Calculating MAGI once FIRE for ACA purposes (US only)

[ysette9]

Have I put enough acronyms in the subject of this post yet? :)

Looking forward to FIRE I realize that I don't understand how to calculate MAGI (modified adjusted gross income) for the purposes of knowing how much we would qualify for in ACA subsidies. I had ignorantly assumed that if we needed $x/yr to live on then our income would be $x and so that would determine what subsidies we could get. However, that isn't the case.

I tried looking this stuff up online but everything I read started with earned income and made adjustments from there, and I'm not sure what to do with that. Can anyone point me to a formula or calculator?

[seattlecyclone]

Per healthcare.gov,

Your MAGI is the total of the following for each member of your household who’s required to file a tax return:

* Your adjusted gross income (AGI) on your federal tax return
* Excluded foreign income
* Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
* Tax-exempt interest
* MAGI does not include Supplemental Security Income (SSI)

[Monkey Uncle]

I will add a couple of things I've learned about ACA MAGI during my first year of FIRE.

If you still have any W-2 or self-employment income at all, stuff as much of it as you can into qualified retirement accounts.  That gets it out of your AGI, and thus out of your MAGI.  If you have a choice between earning W-2 income and self-employment income, choose self-employment because you can put way more of that into a solo 401k and IRA.  Whatever you do, don't use these earnings to fund living expenses until you've totally maxed out all of your qualified retirement account contributions.  You are better off pulling money out of investments to fund living expenses (see below).

If you are pulling money out of investments to fund living expenses, emphasize qualified Roth withdrawals (if you are old enough) and seasoned Roth conversions.  These funds were already taxed when you put them in the Roth, so they don't count toward AGI/MAGI when you pull them out.  Use your standard deduction to cover additional Roth conversions.  Sell investments in a taxable account as a last resort, because any capital gains add to your AGI/MAGI.  If you have to sell taxable investments, look for opportunities to realize capital losses to offset the gains.  Not saying you should lose money on purpose, but if you are holding some losers, they can be an opportunity to fund living expenses without reducing your premium tax credit.

If you have the opportunity to make some extra money beyond the amount necessary to fill up your retirement accounts, run the numbers carefully to see what impact it will have on your premium tax credit and cost sharing.  If you are near the sweet spot where the PTC is covering almost all of your premium, earning extra money causes a pretty steep decline in your PTC.  In addition, it causes an even steeper decline in the cost-sharing amount that covers part of your deductible and co-payments.  I had an opportunity to earn some extra money this year, and in my personal situation the combined reduction in PTC and cost sharing was so steep that if I had gotten sick, it might have actually cost me more than the extra money I earned.  I went ahead and did it anyway, and the gamble paid off since I didn't get sick.  Even so, I only get to keep about 60% of what I earned due to the reduction in PTC.  Mine was somewhat of a unique situation, because I had some earnings from my job at the beginning of the year, and those filled up my retirement accounts and my standard deduction, so I had nowhere to hide the side gig money.  Bottom line, run the numbers for your own situation, considering the likelihood that you'll incur major health expenses.

[rantk81]

I will add a couple of things I've learned about ACA MAGI during my first year of FIRE.

If you still have any W-2 or self-employment income at all, stuff as much of it as you can into qualified retirement accounts.  That gets it out of your AGI, and thus out of your MAGI.  If you have a choice between earning W-2 income and self-employment income, choose self-employment because you can put way more of that into a solo 401k and IRA.  Whatever you do, don't use these earnings to fund living expenses until you've totally maxed out all of your qualified retirement account contributions.  You are better off pulling money out of investments to fund living expenses (see below).

If you are pulling money out of investments to fund living expenses, emphasize qualified Roth withdrawals (if you are old enough) and seasoned Roth conversions.  These funds were already taxed when you put them in the Roth, so they don't count toward AGI/MAGI when you pull them out.  Use your standard deduction to cover additional Roth conversions.  Sell investments in a taxable account as a last resort, because any capital gains add to your AGI/MAGI.  If you have to sell taxable investments, look for opportunities to realize capital losses to offset the gains.  Not saying you should lose money on purpose, but if you are holding some losers, they can be an opportunity to fund living expenses without reducing your premium tax credit.

