Poll: Who's going to try to get ACA subsidies by staying under the threshold?

[MichaelB]

Quote:

Originally Posted by pb4uski In the definition below, it is AGI + foreign earned income excluded under section 911 + tax-exempt interest.

You got it. No chance of excluding any type of IRA withdrawal or conversion. Zero. They also add back any part of SS income that was excluded from AGI.

[pb4uski]

So Obamacare MAGI = Tax return AGI + any excluded foreign earned income + tax-exempt interest + any excluded SS?

If so, then IIRC all those numbers are easily determinable once you have completed your 1040 so it should be an easy computation. Make sense?

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?

[Live And Learn]

Quote:

Originally Posted by FIREd Assuming there will be no difference in the quality of care received by people who are subsidized (and it looks like there won't be), then yes, I will do my best to keep my income below the threshold.

+1
ACA is my "plan B". I am currently covered by DH's insurance. DH will work another 8 years. Assuming that I can get the same level of care / doctors that I am getting under DH's current plan I may look to keep my MAGI low enough to get a subsidy for the 7 years between when DH retires and when I become eligible for Medicare.

Having said all that - for planning purposes I've assumed I am going to need to pay full cost for healthcare.

[teejayevans]

My understanding is if you have access for employer insurance you won't qualify. Also remember the numbers are for a Silver plan, Gold plans will be more $ so even it's cheaper you may be better off with individual insurance if you are healthy
TJ

[MichaelB]

Quote:

Originally Posted by pb4uski So Obamacare MAGI = Tax return AGI + any excluded foreign earned income + tax-exempt interest + any excluded SS? If so, then IIRC all those numbers are easily determinable once you have completed your 1040 so it should be an easy computation. Make sense? 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?

That's what it looks like to me. 1040 line 37 plus the add backs.

[rbmrtn]

There seems to be different definitions of MAGI depending on what it is applied to. There was an IRS bulletin on the ACA

Internal Revenue Bulletin - June 4, 2012 - REG-119632-11

It defines MAGI as

MAGI is defined under section 36B as the taxpayer’s adjusted gross income defined under section 62, increased by three components: (1) any amount excluded from gross income under section 911, (2) any amount of interest received or accrued by the taxpayer during the taxable year that is exempt from tax, and (3) the amount of social security benefits of the taxpayer excluded from gross income under section 86 for the tax year.

[gerrym51]

Quote:

Originally Posted by teejayevans My understanding is if you have access for employer insurance you won't qualify. Also remember the numbers are for a Silver plan, Gold plans will be more $ so even it's cheaper you may be better off with individual insurance if you are healthy TJ

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

[pb4uski]

Quote:

Originally Posted by rbmrtn There seems to be different definitions of MAGI depending on what it is applied to. There was an IRS bulletin on the ACA Internal Revenue Bulletin - June 4, 2012 - REG-119632-11 It defines MAGI as MAGI is defined under section 36B as the taxpayer’s adjusted gross income defined under section 62, increased by three components: (1) any amount excluded from gross income under section 911, (2) any amount of interest received or accrued by the taxpayer during the taxable year that is exempt from tax, and (3) the amount of social security benefits of the taxpayer excluded from gross income under section 86 for the tax year.

That definition is the same as what we are saying.

O-MAGI = Tax return AGI + any excluded foreign earned income + tax-exempt interest + any excluded SS

I agree with you that the definition of MAGI for Roth eligibility is different. I'll call that R-MAGI from here on.

[golfnut]

Quote:

Originally Posted by teejayevans My understanding is if you have access for employer insurance you won't qualify. Also remember the numbers are for a Silver plan, Gold plans will be more $ so even it's cheaper you may be better off with individual insurance if you are healthy TJ

I (along with my family) are covered via my former employer's retiree plan. Although it is subsidized, it is expensive. Does this mean I cannot take advantage of the exchanges/subsidies?

Golfnut

[jj]

Quote:

Originally Posted by golfnut I (along with my family) are covered via my former employer's retiree plan. Although it is subsidized, it is expensive. Does this mean I cannot take advantage of the exchanges/subsidies? Golfnut

Same here... our family HI premiums are almost $24k pa, (mom, dad, 4 kids). If we gave up this very expensive non- subsidized health insurance could we use the exchanges and garner a subsidy?

jj

[MichaelB]

Quote:

Originally Posted by pb4uski That definition is the same as what we are saying. O-MAGI = Tax return AGI + any excluded foreign earned income + tax-exempt interest + any excluded SS

+1

Good re-name of the magi.

