Does income increasing from 390% of FPL to above 400% FPL give special election to change plans?

[TN_agent]

Couple calls in. They aren't my ACA clients, they are agency clients on another product. They are 63 and 62 drawing SSI, IRA, consulting firm. They made $60,000 in 2017 (got subsidy). For 2018 they chose a low-deductible silver plan, with subsidy they pay like $700 a month. Hubby's side business doing well. They estimate $80,000 (he earned a huge one-time chunk this year) after all deductions. I told them to talk to an accountant but they say no way they can get 2018 below 400% of FPL at this point between SS and what they have already earned/taken out of IRA. They already talked to an accountant, he sent them to me! They are literally getting like $3000 a month in subsidy, something like that. Their plan is $3700 without subsidy.

What are their options?

I don't think that they can switch to a cheaper plan at this point, the way I understand it is that the SEP for income change is only valid if it will change plans available to you . Does going from 390% FPL subsidy eligible to 400%+ not-subsidy eligible (on the high end) allow you to change plans in an SEP?

I told them they could try their luck with the marketplace on switching, but that wasn't something I could help them with or guarantee. Cheapest bronze is still $16k for the rest of the year and they are paying Uncle Sam back the $12k in subsidy. Plus the wife's meds another $500-750 a month.

If they can't change plans, can they:

1. Cancel the insurance outright effective end of April and still have to pay back $12k subsidy they got so far this year. Take out short term or go Christian healthshare for hubby (wife won't qualify for either, will be uninsured and paying $500-750 oop a month for meds). Exempt from tax penalty.

2. Report income change and keep it without subsidy for the rest of the year, so pay $29,000 MORE the rest of the year and still have to pay $12k to Uncle Sam.

3. Don't report increase in income and have to pay Uncle Sam $36,000 in APTC back next year. (Is that number FOT REAL?????) (not recommended)

4. ????

What other options haven't I thought of? Am I looking at this correctly? The numbers are mind-boggling.

 

[Yagents]

I am pretty sure you cannot change plans, and is not an SEP.
Any "changes" at the Marketplace will open you up to probably admin / billing issues at carrier or from Marketplace feed.
The options you laid out are correct.
You can cancel marketplace plan 15 days in advance, any month you wish.
Separate out income, and whether or not they will actually keep the plan.
If keeping that plan at full price (regardless), it doesn't matter if they pay it now or pay it later with a clawback come tax time.
Instead, I would focus on the income, you still have 8 months.
They could open a solo 401k and contribute 24k of that 80k (maybe)
Also, the new tax law has a 20% reduction of income for self employed.

If absolutely no way to lower income, or increase expenses, then deal with the fact of paying full price. Even then, paying back the tax credit at end of year is best option since it is penalty and interest free loan, and nobody really knows what the final numbers will be 1 year from now.

If they don't want to pay $3k a month for coverage, or roll the dice of having to possibly pay that amount, then STM is option. Don't care for CHM recommendation.

 

[scagnt83]

An income change triggers SEP if it is large enough to change the amount of Premium Credits being received.

It can be a bit of a loophole for the self-employed.

 

[Yagents]

I stand by my comments. You cannot change plans if raising income.
It does not create an SEP.
You could lose your CSR help, but you cannot go from silver to bronze.
You CAN go from bronze to silver CSR if reducing income

 

[scagnt83]

I stand by my comments. You cannot change plans if raising income.
It does not create an SEP.
You could lose your CSR help, but you cannot go from silver to bronze.
You CAN go from bronze to silver CSR if reducing income

Per CMS, if income changes enough to cause a change in Premium Credits, it creates SEP.

I know people that have done it. I dont know if they changed from Silver to Bronze. But I do know they created SEP again and were allowed to enroll in a different plan and still received CSR.

 

[Yagents]

Cool. My friend just got a bad diagnosis, I will have him call and change his income $5 and move to gold plan. Not happening.

 

[kgmom219]

1. I am 99.9% sure Y is correct
2. Do the math on the cheaper plan, with the RX added in for total cost. Make sure moving to the cheaper plan makes sense.
3. HOWEVER, what I would do is tell them that you are 99% sure it won't work, but when dealing with the government, you never know. They need to call the FFM and say that they need remove the subsidy due to an income change and would like to change plans. Tell them not to offer any more information than that. Its probably 50-50 that it will work. And its damn sure worth the 30 minutes on the phone to find out.

 

[scagnt83]

Cool. My friend just got a bad diagnosis, I will have him call and change his income $5 and move to gold plan. Not happening.

I could care less if you believe me. I have seen this done before. It was to add people and not to change plan types, but it still triggered SEP and allowed them to go through enrollment process again on HealthCare.gov . Perhaps they could not change plans, but it did allow them to add members.

A $5 increase is not very likely to cause a change in CSR. And you have to be able to provide proof of the change. As I said before, I have seen this done more than once. These are government benefits, it doesnt have to make financial sense.

 

[scagnt83]

Bottom section of page 4 (pdf page 6):

http://www.healthreformbeyondthebasics.org/wp-content/uploads/2015/06/SEP-Reference-Chart.pdf

It does say you cant change metal levels, unless changing to a Silver Plan. So you could change from Bronze to Silver. And you can change within the same metal level.

 

[Yagents]

UH...... adding people is a different story. We aren't talking about ADDING people. Just income. And yes, a $5 in income, could change a tax credit amount of $1. Run any quote for 64 yr old at $12,500 of income. And no, you don't need to show proof of income if changing your income higher. Stay in your zone SC83.

Edit: Ok, maybe raise income by $50 to get change in aptc