Last week, Butch asked a great question:
How are income and subsidy calculated if you’ve been laid off?
The short answer is that it depends.
Now let’s get to the longer answer.
For Medicaid and CHIP eligibility (Expansion and non-expansion) income is calculated on a monthly basis. If you got laid off in March and were paid through the 15th, you would use your last paycheck plus any unemployment insurance you can collect for the month of March. If you apply in April, you’ll just use any unemployment insurance that you collect.
Now if you are going onto the Exchange for ACA subsidized insurance, income is determined on an annual basis for “modified adjusted gross income (MAGI)”. MAGI does not include Supplemental Security Income (SSI) from Social Security. MAGI is calculated on an annual basis. Subsidies are allocated based on estimated MAGI at the start of the year. At the end of the year, the IRS will reconcile actual income versus projected income. If you overestimate your income and made too little, the IRS will give you a bigger tax refund in the spring of the following year. If you estimate too low and make more than you thought, the IRS will clawback some or all of the excess subsidies.
No one expected million person lay-off weeks at the start of the year.
So if you are applying for a Special Enrollment Period for an ACA plan, add up your January through lay-off income. Then estimate what you think you’ll get from unemployment for the rest of the year until you think you can go back to work at whatever wage is available. I have no idea how to estimate when people will be going back to work and at what wage levels. It is a fraught calculation. As soon as your situation changes (hopefully for the better), update your income on either your state based marketplace or Healthcare.gov account so that your subsidy will reflect your reality as best you can guess.
If you have questions, let’s talk in the comments.