Need an ACA math and reality check

[Carpediem]

I'm embarrassed to admit that I am behind on the ARPA's impact on ACA subsidies and income limits. But I've been reading and doing research on what it means to my own situation with ACA - which is our first year on ACA. I'm hoping y'all can confirm some of the details for me.

We currently have a BCBS HSA Bronze plan. The cost is $1714/mth. However, I am receiving credits of $2029 based on an income limit of $60k, a difference of $315.

According to the Marketplace website today, I would now receive credits of $2240 on an income limit of $60k - an increase in credits of $211. The monthly premium for my BCBS bronze plans is now $1768. (Not sure why it increased $54 but whatever.)

My question - With the ACA increased income limits, could I withdraw more money from my tIRA this year and exceed the estimated income on my 2021 ACA application without any penalties as long as the tax credits remain more than the monthly premium amount?

 

[SecondCor521]

Yep. In fact, it would be smart to do so, because the subsidies essentially work like non-refundable credits. If you hit your income estimates, the excess subsidies are just lost. If you do either a tIRA withdrawal (assuming your over 59.5) or a Roth conversion (if you're under 59.5), then the additional income would probably create both some additional income tax and some loss in subsidy, but up to a certain point the withdrawal or conversion could be done for zero federal income tax cost.

You'll want to consider the state income tax effects, and any FAFSA effects, but it could be a sweet deal.

The other alternative - for next year - would be to upgrade your HI coverage, maybe to a Silver HSA plan if you can find one. The cost could still be "free after subsidies", plus you would qualify for CSRs which would probably lower your deductibles and OOP maximum, depending on if your estimated 2022 income was under 250% / 200% / 150% of FPL.