I have a few questions and am looking for another set of eyes to validate some assumptions I have regarding ACA benefits.
Background
I am 63 and currently using Cobra for my health care. At the start of 2021 I will have 6 months left on Cobra and then will require 9 months of self paid insurance until I qualify for Medicare. My wife is on Medicare and will begin Social Security the beginning of the year with an annual expected benefit of $22,322 a year. I am waiting to take my Social Security. This year we made Roth conversions of ~$60K to fill the 12% tax bracket as we lived off of LTCG’s in our taxable account.
I am contemplating foregoing Roth conversions this year to take advantage of the ACA since I only have a half-year of Cobra left and will have to find other health insurance during the year. We live in Washington state and the ACA income limits are approximately $24K-$68K of MAGI.
I am using this 1040 calculator to run the numbers for tax year 2021. I realize the calculator is for tax year 2020 but it should be close enough. (https://www.mortgagecalculator.org/calcs/1040-calculator.php).
$4300 Dividends all qualified. I used last year’s number so it should be less next year since my taxable account is now smaller than last year.
$22,322 Wife’s social security.
$40,247 LTCG’s from taxable account. This number will also be much less since I will not need to sell as much equities due to my wife’s additional Social Security income.
So using the above numbers as a worst case (most possible income for the year) and plugging that into the calculator I come up with AGI of $59,944.
Questions
The calculator states that only $15,697 of SS is taxable. Does that mean I have to add $6,625 ($22,322-$15,697) to my AGI to come up with our MAGI?
Am I missing anything else I will need to add to my AGI to come up with the correct MAGI?
Do I have to state my MAGI for 2021 when I sign up for ACA health insurance and what will happen if I miss the number?
Any other thoughts or advice is welcome.
Thank You
Background
I am 63 and currently using Cobra for my health care. At the start of 2021 I will have 6 months left on Cobra and then will require 9 months of self paid insurance until I qualify for Medicare. My wife is on Medicare and will begin Social Security the beginning of the year with an annual expected benefit of $22,322 a year. I am waiting to take my Social Security. This year we made Roth conversions of ~$60K to fill the 12% tax bracket as we lived off of LTCG’s in our taxable account.
I am contemplating foregoing Roth conversions this year to take advantage of the ACA since I only have a half-year of Cobra left and will have to find other health insurance during the year. We live in Washington state and the ACA income limits are approximately $24K-$68K of MAGI.
I am using this 1040 calculator to run the numbers for tax year 2021. I realize the calculator is for tax year 2020 but it should be close enough. (https://www.mortgagecalculator.org/calcs/1040-calculator.php).
$4300 Dividends all qualified. I used last year’s number so it should be less next year since my taxable account is now smaller than last year.
$22,322 Wife’s social security.
$40,247 LTCG’s from taxable account. This number will also be much less since I will not need to sell as much equities due to my wife’s additional Social Security income.
So using the above numbers as a worst case (most possible income for the year) and plugging that into the calculator I come up with AGI of $59,944.
Questions
The calculator states that only $15,697 of SS is taxable. Does that mean I have to add $6,625 ($22,322-$15,697) to my AGI to come up with our MAGI?
Am I missing anything else I will need to add to my AGI to come up with the correct MAGI?
Do I have to state my MAGI for 2021 when I sign up for ACA health insurance and what will happen if I miss the number?
Any other thoughts or advice is welcome.
Thank You