If you have the opportunity to make some extra money beyond the amount necessary to fill up your retirement accounts, run the numbers carefully to see what impact it will have on your premium tax credit and cost sharing.  If you are near the sweet spot where the PTC is covering almost all of your premium, earning extra money causes a pretty steep decline in your PTC.  In addition, it causes an even steeper decline in the cost-sharing amount that covers part of your deductible and co-payments.  I had an opportunity to earn some extra money this year, and in my personal situation the combined reduction in PTC and cost sharing was so steep that if I had gotten sick, it might have actually cost me more than the extra money I earned.  I went ahead and did it anyway, and the gamble paid off since I didn't get sick.  Even so, I only get to keep about 60% of what I earned due to the reduction in PTC.  Mine was somewhat of a unique situation, because I had some earnings from my job at the beginning of the year, and those filled up my retirement accounts and my standard deduction, so I had nowhere to hide the side gig money.  Bottom line, run the numbers for your own situation, considering the likelihood that you'll incur major health expenses.

I've been wanting to read someone's insight on this topic for quite a while. The info in your post is awesome.  Thanks!

[ysette9]

And estimating what my AGI would be on my federal tax return for the first year of FI?

I’ll look this up when I get a chance, but if you have an easy link to share, I’d appreciate it.

For as much as I love the investment stuff, for some reason I just hate the tax side of the coin. I’m not sure why my brain stalls on this stuff.

***
Edit:
Looking at this it appears our Income will be a combo of dividends and interest on investments and savings. Where I start to get fuzzy is how things are treated for selling taxable investments. I believe “income” is the amount of my taxable investment I sell that is above and beyond the original contributions I made to the account, correct?

So if my taxable account has $100k in it and $80k of that is my contributions, then if I take $10k out, my “income” should be $2k, not $10k. I think.

https://www.investopedia.com/financial-edge/0312/how-to-calculate-agi-for-tax-purposes.aspx

[ysette9]

I will add a couple of things I've learned about ACA MAGI during my first year of FIRE.

If you still have any W-2 or self-employment income at all, stuff as much of it as you can into qualified retirement accounts.  That gets it out of your AGI, and thus out of your MAGI.  If you have a choice between earning W-2 income and self-employment income, choose self-employment because you can put way more of that into a solo 401k and IRA.  Whatever you do, don't use these earnings to fund living expenses until you've totally maxed out all of your qualified retirement account contributions.  You are better off pulling money out of investments to fund living expenses (see below).

If you are pulling money out of investments to fund living expenses, emphasize qualified Roth withdrawals (if you are old enough) and seasoned Roth conversions.  These funds were already taxed when you put them in the Roth, so they don't count toward AGI/MAGI when you pull them out.  Use your standard deduction to cover additional Roth conversions.  Sell investments in a taxable account as a last resort, because any capital gains add to your AGI/MAGI.  If you have to sell taxable investments, look for opportunities to realize capital losses to offset the gains.  Not saying you should lose money on purpose, but if you are holding some losers, they can be an opportunity to fund living expenses without reducing your premium tax credit.

If you have the opportunity to make some extra money beyond the amount necessary to fill up your retirement accounts, run the numbers carefully to see what impact it will have on your premium tax credit and cost sharing.  If you are near the sweet spot where the PTC is covering almost all of your premium, earning extra money causes a pretty steep decline in your PTC.  In addition, it causes an even steeper decline in the cost-sharing amount that covers part of your deductible and co-payments.  I had an opportunity to earn some extra money this year, and in my personal situation the combined reduction in PTC and cost sharing was so steep that if I had gotten sick, it might have actually cost me more than the extra money I earned.  I went ahead and did it anyway, and the gamble paid off since I didn't get sick.  Even so, I only get to keep about 60% of what I earned due to the reduction in PTC.  Mine was somewhat of a unique situation, because I had some earnings from my job at the beginning of the year, and those filled up my retirement accounts and my standard deduction, so I had nowhere to hide the side gig money.  Bottom line, run the numbers for your own situation, considering the likelihood that you'll incur major health expenses.

