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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


How to Explain Much Lower Income for 2014?

By on | 6 Comments

Question: My estimated AGI (2 person household) for 2014 is $20,000. In 2012 I cashed out of an annuity and had an AGI of $70,000. I was considering cashing out of another annuity in 2013 which would lead to a similar AGI. Can I obtain the reduced rates (AGI $20,000) for my 2014 premiums? What's the best way to proceed?

Answer: Since your estimated 2014 income is way less than the 10% allowed without verification, your best option is to submit an affidavit explaining that you will not be cashing out another annuity in 2014. You should also submit documentation showing the annuity income. Feel free to cash another one for the 2013 tax year. It will not affect anything at this point. If you do so, you will probably have to do this again when you renew for 2015 to explain why your income in 2013 if higher than your 2015 estimate.

6 Comments

Thank you freelancer, this is really helpful. If CoveredCA had informed us that they will automatically verify 2014 estimated income against 2012 income to within 10% and for us to please explain the difference that would be much clearer. We could then provide clear evidence as to the differences we expect. Instead they keep asking (me anyway) for one of many pieces of information that only indirectly address the discrepancy.

Bob, when you sign up online the system can do a verification check against your 2012 return. It is automated and will not give Covered California details from your return, such as your actual AGI — but instead will return a confirmation as to whether the numbers you provided are consistent with the AGI on the return (probably within that 10% range)

I am self employed and have no clue as to what I will earn in 2014, so I just entered rounded numbers based on my 2012 return and was verified within minutes. I think if you are being asked to provide evidence, then they just want some sort of documentation.

As far as I know, the requirement to report changes of income in 2014 applies to everyone — you have to make that promise in order to get a subsidy whether you are verified or not.

Thank you for the guidance document and while it does mention 10% increase or decrease in regards to tax return data it does not mention which tax return data? Since tax return data was not requested, from me anyway, I would assume they could pull 2012 data since they have my SS#. If that was in fact the case then they should be asking us specifically to explain any increase or decrease outside the 10% . Instead I have been asked for evidence of my 2014 income that would verify the amount I used to enroll with. I was also asked to electronically sign a document attesting that I will report ANY changes to 2014 my income and/or living situation. So, I am not sure when and how this 10% should be addressed. Should we be proactively explaining 10% differences even if not specifically requested?

Bob — check this document: http://www.healthexchange.ca.gov/StakeHolders/Documents/(W)EE%205%2010%2013%20Regulations%20Webinar_FINALv%202.pdf

Read the section on income verification beginning at page 20; you will find the 10% reference on page 22

There are probably other references as well — I’m just sharing the first thing that came up for me with a Google search.

I have a question, regarding a single mother of 3 who made $35,300 in 2012 and only $15,000 in 2013 and is supposed to make more in 2014. She is 47 with a 22, 20 and 16 years old who all live with her , zip code 91302. The 22 years old made $4,000 in 2012 and about $25,000 in 2013. The mother is claiming him in her tax return and he also filled out a tax return and will be filling his own tax return as well in 2013. What should be done in this situation? Is she eligible for the subsidy? Can she still claim the 22 years old and include him in her application to receive a subsidy?

Can you please point me to the 10% rule you refer to? I was only asked to provide an estimate of 2014 income and evidence of where that income would come from (verification). No where on my application was I asked for my 2012 nor 2013 income nor if my 2014 income would greater than or less than 10% of previous incomes. BTW, I find these forums very helpful, much more so than any info I could get from CoveredCA directly. Thanks

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