ACA and Falling Income - Client's Not Mine

Dec 11, 2015

  1. junkman
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    What happens when a self employed individual over estimates his income, qualifies for exchange coverage, and ultimately discovers that he in fact made too little income and wasn't eligible?

    He will be in the same position of estimating income again next year. Will he be able to buy coverage on exchange? Will the carrier term him retroactively and refund premiums since he wasn't eligible? What will be the recourse?
     
    junkman, Dec 11, 2015
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  2. TN_agent
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    I don't think the carrier will term them retroactively. They got paid in full from the client and the government for the coverage.

    Much more likely the IRS will come after them for the subsidies that were paid, although there is some gray area as to how exact that would happen if they are under the poverty level. I am not sure if they would essentially go after all refunds in the future until they had been paid back or not.
     
    TN_agent, Dec 11, 2015
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  3. MBSC
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    The person keeps the subsidy if the 4 criteria in the Code of Federal Regulations listed below are met.

     
    MBSC, Dec 11, 2015
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  4. Yagents
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    I won't look for it, but there was a regulation passed, that if given this scenario in the OP, the APTC does not have to be paid back at all.

    Technically, for next year, it asks to forecast his income, and he can do the same thing again in year two.

    But, Personally, it falls under the "you can fool me once........not twice".

    If I feel they are stretching the truth, I won't play.
    They can go commit fraud without me on the second round.

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    Yah, that regulation. But still don't understand it. I could never be a lawyer.
     
    Yagents, Dec 11, 2015
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  5. junkman
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    This particular person's income is all over the place. He is not without assets, just income. Were he to sell an asset, he would have income - capital gain which counts as MAGI. He has no reason to generate taxable income when he has liquid resources. He is self employed and does earn and expects to earn in the future. Sometimes expectations don't come to fruition in a given year.

    I find it interesting that assets aren't seen as a premium paying source and that people with assets and low income get the same tax credit as those with only low income.

    Good to know that he won't get kicked off or made to repay the subsidy.
     
    junkman, Dec 11, 2015
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  6. yorkriver1
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    So far, this program is not "means" tested, like Medicaid, and Medicare Low Income Subsidies are.
     
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