I appreciate the details.

I find it interesting that you advise spending the taxable account last, as I have received exactly the opposite advise as well. I thought it was best to spend taxable first, doing Roth conversions when you can, then Roth contributions, and hope that takes you to Roth IRA concession land and then old age.

[Monkey Uncle]

I will add a couple of things I've learned about ACA MAGI during my first year of FIRE.

If you still have any W-2 or self-employment income at all, stuff as much of it as you can into qualified retirement accounts.  That gets it out of your AGI, and thus out of your MAGI.  If you have a choice between earning W-2 income and self-employment income, choose self-employment because you can put way more of that into a solo 401k and IRA.  Whatever you do, don't use these earnings to fund living expenses until you've totally maxed out all of your qualified retirement account contributions.  You are better off pulling money out of investments to fund living expenses (see below).

If you are pulling money out of investments to fund living expenses, emphasize qualified Roth withdrawals (if you are old enough) and seasoned Roth conversions.  These funds were already taxed when you put them in the Roth, so they don't count toward AGI/MAGI when you pull them out.  Use your standard deduction to cover additional Roth conversions.  Sell investments in a taxable account as a last resort, because any capital gains add to your AGI/MAGI.  If you have to sell taxable investments, look for opportunities to realize capital losses to offset the gains.  Not saying you should lose money on purpose, but if you are holding some losers, they can be an opportunity to fund living expenses without reducing your premium tax credit.

If you have the opportunity to make some extra money beyond the amount necessary to fill up your retirement accounts, run the numbers carefully to see what impact it will have on your premium tax credit and cost sharing.  If you are near the sweet spot where the PTC is covering almost all of your premium, earning extra money causes a pretty steep decline in your PTC.  In addition, it causes an even steeper decline in the cost-sharing amount that covers part of your deductible and co-payments.  I had an opportunity to earn some extra money this year, and in my personal situation the combined reduction in PTC and cost sharing was so steep that if I had gotten sick, it might have actually cost me more than the extra money I earned.  I went ahead and did it anyway, and the gamble paid off since I didn't get sick.  Even so, I only get to keep about 60% of what I earned due to the reduction in PTC.  Mine was somewhat of a unique situation, because I had some earnings from my job at the beginning of the year, and those filled up my retirement accounts and my standard deduction, so I had nowhere to hide the side gig money.  Bottom line, run the numbers for your own situation, considering the likelihood that you'll incur major health expenses.

I appreciate the details.

I find it interesting that you advise spending the taxable account last, as I have received exactly the opposite advise as well. I thought it was best to spend taxable first, doing Roth conversions when you can, then Roth contributions, and hope that takes you to Roth IRA concession land and then old age.

If you don't have enough Roth conversions and contributions in the pipeline to fund living expenses, then yes, you'll have to fund living expenses out of your taxable account.  But if you do have enough Roth money, you can spend that without incurring any tax liability, so that generally would be preferable to realizing capital gains in your taxable account.  If your taxable income is low enough, the capital gains will qualify for the 0% tax rate, but the gains still count toward your MAGI that is used to calculate the PTC.

Of course you will have to keep feeding your Roth pipeline with conversions from your tIRA.  If the conversions fit within the standard deduction, you won't owe any tax on them, but they are included in your AGI and thus your MAGI.  But if you're keeping the conversions within the standard deduction, hopefully your MAGI is still low enough to qualify for a substantial PTC.

Here's my withdrawal strategy as I posted it in another thread a while back:

Focus on minimizing tax liability through a Roth ladder.  Convert as much as possible in the early years before SS and pension are fully kicked in.  At that point those sources will use up a good portion of my standard deduction space.

