Understanding Income Requirements and Health Coverage under the ACA

The Affordable Care Act (ACA), also known as Obamacare, aims to provide accessible and affordable health insurance coverage to all Americans. Understanding how your income affects your eligibility for ACA coverage is crucial for making informed decisions about your healthcare options.

Eligibility Based on Income

ACA subsidies are available to individuals and families whose household income falls within specific income ranges. These ranges are based on the Federal Poverty Level (FPL), which measures the minimum income needed to maintain a basic standard of living.

In Texas, which has not expanded Medicaid, ACA subsidies are available to individuals and families with incomes between 100% and 400% of the FPL. For a single individual in 2023, this translates to:

Minimum income for subsidies: $12,880 (100% of FPL)
Maximum income for subsidies: $51,520 (400% of FPL)

Income Estimation and Subsidy Calculation

Your income for ACA eligibility purposes is based on your projected annual income for the plan year (calendar year). This estimate is not based on your previous year’s income. When you apply for ACA coverage, you will need to provide an estimate of your income.

The ACA uses a Modified Adjusted Gross Income (MAGI) to calculate your subsidy. This number is similar to your income reported on your tax return but may be higher or lower depending on certain deductions and income adjustments.

Special Enrollment Periods

If you lose job-based health insurance, you may qualify for a special enrollment period to enroll in ACA coverage. This period typically lasts 60 days after the loss of coverage.

Your Case

Based on your situation, it appears that you may be eligible for ACA subsidies if your projected income for the rest of the year falls below 400% of the FPL. To estimate your income, you can consider the following:

Your current paychecks until the date you leave your job
Any expected income from investments, dividends, or other sources

You can use the Healthcare.gov website to estimate your subsidy and apply for ACA coverage. It’s important to provide accurate income information to avoid potential penalties or having to repay subsidies later.

Additional Considerations

Roth IRA rollover: Rolling over funds from your 401(k) to a Roth IRA typically counts as income and may affect your ACA eligibility.
Advance Premium Tax Credits (APTCs): APTCs are paid directly to your insurance company to lower your monthly premiums. You can choose to receive these credits upfront or have them applied later during tax time.
Over-income penalties: If your income exceeds 400% of the FPL, you may have to pay back the subsidies you received.

Seeking Professional Guidance

Navigating ACA coverage can be complex. It’s advisable to consult with a licensed insurance agent or tax professional for personalized guidance and assistance.