Should I overstate my income to qualify for Obamacare?
September 8, 2014 9:42 PM   Subscribe

I want to qualify for the Health Insurance Exchange in a state that doesnt have health care expansion. But I don't make the minimum amount to qualify. What would you do?

Here is my pertinent info:
* Full-time student.
* Community college doesn't offer health insurance plans.
* Too old to qualify on my parent's plans.
* To qualify on the Health Insurance Exchange, I need to make at least $11,490 this year.
* In order to state I make that much income, I would also have to file federal and state taxes for $11,490 income.
* Using a tax bracket calculator, wage income totaling that amount will have federal taxes of $1,271.25 and state taxes of $248.50 for 2014. Total = 1519.75
* If that was considered a health insurance premium it would be $126.65 per month for health insurance.

I have money saved up from working last year to cover taxes and health care premium for 2015. Is $127 per month a good value for health insurance? How should I report my income as: wage income? business income? other income?
posted by chrisdab to Health & Fitness (19 answers total) 3 users marked this as a favorite
Not sure about the lying aspect, but last time I looked a basic BlueCrossBlueShield plan in CA was half that ($60-$70/m). Obviously YMMV based on your stats, but I'd do more research first.
posted by jrobin276 at 10:00 PM on September 8, 2014

If your real income is $0, you'd be looking at about $150/mo in taxes if you claimed $11,500 in fake business income (wages might trigger an inquiry since the W2 or substitute W2 would be missing.) You can definitely do better just buying the insurance.

If you make some money and just need to get over the edge, and someone's supporting you, maybe you can have them pay you $500/month (or whatever) to help around the house, and then you pay them back for rent and groceries. You could claim that as business income and get the subsidy that way. But, I don't recommend that.
posted by michaelh at 10:50 PM on September 8, 2014 [1 favorite]

It would not be wise to lie on your tax return, even if it is in the IRS's favor. You can't really just make up income.

If your health situation allows, perhaps you can look into catastrophic plans? Hopefully just to tide you over until either this gap is closed or you have substantial income again. I've had similar coverage in the past for $60-90/mo (for like a $5k deductible plan, just to keep from financially ruining me if I had something go crazy wrong), though of course the whole system is changing at the moment, so such plans may be harder to find now.
posted by ktkt at 10:52 PM on September 8, 2014 [1 favorite]

Unfortunately, you are living in a state that is not expanding Medicaid. You don't have a lot of good options that do not involve fraud. On the other hand, you are no worse off than you were before Obamacare and also uninsured.

Lying about extra income is not recommended. The IRS is quite diligent about pursuing fake Schedule C income because of past experience with the Earned Income Tax Credit.

The numbers quoted above by jrobin are a bit optimistic. In California the cheapest plan for someone over age 27 with no subsidies is about $160 a month. You may find cheaper rates in your state, but you won't know until you have looked. There is nothing to prevent you from buying a policy on the government insurance exchange. You just won't be eligible for a subsidy because you don't earn enough money.

If you are under age 30, you are eligible for a slightly cheaper catastrophic plan with a high deductible, but typically these aren't much cheaper than the lower tier bronze plans and don't do much for you unless you are hit by a bus.

Worst case, if you are healthy and willing to chance going uncovered, you will be exempt from the non-insurance penalty since you are in a state that did not expand Medicaid.

You could work to get you and all of your college friends to vote out the sociopaths running your state. Or you could move to a more enlightened state that provides Medicaid.
posted by JackFlash at 11:03 PM on September 8, 2014 [3 favorites]

Do not lie about your income. Talk to your student body president about having a meeting for people in your situation. Discuss options. You could have a rally and protest your state's anti-poor people agenda. You could petition the campus to provide insurance. You could band together and get a group rate. Whatever you do, involve the media.
posted by myselfasme at 4:25 AM on September 9, 2014 [3 favorites]

I'm confused as to why Medicaid isn't an option here. If you're not working and have no income you should qualify irregardless of whether your state has adopted the Medicaid expansion, which was designed to cover people whose income falls between the Medicaid and State Exchange income requirements. Super cheap health insurance sounds like a better bet than lying to the IRS any day of the week.
posted by fox problems at 5:33 AM on September 9, 2014

lying on a an application to receive benefits that you are not eligible for is known as fraud. It may seem innocent to you but the judge would probably not agree. I wouldn't do it.
posted by The Violet Cypher at 5:46 AM on September 9, 2014 [1 favorite]

