Updated for 2020 and beyond.
The Affordable Care Act (Obamacare) is a potentially great way to help lower income individuals afford health care. I’m a supporter of ACA despite the trappings of ever bigger government running our lives because disease and accidents do not discriminate between rich or poor. In a nation as rich as ours, nobody should die or get stuck in a permanent loop of poverty just because they can’t afford medical treatment.
The two most common reasons why people don’t retire earlier are: 1) Lack of money and 2) Uncertainty regarding health care access and costs.
As an early retiree in 2012 with a full 30 years to go before being eligible for Medicare benefits, I was worried about health care until I did some research on cheap health care alternatives.
Now that I’ve spent a good amount of time studying what healthcare.gov has to offer, I’m not worried but thrilled for the potentially millions of other people who don’t have health care or who have no desire to work into their 60s.
I’ve also discovered that even millionaires will be eligible for health care subsidies. More equality is a welcome relief from the constant class warfare rhetoric and discriminatory policies we hear from Capital Hill.
Obamacare (ACA) Subsidy Amounts By Income
When it comes to paying income taxes and receiving health care subsidies, it’s generally better to be middle to lower middle class. The philosophy on Financial Samurai is to be wealthy but blend in with the crowd. Staying in the shadows is even more important as an early retiree because we are no longer contributing as much to society, yet we don’t look as old as we should which may anger some people.
We already paid our dues in the form of taxes, hence why we retired. One tip for early retirees is to never tell anybody you’ve retired. Instead, tell them you are unemployed, a consultant, or an entrepreneur to deflect envy and potentially garner sympathy.
The below are four charts I painstakingly put together by inputting income levels in the Kaiser Family Foundation Subsidy Calculator. A Silver Plan is used in the example where the insurer will pay for 70% of the medical expense.
Premium expense is capped at 9.5% of income, and out of pocket expense excluding premium expense ranges from $6,350 for a single individual up to $12,700 for a family of four. You are welcome to play around with the calculator to fit your situation.
SUBSIDY BY INCOME FOR FAMILY OF FOUR
SUBSIDY BY INCOME FOR FAMILY OF THREE
SUBSIDY BY INCOME FOR MARRIED COUPLE NO CHILDREN
SUBSIDY BY INCOME FOR SINGLE INDIVIDUAL
Analysis Of Income Limits For Subsidies
* Poverty levels: Income under $25,100 to be exact for a family of four (two adults, two children), $20,780 for a family of three, and $12,140 for an individual are considered poverty levels in the United States. The calculator spits out $0 subsidies, which is a glitch, implying such applicants pay $0 to next to nothing for annual health care premiums.
ACA Income Limits For Subsidies 2020
* Phaseout levels: After earning an income of $100,400 or higher for a family of four, $83,120 for a family of three, $65,840 for a married couple with no kids, and $48,560 for single individuals, you will no longer receive government health care subsidies. The basic math is 4X the Federal Poverty Level (FPL) as determined by the government. Despite the phaseout, the good thing is that it looks like the max % of income one has to pay annually in premiums gets fixed at 9.5% of gross salary no matter what you make.
* Other levels of coverage: The premium and subsidy amounts above are based on a Silver plan. You have the option to apply the subsidy toward the purchase of other levels of coverage, such as a Gold plan (which would be more comprehensive) or a Bronze plan (which would be less comprehensive).
* Out of pocket costs: The out of pocket costs excluding premium costs are capped, depending on your situation. For example, a family of four making $50,000 cannot exceed $10,400 for the silver plan for example. The out of pocket increases to a maximum of $12,700 for a family of four making $94,000. The out of pocket costs for an individual making $30,000 cannot exceed $6,350. It’s good to see these out of pocket costs limited, however, they still seem quite high.
A family making $50,000 a year should bring home roughly $35,000-$40,000 after taxes. To spend 30% of their after tax income on health care is a large percentage. Hence it is always important for people to continue saving no mater what their income level. The point is at least we know our backstop cost and can plan accordingly.
Related: The Health Affordability Ratio
How To Take Advantage Of Health Care Subsidies
It’s obviously better to make so much money where you have no problem affording unsubsidized health care. However, let me share some ways in which everybody can better benefit from government subsidies and not just the middle income to lower income population.
*Maximize contribution to pre-tax retirement accounts. Contribute the maximum $19,500 to your 401k to reduce your taxable income by $19,500. If you have a working spouse, do the same thing to get a combined $38,000 reduction to your MAGI. You can contribute $6,000 each to your IRA as well pre-tax if you make under $122,000 as a single and under $193,000 as a married couple. But your goal is to get way down the charts so you start receiving subsidies.
Related: How Much Should You Have Saved In Your 401k By Age
* Start an S-Corp or LLC. Starting a business is a way to reduce your taxable income by deducting all business related expenses. Everyone should check with an accountant first about deductions before going ahead because each business is different. There is a lot of overlap in terms of business expenses and general lifestyle expenses.
For example, if you are a Scuba Diving Instructor, how are you going to put together your course and write about your experiences online about scuba diving in the Maldives without going to the Maldives? There’s no law saying you can’t enjoy yourself on business.
