 10:23 am Just wanted to confirm my understanding of how it works. If our modified agi is 100k in 2021, our cost for silver plan is limited to $8,500 a year. However if we choose the bronze plan that costs $10,000 less in annual premium, our net cost for the bronze plan would be 0.
Thanks
That is how it worked for us, but there's a bit more to it.

MFJ MAGI for $100K, max cost for SLCSP (second lowest cost silver plan) is $8500.

Now, subtract the $8500 from the full SLCSP premium cost for your situation (in our case it was $33K). That leaves your your premium credit. So in this example that's $24.5K.

You can apply the premium credit to any plan, Bronze through Gold. If the bronze plans all cost $24.5K per year or less, your cost is 0. You do not get the difference. If your gold plan costs $34.5K per year, your cost is $10K per year.
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