How do I reach minimum income for ACA subsidy?

[Popsicletoes]

Hi everyone, finally finished work and had a chance to read through all the replies.

Wow, you guys are super generous with your knowledge. Thanks so much.

Yes, we just started this brokerage account this year, so there won’t be significant Cap Gain and dividends to be had as ‘income’. That’s why I’m panicking now trying to come up with the minimum income for ACA next year.

It certainly sounds like Roth conversion is the way to go for us. Let me do some more reading on this.

Another option I can think of is to rent out our house while we travel full time. DH is not keen on this idea because of too many horror stories he heard about irresponsible tenants, so convincing him is going to be an uphill battle for me.

Or we may just have to bite the bullet and pay full cost. With the new American Relief Plan it’ll come to around $700-$800 per month, which is still cheaper than $1300 before the relief was signed into law. Still.....

Thanks again everyone!

[pb4uski]

What you might consider is to just live off of savings for a while. Then your income will only be dividends and interest from your taxable accounts. You can then supplement that with Roth conversions to create income to the total level that you want considering ACA.

So if you want $25k of income for ACA and your interest and dividends are $10k, then just do $15k of Roth conversions... your total income will be $25k but the standard deduction will offset that so your taxable income will be $0 and your tax will be $0.

You can let the taxable account equities grow.

[figuy1]

Quote:

Originally Posted by Popsicletoes Or we may just have to bite the bullet and pay full cost. With the new American Relief Plan it’ll come to around $700-$800 per month, which is still cheaper than $1300 before the relief was signed into law. Still.....

How are you coming up with those figures? You should be getting at least $1200/mo in subsidies if you stay under 150% of FPL depending on your state. In my state, you can get a $0 premium, $0 deductible, $2k Out-of-Pocket max plan that covers the best hospital in the state for those under 150% of FPL. If you aren't already, take a look at silver plans, they have extra low deductibles for those under 250% of FPL due to special cost-sharing subsidies.

I believe if your income is too low for subsidies and you qualify for Medicaid, you must take it and can't even pay full price for an ACA plan.

[Popsicletoes]

@ Pb4uski: yes, our plan is to take a little from taxable account (and now might just do Roth conversion instead) at less than 150% FPL for maximum ACA subsidy, and pull the additional spending money from regular savings account to keep the taxes low. That's why we built the cash relatively high from the beginning.

@ figuy1: the high number I quoted was for full price without subsidy, which we would need to pay if we can't come up with enough income to qualify for subsidy. Hence the entire thread about it. I don't know if we would qualify for medicaid. Unlike ACA, doesn't Medicaid look at asset too, not just income?

In any case, I have made several appointments to interview some tax planners in my area in the next coming weeks. I figured it doesn't hurt to talk to some tax CPAs and see what they say.

Thanks again, everyone!

[Dtail]

Quote:

Originally Posted by Popsicletoes @ Pb4uski: yes, our plan is to take a little from taxable account (and now might just do Roth conversion instead) at less than 150% FPL for maximum ACA subsidy, and pull the additional spending money from regular savings account to keep the taxes low. That's why we built the cash relatively high from the beginning. @ figuy1: the high number I quoted was for full price without subsidy, which we would need to pay if we can't come up with enough income to qualify for subsidy. Hence the entire thread about it. I don't know if we would qualify for medicaid. Unlike ACA, doesn't Medicaid look at asset too, not just income? In any case, I have made several appointments to interview some tax planners in my area in the next coming weeks. I figured it doesn't hurt to talk to some tax CPAs and see what they say. Thanks again, everyone!

Yes, Medicaid does look at assets and all sorts of rules surrounding it.

[figuy1]

Quote:

Originally Posted by Popsicletoes @ figuy1: the high number I quoted was for full price without subsidy, which we would need to pay if we can't come up with enough income to qualify for subsidy. Hence the entire thread about it. I don't know if we would qualify for medicaid.

I get where you got the $1300 number, I didn't understand where you got the $700-800/mo after subsidy number. With a $1200-$1300/mo subsidy, your plan should be $0-100/mo. Are you looking at gold or platinum plans by chance?

Quote:

Originally Posted by Popsicletoes In any case, I have made several appointments to interview some tax planners in my area in the next coming weeks. I figured it doesn't hurt to talk to some tax CPAs and see what they say.

It's good to talk to CPAs too, just try to find one that has dealt with a lot of clients that have used ACA subsidies. Some that haven't had much experience with the ACA, may not fully account for the value of the loss of subsidies and may encourage you to fully fill up your 12% bracket space with Roth conversions and possibly do even more than that.

[jim584672]

Quote:

Originally Posted by Dtail Yes, Medicaid does look at assets and all sorts of rules surrounding it.

Only for the elderly, disabled and blind are assets considered. Not for the expansion group, 18-64 able bodied childless adults.

[Dtail]

Quote:

Originally Posted by jim584672 Only for the elderly, disabled and blind are assets considered. Not for the expansion group, 18-64 able bodied childless adults.

Interesting, didn't know that.

[Popsicletoes]

Quote:

Originally Posted by figuy1 I get where you got the $1300 number, I didn't understand where you got the $700-800/mo after subsidy number. With a $1200-$1300/mo subsidy, your plan should be $0-100/mo. Are you looking at gold or platinum plans by chance?

The $700 - $800 range was for the full price Bronze plan per the preview on Healthcare.gov (the website gives you a preview of plans and costs for your area, just to whet your appetite, so to speak). Although when I looked at it again yesterday, it already jumped to $800 - $1000 full price per month for 2 people. Not sure why.

Quote:

Originally Posted by figuy1 It's good to talk to CPAs too, just try to find one that has dealt with a lot of clients that have used ACA subsidies. Some that haven't had much experience with the ACA, may not fully account for the value of the loss of subsidies and may encourage you to fully fill up your 12% bracket space with Roth conversions and possibly do even more than that.

Yeah, not going to max out Roth conversion for now. We are going fulfill our dream to travel slowly around the world when we retire, so that is one of the main reasons for targeting under 150% FPL taxable income so we pay 0 in US healthcare for the little time when we are in the US. I still have to buy travel and overseas medical insurance as it is (but they will be a lot cheaper than paying full price for ACA, for sure).