You can start your own website to legitimize your business with Bluehost. You get a free domain name for a year. There’s not a day that goes by where I’m not thankful for starting FinancialSamurai.com in 2009. I no longer ever have to work for someone else. I pay ~$750 a month for excellent healthcare, and it’s tax deductible.
* Become a rental property owner. All expenses related to operating your rental property are tax deductible. Add on the non cash expense of depreciation and you’ll easily be able to reduce your rental income and pay less taxes. If you have a rental property in Bora Bora, you can deduct your transportation costs to get there. Not bad at all. In fact, I believe there’s a golden opportunity to buy real estate in 2020 and beyond because the S&P 500 did so well in 2019, mortgage rates have come down, and affordability is up.
One of the easiest ways to buy real estate is through Fundrise and CrowdStreet, the two leading real estate crowdfunding marketplaces today. both are free to sign up and explore. Both platforms provide investors the ability to diversify their real estate investments into commercial real estate across the country. There is a demographic shift towards the heartland of America due to technology and the rise of remote work.
* Own income producing assets and be debt free. Let’s say you own $1 million dollars worth of property outright that generates operating income of $45,000 a year (4.5% net rental yield). You have no other income, but you have no debt so life isn’t too hard supporting your family of four. Your family qualifies for $5,640 a year in health care subsidies and you only have to pay $2,650 a year.
Another example is amassing a $3 million dollar stock portfolio yielding $90,000 a year in dividends with a $25,000 a year deduction in primary mortgage interest. Your MAGI is $65,000 meaning that you and your family of four still qualify for $2,600 a year in health care subsidy as multi-millionaires.
Related: Ranking The Best Passive Income Streams
* Check with private exchanges online. Like every good deal shopper, you shouldn’t just rely on one source. I checked online for very similar plans for a family of four and for an individual and here’s what I came up with: $950 a month for a family of four with a $5,000 max deductible and $210 a month for a 35 year old individual in good health with a max deductible of $2,000.
There are many options tailored to each individual case. For those of you who have much higher incomes than $94,000 for a family of four and more than $30,000 per individual and can’t adjust your MAGI down any further, going the private exchange looks like the better option.
Bottom line: It is much better to have a high net worth and low adjusted gross income instead of a high adjusted gross income and low net worth to take advantage of government subsidies. I’m sure the government realizes this as well, which is their way of encouraging individuals to save and invest for their future. By accumulating a healthy amount of assets, the government will also reward you with subsidies. (Read The Average Net Worth For The Above Average Person and What Should My Net Worth Be By Income?)
Affordable Health Care For All
As you can see from the charts above, income plays the key role in how much subsidy an individual or a family gets. Together, we are helping subsidize lower income groups to gain health care access that they deserve. Helping others is what being a good citizen is all about.
Those with pre-existing conditions and who are considered of lower health can no longer be denied health care or discriminated against. Yes, Obamacare creates somewhat of a moral hazard when it comes to exercising and eating healthy. However, just as the rich help subsidize the poor through a progressive tax system, the healthy will subsidize the less healthy through the Affordable Care Act.
The largest point of contention will likely be how the government determines what income levels are poverty levels and what income levels are considered too much to receive subsidies. It’s difficult to live on less than $20,000 a year as an individual in San Francisco for example, yet the poverty level is $12,140 and below.
The greatest benefit from the Affordable Care Act is that if you or your family are experiencing hard times, you will be highly subsidized until income improves. Having at least disaster insurances is tantamount. For those who are considering quitting their jobs to do something new, or others who’ve decided to get out of the rate race early, you’ve now got one less thing to worry about.
Wealth Management Recommendation
Manage Your Finances In One Place: The best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize.
Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing and how my net worth is progressing. I can also see how much I’m spending every month.
Their most important tool is their Retirement Planner. The tool uses your real linked data to run a Monte Carlo simulation to see whether your future financial situation is on track. There is NO REWIND BUTTON when it comes to your finances. Therefore, I highly recommend you take full advantage of the best free financial management tool on the web today.
Is your retirement on track? Sign up to find out!
Updated for 2020 and beyond.
my wife and i are on medicare next year
income will be about 75k
we have 2 8 year old kids
can we get obamacare and a subsidy, and what is the cost?
all i can find online, assumes that me or my wife are included
will we have to pay 9% of our income just to insure 2 kids, who should be cheap?
>All expenses related to operating your rental property are tax deductible.
No, they aren’t. I learned this the hard way. I had $10K in renovation expenses for a rental property but could only take $5000 off my taxes because that was the limit per calendar year. It was *really* annoying.
I am self-employed and operate a business that is seasonal, making it difficult to estimate my yearly income. For 2019 my estimated Adjusted Gross Income was approx. 18k, however it appears that my AGI is going to be below the FPL at approximately 4k-8k. I am required to provide income verification for 2019 by December 13, 2019. How will this income amount of approximately 4k-8k affect my healthcare for 2019? Also if my projected AGI for 2020 is similar to 2019, will I still be eligible for Obamacare?
