ACA CSR94 Balancing Act Question

[Max Valerion]

I would like to clarify something that AI told me about ACA subsidies.

I live in Indiana and my goal is to stay in the CSR94 range which would be $29,864.00 - $32,460.00 in 2026 (can't earn too much but also can't earn too little or risk triggering Medicaid).

If I feel my MAGI is going to be too low I can do a conversion from Traditional IRA to Roth IRA to create some income, is that correct?

If I end up with MAGI that is too high I can make a contribution from cash to Traditional IRA to lower my income, is that correct?

The Roth conversion needs to be done in the calendar year I am dealing with but cash contribution can be done up until tax time the following year, is that correct?

So if I estimate in the range for 2027 but then come Jan 2028 I realize I made too much I can contribute to my Traditional IRA anytime prior to April 15, 2028 and still lower my MAGI into the range for 2027, is that correct?

 

[Aerides]

Cathy63 will no doubt have the details (she's expert at this stuff), but how much you can contribute is the question (hint, it's not the max you think). I believe it's tied to earned income. DH and I do this but for the last two years (despite my tiny business) we can only put about $2500 each into our IRAs. I don't believe an earned income in the mid-30's is going to qualify you for much, so look into what you might actually be able to contribute.

HSA contributions, however, do come off your MAGI for the full amount, so there's that.

 

[RetiredHappy]

Traditional IRA contribution has to be made with earned income. If you are retired, you cannot contribute to it.

 

[Max Valerion]

Traditional IRA contribution has to be made with earned income. If you are retired, you cannot contribute to it.

Yeah AI just told me that lol.

I guess I just have to wait until last week of 2027 to calculate where my MAGI is and then do the Roth conversion so I don't overshoot?

 

[PlayinwithFIRE]

Yes-unless it is very predictable income for the year, i think many wait towards end of year to
take a stab at it.

Some investment drop big dividends at end of year which can throw off total income right at the end.

pwf

 

[Fermion]

The only late game trick I know about to reduce your MAGI last minute is to sell some stocks (or bonds now with rates rising) for a loss and this allows you to deduct up to $3,000 against ordinary income once you have offset any capital gains. The other neat trick about this is it does not use up the capital loss. A $3000 capital loss is good for reducing your MAGI by $30,000 over a decade. A very weird tax law quirk.

 

[SecondCor521]

I would like to clarify something that AI told me about ACA subsidies.

I live in Indiana and my goal is to stay in the CSR94 range which would be $29,864.00 - $32,460.00 in 2026 (can't earn too much but also can't earn too little or risk triggering Medicaid).

Correct conceptually, but I couldn't verify your numbers because you didn't provide your ACA family size. The numbers you gave don't match what I found. Also, please clarify if you're referring to AGI or taxable income.

The correct range is an ACA MAGI of 138% to 150% of FPL for your family size and for the coverage year in question, whatever that works out to be.

If I feel my MAGI is going to be too low I can do a conversion from Traditional IRA to Roth IRA to create some income, is that correct?

Correct. You can also realize capital gains, which will add to ACA MAGI.

If I end up with MAGI that is too high I can make a contribution from cash to Traditional IRA to lower my income, is that correct?

As others mentioned, you can if you have eligible compensation, which can be from a W-2 job, or from self employment net income.

The contribution limit is the lesser of your eligible compensation or ~$8K-ish depending on your age. There are also contribution phaseouts for high incomes.

There are also spousal contributions, so you may be able to contribute if, for example, you are retired but your spouse has eligible compensation.

The Roth conversion needs to be done in the calendar year I am dealing with but cash contribution can be done up until tax time the following year, is that correct?

Correct. As others have noted, if you're an HSA eligible individual, then an HSA contribution works and is on the same deadline too.

So if I estimate in the range for 2027 but then come Jan 2028 I realize I made too much I can contribute to my Traditional IRA anytime prior to April 15, 2028 and still lower my MAGI into the range for 2027, is that correct?

Again, yes but subject to the eligible compensation and contribution limit rules.

 

[Max Valerion]

Correct conceptually, but I couldn't verify your numbers because you didn't provide your ACA family size. The numbers you gave don't match what I found. Also, please clarify if you're referring to AGI or taxable income.

The correct range is an ACA MAGI of 138% to 150% of FPL for your family size and for the coverage year in question, whatever that works out to be.



Correct. You can also realize capital gains, which will add to ACA MAGI.



As others mentioned, you can if you have eligible compensation, which can be from a W-2 job, or from self employment net income.

The contribution limit is the lesser of your eligible compensation or ~$8K-ish depending on your age. There are also contribution phaseouts for high incomes.

There are also spousal contributions, so you may be able to contribute if, for example, you are retired but your spouse has eligible compensation.



Correct. As others have noted, if you're an HSA eligible individual, then an HSA contribution works and is on the same deadline too.



Again, yes but subject to the eligible compensation and contribution limit rules.

I will be married filing jointly. I will have to verify the 2027 range later this year.

 

[SecondCor521]

I will be married filing jointly. I will have to verify the 2027 range later this year.

Then your OP numbers look right to me for 2026.

The other thing I was going to mention is that, as far as I know, while ACA APTC is reconciled on your tax return, CSR94 is not. So if you can get your Indiana marketplace to accept your income estimate and your estimate is in good faith on your part, and it falls in that AGI range, then you'll get CSR94 that year regardless of how your tax return actually turns out. You will still have to reconcile APTC on your tax return.

Oh, and to get CSRs you have to choose a Silver plan, but if you're in the CSR94 range a CSR Silver plan is very likely the most attractive choice anyway.

 

[cathy63]

If I feel my MAGI is going to be too low I can do a conversion from Traditional IRA to Roth IRA to create some income, is that correct?

You don't actually have to get your MAGI over 138% of the FPL. They don't take away your CSR or PTC if you don't get over that hurdle. The main risk of having too low an income would be that they try to force you into Medicaid the next year or make you provide extra proof of income.

If you end up with higher income than you estimated you will have to pay back some (or all) of the Advance PTC you received.

 

[jim584672]

You don't want Medicaid with the work requirements in 2027. Make sure you never report monthly income under $1,836 to avoid it.

 

[GenXguy]

Yeah AI just told me that lol.

I guess I just have to wait until last week of 2027 to calculate where my MAGI is and then do the Roth conversion so I don't overshoot?

You don't need to worry about overshooting much. The DMI is $12,000 based on the latest tax filing on record. But if you overshoot the CSR94 level, you only have to pay back PTC dollars beyond what you were should have gotten based on income, and you don't have to pay back any CSR subsidies that kept your out of pocket costs much lower. Plus, you can sign up on Nov 1 near the end of the year for CSR94 for the following year before you even know you exceeded your current coverage year estimate. This happened to me on CSR87 my first year on ACA. I exceeded my estimate my several thousand due to late year dividends. No problems. I got my MAGI income down for following years.