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Healthcare ACA Subsidy Cliff

L

laminar-flow

Stainless
Joined
Jan 26, 2003
Location
Pacific Northwest
Again, we are doing our annual healthcare decision making for next year and since I have been slowing down a bit, I will try to get the subsidy again next year. If you have been using ACA with subsidy, you will understand what is going on. If you have never been self employed or never used the ACA, you might have to read a bit to understand.

Getting the subsidy is a big deal. Make under a certain amount, (adjusted gross income), and you get a big subsidy. Make a $1.00 over, and you have to pay full premium. This is known as the ACA Cliff. Beware Obamacare’s ‘subsidy cliff’ | healthinsurance.org

I know some people in a similar situation that take the subsidy, then manage their income towards the end of the year to make sure they don't earn too much and end up having to back pay many thousands of back premiums. They shut down, defer payments until the next year, or buy equipment. Anything to get the AGI down.

Mind you, this is not a big deal if one makes 20 or 30k over, just back pay the subsidies.

Is anyone else in this mess and have any other ideas on ways to deal with this?

Also, I can't believe the designers of this system didn't see this coming. I mean really?
 
Social security recipients still working in the ~66-70 age brackets have an effective 33% plus regular
income tax rates for income above a certain level. Medicare charges a progressively increasing premium for AGI above
a fairly generous level. Medicaid/rental supplements/SNAP also have sharp cutoffs with income essentially
the same as your ACA subsidy cliff, so the Feds have been at this a long time.

For the ACA, it may take > 12 months for the AGI to come to the ACA admin attention, leading to an 18 month or
so whammy down the road and demands for repayment of unwarranted subsidies.

This is one reason the 'black economy' (cash economy/criminal economy)is more prevalent at the low end of income,
to avoid these cliffs.
 
sch said:
This is one reason the 'black economy' (cash economy/criminal economy)is more prevalent at the low end of income,to avoid these cliffs.
Click to expand...
"Criminal" ? Umm, would it be impolite to say "piss off !" ? Remember "no taxation without representation" ? The average person in the US has not been represented for thirty years or more.

Same principle as 1776. The cash economy is the truly American, patriotic one.

Don't tread on me.
 
I am in the same spot, and it sucks. I dont understand $1 dollar over $82,000. you pay full price, $1 less and the price is much cheaper, you would think a scale up to maybe $100,000 there would be lesser subsidy until $0. I was getting ready to add a thread, hoping somebody would have an answer.

I am meeting with my accountant on Wednesday to see what i have to do to stay under the $82,000., i may not receive a paycheck the rest of the year, and have to spend money i dont want to spend or have, or give it to the gov..I really think this is a way to try and get rid of the middle class.

If anybody has an magic answer let all of us know. Please. Thanks Jason
 
This has been the problem since day one of Obamacare. If you are single, the cutoff is about 46K. It's not hard to blow past that. I went without from 2014 to 2018 because I couldn't get a subsidy.

It would have been so much easier for self-employed people if they would have based the subsidy on the previous year's income. At least you would know where you stand.

Even with a subsidy, the deductibles are so high that you can't afford to use the insurance anyway.

This year I bought a machine to drop my income and I took a subsidy. 2019 I may have to go without, my premium is going from $550 to $750 per month for 2019. :mad5:
 
My sister tells me the maximum penalty payback is capped at 1,400. They screwed up on her subsidy and only charged her family $2.00 a month. They gave up on correcting the subsididy and paid the penalty by April 15.
This is not the penalty for not having insurance.
Bil lD.
 
Bill D said:
My sister tells me the maximum penalty payback is capped at 1,400. They screwed up on her subsidy and only charged her family $2.00 a month. They gave up on correcting the subsididy and paid the penalty by April 15.
This is not the penalty for not having insurance.
Bil lD.
Click to expand...
That's a new one, I've never heard that. I'd like to see that in writing on the IRS website.

What's to keep people from saying they only make 20K, pay no premiums and then just pay the $1400 at tax time? That would save me thousands of dollars a year...

