Healthcare Open Enrollment 2020

[Nebu]

Hello all,


I started my new journey to semi retirement this April. I plan to travel rest of the year and look at creating income next year. Of course I no longer have health insurance from previous employer. My question is would I qualify for healthcare insurance subsidies through ACA if I grossed $250K in 2019? I expect to live off savings in 2020 and may earn ~$15k income.



Does government use 2019 income to see if qualify for subsidies or use expected 2020 income? Any insight would be greatly appreciated and thanks for your wisdom. I live in Texas if that makes any difference.



Len

[NoMoreJob]

Expected 2020 income.

You may be asked to support that. I would think that explaining your retirement and sources of expected income should take care of that if necessary. But don't be surprised if it isn't as simple as it should be as many of the marketplace people don't have a clue about non-W2 income.

[Aerides]

When we signed up for the ACA we weren't asked for prior year actuals, only next year (first covered year) projections. Do make sure you at least meet the minimums in your projections (15k is too low I believe).

[footenote]

Quote:

Originally Posted by Aerides When we signed up for the ACA we weren't asked for prior year actuals, only next year (first covered year) projections. Do make sure you at least meet the minimums in your projections (15k is too low I believe).

+1 Unless you want to go on your state's version of Medicaid, make sure your income is above your state's minimum (or the federal minimum if applicable) for your household size.

I'm using a combination of bond interest income (which I can't control) and tIRA liquidations (which I can control) to keep my 2020 ACA MAGI within the Goldilocks guardrails.

EDIT: H/T to Spock to catching my typo

[Spock]

Quote:

Originally Posted by footenote +1 Unless you want to go on your state's version of Medicare, make sure your income is above your state's minimum (or the federal minimum if applicable) for your household size. I'm using a combination of bond interest income (which I can't control) and tIRA liquidations (which I can control) to keep my 2020 ACA MAGI within the Goldilocks guardrails.

State's version of MedicAID.

[RockyMtn]

Question for the experts:

DGF has been on ACA since 2015. Converting just enough TIRA to Roth each year to stay off medicaid and qualify for nice subsidies. This year (2019) her conversion to Roth is only going to be about half of the required Federal Poverty level figure. They did not ask for proof of income from her for this year. Since she will fall below FPL this year will they ask for subsidy back? I have read on several sites that they won't do that.

I do expect that they will want MAGI estimate for 2020 though. Will show them that she is starting SS payments and that will put her above the FPL for next year. Make sense?

[MichaelB]

Quote:

Originally Posted by RockyMtn Question for the experts: DGF has been on ACA since 2015. Converting just enough TIRA to Roth each year to stay off medicaid and qualify for nice subsidies. This year (2019) her conversion to Roth is only going to be about half of the required Federal Poverty level figure. They did not ask for proof of income from her for this year. Since she will fall below FPL this year will they ask for subsidy back? I have read on several sites that they won't do that.

No, there’s no recovery if income falls below the FPl.

Quote:

I do expect that they will want MAGI estimate for 2020 though. Will show them that she is starting SS payments and that will put her above the FPL for next year. Make sense?

Makes perfect sense. Good luck..

[LarryMelman]

Quote:

Originally Posted by RockyMtn DGF has been on ACA since 2015. Converting just enough TIRA to Roth each year to stay off medicaid and qualify for nice subsidies.

What does she live on, if her only taxable income is from Roth conversion?

I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably.

In my own case, I already get income from my taxable investments that exceeds 4*FPL. The only alternative seems to be to sell everything and bury the proceeds in the yard. And then using Roth conversions as your girlfriend (I hope that's what DGF means) is doing.

[RockyMtn]

Quote:

Originally Posted by LarryMelman What does she live on, if her only taxable income is from Roth conversion? I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably. In my own case, I already get income from my taxable investments that exceeds 4*FPL. The only alternative seems to be to sell everything and bury the proceeds in the yard. And then using Roth conversions as your girlfriend (I hope that's what DGF means) is doing.

She lives on my inflated piggy bank. We are not married so we file separate tax returns.

[NoMoreJob]

Quote:

Originally Posted by LarryMelman What does she live on, if her only taxable income is from Roth conversion? I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably.

It's certainly possible depending upon the tax efficiency of your investments and how well you plan.

[Dtail]

Quote:

Originally Posted by LarryMelman What does she live on, if her only taxable income is from Roth conversion? I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably. In my own case, I already get income from my taxable investments that exceeds 4*FPL. The only alternative seems to be to sell everything and bury the proceeds in the yard. And then using Roth conversions as your girlfriend (I hope that's what DGF means) is doing.

Yes DGF is a girlfriend.
There are different ways we all make this happen.

My DGF has SSDI coming in plus some child support. Thus she already is on Medicare.

As for myself, I live partially off her income, plus our taxable accounts are being depleted partially for living expenses. I convert a small Roth (20k) as my MAGI.