I am 63, live in Arkansas and am divorcing this November. I have been receiving subsidies for my health insurance. However, I am concerned that my income level of $12,000 (part time job)will fall below the poverty level and I wouldn’t be eligible for subsidies. Will I have to pay back subsidies received for the full year? I do have a 401k where I could pull funds out of if that would in fact raise my income level. I still haven’t applied for social security and haven’t pulled any funds out of my retirement, as I’ve been wanting to save for retirement. My insurance agent tells me I’d have to make over $18,000 next year to even be eligible to continue receiving subsidies next year. I am so confused. Thanks.
You’ll need to withdraw $6,000 from your 401k to reach the income limit. This link shows what counts as income with respect to Obamacare subsidies:
https://www.healthcare.gov/income-and-household-information/income/
Make sure you DON’T convert all your retirement accounts to Roth accounts, because then you won’t have this flexibility to bump up the income, at least as far as I understand it.
Thank you for commenting. Will I need to pull money out for 2019 taxes to reach 18,000 even though we divorce here in Nov-December? I am really concerned I will have to pay back this years subsidies already received since being married allowed me the subsidies?
You need to research the “clawback” clause from ACA. They cant take as much back as you think from incorrectly estimating your income.
Double check with IRS.gov, but I’m pretty sure your marital status for 2019 will be what it is by the end of the year. So in this case it will help you out as you’ll be considered single and will only need FPL for single person.
When I divorced in October 2002, I filed taxes for that year as single and a CPA did my taxes.
I have a question if anyone might be able to help me, I am divorced and my 23 year old severely autistic daughter pays rent (ssi) to me to live with me so I have to claim that on my taxes, I’ve always stayed home with her since birth and I do receive 3k a month in maintenance from my ex husband But in the decree it states he pays the taxes on that money so basically I have almost zero income other than the rent I receive From my daughter. I was on my ex-husbands payroll for the forest 2 years after our divorce which got me to the minimum needed to even be able to be eligible for a healthcare subsidy But now I am not in that and I have had numerous health issues the past 2 years which I can’t get a job really even if I wanted to, I was thinking of renting out another room in my home to get more income go help me get to the minimum allowed to get a subsidy but I’m not even clear if that counts as the right kind of income to get a subsidy. Medicaid is not expanded in the state I live in so I’m not eligible for that either. I really need to be able to have insurance this coming year as I will likely need some more surgeries. So any help with me understanding how this really works would be greatly appreciated.
This page shows what counts and what doesn’t as income for ObamaCare ACA:
https://www.healthcare.gov/income-and-household-information/income
I assume your daughter is on the Medicaid DD waiver. If not, call Medicaid and find out how to get her qualified ASAP. Once she is qualified Medicaid will pay you to care for her. Then the rent she pays will be active income not passive income for Obamacare. You can also certify to care for other adults who are also on the DD waiver. They pay you rent, food, utilities with their SSI and Medicaid pays you to care for them too. There is a HuGE tax benefit. You do not need to pay taxes on the money Medicaid pays for care because it is considered adult foster care income. Read about it at IRS Medicaid Waiver Notice 2014-7. The first tax return you file with this type of income where you don’t enter the 1099 Medicaid Income but instead write “Medicaid Waiver Notice 2014-7” on other income line 21 of form 1040 the IRS might give you a bit of a hard time but after you defend it they will leave you alone every year there after. I started doing this adult foster care work when, like you, I went through a decline in health. If you just rent out a bedroom to someone it’s considered passive income and doesn’t count for Obamacare last time I checked.
I’ve had Medicaid through Michigan’s Medicaid expansion for a few years now. I originally tried to buy insurance through the ACA Marketplace but I was denied because my income was too low and they said I had submit a letter of denial and surprisingly I was approved. I foster children of all different ages therefore I can’t work. I want to buy ACA insurance but want to know what I will pay if my income is only 11,700 (rental property). I want a decent plan. I can’t wait a month to find out, I need to prepare now. What would be the most I would pay? Thank you!
I am somewhat confused. According to the Marketplace my family of 6 qualifies for Subsidies in the amount of $2,014 per month. We can’t really afford insurance so we got a bronze plan. When we did our taxes this year, we found that our income was $124,000 which is below the cap is it not? but we got a bill for over $24,000. How is it possible that we owe back all of our subsidies.
If you look at the chart accompany this article, you are at about 380% of poverty level for your household size and income.. at 400% not qualified for ANY Subsidy .
So someone grossly underestimated your income. Are you a business owner who’s income varies (the reason for not having correct year end? ).
I ended up using an insurance broker no cost paid for by insurance company that you end up going with. Reason why is a customer rep people at the marketplace are very kind whatever they’re using to enter in what you report on the phone to calculate…very inaccurate! After three phone calls on my part never came back accurate to what it actually was.
Madw me very nervous , so that is one of the reasons I ended up going with a private broker who used old fashioned calculator, not a system calculator and software adding and told me we did not qualify for subsidy, presently the case.
The cap for a family of 4 is $100,400. If you make over that amount you will have to pay all of your subsidy back because there is no subsidy available for incomes over that amount. If you were receiving $2014 per month in subsidies then you entered an estimated income in your marketplace application that was less than $100,400. Since your final taxable income was $124,000 then you do owe all of your subsidy back; therefore the $24,000 bill.