Edit to add: I just looked that up- the repayment caps are for those making less that the 400% of poverty level "cliff". It looks like there is savings to be had there if you can manage your income to stay in the subsidy range.

Obamacare Tax Credits: The Pay Back Requirements For Underestimating Annual Income | Nolo.com

Important Information about Advance Payments of the Premium Tax Credit and Your Tax Return | Internal Revenue Service
 
I end up buying a lot of materials at the end of the year. This works well if you have ongoing production you can plan for.

Piss off Gordon, everything is better in the US, we're exceptional!
 
thermite said:
Dunno. You being a vicious f**k most of the time, how 'bout a hundred-percent Brooklyn-curb-stomping and we just don't file the paperwork?

How's that grab yah for "underground economy", then?
Click to expand...
You are quite brave on the internet.

There were quite a few people in 1776 that wanted to keep kissing the King's royal behind, too. Fitting that you chose Monarchist for a handle.
 
I will have to look into the capped repay, first i had heard of that, my old accountant, and insurance people never told me about a max cap to pay back, i just figured from what i had been told is i had to pay back the whole subsidy. Thanks Jason
 
It is disturbing to even see this in need of a discussion.

High level Finance Gurus - and, no apology, those who never MAKE IT to "high level" just don't COUNT - literally - have been aware since before Sumer had a water problem, that one goals FIRST and ALWAYS for commercial success, then second at best - never higher, usually LOWER - for tax efficiency.

WHEN you get that bass-ackwards? You are goaling for commercial FAILURE to reduce tax burden?

You will, in the fullness of time, accomplish both goals. Dead companies - quick death, or decades long agony - have no way to pay tax liabilities, even if they die with tax debts.

It is the same as on a blood and guts battlefield. It does the loser not one damned bit of good to have fought a more efficient war cheaply .. if he is the one as has lost that war and was enslaved, or just died.

Some OTHER business competitor that HAS goaled for success FIRST and tax efficiency later, mayhap even "not at all" will prevail. Same animal exactly as combat arms who goaled for effective first, and efficient later. First, you have to survive and prevail.

Winners have the luxury of counting the costs as and after the win.

Losers have neither the opportunity - nor any further need.

Get too wrapped-up in tax vs performance? You may have already lost. No one cares enough to even send you the memo. Too busy chasing their NEXT win.

Bottom Line?

Get your priorities in order before they put you OUT of order.
 
EmanuelGoldstein said:
You are quite brave on the internet.

There were quite a few people in 1776 that wanted to keep kissing the King's royal behind, too. Fitting that you chose Monarchist for a handle.
Click to expand...

Ahem :) You're replying to thermite or can't you figure out who's who either? I think whoever it is then there are more than just 2 AKAs and I'm not excluding you either LOL

Split personalties seem to have split personalities.
 
Hey, it is Thanksgiving. Let's back off the bickering. We are trying to work within a flawed system and figure out what to do for max dollar. Some of the responses will require some study. Thanks.
 
laminar-flow said:
Hey, it is Thanksgiving. Let's back off the bickering. We are trying to work within a flawed system and figure out what to do for max dollar. Some of the responses will require some study. Thanks.
Click to expand...

"Flawed system" does not begin to cover it.

The US Federal Government publishes new or revised legislation at the rate of what? A hundred thousand dead-tree pages every YEAR? An average of three changes to tax law alone every working day all year long to the rate that the IRS most highly trained experts cannot even write HALF way sane instructions to collect what congress has turned into a bowl of spaghetti, then made worse each year?

And, Oh, BTW? We also have States, Counties, and Municipalities?

Yes, Brethren, let us be thankful for such as we have, however humble or grand. Tough critters, be we. Another full year has been clocked as survivors of it all.

If we are so blessed as to have a roast turkey "in our face"?

Think on that. The poor bird at least KNEW it WAS a "turkey", not a lobster, plastic mailbox, nor a rubber doormat, even if it was unaware it would become dinner.

We seem to have been somewhat less alert, have we?

Well.... there's still NEXT year, yah?

:)
 
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