Health insurance subsidy calculator

[Animorph]

Absolutely. A 1,582% economic cost ignoring income taxes!!! I think I'll target $58k so I'll have some breathing room for unanticipated items or if a deduction is denied upon audit or something like that.

Yeah, after DS leaves I'll be at that $60k level I guess. Clearly not worth $10k for an extra $10k-$15k of Roth conversions. But that's a good thing overall. HI will be less than budgeted.

 

[rbmrtn]

If I recall correctly, MAGI does NOT include SS payments. Anyone care to comment?

If that is so, I can think of about 12,000 good reasons to take it as soon as possible.

I think does. This was taken from an IRS bulletin


" MAGI is defined under section 36B as the taxpayer’s adjusted gross income defined under section 62, increased by three components: (1) any amount excluded from gross income under section 911, (2) any amount of interest received or accrued by the taxpayer during the taxable year that is exempt from tax, and (3) the amount of social security benefits of the taxpayer excluded from gross income under section 86 for the tax year."

Full link...

Internal Revenue Bulletin - June 4, 2012 - REG-119632-11

 

[Cut-Throat]

If I recall correctly, MAGI does NOT include SS payments. Anyone care to comment?

If that is so, I can think of about 12,000 good reasons to take it as soon as possible.

The only reason to take SS at an early age is if you need the money to survive. IOW - Your portfoilo is not big enough.

 

[pb4uski]

The only reason to take SS at an early age is if you need the money to survive. IOW - Your portfoilo is not big enough.

Oh, while I agree with you, please don't go there. This thread is on a good tangent and I would hate to see it derailed.

 

[marko]

The only reason to take SS at an early age is if you need the money to survive. IOW - Your portfoilo is not big enough.

I agree with you as well.
The only reason would be is IF SS was NOT counted in determining MAGI, it would be easier to stay under the $60K subsidy level...that would be good enough reason to take it early and pocket about $10K in subsidies. I assume that's why the law was changed.

 

[Zantastic]

I plan to have my income be higher than the Medicaid limit because I would rather have private insurance than Medicaid. I'm thinking that I will limit my Roth conversions so I am just inside the subsidy income limit.

That's what I'm thinking, too.

 

[pb4uski]

Another thing I question about the Berkeley calculator is that it only looks at the age of the youngest covered adult. Let's say there are two families of three: One is a single parent with two college age children (family A); the other is a couple with one college age child (Family B).

Let's say the ages of Family A are: 43, 22, 20.

Let's say the ages of Family B are: 62, 60, 19.

You would think Family B is more costly to insure, right? But if all you look at is the age of the youngest, if *anything* this calculator would indicate Family A would cost more because the youngest is older.

That can't be right... can it?

Doesn't sound right to me. I suspect it is an oversimplification in the website. But it is still more flexible than the Kaiser calculator which could only do singles or family of 4.

Perhaps the more important numbers to focus on is the % of income/premium cost to family since those numbers don't change with age. The subsidy is just the excess of the health insurance premium over the cost to the family (which is a % of income based on family size).

 

[meierlde]

Another thing I question about the Berkeley calculator is that it only looks at the age of the youngest covered adult. Let's say there are two families of three: One is a single parent with two college age children (family A); the other is a couple with one college age child (Family B).

Let's say the ages of Family A are: 43, 22, 20.

Let's say the ages of Family B are: 62, 60, 19.

You would think Family B is more costly to insure, right? But if all you look at is the age of the youngest, if *anything* this calculator would indicate Family A would cost more because the youngest is older.

That can't be right... can it?

Note that the age based premiums can vary by a factor of 3.

 

[Fermion]

Very interesting thing. I put in 2 people at age 45 youngest (other will be 46).

At 30,200 gross annual income, the premium is $158 a month with limit on co-pays and such at $4033.

At 30,300 gross annual income, the premium is $159 a month with limit on co-pays and such jumping to $6050.