Good evening. It is below the cap; however the APTC (subsidy) that you are receiving during the calendar year is off an adjusted income. whatever income you reported on your initial application was not updated. so when you filled your tax return the adjustment was made as in the amount you owed. according to my calculations which will vary from your state and your household ages at the time you should have been receiving an APTC (subsidy) lower than $500 per month. At any time you believe your income will be more than initial reported update that information so it adjust during the cal/yr instead of having to pay it back at the year. Some families will even go the opposite way and only use a portion of the amount and take the credits back at the end of the year. Hope this help.
I have a couple of questions regarding what qualifies as MAGI for Healthcare.Gov healthplan purposes. I’m real close to the 400% target in 2019, which I believe is $64,597. Right now I am receiving a credit, but looking for a way to reduce MAGI to be on the safe side, as I don’t want to go over and have to pay back the monthly credits.
First, do capital gains from a Roth IRA qualify as income for MAGI purposes? I don’t believe they do, but want to do sure.
Second, do qualified distributions or withdraws from a Roth IRA reduce MAGI?
Third, if I opened and funded a Traditional IRA by rolling over funds from a 401K Plan, would those funds reduce MAGI?
Thank you for your help. I certainly appreciate it.
We make 113,000 Annually. We pay 1300 a month for the bronze plan. Our maga is around 87000. We are over 9.5 % Annual income. Is this correct?
My husband and I are retired. He is 73 and I am 64. He has Medicare but I am on the ACA. Our income is social security and a small retirement. Last year we owe $0 in taxes. Subsidies paid for almost all my premium. This year I received a taxable inheritance that will add $30000 to my income for this year. Even putting the maximum into my IRA will put me over the subsidy limit and I will have to pay back almost $12000 this year. Ouch!
I was also looking into this and it seems that an inheritance is NOT considered as taxable income for the purposes of the ACA (or taxes in general). I believe you are in the clear!
https://www.npr.org/sections/health-shots/2015/12/08/458807324/mom-left-me-money-do-i-owe-uncle-sam-for-my-health-subsidy
Are you able to contribute to an HSA? That will reduce your MAGI.
cap gains from a ROTH IRA do not qualify. infact, no cap, div or int gains…or distributions will effect MAGI from a ROTH.
A rollover will not reduce MAGI. To reduce MAGI you would want to contribute to a Trad IRA…or other pre tax qualifying account….solo 401k, 401k, sep or simple IRA…
1st, thank you for the charts and all the wonderful info you provide.
I live in TX, am unmarried and I am the sole caregiver for my mother who is 87 (she can not care for herself and requires much help). I am not paid for assisting her. I work in a commission only job and I am concerned that my earned income for 2019 may fall below the minimum income required to qualify for the ACA subsidy ($12,700 according to the chart). I have no other sources of income. I have a SILVER health policy in force via the ACA Marketplace. Based on my projected income, I am currently paying only $12.01/month with the remainder of the premium payments going directly to my health insurance company. My mother and I live in the same household and we currently file taxes separately. Her sole income is social security in the amount of $1,785/ month (or $21,420/yr gross) / ($1,730.60/month or $20,767/yr net of her Medicare prescription drug ins premium. Beyond that, she has no other income. Neither of us qualify for Medicaid. My question is this: 1) Will I be subject to an IRS penalty or be required to repay some or all of the subsidy? I have reason to believe that since Texas is NOT a medicaid expansion state, this fact may have a bearing on the answer. Bottom line: If I will be subject to repaying all or most of the subsidy, I may need to leave my commission based sales job in favor of an hourly job which would hopefully assure
that I make >$12,700 for the remainder of the current year. (This is my 1st year in my sales job and with the time demands in caring for my mother, I’ve made next to nothing so far this year. I do expect to make enough next year in my sales position). Any info, advice, suggestions are very much appreciated.
First, I also live in Texas. Second, you are on the right track. In order to qualify for ACA premium tax credit, your income must exceed poverty level. If you are under poverty level, you qualify for Medicaid. Two problems with Medicaid: 1. It is means tested. If you have assets over $3000 (not counting a house and one car) you have to spend down your assets before you qualify. 2. You might have to pay it back. The state of Texas can come after you for reimbursement of Medicaid. So, if your income is going to be below 100% of FPL for a single person, maybe you could have your mother pay you for caregiving to get your income above FPL. (And then, of course, you would buy all the groceries for your aging mother, right?)
Although your income would be subject to FICA tax (12.4%), that is a small price to pay for the ACA subsidy. You might want to talk to a lawyer who practices what is known as Medicaid planning. As it turns out, people without money need expert help at least as much as people with money.
L
Does “unearned” income count towards qualifying for Obamacare? A couple friend who makes their living from rental income (without being set up as employees of their own company) said they don’t qualify for subsidies because their income is not earned income.
If they have rental income they should be reporting it the income and expenses and depreciation on Schedule E. Schedule E net rental income is income and part of agi.
I am 64 and plan on retiring next year when I am on Medicare. But my wife has three more years to go. I work at the local hospital so I went to the people who do the ACA coverage. My SSI check will be about $2100 per month but they told me that doesn’t count towards income since it is tax free. They said that in SC I have to have over $16,000 of taxable income for my wife to be eligible. Has anyone heard about minimum income limits to the ACA or is this just a SC thing?
