scrabbler1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 20, 2009
- Messages
- 6,710
I haven't decided yet. So for now, I am not applying for the subsidy in advance as a reduction of my monthly health insurance premiums. It makes the purchasing process simpler since the system is so screwed up and gives me the flexibility to decide later in 2014. If I do manage my O-MAGI to get a subsidy, I'll get it as a higher tax refund when I file my 2014 tax return in early 2015.
I do not view it as gaming the system in any way whatsoever. If I manage my O-MAGI to get the subsidy it is no different than managing other tax matters to minimize taxes and like FIREd, I paid a lot in taxes over the years and got little in return so I have no guilt at all. If I end up benefiting then I'm one of the unintended consequences of Obamacare.
I agree with this and with pb4uski's later post and with those posts (such as ziggy's) which mention the various cliffs built into the determination of the subsidies. Thanks to some helpful hints from others here a few weeks ago when I hit a few snags signing up in my state's (New York) exchange, I decided to not apply for a monthly subsidy, opting to forgo it and simply reconcile it on the following year's taxes because I always owe money on my income taxes (all of my income in ER is investment income and I have zero taxes withheld). I will use this temporary "overpayment" of my HI as a backhanded income tax withholding and be able to skip a large estimated income tax payment midyear, letting the subsidy cancel out some of my taxes owed the following year.
With regard to the MAGI, mine will be between 300% and 350% of FPL so if there is an unexpected "spike" in the income from one of my investments (it has happened in the last 5 years since I ERed), I don't want that to not only cost me in taxes (which I understand) but also cost me the subsidy because of the "cliffy" nature of how the subsidy is determined. I have a large, unrealized capital loss in one of my mutual funds I can realize through TLH (Tax Loss Harvesting) to reduce my MAGI so I can retain the subsidy, if necessary.
And with regard to those who mentioned how they have paid taxes for years but have derived little or no benefit from at least some of them, add me to that list. Being a childfree person, I have hated paying thousands of dollars in local school taxes every year, taxes not based on income or the number of children one sends to the local schools but on the value of one's property. Since I ERed, my income taxes have fallen (of course), but my local property taxes (which are mostly school taxes) have only risen even after my income dropped after I ERed. So how can I be accused of gaming the system when the system has gamed me?