Author Topic: FIRE and the affordable care act.  (Read 1970 times)

Lynda

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FIRE and the affordable care act.
« on: August 22, 2016, 08:45:48 AM »
If we retire before 65, how do my husband and I cover our sick care coverage and that of our 2 kids who are still under 26?

I know the obvious answer is Obamacare, but I'm looking for some detail.
 
On the "Estimate financial help" screen, what do I list as my income? What are the ethics of the answer?

We're relatively healthy, but my husband and I are also mid to late 50s. Is it too risky to have a high deductible plan at our ages?

I've read MMM article on this but I'm not sure what has changed since that writing and how much our being older than his family should influence our decisions.

jim555

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Re: FIRE and the affordable care act.
« Reply #1 on: August 22, 2016, 09:10:21 AM »
You need to do some Googling for these questions.  Best of luck.

Classical_Liberal

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Eric

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Re: FIRE and the affordable care act.
« Reply #3 on: August 22, 2016, 01:23:07 PM »
Have you read through the stickied thread at the top of this forum?
http://forum.mrmoneymustache.com/ask-a-mustachian/information-on-the-affordable-care-act-with-a-focus-on-early-retirees/


On the "Estimate financial help" screen, what do I list as my income? What are the ethics of the answer?

List your projected income amount upon retiring.  This would generally match your spending amount.  There is no ethical decision to make.  If you're wrong, you'll just make up for it when you file your taxes. 

seattlecyclone

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Re: FIRE and the affordable care act.
« Reply #4 on: August 22, 2016, 01:30:22 PM »
List your projected income amount upon retiring.  This would generally match your spending amount.  There is no ethical decision to make.  If you're wrong, you'll just make up for it when you file your taxes. 

Your income might match your spending. It might also be quite a bit less. It really depends on where your retirement money is coming from. If you have some money in taxable accounts, only the dividends and capital gains count as income, not withdrawals of principal. HSA withdrawals don't count as income, nor do withdrawals of Roth IRA principal.

Eric

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Re: FIRE and the affordable care act.
« Reply #5 on: August 22, 2016, 01:32:02 PM »
List your projected income amount upon retiring.  This would generally match your spending amount.  There is no ethical decision to make.  If you're wrong, you'll just make up for it when you file your taxes. 

Your income might match your spending. It might also be quite a bit less. It really depends on where your retirement money is coming from. If you have some money in taxable accounts, only the dividends and capital gains count as income, not withdrawals of principal. HSA withdrawals don't count as income, nor do withdrawals of Roth IRA principal.

Good point!

Trudie

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Re: FIRE and the affordable care act.
« Reply #6 on: August 22, 2016, 03:18:42 PM »
Read the thread on the topic.  This will give you the best insight on how the program works.

In terms of estimating your income for qualifying for subsidies, line 37 (AGI) is what will determine what subsidies you are eligible for, if any.  Print off a few blank copies of the 1040 and start playing around with numbers.  Better yet, if you have Turbotax, enter some dummy returns in the software using different scenarios and see how it comes out.  If you are within 400% of the poverty level for a family of your size you can still be eligible for subsidies.

Sources of income matter when projecting your AGI.  For instance, Roth IRAs are reported when distributed, but are not taxable so do not get carried down to line 37.  Assuming capital gains laws don't change, a significant amount of capital gains are excluded from taxable income. 

As for the ethics, I'm not sure what you mean there.  The important thing is, "Are you honest on your tax returns?"  To me that's the ethical question. 

seattlecyclone

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Re: FIRE and the affordable care act.
« Reply #7 on: August 22, 2016, 04:27:21 PM »
Assuming capital gains laws don't change, a significant amount of capital gains are excluded from taxable income.

This is not true. Capital gains still count toward your MAGI, even when you're in a tax bracket where this income is taxed at a rate of 0%. This is an important distinction for ACA purposes: even if you're in a low enough tax bracket to have tax-free capital gains, this income can still have an effect on your ACA subsidies so the actual tax rate you pay on this income may well be greater than 0%.