I just met with my tax preparer. For 2018 I owe the IRS $14,000 dollars. The sum total of the premium from my silver tier plan. I earned $7500 more on the year than the 400% FPL unexpectedly. Imagine my surprise. How would you feel with a surprise $14,000 bill? I think it is all smoke and mirrors. Give me the free market anytime. No to government subsidies.
Yikes, that is terrible.
Obamacare is not working.. the deductions are so high it makes it useless to so many.
See: How To Get Healthcare Subsidies Even As A Multi-Millionaire
Scott – this almost happened to us last year. You have to watch your income constantly and NOT go over the limit or you fall off the cliff. Last year we were lucky enough to fund an IRA to reduce our AGI to meet the ceiling. It’s not the ACA’s fault – you have to manage your income. I cannot wait to get on Medicare. We are 62 and early retired… the ACA has been a god-send but we all need Medicare for All NOW.
Joan — I coundn’t have said it any better. Watch your income and don’t go over the 400 % FPL. And yes ACA is very helpful and amazing but Medicare for all would be better. At 60 we are self employed flying below the 400% FPL limit until we turn 65.
Indeed. are plan prior to that for good ten years one could go to any shorts company’s website and buy a private.
We funded our Traditional IRAs (6,500 each) to avoid going over the 400% limit. Our CPA sounded the alarm bell and we actually borrowed the money from a credit card offering a special 0% interest 3% transaction fee for 12 months and no interest to avoid paying back our entire subsidy. 13K off our AGI was enough to dodge the penalty.
The “free market” froze out millions of people including me, prior to the ACA. The ACA is a godsend for us. I am literally saving $9000 a year in premiums. You went over the “subsidy cliff”, as it is known. That is a NO-NO. You have to plan ahead and it is your responsibility to avoid that. Blame yourself for not knowing. Blame the GOP for refusing to allow changes the Democrats have been trying to make for over 4 years, to fix that subsidy cliff. The GOP is using this intransigence as a weapon to get people like you to dislike the ACA – it is sinister IMO.
Where do I find the maximum percent of income that I have to pay for coverage? I went to the Kaiser Family website that you linked, and it looks like in North Carolina the subsidy is all or nothing when you go above the $400% of poverty level. The cost of Bronze level coverage goes from $0 to $16,978 per year ($0 if income is 65k and $16978 if income is 66k). It looks like I will have a one time added income that puts me above the 400% level this year. Kaiser does say I could be eligible for “catastrophic coverage” since my premiums would be about 20% of my income!
Thanks for any clarification.
That is the “subsidy cliff” you may have heard about.
Earn $1 over 400% FPL and it can cost you $20,000 more for your health insurance, depending on your age and location.
This could be fixed, but the GOP won’t lift a finger to help a program started by Democrats. Sad!
See my note earlier from “Felisse”. In N.C. a couple cannot exceed $65,839. Should you have excess of that your only option is to fund Traditional IRA with an individual maximum of $6,500 or $13,000 for a couple. If that brings your combined income below the $65,839 you are good. Otherwise you will owe all the subsidy.
Thank you for doing the research for your charts. However, I’m confused about the premium amounts you listed. I’m a family of 2 and the premium for the second lowest silver plan is $1900 per month!. That’s $22800 per year. Your chart lists $5000-9000 yearly premiums. Why the huge difference?
This sentence in your post seems to be incorrect:
“Despite the phaseout, the good thing is that it looks like the max % of income one has to pay annually in premiums gets fixed at 9.5% of gross salary no matter what you make.”
That gave me hope, but as nearly as I can tell once you slip over that 400% FPL line, your premiums can skyrocket. Ours would go up to 29% of our income if we’d stayed in the ACA Marketplace. Completely unaffordable, so we had to go elsewhere for coverage.
I think the ACA was a good step, but needs some serious improvements. The sooner we can get to Single Payer, the better, in my opinion.
I don’t suppose you happen to have an updated chart for 2019? The healthcare.gov website is cumbersome and I am trying to run different income scenarios as we may be selling a rental home this year. I am trying to see how much subsidy we will lose to see if it is worth selling, and so far all I can do is guess because they don’t make it easy to compare without starting brand new applications.
I’ve left the initial charts alone to give readers a sense of how much they have to pay, but I updated the post with two new charts in the middle for 2019. You can just do the math yourself to get a rough estimate on cost based on your income for a Silver Plan.