I would definitely call the exchange and see if you qualify for Medicaid, which you can apply for at any time (you don't have to wait for open enrollment). In some ways, Medicaid is better than having a commercial plan because there's generally no patient responsibility; you're not going to get stuck with thousands of dollars of deductible, coinsurance, etc. You definitely shouldn't lie about your income to the exchange or to the IRS, because they will catch you.
posted by ThePinkSuperhero at 6:00 AM on September 9, 2014 [3 favorites]

Others have addressed the fact that you shouldn't lie to get around the law, even if the law is nonsensical. I'd add that you should also vote, to elect people who will change the law.
posted by alms at 6:51 AM on September 9, 2014 [1 favorite]

Echoing to check on Medicaid -- under the new rules, about half the states expanded it to include students who earn up to to 133 percent of the federal poverty level (which is $11,670, so you'd certainly qualify).
posted by susanvance at 7:19 AM on September 9, 2014

I'm confused as to why Medicaid isn't an option here.

Traditional Medicaid has never covered adults without dependent children, no matter how poor you are. That is still the case in states that did not expand Medicaid under Obamacare. The Medicaid expansion is paid 100% by the federal government for the first three years, gradually tapering to 90% by 2020. This is absolutely free money from the federal government that some states are refusing to pass on to poor people.
posted by JackFlash at 7:19 AM on September 9, 2014 [7 favorites]

Just to be clear, while I don't recommend lying, I extra-don't recommend claiming EITC. A profitable Schedule C with no EITC is not particularly audit-risky, but a Schedule C with EITC is a trigger, and you can get in pretty big trouble even though EITC is only a couple hundred for a childless person.

This is all pedantic and in regards to your specific question about the best way to claim false income on a tax return - I'm not saying to do it.
posted by michaelh at 8:01 AM on September 9, 2014

Have you called 800 706 7893 to ask questions and find resources in your state?
posted by Lesser Shrew at 8:20 AM on September 9, 2014

Response by poster: I forgot to mention that I did inquire into whether or not I qualify for Medicaid. As a single adult with no family and not pregnant, I do not qualify for Medicaid no matter how little I earn.

Since having medical insurance this year under the ACA, I have used it to get my first doctor's physical in years, found out I have diabetes and am on medication to control it. If I lose it or get catastrophic insurance, I will lose the ability to get preventative care.

As far as resources for the uninsured, there are free community clinics which are an option but that leaves me with the option of using the free clinic and forgoing insurance or getting catastrophic insurance and not benefiting from preventative care a free clinic provides.
posted by chrisdab at 9:06 AM on September 9, 2014

If you do decide to overstate your income, be aware that will ask you for proof of income if your previous year's tax return doesn't match your application. You generally don't have to provide it immediately, but they can cancel your subsidy and require you to pay in full if you don't have sufficient proof.
posted by bradf at 9:09 AM on September 9, 2014 [1 favorite]

Yikes, that is difficult. I would call the number and try to find a human to talk to. My understanding is that there are Obamacare subsidies available for private plans through

You can also deduct medical expenses over 10% of your income from your taxes.
posted by susanvance at 10:11 AM on September 9, 2014

My understanding is that there are Obamacare subsidies available for private plans through

There are no special subsidies available through ehealthinsurance. They are simply referring to the subsidies available through Obamacare for which the OP is ineligible.

You can also deduct medical expenses over 10% of your income from your taxes.

The OP has little or no income so has no taxes to deduct. Further, the medical deduction only helps if your total Schedule A deductions are greater than the standard deduction of $6200 for a single person.
posted by JackFlash at 10:40 AM on September 9, 2014 [1 favorite]

There are programs to help those without insurance, or without pharmacy coverage, to get necessary medications for free (or at a reduced cost).

Depending on what your medication is, I'd contact one of those programs right away. Diabetes is nothing to mess around with. They're usually associated with the company that makes the medication.
posted by spinifex23 at 11:12 AM on September 9, 2014

Definitely don't make up income. If you report an income that is at least 10 percent different from last year's tax return, you will have to provide proof of income. The IRS will also make you pay back any tax credits you got that you shouldn't have.
posted by ultraviolet catastrophe at 12:03 PM on September 9, 2014

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