Author Topic: Question about sweet spot for ACA subsidy  (Read 2666 times)

AlmstRtrd

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Question about sweet spot for ACA subsidy
« on: March 23, 2015, 07:07:34 AM »
I'm not on this site much so apologies if this has been covered...

I am a resident of New York State and trying to figure out how much $ to contribute to a Regular Individual 401k (which brings down my taxable income) versus how much to contribute to an Individual 410k Roth (which doesn't bring down my taxable income). Leaving aside the question of whether or not I want this money in a Roth vs. traditional account in the long run, I'm trying to find out what the sweet spot is for New York State on income, i.e. at what level of income I get the largest ACA subsidy.

Hope that makes sense. I have seen this "sweet spot" referred to a few times on this site and elsewhere. What I get from those references is that while it's clearly not as advantageous to make "too much" money, it's also not ideal to make "too little." Just to clarify, it's my AGI that I am trying to tweak.

Many thanks in advance for any help.

teen persuasion

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Re: Question about sweet spot for ACA subsidy
« Reply #1 on: March 23, 2015, 07:33:13 AM »
I think it is over 138% of FPL for your family size to stay out of Medicaid in NY.  The complication is that Medicaid and ACA subsidies use different methods to figure eligibility.  ACA is based on MAGI, while Medicaid is based on current monthly income, not annualized.  I do not like the NYStateofHealth website - you can't input different income ranges to test out scenarios, once you put in a number all forward calculations are based on that, and changing inputs locks the SW up.  Phone reps vary in skill - I've gotten useless ones and helpful ones.  I would look for a facilitator to walk you thru the process and help you navigate the rules, because it is a boondoggle.

AlmstRtrd

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Re: Question about sweet spot for ACA subsidy
« Reply #2 on: March 23, 2015, 08:04:54 AM »
Thanks for that, teen persuasion. I had forgotten that I used a facilitator last year when signing up. Also didn't realize that NY State of Health bases its subsidies on MAGI instead of AGI.

AlmstRtrd

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Re: Question about sweet spot for ACA subsidy
« Reply #3 on: March 23, 2015, 08:44:19 AM »
OK, so for anyone else in my shoes, the ACA subsidies for New York State of Health kick in at a MAGI of $16,105 and are completely phased out at a MAGI of $46,681. For many people in my income bracket, how much one pays for health insurance through the marketplace can be partly controlled by what kind of retirement account one contributes to (deductible versus Roth). Again, thanks teen p.