Thank you- that is very helpful. I’ve had the hardest time figuring anything out from the healthcare.gov website. My situation is an odd one, because I am trying to sell one rental property to pay off a loan used to purchase another rental property (all of our income, around $40k per year, comes from these properties since my husband was laid off two years ago and is currently in school for another career field), and I would have thought that the loan payoff expense would lower the MAGI from the capital gains, but from what I can see, it does not because it would only affect the capital gains from the other property that I am not selling. I talked to my CPA, and as far as I can tell, that is how it would work, but it’s still very confusing so I am trying to be certain before I decide how to proceed. Overall, we will have no money left from the sale after we pay off the loan, but it seems like it will still count as income in the MAGI that ACA uses, so we would lose any subsidy, even though the reality is that we will have no additional income this year after paying the loan (a loss of $9000+ in subsidies). I am all for Universal Healthcare- nobody should have to make life choices like this- I consider myself a reasonably intelligent person, but I think I need a Master’s degree in accounting and a CPA license just to be able to figure out something that should be made to be easily understandable by the lay person so that ordinary people can make informed decisions. And the fact that even if I carry just the basic Bronze plan (that I currently have) all of my medical costs (assuming no major medical problems) are still out of pocket because of the high deductibles. So, I can choose to pay almost $17k out of pocket this year (from our $40k ‘actual’ income) just for the insurance, plus pay all out of pocket for any minor medical appointments, or I can take a risk of not having insurance. Don’t get me wrong- I am a supporter of the Affordable Care Act, but it needs to go farther and make healthcare truly affordable for all, and I am just fine paying higher taxes to pay for Universal Healthcare. If everyone pays the same taxes, such as the way New Zealand does, then it is a fair system that everyone pays the same share and gets the same care. Our current for profit system doesn’t work and isn’t sustainable- people’s lives shouldn’t be in the hands of capitalist corporations who care more about making money than in helping people who need care, and we shouldn’t have to make the choice between having insurance and risking not having it so that we can pay our bills.
Sorry for the rant- I truly appreciate your assistance.
The tables above provide great information, but are they based on gross or net reported income?
Who else pays almost 17,000 annually with a high deductible? Middle class can’t get a break. The rich get subsidies and the poor get it as well while we end up paying for it all having a difficult time paying our own bills.
I was all in favor of the ACA until it actually got implemented in PA. I was happily paying about $225 a month for individual coverage, then not too much more with ACA the first year.
Then I found out that I’d get zero assistance and my actual bill was double, payable in full at tax time.
I’ve been unemployed with zero income since 2012, and I get about $35k in dividends from stocks. I also get another $10-20k in capital gains, but I never know exactly until December. I want to change my portfolio to produce less income, but I can’t, because selling causes a bigger capital gain that also disqualifies me for subsidy. So I am trapped, trying to toe the limit line by selling only losers.
Worse yet, all insurers except IBX have dropped out of the market in PA, meaning IBX can charge anything it wants, and it does. My policy has jumped from $250/mo to $450 to $909 in the past 3 years.
I’ll be quite happy when ACA goes away, even though I am supposed to be it’s target market.
I’m in exactly the same situation. Almost $1000/mth for Bronze level coverage. I don’t dare go back to work, even part-time. Selling losers and trying to minimize dividends within taxable accounts is about all one can do. HSA contributions are one way to lower MAGI but I haven’t done that as the amount is unpredictable, it limits the choices of “affordable” plans, and it doesn’t cover the biggest component: premiums.
For something that was supposed to lower health care cost, a 300% increase in premiums in the past 4 years shows it to be a complete failure. But, nothing will change to help, especially for those in similar situations.
I’ll bet you were happy paying $ 2,700 a year for healthcare when you have a portfolio worth over $1.8M. Who wouldn’t be? But it’s really not fair is it?
Not fair to who? Like Sam said it’s better to have high net worth and lower middle class income than the reverse.
So according to Samurai, it is OK for people to retire in their 30’s as he apparently has done and have the rest of us cover the full cost of his insurance until he hits age 65. Absolutely crazy. If someone can retire at an early age, they should be required to pay the full cost of their health insurance. i don’t need to subsidize his retirement. Health care subsidies should be means-tested on net worth and annual income, not just annual income.
I pay $700 a month for health insurance, and so is my wife. I’m not sure what you’re talking about, but I know I am helping my fellow brothers and sisters on the lower end of the income spectrum afford healthcare.
You are shooting at the wrong target. How about we stop paying for INSURANCE and focus our resources on HEALTH CARE. I’m so tired of this FOR PROFIT insurance game. It has us fighting with each other and distracted from seeing where our money is really going (hint: it’s insurance company profits)
Hi there, my name is AB currently reside in texas, santonio, am barely 2 month pregnant without an insurance, being trying to get an affordable insurance with no luck, my taxable monthly income is 10,000$, please can anyone help me find any affordable healthcare plan?
Thank you
Move to New York.
Seriously, Texas is not a good state for low income people.
I definitely do not have an answer BUT something is so wrong with our health insurance system historically based on employer sponsored plans. Thank God for the ACA even though it is not even close to perfect. Why is the conversation not focused on the fact that the insurance companies have been robbing us blind for decades. Here is the typical scenario: You work your butt off for years and enjoy a real good benefit plan at your job at pretty reasonable prices. You have 6 weeks of sick days stored up. Fantastic. Then you get sick and need surgery and some rehab and maybe can’t go back to work for 8 or 10 weeks. Guess what happens after your sick days expire? You are now responsible for the FULL COST OF YOUR HEALTH INSURANCE so your company sends you a bill for $1400 and you are no longer getting paid. Maybe you have short term disability insurance that pays you 60% of your wage but that is not going to cover your full cost of health coverage. So you have paid your employer sponsored health care premiums for years and years but now that you are sick you can no longer afford to keep your insurance. WHAT A RACKET! These insurance companies have been doing this for decades and decades. Raking in the money but rarely ever having to pay the big bucks for health care because they will never pay a dime for anyone who becomes really really sick. Why is this even acceptable? Why is this not part of the conversation? We need national health care and not insurance based on employment. Isn’t that an oxymoron? How is this even legal? Most people do not apparently realize that individuals who become extremely ill (cancer, chronic disease) are covered under Medicaid because they lose their life savings, their home, anything of value in order to pay for their care until they are destitute and qualify for Medicaid. They may have been gainfully employed and insured for decades but their insurance company is laughing all the way to the bank and in shock that we have let them
Found on a friend’s Facebook page.
