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View Poll Results: Will you try to get the ACA subsidy?
Yes, the thousands saved would be worth the reduced budget 80 42.55%
No, the threshold is too low for the planned budget 23 12.23%
Undecided, still looking for more info. on how the subsidies would work 43 22.87%
Don't plan to use ACA plan, have alternative health care 42 22.34%
Voters: 188. You may not vote on this poll

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Old 04-02-2013, 02:05 PM   #61
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gotta be careful of this though

Millions Could Get Surprise Tax Bills Under ‘Obamacare’ If They Don’t Accurately Project Their Income « CBS DC
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Old 04-02-2013, 05:08 PM   #62
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Originally Posted by gerrym51 View Post
this is a misconception i keep reading. the subsidy is NOT for a silver plan. it is the plans that are coverd for subsidys have the Dollar value of the silver plan.
it is NOT the silver plan perse
But the cost is based on the Silver plan, ie subsidy remains the same but the gold plan will cost more.
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Old 04-02-2013, 05:53 PM   #63
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Won't be a problem here now that I'm semi-FIREd, and 2014 is just in time. Unfortunately I understand we'll be based on 2012 salaries which are likely to be 2-3x what 2014's will be...
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Old 04-02-2013, 05:57 PM   #64
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Won't be a problem here now that I'm semi-FIREd, and 2014 is just in time. Unfortunately I understand we'll be based on 2012 salaries which are likely to be 2-3x what 2014's will be...

actually 2014 income is 2014 income.you may have to pay more upfront will get tax credits back
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Old 04-02-2013, 07:24 PM   #65
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actually 2014 income is 2014 income.you may have to pay more upfront will get tax credits back
Well, yes, whatever I "overpay" based on 2012 income comes back, but you still have to spend the money up front.
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Old 04-02-2013, 07:51 PM   #66
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Well, yes, whatever I "overpay" based on 2012 income comes back, but you still have to spend the money up front.
you spoke about wifes insurance-you can only get tax credits for insurance bought from exchange
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Old 04-02-2013, 07:59 PM   #67
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Man, this is the most complicated thing ever. its like trying to build a piano where everyone in the shop is working from a different set of plans.

My semi-hand crafted retirement plan has been sent into a disassembulator. (recent medical issues, loss of retiree healthcare from Megacorp & having too much in a regular IRA vs taxable accounts)

The Brits & Canadians have to be enjoying this show ... yikes
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Old 04-02-2013, 08:00 PM   #68
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I'm in the same boat. I will only have about $10,000 annual income in 2014, from pension and interest (if still not working) and I will have to add about $5,xxx income to get enough income to qualify for subsidies. In my state they do not plan to "expand" medicaid for Obamacare, so I would still be under the existing state rules and would not qualify for medicaid due to my assets, even with my low income of $10,000 and therefore will have to add the $5,xxx to get up to the minimum income required for Ocare, and the subsidies.
So Medicaid (at least in some states) uses assets in part to determine eligibility, but Obamacare will only use current income? Is that right?
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Old 04-03-2013, 07:15 AM   #69
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So Medicaid (at least in some states) uses assets in part to determine eligibility, but Obamacare will only use current income? Is that right?
Right. Ocare will only use MAGI (Modified Adjusted Gross Income), which has been defined here often. And Ocare will not cover folks (individuals) with MAGI below $15,xxx. Those folks (me) can apply for their state's medicaid program.

All the talk about states choosing or not choosing to "expand" their Medicaid programs for Ocare is about states removing the assets test for Medicaid, I believe.

note: Coffee hasn't kicked in yet. Someone clarify if I am unclear.
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Old 04-03-2013, 07:26 AM   #70
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Also, IIRC AGI is after deductible IRA contributions and HSA contributions, so if one's O-MAGI is a bit over 400% FPL you could make additional IRA or HSA contributions to reduce your O-MAGI below 400% FPL (assuming you are eligible). Right?
I dunno....I can't find it now, but I remember early on that in the case of O'Care, IRA contributions are included in the O-MAGI. It was some sort of exclusion from the normal definition of MAGI, specifically to thwart the scenario above.

Would love to be wrong on this one.
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Old 04-03-2013, 07:55 AM   #71
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I find the OP question kind of funny in a way it is much harder for me to get above the threshold rather than under it.
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Old 04-03-2013, 10:37 AM   #72
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you spoke about wifes insurance-you can only get tax credits for insurance bought from exchange
But in 2014, we will be eligible for the exchange since that employer group insurance will cost much more than 9.5% of our 2014 income.
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Old 04-03-2013, 11:01 AM   #73
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I find the OP question kind of funny in a way it is much harder for me to get above the threshold rather than under it.
In my case it's not quite that stark - but for a family of 4 - the income threshold is around $91k. Which is over our expected budget.