So that extra $100 income could cost you over $2000 a year.

Note these figures are near 200% poverty level and represent a different cliff than the 399% one.

So many sharp edges to this

 

[obgyn65]

I am not getting the same results with the two calculators (Kaiser and Berkeley). I guess we should wait a few more months to have a clearer idea of how the subsidy / premium combinations work. .

So many sharp edges to this

 

[Sue J]

I think it was this one from berkeley

National Health Reform Calculator

I like this calculator better, too.

So if your family size is 2, then the stated monthly premium is for coverage for both people, correct? My situation is that there are 2 of us in the household but only one of us will need the insurance coverage, DH will be covered by a subsidized retiree plan that will be eliminating coverage for spouses.

I'm still not clear if I should use joint household income or just mine since I'm the only one that needs the insurance. Can I even get insurance for just me or will we have to get coverage for both of us? In the next couple of years DHs subsidy for his retiree plan may drop so low and his cost increase so much that coverage with a plan that covers both of us may be the best solution. But that's a few years down the road. For 2014 through about 2017 I'm looking for coverage for just me.

 

[foxfirev5]

I can see a scenario where it might pay to take a big 401k distribution in 2013 for extra cash on hand. AGI minimization may be a new objective.

 

[pb4uski]

I can see a scenario where it might pay to take a big 401k distribution in 2013 for extra cash on hand. AGI minimization may be a new objective.

But a big 401k distribution would increase 2013 income and that 2013 income would probably be used to determine either 2015 or 2014 subsidies, so I don't think that is a great idea.

I'm assuming that 2012 tax return data will be used to determine 2014 subsidies, at least initially; and that the 2014 subsidy might be later adjusted to reflect 2013 tax return data. From the information currently available it is not clear.

 

[Fermion]

But a big 401k distribution would increase 2013 income and that 2013 income would probably be used to determine either 2015 or 2014 subsidies, so I don't think that is a great idea.

I'm assuming that 2012 tax return data will be used to determine 2014 subsidies, at least initially; and that the 2014 subsidy might be later adjusted to reflect 2013 tax return data. From the information currently available it is not clear.

I hope not! We will be retiring in 2015 and needing this insurance and have a big income in 2013.

I was under the impression the subsidy was a refundable tax credit that they advance you, so it would be based on your income for the year in which the insurance is purchased. So the 2015 subsidy is based on your projected income for 2015. If you miss your projection and make more money in 2015, you have to repay a portion of the advanced tax credit when you file your 2015 tax return.

 

[pb4uski]

I hope not! We will be retiring in 2015 and needing this insurance and have a big income in 2013.

I was under the impression the subsidy was a refundable tax credit that they advance you, so it would be based on your income for the year in which the insurance is purchased. So the 2015 subsidy is based on your projected income for 2015. If you miss your projection and make more money in 2015, you have to repay a portion of the advanced tax credit when you file your 2015 tax return.

I hope it works the way you think it does. It would make my 2012 tax planning much easier and it will be fun to watch the feds going back and collecting overcredits that they have made to taxpayers.

 

[Fermion]

I hope it works the way you think it does. It would make my 2012 tax planning much easier and it will be fun to watch the feds going back and collecting overcredits that they have made to taxpayers.

They did this already when they advanced credits for the taxpayer relief stimulous thing a few years back. They are pretty good about getting their money back if you miscalculate.

 

[pb4uski]

I hope not! We will be retiring in 2015 and needing this insurance and have a big income in 2013.

I was under the impression the subsidy was a refundable tax credit that they advance you, so it would be based on your income for the year in which the insurance is purchased. So the 2015 subsidy is based on your projected income for 2015. If you miss your projection and make more money in 2015, you have to repay a portion of the advanced tax credit when you file your 2015 tax return.

I hope it works the way you think it does. It would make my 2012 tax planning much easier and it will be fun to watch the feds going back and collecting overcredits that they have made to taxpayers.

