The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Greystache on October 15, 2014, 08:21:49 PM
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Here is my situation. I am retiring at the end of the year. My wife will retire in June 2015. Since I lose my company health care at the end of the year and my wife's employer provides really crappy health care options, we decided to go with Obama Care for 2015. Between my pension payment $50K and her salary ($15K AGI) we will be just over the income limit for health care tax credits ($62K) for household of 2. We need to reduce our MAGI by about $3K, otherwise out healthcare premium costs will just about double. My wife is maxing out her 403b. What can we do to reduce our MAGI? Will contributing to an IRA help? Contributing to an HSA? Other healthcare options besides Obama Care? My employer offers COBRA coverage but it is even more expensive.
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MAGI under the ACA (http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pdf)
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There is one surefire way, don't work. Does your wife really need to earn that $15k? Particularly if its going to cost you a few thousand, why earn the money in the first place?
If she's obligated to work, maybe she can negotiate with her boss and reduce wages in exchange for 100% health coverage while she works. That gives you less taxable income and less premiums to pay.
MAGI is tricky. It's different for nearly every issue.
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your income appears to place you in the eligibility range for a deductible tIRA, and your wife has earned income so you should qualify.
Contributing at least 3k to that should solve your problem.
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I think HSA and traditional IRA contributions are your best bet. Also if you have some stock in taxable accounts, net losses of up to $3,000 can be deducted from your MAGI.