I have to agree that this shifts the pay off the mortgage thread - less income needed if you don't have to service a mortgage... so the cost of the mortgage might need to include the cost of losing the health care subsidies.
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Old 04-03-2013, 11:02 AM   #74
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I have to agree that this shifts the pay off the mortgage thread - less income needed if you don't have to service a mortgage... so the cost of the mortgage might need to include the cost of losing the health care subsidies.
This is something I know I've mentioned here a few times in the past -- it looks like we're entering an era where financial planning means not only growing your nest egg, but also engineering your finances to live comfortably on less income. This would put more of an emphasis on getting out of debt and reducing your needed cash flow.

In the "brave new world" reducing your need for income will need to be considered along side growing your portfolio *and* arranging your portfolio in a way that minimizes larger RMDs.
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Old 04-03-2013, 12:27 PM   #75
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We aren't really trying to get the ER income below the 400% FPL threshold because we have 5 in the household and the threshold is pretty high. We do, however, plan on receiving a very significant subsidy for health insurance due to ACA, and we will probably shape the taxable vs non-taxable income stream to maximize ACA subsidies (among other tax planning strategies).

I consider the loss of ACA subsidies as your income increases an effective increase in marginal tax rate. Even though we will have a MAGI barely above poverty, our effective marginal tax rate will be ~55% during ER.
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Old 04-03-2013, 12:56 PM   #76
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I really do not thing this is a big deal. It is really paying back what should not have been yours in the first place and not a tax. It like saying having a withholding rate that is too low on your salary/bonus and then having to pay the IRS in April of next year. Yes, people have to know how much they will likely owe IRS if they paid too little in witholding. Millions of people deal this year in and year out. I see Obamacare tax credits/subsidies the same way.
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Old 04-03-2013, 01:03 PM   #77
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I really do not thing this is a big deal. It is really paying back what should not have been yours in the first place and not a tax. It like saying having a withholding rate that is too low on your salary/bonus and then having to pay the IRS in April of next year. Yes, people have to know how much they will likely owe IRS if they paid too little in witholding. Millions of people deal this year in and year out. I see Obamacare tax credits/subsidies the same way.
it's no big deal to people with mucho dinero like you.

but to many americans on a tight budget it could.
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Old 04-03-2013, 01:15 PM   #78
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I really do not thing this is a big deal. It is really paying back what should not have been yours in the first place and not a tax.
I agree it's not a BIG deal, but it's still more hassle and complexity. I kinda like to think my taxes are a "done deal" when the year is over, but this keeps the backward-looking window open longer.
And it's not just a matter of paying tax on the "extra" income. As we've been discussing, the "extra" income can drive up your MAGI by that extra critical dollar and over the cliff so you lose thousands of dollars in subsidies. And it can force some folks to be taxed on Cap Gains that would have been tax free under other scenarios. In those cases, it is a big deal.
Since the government is telling me to use my 2012 income as the estimated base for the subsidies, or to foretell the unforeseeable future, I'd think it more proper if any "extra" they paid me as a result was taxed at my marginal rate but >not< added to my MAGI or taxable income for purposes of all these other (government-imposed) computations.
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Old 04-03-2013, 01:34 PM   #79
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just some info-downloadable copy of the instruction form for online entry


To Sign Up For Obamacare, Start Filling Out The Forms Now (And Hire A Good Accountant) - Forbes


actual link to instruction form


http://waysandmeans.house.gov/upload...s_1_031313.pdf
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Old 04-03-2013, 02:10 PM   #80
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I really do not thing this is a big deal. It is really paying back what should not have been yours in the first place and not a tax. It like saying having a withholding rate that is too low on your salary/bonus and then having to pay the IRS in April of next year. Yes, people have to know how much they will likely owe IRS if they paid too little in witholding. Millions of people deal this year in and year out. I see Obamacare tax credits/subsidies the same way.
While your understanding of the reconciliation process is correct, there is a important aspect of this that you and samclem are not considering in thinking that it is not a big deal.

Let's say you are a 40 yo married couple and have MAGI of $62k a year and pretty much live paycheck to paycheck. As a result of your income you are eligible for a subsidy of $658 a month or $7,896 a year. Around Christmas the boss approaches you and says that things are really busy at the shop with the holiday season and asks if you can do some overtime. You think that a little more green in your pocket for the holidays would be nice so you say sure and put in the OT and earn an additional $500. Then a couple months later you fill out your tax return forms and discover that as a result of that $500 of overtime pay that you are not eligible for the subsidy because you are just a tad over 400% FPL and that you owe the feds $7,896 of subsidy you received last year (which BTW is 12.6% of your gross income).

WADR, if you were in their shoes, I think you would think it is a really BIG deal. I would.
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