AN ENGINEER EXPLAINS “OBAMACARE” IN FOUR SENTENCES..
Is there a single soul who is surprised that an Engineer came up with this 10,535 pages reduced to 4 sentences?
A Great summary by a Notre Dame University engineer..
Here are the 10,535 pages of Obama Care condensed to 4 simple sentences. As humorous as it sounds…..every last word is absolutely
TRUE!
1. In order to insure the uninsured, we first have to un-insure the insured.
2. Next, we require the newly un-insured to be re-insured.
3. To re-insure the newly un-insured, they are required to pay extra charges to be re-insured.
4. The extra charges are required so that the original insured, who became un-insured, and then became re-insured, can pay enough extra so that the original un-insured can be insured, so it will be’free-of-charge’ to them.
Let’s be frank, the US health insurance system has been pretty bad for decades, but Obamacare took a bad thing and made it even worse. Obama tapped the middle class to subsidize the poor, leaving the poor with health insurance, but the middle class with unaffordable health insurance. If the response to it had been widespread non-compliance seven years ago then you might have been able to force him to repeal it. It can’t be fixed. It has to go. Instead, because people blathered on about how much someone would be able to save by cleverly managing their money (even though it should have been obvious the government would never allow you to get away with actually saving money), you capitulated, tugging your forelocks to your political masters.
In New Zealand we had a similar situation a few years ago when our then parliament signed us up for Kyoto assuring us that because of our clean green economy (and we are fairly good) we would make about $2 billion a year in carbon credits. When the matter was finally resolved it turned out that we would be paying $2 billion in carbon credits. Remember, politicians lie. It’s what they do. It’s all they’re good at. Don’t be a useful idiot shilling for them.
The ACA forced responsible Americans who have been purchasing healthcare insurance for decades to lose their healthcare. We still get to pay premiums and they are higher premiums but we no longer have healthcare because we cannot afford to go to the doctor after paying the premiums. I have needed to go to the doctor a few times this year but did not go because I can’t pay anything in co-pay and all of any test. So I don’t even want to know what is wrong with me.
Our taxes help support Medicaid which we had when we were children and very poor. Back then we got dental, vision, hearing… all things that are necessary for EVERYONE. ACA doesn’t even cover these basics.
More American have “Insurance” big deal. We don’t have healthcare anymore. AND more people are NOW dying for the first time from preventable disease. Because they have worked all their life. Do not have insurance they can use. So they are just staying home so they do not deprive their spouses of their retirement. Anyone who thinks the ACA is just wonderful doesn’t care about anyone else.
I know a few addicts who refuse to work or who can no longer work because of their addictions. But they now can go to the doctor constantly (and do) while I cannot. We earn 30,000 a year gross. And are forced to take my husbands work offered insurance. … prior to Obamacare we had a “catastrophe” policy only and it paid better than our current EXPENSIVE insurance.
the “Health Insurance” for everyone is a lie. We were better off before, much better off. And poor people could always go to the ER and get Medicaid. Which paid much better than the current mess. And if you are poor the ER and Hospital would most like forgive your bills. I know they always did my dad. I completed a few pages showing his income, assets, and bills.
And each hospital will forgive the bill.
Obamacare was a huge mistake. And very poorly done.
Anyone who thinks otherwise has never been poor and never been lower middle class working for decades.
This is BS.
I claimed the EXACT AMOUNT of earnings and still have to pay back 45% of my subsidy, and that’s on the lowest costing bronze plan. The first year of Obamacare I picked a gold plan and ended up paying back 55% of what they gave me… and I always entered the EXACT AMOUNT in earnings for the year.
Check out the latest: Healthcare Costs Are Outrageous! How Much Should One Comfortably Spend On Healthcare?
Most people commenting made too much for subsidies. What about folks who make too little?My wife and I are in poor health and can’t work full-time anymore. We need health insurance, but fall Under the minimum(about $12000 combined). Insurance premiums are more than we earn. Where do we go for affordable insurance or healthcare?
You don’t have to take every available deduction. Don’t take the standard deduction. Use Schedule A even if there are no deductions on it. That adds $6350/person to your MAGI. Of course, you will have to pay taxes on that extra amount, but the tax will be much lower than than the subsidy. If that’s not enough extra, skip one or both exemption for another $4050/person.
Boy, did I goof, and my comment is not worth publishing. Deductions are post MAGI. I do employ the same method, though, on my Schedule C, but that, of course, requires one to run a business.
