My understanding is that individuals with income < FPL don't qualify for ACA subsidies. I have made around 10-15k this year from a previous job, but currently don't have a job (by choice, but I intend to start a job in a few months that should pay 100k/yr at the minimum). My taxable investments yield around 5-8k in ordinary dividends and 5k in qualified dividends annually. I also have tens of thousands of dollars in unrealized long-term capital gains that I could potentially liquidate. Based on a quick query, the federal poverty level (FPL) is $12,140. I file taxes as a single individual.

My confusion concerns what exactly I can count as income to qualify for the subsidy, what time frame resolution they look at (do I have to reach the FPL every month?), and how 'random income' is treated.

  • What BrenBarn said (see below) plus: If your state hasn’t expanded Medicaid, your income is below the federal poverty level, and you don't qualify for Medicaid under your state's current rules, you'll fall into a gap. You won’t qualify for either health insurance savings program. So realize some capital gains to get above the FPL. – Bob Baerker Jul 19 '18 at 13:26

The basic answer is that dividends, capital gains, and other "random income" will generally count as income for the purposes of determining ACA subsidies. So if you have lots of dividend income it will likely push you over the poverty line.

The ACA subsidies are calculated based on your Modified Adjusted Gross Income (MAGI). An overview of the calculation of MAGI can be found here. In essence, you take all of your income from all sources, which is gross income; subtract a small number of "above-the-line" deductions (such as deductible IRA contributions) to get Adjusted Gross Income; then add back in some of those deductions to get MAGI. In general the adjustments to get AGI and MAGI don't involve special treatment of dividend or investment income, so that income will be counted "as-is" for the purposes of determining subsidy eligibility.

  • Regarding the temporal resolution part, I think you estimate the income (isn't perfect since there is some random income) and then you settle the difference when you file taxes. Please let me know if this is incorrect. – Wuschelbeutel Kartoffelhuhn Jul 19 '18 at 19:40

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