[golfnut]

Quote:

Originally Posted by jj Same here... our family HI premiums are almost $24k pa, (mom, dad, 4 kids). If we gave up this very expensive non- subsidized health insurance could we use the exchanges and garner a subsidy? jj

$24K in premiums alone! Ouch! We pay approx. 1/2 that much for mom, dad and 1 kid.

[jj]

Quote:

Originally Posted by golfnut $24K in premiums alone! Ouch! We pay approx. 1/2 that much for mom, dad and 1 kid.

That is the price for retiree, spouse and however many kids you have. While we still have 4 kids on the policy we consider it not too outrageous. The premium has gone up quite considerably in the past few years. We itemize for our federal taxes and therefore our taxes are reduced. As the 7.5% limit for medical expenses increases to 10% this year (under 65) it becomes progressively more expensive. This is, unfortunately, the situation we are in to keep a basic BCBS HMO policy.

jj

[kmt1972]

I think I pointed this out before, but see

CBO Confirms: Subsidies Could Shrink Under ObamaCare

namely
"Under a cost-control inserted during reconciliation, a greater share of premium payments would steadily shift to individuals and families after 2018 if exchange subsidies top 0.5% of GDP — as CBO projects they will."

which in turn means

"..., CBO said subsidies would not merely fail to keep up with inflation but would shrink in nominal terms for single policyholders between 350% and 400% of the poverty level once cost curbs are triggered.
Based on the economic inputs in CBO’s example — 6% premium cost growth, 3% income growth and 2% inflation — subsidies also would shrink starting in 2019 for mid-career singles with income as low as 300% of the poverty level and mid-career families at 375% of the poverty level, Capital Hill’s analysis reveals."

So with my family of 3, my bogey is not $78K but $73K which is 375% of the FPL. But for singles this lowers the bogey even lower. I suspect that even 375% threshold is too low because I doubt CBO is taking into account of people like me that on the surface will not qualify for subsidies/tax credits but will in fact claim them.

[pb4uski]

Get back to me in 2017 or so on that one.

I'm more concerned about what to do for 2014 and 2015 at this point.

[gerrym51]

Quote:

Originally Posted by pb4uski Get back to me in 2017 or so on that one. I'm more concerned about what to do for 2014 and 2015 at this point.

me to .i'm 62 and this year is what it is.

2014 and 15 is my concern

[ER Eddie]

Quote:

Originally Posted by kmt1972 See Obamacare makes it really easy for millionaires to retire early? I assume a lot of us will be doing this.

The end of the article makes it sound like it might be only a temporary thing...

Quote:

Will this last? Probably not. If this loophole in the Affordable Care Act was a multi-million dollar windfall for some big corporation, our Congresscritters who are bought and paid for by Big Business would likely let it stand. But since it benefits largely middle-class retirees, expect it to be "fixed" in some way.

I was considering dropping my retiree health insurance to qualify for this, but if Congress might remove the subsidies in a couple of years (for the not-poor), that's too risky. I can't get my retiree health insurance back once I drop it. I am going to sit on the sidelines and watch how this develops over the next couple of years.

[pb4uski]

Quote:

Originally Posted by ER Eddie ....I was considering dropping my retiree health insurance to qualify for this, but if Congress might remove the subsidies in a couple of years (for the not-poor), that's too risky. I can't get my retiree health insurance back once I drop it. I am going to sit on the sidelines and watch how this develops over the next couple of years.

That sounds like a wise course to me. In the meantime while you are waiting for the dust to settle you won't be constrained in Roth conversions or capital gains like those of us who plan to get subsidies.

[kmt1972]

Quote:

Originally Posted by gerrym51 me to .i'm 62 and this year is what it is. 2014 and 15 is my concern

Totally understand. I am 41 ergo you see my concerns are different. Thanks for taking one for the team and trying to get this system to work for you. What you will have to go through next couple of years will be helpful for me to figure out what I will be up against in a few years.

[John Galt III]

Quote:

Originally Posted by Tom52 If I retire at the end of 2013, DW will be nearing 60 and I will be 61, We will have no health insurance and no pensions. In fact, our only "income" would consist of approx $12,000 to $14,000 in 1099DIV and INT. We set aside a CD ladder for the gap years until we reach Medcare at 65 and SS at 66. Once we know the details of ACA we will increase our "income" by converting TIRA funds to Roth IRA. I believe the idea is to roll over enough to, at a minimum, get us above the Medicaid level, but low enough to maximize any available ACA subsidy. In our case I don't think it is a matter of a reduced buget. We will live the same basic lifestyle we do now drawing primarily from our savings. Oh, and by the way, I have no problem what so ever taking full legal advantage of any health care subsidies that are available to me. I might save some bucks on HI but I will be paying more income taxes later because I won't be maximizing tax free TIRA to Roth IRA conversions. The government gets their cut one way or another.

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.