2014 Federal Poverty Guidelines Released

Under ACA, eligibility for Medicaid and premium-reduction subsidies for exchange policies is governed by the poverty guidelines for the policy year.   The 2014 guidelines are now available and can be viewed at: http://familiesusa.org/product/federal-poverty-guidelines

In the Medicaid expansion states, individuals and families who fall under 133% of the  poverty line will receive coverage through Medicaid.   Those whose incomes are between 133% and 400% are eligible for subsidies and/or a tax credit when purchasing insurance through an exchange.

In states that have not expanded Medicaid,  individuals and families are eligible to purchase subsidized insurance from an exchange so long as their anticipated income is at or above the 100% poverty level.

If a taxpayer is approved to receive a subsidy by an exchange, but their total income for the year as reported on their 2014 return falls below the 100% level, their tax credit will be computed as the value that would apply if their income was exactly 100% of the FPL. 

2014 Federal Poverty Guidelines

 

 Household Size

 100%

 133%

 150%

200%

250%

 300%

400%

 1

$11,670

$15,521

$17,505

$23,340

$29,175

$35,010

$46,680

 2

15,730

 20,921

23,595

  31,460

39,325

47,190

62,920

 3

19,790

 26,321

29,685

  39,580

49,475

59,370

79,160

 4

23,850

 31,721

35,775

  47,700

59,625

71,550

95,400

 5

27,910

 37,120

41,865

  55,820

69,775

83,730

111,640

 6

31,970

 42,520

47,955

  63,940

79,925

95,910

127,880

 7

36,030

 47,920

54,045

  72,060

90,075

108,090

144,120

 8

40,090

 53,320

60,135

  80,180

100,225

120,270

160,360

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8 thoughts on “2014 Federal Poverty Guidelines Released

  1. Although the guidelines are for 2014, the subisdies and tax credits for ACA and Covered California apply to the 2013 rates. Thus if a single person earns over $45,960 you receive no subisdy. Am I wrong?

  2. Steve, eligibility for advance tax credit subsidies for 2014 were determined based on the 2013 federal poverty guidelines. That is, any time you submit an application to an exchanged during an open enrollment period, the guidelines for the previous year will govern.

    But the law specifies subsidy eligibility is determined by the guidelines for “the taxable year” — so the 2014 tax year should equate to 2014 poverty guidelines. See: http://www.law.cornell.edu/cfr/text/26/1.36B-2

    What that probably means in theory simply that there is a little wiggle room at the end of the year. If you qualified for a subsidy based on estimating your income to be $45,000 and then it turns out at the end of 2014 that your income is $46,500 — you’ll be ok.

    I don’t know how “taxable year” can be interpreted as anything other than the year in which the insurance premiums are actually paid.

    But I think this means that there will always be a slightly different cutoff involved between signing up for an advance tax credit vs. paying full cost and the claiming the tax credit at the time that taxes are filed.

    Essentially there is a difference between the process for the “advance” credit and the process of reconciling the credits at the end of the tax year. See http://www.law.cornell.edu/cfr/text/26/1.36B-4

    As this is the first year that this process has ever occurred, I could be mistaken- but in general I think that it simply means that some people whose income is slightly above the cutoff for tax credits at the time they apply for insurance will find out later that they have a nice tax refund coming.

    • Freelancer, thanks for the reply. I sincerely hope you are right, but the other expert I consulted with Nancy (at consumer reports) disagrees with you.
      Through a strange quirk, I am eligible and receiving 26 weeks of uneployment insurance and thus increasing my MAGI $11,700 and probalby puts me over the 400% FPL limit. It will be close. I was getting a $337 a month subsidy, but with the change notified Covered Ca that my MAGI will now be $46,500 a thus eliminated the subsidy for the remaining 6 moths of the year.

      • Have you considered any possible AGI-reducing reductions you might be entitled to? The one that comes to mind for me is simply making a contribution to an ordinary IRA. You are probably right to pass on the subsidy…. but I do think that there’s still a good chance you may still qualify for a refund.

        I do agree that the landscape is uncertain and it will remain so (in my mind) until we have 2014 tax forms to work with. I can read and interpret laws and regulations, but IRS could have a different interpretation.

        I’d add that Nancy Metcalf at Consumer Reports is a journalist, not an “expert” — this really is a legal, tax question.

        That’s why I linked to the actual regulation. I can’t tell you the answer with 100% certainty, but I can point to the statute or regulation that forms the basis for my opinion.