Set taxable account to pay out dividends and capital gains instead of reinvesting.  These will mostly be taxed at the 0% rate given my income level, but they get reported as part of my gross income regardless of what I do with them.  May as well spend them rather than reinvesting them and pulling out more tax-free Roth money than I have to.

Use tax-free Roth contributions and seasoned conversions (and withdrawal of tax-free gains when I reach 59 1/2) to fund the rest of my living expenses (at least those not covered by SS and pension when those sources kick in).

If I am unable to convert all IRA money prior to age 70 1/2, substitute RMD money for a portion of the Roth withdrawals.  I'll be paying taxes on it; may as well spend it.

Save principal in the taxable account for last.  No point in generating additional capital gains if I don't have to.  Basis will step up to current value upon my death, completely avoiding tax liability for the gains (I don't anticipate being in estate tax territory).

All of these tax minimization strategies also serve to keep MAGI down for ACA purposes.  Make sure income is high enough to stay off Medicaid, using additional Roth contributions to generate taxable income as needed.

[Monkey Uncle]

<snip>
Looking at this it appears our Income will be a combo of dividends and interest on investments and savings. Where I start to get fuzzy is how things are treated for selling taxable investments. I believe “income” is the amount of my taxable investment I sell that is above and beyond the original contributions I made to the account, correct?

So if my taxable account has $100k in it and $80k of that is my contributions, then if I take $10k out, my “income” should be $2k, not $10k. I think.

No, it's not that simple.  If you are invested in index funds or other mutual funds and you've been making regular contributions and reinvesting the dividends and capital gains, you have made many different purchases over the years.  Each purchase has a different cost basis.  And you've already paid taxes on all of the gains and dividends that the funds have paid out over the years.  If you simply consider your basis to be the amount of your contributions into the fund, you will be over paying your taxes by a large amount.  The good news is that in recent years (I forget the exact year), mutual fund companies and brokerages have been required to track your average cost basis for you, and they will automatically report that number to you whenever you sell shares.  If you've held your mutual fund shares since before this tracking went into effect, you'll have to dig up all your old statements and figure out the basis yourself.

[ysette9]

Our taxable account is only 5 years old or so, so I can log into vanguard and it graphs out my contributions versus market gains. Because it hadn’t had that long yet to grow the majority of the balance is contributions at this point.

It almost sounds like you don’t plan on spending your taxable account as you talk about a stepped-up cost basis upon death. Is that the case? Our taxable is half our net worth, so it is going to get spent one way or the other.

I clearly need to read more about the best strategy for drawdown. GoCurryCracker is drawing down his taxable account first to let the tax-advantaged accounts grow for the longest period of time. This post mentions it but doesn’t go into detail, so I’ll keep poking.  I thought I read a more detailed analysis somewhere but can’t find it just now.

This is complex enough that I imagine the right answer will change depending on how much you spend, ACA subsidy limits, the ratio of taxable to tax-advantages, age, and more.

https://www.gocurrycracker.com/cash-flow-management-early-retirement/

[ysette9]

Amazing what is out there.

This article led to a list of 20 different posts from different bloggers on their withdrawal strategies. I’ll slowly plow through them as I have time.

https://www.physicianonfire.com/drawdown/

I smiled at his description of Roth accounts:

“Roth accounts should be treated like a sleeping baby. Don’t go near them; try not to make a sound when you’re logged in to check on them. Admire them from a distance and let them rest.”

[Loren Ver]

DH and I are pulling the plug this year after Q1.  Our plan is to use our taxable accounts first and let everything else ride.  We are almost 50/50 between taxable and non-taxable accounts.  Our numbers are for a leanFIRE, so YMMV.

Why this works for us:
-We plan to live on ~$36,000/ year.  Coming from taxable accounts, this amount will never get us above the 0% tax bracket due to favorable capital gains taxing.
-We are taking the money out of different taxable accounts based on tax basis (the amount we put in), since the growth counts towards MAGI.  We are planning on staying in the sweet spot for cost sharing and subsidies. 
-This will most likely have us falling below the medicaid line on occasion, so to avoid this, we can do some gains harvesting from taxable accounts (take out the money, pay zero taxes, have it count to bring our MAGI up, then reinvest it in something else).  That way if we really need the money but are too close to the subsidy cliff we can take those out and not have it count to towards MAGI.
- We can choose to Roth convert if needed, but I would rather leave well enough alone if we can.