I found the IRS reg and it does seem to work the way you though it did. We'll get a credit to our premiums paid directly to the insurer in 2014 and when we do our 2014 tax returns will need to reconcile the credits we were due based on our 2014 tax return income with the credits we received and then either pay back or receive the difference.

§1.36B-4 Reconciling the premium tax credit with advance credit payments.
(a) Reconciliation--(1) Coordination of premium tax credit with advance credit
payments--(i) In general. A taxpayer must reconcile the amount of credit allowed under section 36B with advance credit payments on the taxpayer’s income tax return for a taxable year. A taxpayer whose premium tax credit for the taxable year exceeds the taxpayer’s advance credit payments may receive the excess as an income tax refund. A taxpayer whose advance credit payments for the taxable year exceed the taxpayer’s premium tax credit owes the excess as an additional income tax liability.

Also see: https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-12421.pdf

 

[marko]

So what I'm reading here is that we don't have to juggle our 2013 income and instead will get a refund of some sort (if appropriate) in 2015 on our 2014 income. Is that the idea?

If so, wouldn't we be forced to increase our 2014 income to make the HC premiums? That could force some over the line. Or would the premiums be a deductible?

Or is it too soon to know any of this?

 

[Fermion]

So what I'm reading here is that we don't have to juggle our 2013 income and instead will get a refund of some sort (if appropriate) in 2015 on our 2014 income. Is that the idea?

If so, wouldn't we be forced to increase our 2014 income to make the HC premiums? That could force some over the line. Or would the premiums be a deductible?

Or is it too soon to know any of this?

No, they will advance you the money in 2014 to pay the HC premium and you won't have to pay back the advance if you are able to claim the subsidy as a tax credit on your 2014 return you file in 2015. Like i said, it kind of works like the stimulous checks they mailed out a few years ago, except I am not sure in what form they will advance the money or if they will just pay the insurer for you.

 

[pb4uski]

The advances go directly to the insurer from what I have read.

So I think for me, I can do Roth conversions up to the top of the 15% bracket in 2012 and 2013 as the subsidies will not be a constraint for those years, but in 2014 the 399% FPL will be the constraint.

 

[Fermion]

The advances go directly to the insurer from what I have read.

So I think for me, I can do Roth conversions up to the top of the 15% bracket in 2012 and 2013 as the subsidies will not be a constraint for those years, but in 2014 the 399% FPL will be the constraint.

I want to stay far below the 399% FPL Just in the premium difference, there is an extra $5000 to be had if you are at 150% of FPL than 300% (for a married couple, no kids).

This would be like losing $5000 on $30000 of additional income, which is like an additional 16% tax. it actually looks worse than that on some of the calculators if you factor in the deductable portion increasing with income. Not to mention you are also paying more federal income tax on a 60,000 income than a 30,000 income.

I wonder if it works out to something like you take home $48,000 with a $60,000 income after taxes and the lower HC subsidy and you take home $28,000 of the $30,000 income. Would be a big advantage to having your house paid off such that you can easily live on the lower income...

 

[foxfirev5]

Another reason why I shouldn't have contributed excessively to my 401k over the years. Will Roth distributions count as MAGI for the subsidy?

 

[ShokWaveRider]

And Why do some folks want to repeal this?

 

[marko]

So they advance about $10K (per family of 2) to the insurer. If you're tax return is below the wire, you're clean. If you end up above the wire by even $1, you owe them $10K in additional "tax".

It sounds good, but I can see a lot of problems in them getting people in the $60K ($60,001K) income range to cough up $10K at year's end.

This sounds like a great opportunity for some smaht people to come up with a "calculator".

 

[Aiming_4_55]

Interesting... just used the UC calculator for the first time to amuse myself. If this is accurate and holds true, many more options will apply to my semi-ER plans.

Any restrictions for a mid-40s individual from going to part time work and qualifying?