  3. Thanks Freelancer:

    Yes, I am aware of the IRA deduction and the HSA deuction. The HSA turns out to be a quadruple victory. Lower my Taxes, lower my MAGI, use pre tax money to pay medical expenses and since I am now receiving Unemployment Benefits I can use HSA funds to pay for insurance premiums. WOW! We will find out using the 2014 tax forms. One last difficult question, vis-a-vis Medicare.

    I turn 65 in August, 2015 and become eligible for Medicare and will terminate Covered California. If I opt to start receiving Social Security benefits in August 2015, are those benefits reflected in my MAGI for the taxible year and therefore affecting the tax credit subsidies received Jan-July 2015?

    If yes and I am healthy, I may elect for another Covered California HSA plan in 2015, sign up for Medicare and Social Security to begin November, 2015 (last month I can sign up). Covered California informed me termination of Coverage is something I must initiate and becomes effective not upon reaching age 65 but when I begin receiving Medicare. The same scenario applies with HSA contributions. Again thanks for your help.

    Steve

    • Steve, because the MAGI is based on total income for the year, I believe that Social Security benefits received in 2015 will count toward your 2015 MAGI. Keep in mind that you are not eligible for full SS retirement benefits until age 66 – if you start taking your benefits at age 65, there is a 13.3% reduction in benefit amount. See: http://www.ssa.gov/retire2/retirechart.htm

      Even if you do retire early, I believe you can defer payment until a later date– so you could retire at age 65 but opt to begin the Social Security payments in January of 2016. Of course that assumes that you aren’t depending on SS income to meet your basic needs. This page has a chart that illustrates the breakeven point for those who opt to to take reduced benefits early on:
      http://www.schwab.com/public/schwab/nn/articles/When-Should-You-Take-Social-Security

      The HSA contribution needs to be prorated based on the number of months you are covered by the HSA plan. For example, if you are covered for 8 months of the year, then you can make and deduct a contribution equal to 8/12 (or 2/3) of the total allowable basic contribution for the year. The $1000 contribution for individuals over age 55 does not have to be prorated — so, for example, for 2104 the allowable contribution is $3300 plus $1000 catchup.

      A 65 year old covered by an HSA for 8 months would be able to deposit $2200 (2/3 of $3300) – plus $1000. In that case, the math works out to the same as the full amount without catchup contribution, but that’s just coincidental. If instead the person had the HSA for 9 months, the amount of the contribution $2,475, plus $1,000 catchup — or $3,475 in all.

      Here’s a web site with an HSA contribution calculator:
      http://www.dinkytown.net/java/HSAContribution.html

      • Thanks again, Freelancer. You advise is extremely valuable, Thanks to you I just learned the $1000 catch up contribution to an HSA does not have to be prorated.

        Back when I opened my HSA plan in 2005, the proration for tax purposes was different. In those days if you held an HSA account for 9 months you were allowed the maximum contribution for the entire year.

        I will probably opt for Medicare in August, 2015 and opt for Social security in Janaury 2016. Depends on finances. I am basically retired living off savings and unemployment insurance.
        Variables are how long savings last, projected MAGI income for 2015 and state of health. If it looks like I will exceed the $46,680 tax credit subsidy threshold by a small amount (Might be higher in 2015 if your assumption is correct), I may elect to keep the HSA for 10 months.
        FYI, I believe HSA contributions increase to $3400 in 2015 plus $1000 catchup.

  4. Freelancer:

    It may be that the 2013 FPL Levels will be used to reconcile 2014 Taxes: See below:

    The IRS will use the 2013 FPL to determine eligibility for the premium tax credit for the 2014 tax year. In other words, when you are preparing your 2014 tax forms in early 2015, you will be using IRS instructions that will refer to the 2013 FPL (in your example, 400% FPL will be $45,960 for an individual).

    The IRS website “Questions and Answers on the Premium Tax Credit” provides more info but the relevant sentences are under item 6 (“What are the income limits?”):

    http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-the-Premium-Tax-Credit

    “For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period. As a result, the tax credit for 2014 will be based on the 2013 guidelines. The tax credit for 2015 will be based on the 2014 guidelines. Use of the 2014 federal poverty guidelines (FPL) for the 2015 premium tax credit eligibility determinations will begin on the first day of the open enrollment period for 2015 coverage, which is November 15, 2014.”

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