We also pulled out 2019 money (plus buffers) in 2018 to avoid ACA issues (and we had some wiggle room in our tax bracket for capital gains at 0%), and will pull out 2020 money in 2019, so we know what our dividends etc are before moving things around. 

Loren

[jim555]

DH and I are pulling the plug this year after Q1.  Our plan is to use our taxable accounts first and let everything else ride.  We are almost 50/50 between taxable and non-taxable accounts.  Our numbers are for a leanFIRE, so YMMV.

Why this works for us:
-We plan to live on ~$36,000/ year.  Coming from taxable accounts, this amount will never get us above the 0% tax bracket due to favorable capital gains taxing.
-We are taking the money out of different taxable accounts based on tax basis (the amount we put in), since the growth counts towards MAGI.  We are planning on staying in the sweet spot for cost sharing and subsidies. 
-This will most likely have us falling below the medicaid line on occasion, so to avoid this, we can do some gains harvesting from taxable accounts (take out the money, pay zero taxes, have it count to bring our MAGI up, then reinvest it in something else).  That way if we really need the money but are too close to the subsidy cliff we can take those out and not have it count to towards MAGI.
- We can choose to Roth convert if needed, but I would rather leave well enough alone if we can.

We also pulled out 2019 money (plus buffers) in 2018 to avoid ACA issues (and we had some wiggle room in our tax bracket for capital gains at 0%), and will pull out 2020 money in 2019, so we know what our dividends etc are before moving things around. 

Loren

With the ACA as long as your initial estimate has been approved you don't need to worry about dropping below the Medicaid line, it will have no impact at the end of the year. 

[Monkey Uncle]

Our taxable account is only 5 years old or so, so I can log into vanguard and it graphs out my contributions versus market gains. Because it hadn’t had that long yet to grow the majority of the balance is contributions at this point.

It almost sounds like you don’t plan on spending your taxable account as you talk about a stepped-up cost basis upon death. Is that the case? Our taxable is half our net worth, so it is going to get spent one way or the other.

I clearly need to read more about the best strategy for drawdown. GoCurryCracker is drawing down his taxable account first to let the tax-advantaged accounts grow for the longest period of time. This post mentions it but doesn’t go into detail, so I’ll keep poking.  I thought I read a more detailed analysis somewhere but can’t find it just now.

This is complex enough that I imagine the right answer will change depending on how much you spend, ACA subsidy limits, the ratio of taxable to tax-advantages, age, and more.

https://www.gocurrycracker.com/cash-flow-management-early-retirement/

I'll be spending the dividends and capital gains that are declared by funds in my taxable account, because those count toward AGI/MAGI regardless.  May as well make use of them.  But otherwise I want to minimize realizing additional capital gains, even though I'm in the 0% bracket for those gains.  I'm very close to maximizing the PTC, so any additions to MAGI trigger a pretty big hit.  I'm sure I'll end up having to spend some from the taxable account eventually, but best to minimize it.  I've also got quite a bit in a traditional IRA, so I'm trying to focus on converting what I can of that before I hit RMD age.

And yes, anything left in your taxable account when you die passes to your heirs with the basis stepped up to current value.  Of course, your Roth balance passes to your heirs completely tax free, but any tIRA money left gets hit by the tax man.

I think you are right about the complexity - the best withdrawal strategy definitely depends on your individual situation.

[seattlecyclone]

I'm planning to FIRE in a few months, following my wife who left her job a few months ago. Here's my general thinking on the matter, given our specific circumstances.

Our stash is roughly 50% taxable index funds, 25% Roth, 20% pre-tax 401(k)/IRA, 5% HSA/cash/other. Like you, most of our taxable investments are from the past few years and the bulk of the value is therefore cost basis rather than gains at this point.

