Tyler wrote: ↑Wed Dec 02, 2020 8:28 pm
D1984 wrote: ↑Wed Dec 02, 2020 3:40 am
If I currently have COBRA coverage lasting until late April and I go ahead and apply for subsidized ACA coverage and am accepted for coverage:
1. What will happen when I file my 2021 taxes in early 2022? Will the IRS get a copy of the 1095-C from my employer and/or will my employer even send me a 1095-C for the 2021 year since I was no longer an actual employee as of late October 2020?
2. I know that you have to pay ACA premiums subsidies (APTCs) back if you underestimate your income--although if you are under 400% FPL the payback is on an income-based sliding scale so you won't have to pay back nearly the whole amount of the APTCs--but will they make you pay the APTCs back if you had COBRA for a few months while you also had a subsidized ACA Healthcare.gov marketplace plan? I am concerned that they might do so under the guise that if you were on COBRA you had an (to use the legal terminology in the ACA) "Employer-Provided Health Insurance Offer" and took it and thus were ineligible for subsidies?
3. If they
DO make someone in this situation pay the APTCs back, will it be for the whole 2021 year or will it just be for the not-quite-four months that said person had COBRA
4. In a situation as in #3 above......will the repayment amount be on an income-based sliding scale like it is for when you underestimate your income and thus get too much subsidy or will I have to repay the full $670+ a month APTC?
...
So what do y'all think I should do? Go ahead and enroll in a Healthcare.gov marketplace plan with the subsidies (this plan would kick in on 1-1-2021 since I know I will keep my COBRA until at least then) and risk having to pay back the APTC subsidies and/or risk prosecution for fraud (if having COBRA coverage counts as an "offer of Employer Provided Coverage" and I checked "no" in the box on the online application where they asked if I had such an offer or not) or wait until April and risk trying to enroll in said plan then and risk not having health insurance for over half the year if it turns out I am not allowed to enroll at that point?
Sorry about the layoff. That's never fun.
I've used the ACA pretty regularly over the last few years and have been pretty happy with it. Although I've never been in your situation because I always turned down COBRA, here's what I know.
1. Unless it has changed in the last few years, I believe the 1095-C is something you fill out yourself. I distinctly remember having to look up info to fill it out on Turbotax.
2. You can't get ACA coverage if you also use COBRA. It's one or the other. Although when you lose COBRA coverage, that qualifies as a life change that lets you have a special enrollment period. I understand you're not sure that's true, but I'll add my voice to the many others who believe it is.
3. Subsidies are reconciled on an annual basis when you do your taxes. So individual months are irrelevant for final calculation purposes. If you have minimum income for 11 months (qualifying you for maximum subsidies) and make $100k in December, you lose all subsidies for the entire year and will have to pay them back.
4. Not sure on the repayment rules. I know there's a system that keeps you from repaying too much at once. Personally, I err the other way and take no subsidies up-front while getting a larger tax refund in the future. But everyone's situation is different.
So in your situation, it sounds like you have 2 options:
0. Accept COBRA and sign up for simultaneous ACA coverage. I don't think this is a legit option, as it's explicitly against the rules. Even if you slip it through up-front, it will probably come back to bite you. In fact, I just renewed yesterday and there was a signature box where you have to accept that they can cancel your coverage at any time if they find out you're covered elsewhere.
1. Accept COBRA and sign up for the ACA when your COBRA expires. To my knowledge, that should work fine.
2. Decline COBRA (if you still can) and sign up for ACA coverage. Based on your note about gaming your income, it will be super cheap and maybe even a better deal than COBRA because you may also get a greatly reduced deductible. The downside is that you'll need to quickly update your income in their system in the event you get a new job in order to make sure you don't have a big tax bill later.
I hope that helps. And good luck with the job hunting!
Regarding losing COBRA: I actually 100% agree with you that it is factually true as a matter of the letter of the law that when you lose COBRA that qualifies as a life change event and thus qualifies you for a Special Enrollment Period. This is only true, however, if by "losing COBRA" you mean having your 18 months of COBRA entitlement run out. My problem/situation is not the 18 months of COBRA running out; it is the
employer subsidy running out...that will happen well before the 18 month COBRA period ends (18 months of COBRA would end for me roughly by late May 2022); the employer subsidy will end by spring 2021. My concern is that there is no explicit authorization in the ACA that says that they HAVE to give you a Special Enrollment period once your employer subsidy runs out. As such, I am left choosing between:
A. Applying for subsidized ACA coverage (presumably to start on 1-1-21....In such a case I will call my employer by next week or so and tell them to please cancel my employer-subsidized COBRA as of 11:59:59 PM on 12-31-20), or,
B. Staying with COBRA, taking the employer subsidy that makes it free until the coming spring, and then hoping that Healthcare.gov will grant me a SEP and if not I'll be stuck paying for COBRA out of pocket until 12-31-21 at which case I can get the subsidized ACA policy for the 2022 plan year.
