A couple ACA and HSA Questions

[doneat54]

DW retired mid 2022 and we are on her COBRA (at over $2k/mo!) for insurance until the end of the year. I will have been retired 7 years in January. We are shopping ACA plans now to get insurance for 2024. We put in our "base" expense budget as our income for 2024 at healthcare.gov, and it gave us a surprisingly generous subsidy. We are looking at Bronze plans just south of $500/mo (after subsidy), but with high deductibles. But I have no problem socking away some cash in an HSA to cover the deductible and max out of pocket, and more.


First question is moving funds from the portfolio into our existing HSA. Google says it looks like you can do it and stay behind the tax wall. We already have an HSA with a good bit of $$ in it. We have put nothing into it in 2023. Thought is to put the max yearly allowance in it before 2023 ends to jack it up more. Have some cash accounts at FIDO that could be used for this. Anyone done this? Will reach out to our FIDO guy and ask. If we could kick the max allowed in 2023, and again in 2024, I would sleep well at night knowing that the deductible and max out of pocket is well covered.


Other question is regarding the ACA subsidy. I'm sure healthcare.gov based it on what we said out income out of the portfolio was expected to be in 2024. What if it ends up being more? (we are in those spend-happy years). I assume the IRS reported income pulled from the portfolio at the end of 2024 will get back to the healthcare.gov folks and they may adjust our subsidy downward? That is what I would expect, and I am OK with that. Just want to confirm.

Thanks in advance for any info.....

 

[PaunchyPirate]

DW retired mid 2022 and we are on her COBRA (at over $2k/mo!) for insurance until the end of the year. I will have been retired 7 years in January. We are shopping ACA plans now to get insurance for 2024. We put in our "base" expense budget as our income for 2024 at healthcare.gov, and it gave us a surprisingly generous subsidy. We are looking at Bronze plans just south of $500/mo (after subsidy), but with high deductibles. But I have no problem socking away some cash in an HSA to cover the deductible and max out of pocket, and more.


First question is moving funds from the portfolio into our existing HSA. Google says it looks like you can do it and stay behind the tax wall. We already have an HSA with a good bit of $$ in it. We have put nothing into it in 2023. Thought is to put the max yearly allowance in it before 2023 ends to jack it up more. Have some cash accounts at FIDO that could be used for this. Anyone done this? Will reach out to our FIDO guy and ask. If we could kick the max allowed in 2023, and again in 2024, I would sleep well at night knowing that the deductible and max out of pocket is well covered.


Other question is regarding the ACA subsidy. I'm sure healthcare.gov based it on what we said out income out of the portfolio was expected to be in 2024. What if it ends up being more? (we are in those spend-happy years). I assume the IRS reported income pulled from the portfolio at the end of 2024 will get back to the healthcare.gov folks and they may adjust our subsidy downward? That is what I would expect, and I am OK with that. Just want to confirm.

Thanks in advance for any info.....

1. Are you currently using an HSA-compatible High Deductible Health Plan for 2023? That is a requirement for contributing to your HSA in 2023.

2. Yes, your ACTUAL Modified Adjusted Gross Income will be calculated when you do your 2024 income taxes. This will be used to calculate the ACA subsidy you were actually entitled to. Any difference from what you received doing the year will be reconciled as part of your tax refund or taxes due. There are tax forms that do all this. Your healthcare exchange will send you a 1095-A form in January to use when filing your taxes.

 

[SevenUp]

Other question is regarding the ACA subsidy. I'm sure healthcare.gov based it on what we said out income out of the portfolio was expected to be in 2024. What if it ends up being more? (we are in those spend-happy years). I assume the IRS reported income pulled from the portfolio at the end of 2024 will get back to the healthcare.gov folks and they may adjust our subsidy downward? That is what I would expect, and I am OK with that. Just want to confirm.

Thanks in advance for any info.....

Roth Conversion and Capital Gains On ACA Health Insurance is a good article on that.

 

[doneat54]

Our current plan is a HDHP, and we have used our HSA while having it. I just found out that I can (and did) open an HSA at Fidelity. I also entered info on DWs Healthequity HSA account and requested that all of it be transferred to the new FIDO HSA (it's all cash there, not invested). Hopefully can still transfer another $8750 into it before the years end. I am assuming that since the transferring balance came from another HSA that this will not be a problem ()


Having consolidated it all in Fidelity will keep things simpler.


On the ACA front, I found that I can opt to use only some of the tax credit that it says I am entitled to. When I filled out the ACA application and put in our expected income, I used our "base" budget number. We have a stout travel budget on top of that that we WILL spend also. So I Googled "ACA Subsidy" calculator, put in a more realistic budget/income number and it went from $761 to $533. So I am going to specify using only $500/mo of the tax credit. The ACA website says that "using a portion of your tax credit is often a good idea if you think that you will have more income in the coming year than you specified in the application" (or something to that effect).

 

[cathy63]

Our current plan is a HDHP, and we have used our HSA while having it. I just found out that I can (and did) open an HSA at Fidelity. I also entered info on DWs Healthequity HSA account and requested that all of it be transferred to the new FIDO HSA (it's all cash there, not invested). Hopefully can still transfer another $8750 into it before the years end. I am assuming that since the transferring balance came from another HSA that this will not be a problem ()

Having consolidated it all in Fidelity will keep things simpler.

You can rollover funds into the Fido HSAs (hopefully you have opened separate accounts for each of you). You can do this any time, regardless of whether you currently have an HDHP.

You can also make an annual contribution to your HSA by doing a direct transfer from an after tax account or by writing a check. This is not related to doing a rollover and you can do both in the same year as long as you are covered by an HDHP. If your wife's former employer makes any contributions to her HSA, then those count towards the annual contribution limit even if the HSA accounts are now at a different provider.

Once in a lifetime, you can make your HSA contribution by rolling funds from an IRA to the HSA. This type of contribution is still subject to the annual limits. I'm not sure why you'd want to do this but the law allows it (maybe you avoid some tax on some IRA money instead of just deferring it?). Fidelity can also handle this type of contribution and if you have an IRA there, they can move the funds for you.

On the ACA front, I found that I can opt to use only some of the tax credit that it says I am entitled to. When I filled out the ACA application and put in our expected income, I used our "base" budget number. We have a stout travel budget on top of that that we WILL spend also. So I Googled "ACA Subsidy" calculator, put in a more realistic budget/income number and it went from $761 to $533. So I am going to specify using only $500/mo of the tax credit. The ACA website says that "using a portion of your tax credit is often a good idea if you think that you will have more income in the coming year than you specified in the application" (or something to that effect).

When you file your tax return in 2025 for the 2024 tax year, you will be required to include form 8962. The calculations on that form will figure out how much of a subsidy you were entitled to. If you have taken $700/mo and it turned out that you were only entitled to $500/mo, you'll pay back a portion of the $2400, not the entire amount, because there are repayment caps for those whose income is under 400% of the Federal Poverty Line (which it seems you are based on the numbers you gave here). If you were entitled to $533 and took only $500, then you'll get $396 ($33 * 12) added to your tax refund. If you expect to be below the 400% line, it is usually better to take a larger subsidy in advance because of the repayment caps. I recommend filling out the top part of the 2022 or 2023 version of form 8962 using your 2024 numbers so you can see how this all works.