Companion to the lesson "Estimating Income Without a Job"
1. Build the Estimate
Start with committed money, add a conservative haircut of pipeline you can actually see, subtract documented expenses you know you will incur. Write it down with its pieces, because you will update it, and updates need the original.
Piece
Committed $
Pipeline haircut $ (conservative)
Wages through your last day
committed
Severance or payout
committed
Unemployment benefits (expected weeks)
committed
Spouse's salary (if filing jointly)
committed
Contracted revenue / retainers
Visible pipeline x conservative haircut
Known documented expenses (subtract; net, always)
Estimated MAGI for the calendar year
$
2. Why the Estimate Has Teeth (2026 rules)
The repayment caps are gone for 2026 coverage (Public Law 119-21): every excess dollar of advance subsidy is repaid at tax time. Underestimate near the cliff and the bill is real money: a single 40-year-old who estimated $60,000, collected the subsidy all year, and landed at $66,000 owes back roughly $1,500, on top of full-price premiums ahead. The safe error is high: overestimate, take no subsidy, finish low, and the correct subsidy arrives as a refundable credit. Exception: if actual income would have made the household Medicaid/CHIP eligible, no repayment.
Miss size (from the tax-preparer literature)
Consequence
$2,000 over an $80,375 estimate
repaid $325
$2,000 under the same estimate
collected $349 more
Any miss that crosses the cliff line ($62,600 single / $84,600 for two)
full repayment of advance credit; not capped
3. Monthly Update Triggers (two calendar alarms)
Trigger
Action
Done ☐
A big contract lands; year trending over the cliff
Update the marketplace application that week; raising the estimate reduces or stops the advance subsidy and shrinks the repayment to zero
☐
The business stalls; year trending toward the Medicaid line
Update it too; eligibility moves with the fact, and the marketplace routes you correctly if you tell it
☐
4. Cliff-Distance Tracker (for December decisions)
Month
Updated estimate $
Cliff line $
Distance $
Side of the line
Action taken
62,600 / 84,600
62,600 / 84,600
62,600 / 84,600
November
62,600 / 84,600
By November you usually know. If the year is landing over: choose a cheaper metal, price the spouse plan, or hold the COBRA option differently, inside open enrollment. Income timing near the cliff is legal to manage (deferring an invoice into January, accelerating a planned equipment purchase) and illegal to misreport: the first is tax planning, the second is fraud.