ACA Subsidy Calculation

[Packman]

I'm trying to understand the formula for calculating the ACA premium tax subsidy. I know there are calculators online, but only for 2016 plans. I also know that I can get this info on healthcare.gov as of Nov. 1, but I'm trying to understand this now.

First, you need to be less than 4x of the federal poverty level (about $64k per year for 2 people in 2017). We will be just under that. With that qualification it is my understanding that the difference between roughly 10% of your MAGI and the cost of the second lowest silver plan is your subsidy. In other words, if you bought that silver plan, your premium is capped at 10% of your MAGI. Is this right? If so, my subsidy for 2017 would be nearly $15,000 for my wife and I.

$64,000 X 10% = $6,400 - $21,228 (silver plan annual cost in AZ for two) = $14,828

At least I hope that is how it is calculated.

 

[MBSC]

That is correct. For 2017 your SLCSP contribution amount is 9.69% MAGI when your MAGI is between 300%-400% FPL.

 

[brucethebroker]

Keep in mind that IRA, SEP and HSA contributions reduce your MAGI. Since contributions can be made up until filing taxes, it is a really important benefit for monitoring your income.

 

[Sue J]

Between now and Nov. 1st HealthCare.gov should have a preview of plans available. You will be able to put in your zip code, household size, ages and income and see plans and your expected subsidy. This is done without making an account and entering personal info. You can then play around with different income sizes to see the effect on your subsidy.

Last year it was at this link - https://www.healthcare.gov/see-plans/ You can use this now to see what the numbers would have been for 2016. I hope it's updated soon for 2017.