Yes, but given his work status change, I think he has a bit longer? If work ended on 12/5, I think he has a "change of life" status claim that might buy him some time.
As far as Cobra v the ACA, one factor I missed - is OP a big consumer of HC today? Do you have favorite docs/specialists you want to stay with? Cobra may offer more options there, as you literally continue your workplace plan in most cases. Staying on Cobra for up to 18 months would make for an easy slide into Medicare with just a few months to cover on the ACA, costs aside.
you also received a severance? If that was lump sum, fine, of not, if it's serial, that would be 2023 income. But I'm guessing lump given the rest of the details.
A couple of other points to mull over in the next year
- The $25K or so that you need to show is in addition to the Standard Deduction.
-...
Are you sure about that? My impression is that the minimum income requirement is MAGI, which is income before taking the standard deduction. This website seems to agree with that understanding.
https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/
The 10% penalty hurts though and my state charges a penalty of 33% of the federal penalty so 13.333% penalty overall. I hope to not have to do that very often.
So just convert to your Roth instead of taking an early distribution.
If you don't have cash on hand to pay the taxes, there's a way to address that. Say your income target indicates pulling $50K from pre tax accounts. You tinker with the split 45K + 5K, etc until you get to a split that if you convert the first amount, the second amount is the extra cash you need to cover the taxes. Then you do two transactions, the big one is the conversion, and the smaller one is for taxes. And to make it really easy, just apply the whole amount to withholding, essentially cutting a check to the IRS directly out of your pre-tax account.I will do that if I can but not everyone has the cash on hand to do that. I didn't feel confident letting my cash get so low by doing the conversion this year but I hope to do it next year if I need to get additional income. It will be a year-to-year decision based on my cash level.
If you don't have cash on hand to pay the taxes, there's a way to address that. Say your income target indicates pulling $50K from pre tax accounts. You tinker with the split 45K + 5K, etc until you get to a split that if you convert the first amount, the second amount is the extra cash you need to cover the taxes. Then you do two transactions, the big one is the conversion, and the smaller one is for taxes. And to make it really easy, just apply the whole amount to withholding, essentially cutting a check to the IRS directly out of your pre-tax account.
I don't know why you all are bending over backwards to avoid Medicaid, it is the best coverage you can get and it is free. I literally can't be billed in my state.
YMMV. All the docs and specialists are in my Managed Care plan so I see no difference in quality.For starters, the number of doctors who take Medicaid patients is often very limited. One of my young friends was on it for a while. She needed a specialist and the only one she could find who took Medicaid was a young guy with a new practice 30+ miles from her home. Not so good.
For starters, the number of doctors who take Medicaid patients is often very limited. One of my young friends was on it for a while. She needed a specialist and the only one she could find who took Medicaid was a young guy with a new practice 30+ miles from her home. Not so good.
You had indicated that you were contemplating a conversion, and I wasn't aware of the magnitude. If your pre-tax assets aren't that big, then a conversion is probably not going to be helpful; conversions help reduce the RMD 'tax torpedo' and that's probably less of an issue with lower pre-tax balances.I would only be taking money out of my IRA if I needed it go get my MAGI up to 100% FPL. If I don't make enough money to get to FPL then I need the money not only to qualify for ACA subsidies but also to live on. I live very cheap but even I have a hard time living on $13K/yr. I don't have the income or the net worth that everyone else here has so I can understand that it would be hard for you to relate.
Somewhat similar position as OP. Planning on retirement 5/1/23 and we are 62. I plan to keep Cobra for the 18 months, then do ACA or short term for the 8-10 month gap to Medicare. The reason I'm staying away from ACA is because of the ACA in GA. Our options and plans are terrible. All HMO's with no PPO's available and a very limited network of physicians. Plus we have some extended travel planned for the remainder of 2023. So, is Cobra cheap, no not at all but I feel it's the best option given what's available in GA.
If anyone know's better or has experience with ACA in GA, I'm open to suggestions.
The healthcare system is so screwed up. We live in Texas and as the other poster indicated, the ACA plans are terrible, HMO's only with very narrow networks. Being older, we need specialists for certain health issues and now we are pretty much screwed. Wife has gone back to work to at least have decent healthcare, even though we have plenty of assets and don't need the working income. Just need healthcare. Ridiculous.
Wife has gone back to work to at least have decent healthcare, even though we have plenty of assets and don't need the working income. Just need healthcare. Ridiculous.
Since we have such bad options, I'll either stick with Cobra as I've said, or do the ACA HMO with the crappy networks. Then we'll just self insure and pay out of pocket for our current providers out of network and use the ACA policy as a major medical type policy for something catastrophic. We'll have about 26 months of need to Medicare.
Has anyone else taken this approach with ACA HMO's.