Watch Out for the Subsidy Cliff !

[Yagents]

Look out below! Work more, get less in Obamacare 'cliff'!

Finally some press on the potholes in the law.

This is going to sting a lot of clients, and you will be to blame. Not the financial advisor who sold stock for cap gains, or the SSA office/neighbor who said it's better to take SS benefits at age 62, or your book-keeper who hit the + button vs the minus button, or little johnny finally got a job while he's a dependent of yours.

 

[Ann H]

Great warning to keep in mind, Yagents! It will be hard enough for clients to calculate their MAGI income more than a year in advance, much less needing to anticipate changes to income.

While we are warning people about cliffs, let's warn them to keep away from 400%, 250%, and 133/138% edge. There is conflict in the law and regs, where in some places it says "up to 400%, and in other places it says "not more than 400%". Conservative folks use 399% as the top limit. Be careful about those 2013 FPL tables that show how much 400% of FPL is for various family sizes. Remember that 400% is OVER the subsidy qualification limit. If you look closely at the online subsidy calculators, you'll see that they show no subsidy when the dollar amount of income is at or above 400%.

Since the IRS usually rounds to whole dollars, but at this point we don't know if the percentage is calcuated before rounding or not, it's best to stay under 399%. For instance, 399.51% may be rounded to 400% and therefore not eligible for subsidy. The same issue applies at the 250% threshold for CSR (cost sharing reductions) and the 133%/138% threshold for Medicaid.

Fortunately, when the 2014 FPL amounts are published, they will undoubtedly be slightly more than 2013, giving us a little extra wiggle room.

Also, one correction to what was written in the article. They said, "For a single person, that FPL income maximum is $45,960 per year. The maximums are adjusted upward for couples and families until maxing out at $94,200 for a family of four." Yet as we all know they are actually adjusted upwards for all family sizes, not just maxing out at a family of four.

 

[houcoogster]

Oh you want to sue me?

Ok, no problem take a number and get in line.

Meanwhile I have to feed my family, Have a great day!

 

[Yagents]

Those who educate their clients reduce the chance of a lawsuit occurring, and gain a client for life.

 

[somarco]

InsureBlog: Oliver Twisted

 

[RayNY]

from July 31 Congressional Research Service Report: http://www.fas.org/sgp/crs/misc/R41137.pdf

I've always like this chart. Makes it pretty clear who is getting the short end of the stick.

FYI, the top end of the chart (60 yr old) is $6300/yr, which straddles the silver/gold plans in NY (which are not age banded).

 

[Yagents]

If you turn it upside down, you'll see THE "cliff"

 

[houcoogster]

If you turn it upside down, you'll see THE "cliff"

Ha ha good one yeah if you make over 15k you have really screwed up...off the cliff....lol
Unlike playing a record backwards this makes sense.

 

[RayNY]

Standing at the bottom of a cliff looking up, it's still a cliff. You don't have to fall off, sometimes you have to climb up.

It's a good visual of the cost difference.

 

[Yagents]

Very good blog post Bob!