Regarding a drawdown strategy I think I have three main priorities that somewhat compete with each other:
1) I'd like to keep our MAGI just below 200% of the poverty level most years. That seems to be a pretty sweet spot for ACA cost-sharing subsidies (you can purchase a near-platinum 87% actuarial value plan for the price of a 70% actuarial value silver plan). Getting below 150% gets you a 93% actuarial value plan, which would be marginally better, but I'm less confident about being able to sustain a MAGI that low year after year.
2) I'd like to get as much of our spending as possible from the taxable account early on in retirement. It has a relatively low level of unrealized gains right now, but that will change if we wait a couple decades to start spending out of there beyond just the dividend income. Letting it sit just seems like a MAGI time bomb waiting to happen. Speaking of dividend income, that's currently a five-figure amount each year that we have to count toward our MAGI whether we like it or not. As we spend down the taxable account this taxable dividend income should decrease.
3) I'd like to gradually do Roth conversions from our pre-tax retirement accounts. Letting the pre-tax accounts sit and grow to a huge amount also can be a minor MAGI time bomb once RMD age rolls around. I don't think we ever want these accounts to get to zero, because that would probably imply we converted some of this money at a higher tax rate than we could have gotten by waiting to withdraw. I will maybe aim to keep pre-tax at a consistent percentage of our overall stash, with taxable decreasing and Roth increasing over time.

We'll have to seek a balance between the three competing priorities. Roth conversions and taxable account withdrawals will be competing for the relatively limited MAGI target, perhaps moreso as the taxable shares increase in value.

[ysette9]

I'm planning to FIRE in a few months, following my wife who left her job a few months ago. Here's my general thinking on the matter, given our specific circumstances.

Our stash is roughly 50% taxable index funds, 25% Roth, 20% pre-tax 401(k)/IRA, 5% HSA/cash/other. Like you, most of our taxable investments are from the past few years and the bulk of the value is therefore cost basis rather than gains at this point.

Regarding a drawdown strategy I think I have three main priorities that somewhat compete with each other:
1) I'd like to keep our MAGI just below 200% of the poverty level most years. That seems to be a pretty sweet spot for ACA cost-sharing subsidies (you can purchase a near-platinum 87% actuarial value plan for the price of a 70% actuarial value silver plan). Getting below 150% gets you a 93% actuarial value plan, which would be marginally better, but I'm less confident about being able to sustain a MAGI that low year after year.
2) I'd like to get as much of our spending as possible from the taxable account early on in retirement. It has a relatively low level of unrealized gains right now, but that will change if we wait a couple decades to start spending out of there beyond just the dividend income. Letting it sit just seems like a MAGI time bomb waiting to happen. Speaking of dividend income, that's currently a five-figure amount each year that we have to count toward our MAGI whether we like it or not. As we spend down the taxable account this taxable dividend income should decrease.
3) I'd like to gradually do Roth conversions from our pre-tax retirement accounts. Letting the pre-tax accounts sit and grow to a huge amount also can be a minor MAGI time bomb once RMD age rolls around. I don't think we ever want these accounts to get to zero, because that would probably imply we converted some of this money at a higher tax rate than we could have gotten by waiting to withdraw. I will maybe aim to keep pre-tax at a consistent percentage of our overall stash, with taxable decreasing and Roth increasing over time.

We'll have to seek a balance between the three competing priorities. Roth conversions and taxable account withdrawals will be competing for the relatively limited MAGI target, perhaps moreso as the taxable shares increase in value.

I find that interesting and helpful because our portfolio is approximately similar to yours in the breakdown between taxable/Roth/traditional. Thanks for sharing.

[Loren Ver]

DH and I are pulling the plug this year after Q1.  Our plan is to use our taxable accounts first and let everything else ride.  We are almost 50/50 between taxable and non-taxable accounts.  Our numbers are for a leanFIRE, so YMMV.

