ACA question for mid-year retirement

[ClarkeK]

Hello all,

I plan on retiring in April 2022. Does my earned income from January through March count towards my ACA MAGI number for 2022? Or does it start from the time my new ACA policy goes into affect?

Apologies if I'm repeating any previous posts, I've done some sleuthing and couldn't locate the answer.

 

[MRG]

Your earned income(magi for ACA) is for the entire calendar year.

 

[jim584672]

ACA is calendar year. Medicaid goes by currently monthly income, not calendar year.

 

[boog]

Ditto the above. I retired in April ‘16 and switched to ACA insurance and received the subsidy for the remainder of the year. To be eligible for subsidy for the rest of the year, make sure your income for the year won’t exceed the 400% FPL limit. Consider not only your income for Jan thru April, but also any vacation and sick leave that will be paid out when you retire. Also, state tax refunds received if applicable.

 

[Aerides]

When you retire in 2022, the ACA will ask you what your 2022 full year income will be, as an estimate. You will enter month by month estimates data, but that's just a way to break it down. So if Q1 alone puts you over the MAGI cliff, you will pay full freight for 2022.

Your policy cost will be based on FY estimates, and "true up" at tax time if there's a big enough difference to change your pricing tier, up or down.

To complete 2022, Cobra might be cheaper, or the same-ish, and it's often a better thing to start with as you don't have to change docs mid-year, or worry about a new set of deductibles, since any expenses on your Q1 employer plan will be meaningless to your expenses on your Q2-4 ACA plan.