Are ACA Health Plans Worth the Risk?

Politics aside, ACA plans provide affordable care to many Americans. For those under 300% of Federal Poverty Level, these plans can provide a very affordable option. When you sign up for these plans you need to be aware that these plans are not cheap. In fact, they are very expensive plans. This is because they are “subsidized” by the government and have to cover everyone regardless of health. You are given a tax credit to offset the premium for the plans. Why is this important? Well if you fall either below the income limit or above the income limit you will not qualify for the subsidy. That means that you will not get the tax credit on your tax return and in essence will pay the government the difference between what you thought you would pay and the actual cost of the plan. So, let’s just think about this. You are 63 years old and have a Silver plan that cost $3000 a month and get a subsidy of $2470.25 a month. Your income goes from an expected $65,000 a year that qualifies for a subsidy, but you have to take an additional withdrawal of $5000 to cover repairs to your house. This bumps up your income to $70,000 and eliminates you from qualifying for the subsidy. This seemingly minor withdrawal cost you the taxes on the withdrawal plus $29,643 of the tax credit. Now since you file taxes in the following year you have to take out $29,643 out of your IRA to pay your taxes and have again increased your income for that year to $94,643 and will not qualify for the subsidy again. In my opinion for those that are so close to the upper limits and are households without dependents, it is probably not worth the risk of the low-cost insurance. You also have the option to reposition your qualified assets to avoid this problem.  If you have questions or want to look at other options, please feel free to give me a call.

Healthcare Sharing Ministries

Healthcare Sharing Ministries

For many Americans, healthcare has become the most significant expense in their budget. With the introduction of the Affordable Care Act (Obama Care), the cost of health insurance premiums has skyrocketed for millions of Americans that do not qualify for subsidies....

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What is Social Security Leveling?

What is Social Security Leveling?

I was approached by an NC State Employee who had worked for the State of NC for 30 years but was only 56. They had talked with the State Retirement System and were told that they had the option of starting Social Security early. Now let me clarify that this was...

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The IRS is a Bad Business Partner

The IRS is a Bad Business Partner

Managing Income Taxes When you started saving in your 401(k)/403(b) plan you probably did not think I want to go into business with the Government, but that is exactly what happened. Qualified retirement accounts (401(k), 403(b) IRAs) were a great deal when they were...

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