Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Oct. 05--[Editor's note: With significant portions of the Affordable Care Act to be implemented starting on Jan. 1, 2014, the Kokomo Tribune will run a series that explores how the personal responsibility mandate, the expansion of Medicaid and the new health exchanges will affect consumers.]
Q: If I retire Feb. 1, 2014, how will I be able to show that my income has been reduced from my salary of 2013? When I enroll for coverage to begin March 1, 2014, how will I document my retirement income for 2014, which will be less than my salary in 2013? Will I have to show statements from my pensions and Social Security?
A: The Affordable Care Act doesn't require an individual to prove their income has decreased when purchasing health insurance through the Marketplace exchanges.
Jennifer Lyons, a financial planner with Bucheri McCarty & Metz said if a person has a decrease in income in the current year that would allow them to qualify for a premium assistance credit or cost-sharing-reduction subsidy, they can submit current year earnings when completing the application.
"The Marketplace may ask for additional documentation for the claim of reduced income, including pay stubs, unemployment benefits and pension plan substantiation," she said.
Kathy Young, CEO of St. Joseph Hospital, said if a person retires before the age of 65, they may use the Marketplace to buy a plan that meets their needs.
Open enrollment for the Marketplace began Tuesday and runs through March 31, 2014.
"If you retire on Feb. 1, 2014, you'll have time to purchase insurance before the open enrollment period ends," Young said. "Depending on your income and family size, you may qualify to get lower costs on your monthly premiums and out-of-pocket costs."
When applying for lower costs in the Marketplace, a person needs to provide household income now and an estimate for 2014, Young said.
"You won't have to prove your income will be reduced before purchasing coverage in the Health Insurance Marketplace as the Affordable Care Act provides a new tax credit to help you afford the health coverage purchased," she said. "Advance payments of the tax credit can be used right away to lower your monthly premium costs."
Young added a cautionary note, stating if you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. If the amount of advance credit you get for the year is less than the tax credit you're due, you'll get the difference as a refundable credit when you file your federal income tax return for 2014. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return for 2014.
If you retire after you're 65 and have Medicare, you don't need to purchase coverage in the Marketplace, she said. If you have Medicare, you are considered covered.
Readers can submit their questions on the Affordable Care Act to Enterprise Editor Ken de la Bastide at firstname.lastname@example.org or by mailing them to Kokomo Tribune, care of Ken de la Bastide, 300 North Union St., Kokomo, IN, 46901.
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