New Monkey Wrench in the Deal ?

[TonyC]

Hi Friends,

I've been doing some health insurance while i build up my life insurance biz (its been a slow process but i'm still plugging away).

I've been putting a few through the health.gov system. Doing it the old fashion and going directly through the phone at gov. phone number.

Anyway, I ran across a few souls who were unfortunate enough to get the infamous 1099-c statement from their banks. This form is a statement that shows income to the borrower (or potential insured). Some of the 1099's I HAVE ENCOUNTERED were in the 100's range. Its a debt that was forgiven by the banks, BUT the borrower will have to pay taxes on the income from that debt (unless they qualify) and some of them DON'T.

However, their standard normal income is in the 25-30k range and they qualified last year. BUT upcoming income year (2015) they got the 1099-c (or i should say, the 1099-c will be issued for income in 2015) and i'm not sure how to handle that on the income side.

Another curve ball to deal with....?
Anyone run across this yet?

Thanks for your input.

 

[Post Quartermaster]

"Ask your CPA, as an insurance broker, I cannot legally provide tax or legal advice"

 

[TonyC]

"Ask your CPA, as an insurance broker, I cannot legally provide tax or legal advice"

Thanks Post....i did ask a few of them. (lol). Most of them, didn't know what will happen in these cases....as its a new area.

2014 seems to be ok...but 2015 (the year that we are processing NOW), will or may change. IF that is the case, MANY insured will be SCREWED.

THOSE PEOPLE doing Short Sales on their homes in 2015 (will get a 1099-c) and that force a penalty and PAY-BACK (or may) of premiums.

Apparently, its an Issue that Congress has approved, but President Obama himself, is playing cards with Congress and trying to force the immigration law passage.

 

[kgmom219]

Thanks Post....i did ask a few of them. (lol). Most of them, didn't know what will happen in these cases....as its a new area.

.

He didn't say for YOU to ask the CPA's. He said punt. Tell the client to ask the CPA's. Then the client can make the decision.

 

[G.Gordon]

If it is a few $100's of dollars then there is not an issue. For most "estimates" being over/under a few hundred or even a $1000 is not a huge issue when it comes down to the actual amount of the subsidy.

 

[azhealthgal]

I have several clients that are self-employed and therefore, cannot easily estimate their income for the next year. For those folks, I am following up after the first quarter to ensure their estimated 2015 income is on track. If they are running significantly higher or lower, you can report the income change as a life change.

As a rule, I tell all my customers to call me if there is any significant change in their income so that we can report the change right away.

 

[TonyC]

If it is a few $100's of dollars then there is not an issue. For most "estimates" being over/under a few hundred or even a $1000 is not a huge issue when it comes down to the actual amount of the subsidy.

NO...

"We're talking 100's of K's (like in 100,000 plus) of debt forgiveness."

IF some working class poor man gets in trouble (like many americans have over the past 10yrs) and can't pay his mortgage, he gets to do a short sale...and he gets a 1099 from the bank for the difference (in most cases).

That debt (1099c) was non-taxable in most cases (hence the name 1099-c, AKA cancelled debt). In other words, that 1099 did not (prior to 2015) have to be counted towards your income...and through a few short forms was non-taxable.

NOW, these same working class poor (getting 1099-c in 2015)are applying for Obama Care TODAY for 2015. We don't know if it (1099-c, AKA cancel-able debt)will be extended through the income year of 2015.

That's what i'm getting at....FOLLOW ?

(ANYWAY, ME, being Mister "wanna know"....started making some calls to my network of CPA's----still waiting for a call-back on this one).

 

[G.Gordon]

Sorry, my mistake. Then in that situation I'd assume it is counted if it is taxed. Got to pay the piper sooner or later.

 

[TonyC]

....If they are running significantly higher or lower, you can report the income change as a life change.

As a rule, I tell all my customers to call me if there is any significant change in their income so that we can report the change right away.

Hey AZ...what's that "INCOME CHANGE OF LIFE" rule you are referring to about?

thanks...

 

[RayNY]

Hey AZ...what's that "INCOME CHANGE OF LIFE" rule you are referring to about?

thanks...

In the exchange portal, there is a "Life Change Event" button that allows you to inform the exchange of a "life change" for a particular client. Things like job loss, raises, lottery winnings, change of residence, birth, death, marriage, etc.

As part of those "Terms and Agreements" you consent to during enrollment, you said you'd inform the exchange if anything changes mid-year to ensure accurate APTC's (instead of just reconciling at tax time).