Why this works for us:
-We plan to live on ~$36,000/ year.  Coming from taxable accounts, this amount will never get us above the 0% tax bracket due to favorable capital gains taxing.
-We are taking the money out of different taxable accounts based on tax basis (the amount we put in), since the growth counts towards MAGI.  We are planning on staying in the sweet spot for cost sharing and subsidies. 
-This will most likely have us falling below the medicaid line on occasion, so to avoid this, we can do some gains harvesting from taxable accounts (take out the money, pay zero taxes, have it count to bring our MAGI up, then reinvest it in something else).  That way if we really need the money but are too close to the subsidy cliff we can take those out and not have it count to towards MAGI.
- We can choose to Roth convert if needed, but I would rather leave well enough alone if we can.

We also pulled out 2019 money (plus buffers) in 2018 to avoid ACA issues (and we had some wiggle room in our tax bracket for capital gains at 0%), and will pull out 2020 money in 2019, so we know what our dividends etc are before moving things around. 

Loren

With the ACA as long as your initial estimate has been approved you don't need to worry about dropping below the Medicaid line, it will have no impact at the end of the year.

Good to know, thanks.

[Greystache]

Just wanted to add a couple things I did not see covered in the posts above.

One way to reduce your MAGI is to contribute to an HSA. In our case, we have an income of around $50K (mostly pension and interest income). By selecting a Bronze plan with an HSA, we can contribute around $7,600 (don't remember the exact number for married couple but it is close to this) to an HSA. This reduces our MAGI by $7600. If you are healthy and and do not require a lot of health care/prescriptions, this is a great way to reduce MAGI and build up tax free money to use later.

If you are using Municipal bonds to help fund your retirement, remember that tax-free interest from Municipal Bonds is counted on your MAGI.

If you are getting ready to retire soon, you might want to look into moving some money to cash or Roth accounts so you have some money that will not add to your MAGI.

[rantk81]

Just wanted to add a couple things I did not see covered in the posts above.

One way to reduce your MAGI is to contribute to an HSA. In our case, we have an income of around $50K (mostly pension and interest income). By selecting a Bronze plan with an HSA, we can contribute around $7,600 (don't remember the exact number for married couple but it is close to this) to an HSA. This reduces our MAGI by $7600. If you are healthy and and do not require a lot of health care/prescriptions, this is a great way to reduce MAGI and build up tax free money to use later.

If you are using Municipal bonds to help fund your retirement, remember that tax-free interest from Municipal Bonds is counted on your MAGI.

If you are getting ready to retire soon, you might want to look into moving some money to cash or Roth accounts so you have some money that will not add to your MAGI.

A couple of issues --
If you are looking to try to structure your income to get ACA subsidies, you almost certainly want to aim for getting a Silver plan so that you can take advantage of the "cost sharing" savings too.
Also, my experience has been that HSA-compatible plans are few and far between on the ACA Exchange -- and especially so for Silver plans.  (Not sure why, but the insurance companies seem to offer some tiny negligible/irrelevant benefit before deductible to intentionally make the plans non-HSA-compatible.)

[ysette9]

If you are already FIRE and not bringing in any income then an HSA doesn’t seem to make any sense to me. Am i missing something?

We are putting as much into Roth now as we can that still makes sense while working (mega backdoor Roth conversion for after-tax 401k contributions and backdoor Roth IRA).

[seattlecyclone]

If you are already FIRE and not bringing in any income then an HSA doesn’t seem to make any sense to me. Am i missing something?

You can still take the HSA deduction when you have no wage income. It would counteract the other income you realize from Roth conversions or capital gains or whatever else, allowing you to shift a bit of your money to a tax shelter even as a retiree.

As @rantk81 said, if your FIRE income is low enough for cost-sharing subsidies you'll probably want to choose those over an HSA plan, but the HSA plan can be a good option in a higher-income year.

[bilmar]

Don't forget about mortgage. 
Many reasons to keep it,  but if you pay house off then your MAGI can be perhaps $10K less because you don't need more income to make  the payment.  That $10K can really impact your ACA subsidy.  For my 2019 plan a $10k difference in MAGI represents a $120mo difference in subsidy