The choice should seem like a no-brainer; COBRA is over $600 per month once unsubsidized and carries a $600 deductible and 25/75 coinsurance (I pay 25% and the insurer pays 75%) after that until max OOP of $4,000 while the ACA policy has a deductible of $150 and a max OOP of $900 or so. Even considering that the subsidized ACA policy costs a bit over $20 a month while the COBRA is free for around the next roughly 4.5 months or so this would still be a laughingly easy decision (take the AC policy, ya idjit!) except for two huge caveats:
The first is that what if Healthcare.gov refuses to believe I will only make $13K next year and tries to base my policy price on this year's income or 2019's income? If that's the case then I will get either almost no premium subsidy (if based on 2019 income) or only enough premium subsidy to reduce the same Silver plan (the one that if I make $13K a year i can get for roughly $20 a month) to around $178 a month instead of $20 a month. This is a moot point of sorts, though, because if I really DO only make $13K next year then I can get back the cost of the APTCs (the subsidies I should've gotten that would've had me pay $20 a month instead of almost $200) when I file my taxes next year....and having to wait a year to get the money is no big deal to me. The actual big issue here is that when I file my taxes in 2022 for next year (for 2021) I
CANNOT get back what would've been the (considerable) financial benefit of the CSR subsidies. If I only make $13K a year the CSR subsidies reduce my deductible and max OOP enough that the policy is actually a very good one; without them it's kind of a barebones catastrophic only policy which (while better than nothing) is really not any better than COBRA should I actually ever need to use the policy for anything major illness or injury-wise (COBRA would have a yearly premium cost of $4800 for May-Dec and a max OOP of $4000 for a worst case yearly cost of $8800; the ACA policy--assuming that I did get all the APTC subsidies back on my taxes in April 2022--would have a yearly premium cost from Jan-Dec of $240 and a max OOP without CSR subsidies of $8500 which comes out to a yearly total cost of $8740). So if they won't accept upfront when I apply (rather than me waiting to claim back the APTC subsidies when I file my 2021 taxes in 2022) that I will be making only $13K a year then the ACA policy isn't much of a better value than COBRA if I actually have any major medical costs that are enough to max out the max OOP. Of course, assuming I have no major medical costs or even assuming I have, say, $1K or $2K costs in a year then yes, the ACA policy would still be a better deal even without CSR subsidies.
The second caveat (and this is the biggie) is the upcoming Supreme Court decision in the
California v. Texas case in May or June of 2021. The whole premise behind the case is utterly ridiculous (somehow a mandate of $0 is more coercive than one that actually costs the person some money? GMAFB....and even if one accepts the premise about said zero dollar mandate being more coercive and thus giving the person standing to sue, the clear proper thing to do would be just to sever the mandate from the rest of the law and leave the rest of the ACA intact) but if the SC agrees that:
1. A zero dollar mandate is coercive and thus gives standing,
2. That a mandate with a penalty of $0 is unconstitutional because the only justification making the ACA insurance mandate Constitutional to begin with was that it was a tax that raised revenue and the Constitution is clear that Congress has the power to tax and to regulate that which it taxes,
3. That having found the $0 mandate a violation of the Constitution, the whole ACA must therefore be found to be inextricably and unseverably linked to the mandate and thus the whole law must fall
Then as soon as 30 days after the SC decision I could (in the case of having chosen to cancel my COBRA and instead go with an ACA policy) be left with no insurance and (as a cherry on top of this shit sundae) not be able to claim back any of the cost of the premiums--i.e. the money I paid in premiums that I should've got in APTC subsidies instead since my income was low enough....this is assuming I do what you do and tell Healthcare.gov I have a high enough income not to qualify for subsidies and then if my income was low enough I get it back next year at tax time--when I file my taxes next year (because the ACA itself was what put the premium subsidies in place and if the whole ACA law is struck down then the premium subsidies go bye-bye as well).
So you see why I'm kind of in a pickle. I run the risk of being damned if I do, damned if I don't....I'm forced to try and guess what the courts will do and then base my actions off that just to determine if I get to have health insurance next year or not....something that every other civilized country guarantees as a matter of right just for being a citizen.
F**k do I ever hate the healthcare financing system in this country!
