Is Your Income Hurting Your Health Insurance Options? How to Navigate Income Counting for ACA Coverage

Income Calculation for ACA Health Insurance: A Case Study

Navigating the world of health insurance can be challenging, especially when it comes to understanding how income is calculated for Affordable Care Act (ACA) coverage. A recent case involving the Pennsylvania exchange website, Penney, highlights a common issue that can arise when applying for health insurance: how to handle income that is counted for Medicaid but not for the ACA marketplace.

In the Penney case, an individual was receiving alimony, which is typically not counted as income for ACA purposes. However, when the individual included alimony in their application, they were deemed ineligible for ACA subsidies and were advised to apply for Medicaid instead. Conversely, when they excluded alimony from their application, they were determined eligible for Medicaid. This situation created a “catch-22” for the individual.

Understanding the Difference Between Income for Medicaid and ACA

The discrepancy in income counting between Medicaid and ACA is due to different eligibility criteria and income calculation methods. Medicaid is a federally funded program that provides health insurance to low-income individuals and families. In general, Medicaid counts all forms of income, including alimony, wages, and investment income.

On the other hand, ACA health insurance is purchased through state-based marketplaces, such as Penney in Pennsylvania. ACA subsidies are available to individuals and families who meet certain income requirements. In calculating income for ACA purposes, certain types of income are excluded, such as alimony, child support, workers’ compensation, and Social Security disability benefits.

Navigating Income Issues When Applying for ACA Coverage

If you are applying for ACA health insurance and have income that is not counted for Medicaid but is counted for ACA purposes, it is important to understand how this income may affect your eligibility for subsidies. In such cases, you should:

Consult with a licensed agent: A licensed agent can help you determine which types of income to include and exclude on your application. They can also assist you in exploring other options, such as Medicaid or CHIP (Children’s Health Insurance Program).
Contact the marketplace directly: If you have questions about income counting or eligibility, you can contact your state’s ACA marketplace. They can provide you with additional information and support.
Consider household income: If you are applying for ACA coverage as part of a household, you should consider the combined income of all household members. Income from spouses, domestic partners, and other dependents may affect your eligibility.

Avoiding Common Income Counting Errors

To avoid confusion or delays in your application, it is crucial to remember the following tips:

Provide accurate information: Always provide accurate information on your ACA health insurance application. Misrepresentation or omission of income could result in loss of benefits or other penalties.
Exclude non-taxable income: Do not include income that is not subject to federal income tax, such as alimony, child support, and most forms of government assistance.
Seek professional advice: If you have questions or concerns about income counting, seek guidance from a licensed agent or contact your state’s ACA marketplace for assistance.