ACA cliff question - please check my math

[oscar1]

@lisa99 I am struggling with this exact issue, figuring out a way to raise operating cash (~50k per year) while managing the $67k cliff. I’m 58 with about $1400/mo subsidy for wife and I. I am considering a blowout year too but can’t fathom the tax and subsidy repayment hit (talk about denting your returns?!). The ACA individual mandate is gone so if you can find a catastrophic health insurance plan for 1 year, or one of those faith-based co-ops, that may help. I am hearing the big insurers have those cheaper plans but are not yet fully marketing them. You might also be able to Home Equity Loan your home for cash but I sleep better at night knowing I have no mortgage. I have pretty much given up on my Roth conversion ladder due to having to manage MAGI for ACA cliff purposes.

On a more fun note, does The Villages have an early retirees club? Bet they have some tips on ACA cliff income management. Wife and I are in Texas (also a no income tax state) but considering a move to Florida. Do you like it there? Maybe DM me to keep the replies out of your original thread.

 

[scottpush]

Agreed in the general case. But I think the OP has made it clear that she understands the tax implications. I think the idea is to load up on LTCG one year, just surrender the ACA subsidy in a big way for that one year, and make it likely that they will not accidentally go "over the cliff" in future years since they can live off of some after-tax income that won't hit the MAGI in the future.

I mean, the extra taxes here are basically about one year's ACA subsidy, so if it prevents one or more potential "accidents" by going over the cliff in the years to come, it's a reasonable idea. But so too is wondering if there might be a more tax-efficient way to help keep them on the right side of the cliff in the years to come.

And you are right on point. I'm single, 60, and own 9 rental properties that are burning me out. Always kept my MAGI under $48k (the cliff) and selling one property will put me over the cliff. Made a decision that I would sell three of them in 2020 which will cost me around $10K in ACA penalties as well as capital gains taxes for all the properties but only for this year. Lot less than the $20k in ACA penalties the OP will have to pay but obviously worth it to them just as it is to me.

 

[scottpush]

@lisa99 I am struggling with this exact issue, figuring out a way to raise operating cash (~50k per year) while managing the $67k cliff. I’m 58 with about $1400/mo subsidy for wife and I. I am considering a blowout year too but can’t fathom the tax and subsidy repayment hit (talk about denting your returns?!). The ACA individual mandate is gone so if you can find a catastrophic health insurance plan for 1 year, or one of those faith-based co-ops, that may help. I am hearing the big insurers have those cheaper plans but are not yet fully marketing them. You might also be able to Home Equity Loan your home for cash but I sleep better at night knowing I have no mortgage. I have pretty much given up on my Roth conversion ladder due to having to manage MAGI for ACA cliff purposes.

On a more fun note, does The Villages have an early retirees club? Bet they have some tips on ACA cliff income management. Wife and I are in Texas (also a no income tax state) but considering a move to Florida. Do you like it there? Maybe DM me to keep the replies out of your original thread.

Good luck finding a catastrophic plan. They interrogate you to no end to make sure you're in perfect health so that they can max out their $$ off of you. I was turned down twice for health insurance 15 years ago because I had slightly high blood pressure. Very manageable. Lived w/o insurance for almost a year until I found state sponsored insurance. Tried catastrophic insurance not on ACA again this year and to no avail. They want perfect health = more $$. I'd just take the over the cliff hit for one year. That's what I'm doing in 2020. Our broken healthcare system won't change for a long time.

 

[zinger1457]

Good luck finding a catastrophic plan.

As far as I know catastrophic plans are available through the ACA as long as you meet the requirements (age and/or hardship exemption), don't believe current health status is a factor. I think they also expanded the requirements to qualify for one like if only one insurer offers plans in your area, so more people now qualify.

 

[GenXguy]

Our broken healthcare system won't change for a long time.

And it could get a lot worse at the end of 2021.

http://www.early-retirement.org/forums/f38/before-aca-what-did-retirees-do-101562-8.html#post2358328

 

[GTFan]

Good luck finding a catastrophic plan. They interrogate you to no end to make sure you're in perfect health so that they can max out their $$ off of you. I was turned down twice for health insurance 15 years ago because I had slightly high blood pressure. Very manageable. Lived w/o insurance for almost a year until I found state sponsored insurance. Tried catastrophic insurance not on ACA again this year and to no avail. They want perfect health = more $$. I'd just take the over the cliff hit for one year. That's what I'm doing in 2020. Our broken healthcare system won't change for a long time.

This is not true in today's ACA market, there is no health screening for individual policies regardless of type. Bronze plans in our area are basically cat plans with same cost/bennies etc.

 

[scottpush]

As far as I know catastrophic plans are available through the ACA as long as you meet the requirements (age and/or hardship exemption), don't believe current health status is a factor. I think they also expanded the requirements to qualify for one like if only one insurer offers plans in your area, so more people now qualify.

There are many plans to choose from under the ACA umbrella. Nothing wrong with any of them but even the 'catastrophic' ones aren't cheap at all. You can find much cheaper outside of ACA, which is what I think she was talking about, although it's very hard to qualify for them. Yep ACA is the way to go. But they'll cost.

 

[scottpush]

This is not true in today's ACA market, there is no health screening for individual policies regardless of type. Bronze plans in our area are basically cat plans with same cost/bennies etc.

I haven't found any under ACA that I would say is reasonably priced. It's all ones perspective. I am under ACA because that's all I qualify for. None of it is cheap. My opinion. That's all.

 

[Dtail]

There are many plans to choose from under the ACA umbrella. Nothing wrong with any of them but even the 'catastrophic' ones aren't cheap at all. You can find much cheaper outside of ACA, which is what I think she was talking about, although it's very hard to qualify for them. Yep ACA is the way to go. But they'll cost.

Again it depends where you live and what your MAGI is.

 

[GTFan]

I haven't found any under ACA that I would say is reasonably priced. It's all ones perspective. I am under ACA because that's all I qualify for. None of it is cheap. My opinion. That's all.

I agree, but many of us are successfully managing MAGI to stay under the subsidy cliff which makes ACA reasonable. That's what OP was after, not the secondary market.