All our taxable income generated is reported under her taxes.

Next year, I will start paying down some TIRA for my MAGI and living expenses and reduce a like amount of our taxable investments.

[BeachOrCity]

Quote:

Originally Posted by LarryMelman What does she live on, if her only taxable income is from Roth conversion? I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably. In my own case, I already get income from my taxable investments that exceeds 4*FPL. The only alternative seems to be to sell everything and bury the proceeds in the yard. And then using Roth conversions as your girlfriend (I hope that's what DGF means) is doing.

Larry. I know you use a dividend heavy approach. Some people purposely use a dividend light (or no dividend) approach and to keep within 400% fpl they sell securities with little gains.

This way they have the cash but not the income.

[swakyaby]

Quote:

Originally Posted by LarryMelman What does she live on, if her only taxable income is from Roth conversion? I'm not trying to be overly nosy, but I would like to know how people can hold their MAGI so low to qualify for ACA subsidies, and still live reasonably.

I used to have a high income before FIRE, along with high taxes, and $10K AMT every year. I would max out the tax-deferred accounts, and invest any funds left over in tax-efficient mutual funds (state municipal bond fund, tax-managed equity funds, index funds). Once early retired, my taxable income dropped very low even though I was spending more, because my dividend heavy mutual funds (REIT, utilities, equity income fund, bonds, dividend growth fund) are in tax-deferred accounts. So before RMDs begin, I have been doing Roth conversions up to the ACA subsidy limits and living comfortably on after-tax savings.

[Smitty700]

Quote:

Originally Posted by Nebu Hello all, Does government use 2019 income to see if qualify for subsidies or use expected 2020 income? Any insight would be greatly appreciated and thanks for your wisdom. I live in Texas if that makes any difference.

This was exactly my situation last year. I quit working in 2018 but had large Roth conversion income. The Healthcare.gov site requested income verification for 2019 to qualify for premium tax credits. I sent a letter specifying my expected 2019 MAGI, and I stated that I retired and that previous years income did not reflect my expected 2019 income.

They approved that, no problem.

[drums]

Just sold out of a business and retired this year. Just lost my group insurance plan so will be hitting the exchange in 2020. My income for the next 5 years will come from a non qualified deferred comp agreement that will put me over the annual limits. My question is whether deferred comp is included in the calculation (i am using it as part of my retirement planning). I am thinking the government would count this in 2020 and beyond as income thus putting me over the subsidy limits? Anyone know this situation?

BTY, I am new here and will do the full intro later this week.

[Smitty700]

Quote:

Originally Posted by drums Just sold out of a business and retired this year. Just lost my group insurance plan so will be hitting the exchange in 2020. My income for the next 5 years will come from a non qualified deferred comp agreement that will put me over the annual limits. My question is whether deferred comp is included in the calculation (i am using it as part of my retirement planning). I am thinking the government would count this in 2020 and beyond as income thus putting me over the subsidy limits? Anyone know this situation?

Modified Adjusted Gross Income (MAGI), which includes W-2 income, is used as the determine ACA subsidies. (I believe that the deferred comp will be reported on a W-2). For details on what is / is not included in MAGI, see https://www.healthcare.gov/income-an...n/income/#magi.

[Rio2016]

Drums.... I sold my business in 2015 and the quarterly payments I received over 4 years were classified by my CPA as an Installment Sale which flowed through 1040 and ultimately became LTCG. Payments were not on a W-2. They were on a Payment Schedule with Interest negotiated at Sale. Not sure by what you wrote how they are reporting the “non-qualified deferred compensation”. If it’s on a W-2, it cannot be an Installment Sale for tax purposes. LTCG is part of magi and taxed much lower than ordinary income.

[Rio2016]

In regards to ACA, Anybody taking there SS early at 62 and using it to pay there Health Insurance if your magi is over 400FPL therefore not eligible for a subsidy?

[rodi]

Quote:

Originally Posted by Rio2016 In regards to ACA, Anybody taking there SS early at 62 and using it to pay there Health Insurance if your magi is over 400FPL therefore not eligible for a subsidy?

Health insurance is an expense.... SS is an income source (with some tax quirks that are different than other income sources.) To me they are separate calculations... do I have enough income overall to cover my expenses (including healthcare and taxes) without SS? If the answer is yes - I'll defer SS... if the answer is no... then I need to consider taking SS at 62 (or whenever.)

This is hypothetical for me - I'm only 58 and at this moment am considering waiting till either 65 (for the medicare hold harmless) or age 70 for SS... But if the market tanks, meteors hit the earth, or something else changes my current cashflow/expense situation - I'll look at SS again.

[Smitty700]

Healthcare.gov now has the 2020 plans and prices available for preview. I just checked mine and found a pleasant surprise as our cost after PTC will go down about $130 / month.