ACA issue with MAGI

[Steelart99]

Wife and I are both retired. My yearly income is covered by two small pensions and income from the sale of an investment (fairly high CG percentage) as needed to meet our needs. Our bills are fairly light, being mortgage, utilities, food, hobbies and local travel.

I manage my MAGI in order to minimize the cost sharing for ACA. I sold some of our investments with the goal of keeping the CG and thus MAGI low enough to allow us to remain under 200% FPL.

But .... this year, I overlooked about $1300 in dividends paid by my investment which bumped me over the 200% FPL and thus bumps up the amount i have to repay at tax time by about $600.

I don't think I can qualify for a contribution to a Roth ... can I? Turbo Tax indicated that I couldn't.

Is there some other way to drop my income? I take a standard deduction.

 

[Aerides]

Is your ACA plan HSA-eligible? If so you can still contribute for 2018, it's about $6900 for two I think

I also have an IRA with fidelity that I can add to.

 

[ziggy29]

Ouch. All I can think of now to reduce previous year's taxable income after the previous calendar year and before the tax deadline is traditional IRA contributions and HSA contributions. If you don't have an eligible HDHP or any earned income in 2018, I have nothing....

 

[GTFan]

Is your ACA plan HSA-eligible? If so you can still contribute for 2018, it's about $6900 for two I think

I don't think there are any <200% MAGI Silver CSR plans that are HSA-eligible because the max OOPs are way too low.

 

[Steelart99]

Yeah, you've told me what I 'thought' I'd figured out. I have no earned income and my Silver plan does not appear to be HSA eligible.

I'd hoped someone might have some magic wand ... sigh

 

[RunningBum]

Is 200% FPL any kind of cliff? I thought CSR is 250% and below. Why is 200% a target? Is there any meaningful difference between 199% FPL, 200%, and 201%? If not, you're just paying a small delta for every dollar extra you earn. Usually that's around 10%. It's nothing like the cliff you go over at 400%. Just not seeing why you need a magic wand for something that doesn't seem to be a problem, unless I'm missing something.

 

[Blueskies123]

I keep my MAGI far enough below the cliff to allow for surprise dividends or other types of income. You are not allowing for enough wiggle room.

 

[RunningBum]

OK, I found at <200% you only have to pay back $300 of excess subsidy you should not have gotten, and 200-300% you have to pay back $775. So if you've really been gaming the system and getting a larger subsidy than you should, at over 200% you'd have to pay back more of what you shouldn't have gotten.

In any case, $600 is not much of a cliff to deal with.

 

[ivinsfan]

Yeah, you've told me what I 'thought' I'd figured out. I have no earned income and my Silver plan does not appear to be HSA eligible.

I'd hoped someone might have some magic wand ... sigh

You got gold plated HI for very low cost, 600 bucks extra is chump change for that benefit provided to you by the taxpayers, just be grateful you didn't have to pay market rates and move on.

 

[ShokWaveRider]

You will just pay the difference in your 2019 tax return, no biggie. We under estimated for the last 3 years to minimize copays and MOOP. All works out in the wash. you only pay the difference on the premium. Copays and MOOP does not change.

 

[Steelart99]

Yeah, I know we got good insurance cheaply. Just always trying to keep expenses low. I got seriously sidetracked last year moving my mom to assisted living in another state, taking over handling all of her accounts, dealing with some large bogus charges on her accounts, her hospital stays, etc. I just overlooked the dividends I'd recieved while trying to maximize my 'income' from the sale of our investment.

I'll certainly never let it happen again.

 

[Smitty700]

I don't think I can qualify for a contribution to a Roth ... can I?

It doesn't matter to @Steelart as he's not >400% of the FPL, but a Roth contribution doesn't lower MAGI. He'd have to go with a traditional IRA contribution to deduct it.

 

[SecondCor521]

Is 200% FPL any kind of cliff? I thought CSR is 250% and below. Why is 200% a target? Is there any meaningful difference between 199% FPL, 200%, and 201%? If not, you're just paying a small delta for every dollar extra you earn. Usually that's around 10%. It's nothing like the cliff you go over at 400%. Just not seeing why you need a magic wand for something that doesn't seem to be a problem, unless I'm missing something.

IIRC:

There are three different levels of CSR - what I have seen referred to as CSR73, CSR87, and CSR94. The FPL eligibility for these three levels is estimated income at 250%, 200%, and 150% of FPL, respectively.

The 73, 87, and 94 in the names refer to the actuarial value (AV) that the insurance plan must meet, usually by fiddling with the deductible and max OOP. You can compare these AV's to the metal level AV's to get a sense for how valuable or not it may be to be at 199% of FPL (CSR87) vs. 201% of FPL (CSR73).

As you probably know, CSRs are provided based on estimated income and are not reconciled at tax time.