I liked this article and wish you would write a follow up to it, now that we are a few years into Obamacare. Have the income requirements for subsidies changed at all, for example. What happens if someone starts out the year getting a subsidy and their income increases, etc.
A follow up would be interesting, I recently looked at the price of an ACA policy for my family of 4,
Silver plan. The cost is $18,455 vs $8,290 in this 2013 article.
Prices have definitely surged higher.
In a big government scenario, it is all about the middle class and higher subsidizing the poor.
I was married 2014 and am dealing with the harsh reality of having to pay back all my 2015 Obamacare subsidies. Close to 5,000 dollars. I really dont understand the covered CA software. I enter all the correct info and the results show that my premium with a PTC is 25 dollars per month based on the facts I am buying Individual Health Insurance and cannot get health insurance from my husbands workplace. But at the end of the year when filing my 2015 taxes filing jointly (as Obamacare requires you to do) my combined income with my husband puts us over the 400% poverty level and Im have to pay all the subsidies back. All I can do now is try to avoid this in the future by putting money into IRA for 2016 tax period and following your advice in your article. Why does Covered California software give such conflicting results?
Bumped in to this website out of frustration…and leaving in more frustration. Samurai, I dont know who you are…but you show nothing here more than being a stump for this horrible Obamacare program. You must be a liberal because all you do is trump the program for “helping the poor”. Well F that line of thinking. There are MANY of us making just over the min. to get a subsidy and are screwed with HUGE deductions and HUGE premiums for a worthless Bronze plan. In addition to that, those that get a subsidy, then get rammed in the a– with penalties if they get a job and their income goes up above the subsidy cutoff. Geez… if you buy in to this socialist disaster of a program, then that says a lot…especially for someone who calls him/herself “Financial Samurai”. Buy a clue or shutter this website. Your opinion is biased, ignorant and worthless. You must be like Hillary and are completely out of touch with reality. Trump is as well. Bye.
Question , what qualifies as income under ” ObamaCare” ???
I do not see the answer to the question: What is the income level at which ACA becomes free?
Family of soon to be 6. Paying $1000.11 per month for silver (HMO). Being a business owner does help some in that its deductible. However, I still have a very serious problem paying for other people and receiving nothing but increasingly higher premiums in return. Obamacare may have been a necessary step to get our county on parity with the rest of the world but I sincerely hope it turns into a completely universal system instead of just another way to hold the middle class down. Looking very seriously at Health Share Ministry plans if things don’t change. It just ridiculous when before all of this I was paying $375 a month for a family PPO with significantly better coverage and out of pocket. As is, I basically have no insurance until I hit my $2700 deductible.
Six years ago when my premium hit $9,900 for a family of 4, I raised my deductible from $2,500
to $10,000, the premium dropped to $4,500. A very substantal drop. In less than two years I made up the $7,500 difference in the deductible. Of course now, the premium has increased to $8,450 for a family of 3. People winced when I said I had a $10k deductible, now many have Obamacare with a $13,200 deductible and aren’t happy.
I was a family of 4 and was receiving $465 dollars a month (living in West Palm Beach, Florida) with a Humana Silver 4600 HMOx Florida plan. I got pregnant gave birth and was cut off on August 21st, 2015. Mind you I had already met my maximum out of pocket share of cost to Humana and was supposed to be covered 100% until 2016. My husband kept his subsidy. Was told by ACA that I ‘should’ qualify for medicaid. Of course because Florida did NOT expand medicaid was told by medicaid I do not qualify for medicaid. Son was born with Cleft palate and lip.
Call back healthcare.gov and get transferred and told a mirage of stories from IRS sets the subsidy amounts and because you will claim your son next year you no longer qualify for your subsidy but your husband does. Not sure how next years tax return benefits me for the rest of this year. I’ve been transferred and told thus far 6 different stories as per why I no longer qualify for a subsidy. Then was told to file an appeal, another rep tells me if my husband qualifies I should too. No one has any explanation as to why the subsidy was given to humana for the month of August but I was cut prior to being discharged from the hospital now on the hook for thousands of dollars worth of hospital bills because my insurance was cut the day I gave birth.
The ACA representatives are incompetent. The law is completely screwed up. Appealing to medicaid in a state which refused to expand medicaid leaves one with 0 options. I already know my appeal will fall on deaf ears. my husband does not have any employer health care coverage offerings so I am stuck in a family ‘glitch’ supposedly. Lovely system really. Let’s reelect Rick Scott who was involved in healthcare fraud twice and continue the 20 billion dollar healthcare fraud featured on 60 minutes out of South Florida instead of expanding medicaid and fixing the glitches. Hopefully I will hurry up and die quickly. The typical republican plan.
Nicol same here in Arkansas. Our governor stinks.
Question: My wife is applying individually for ACA medical coverage in New York. (I am covered by Medicare) Our modified adjusted gross for 2015 will exceed amount permitting any premium reduction; but she is leaving her job next month. Is there a way we can apply in the future for a premium reduction once her substantially reduced income takes effect?
Thank you
Obamacare is based on coming year income. They want you to estimate your income for 2016 to see if you qualify for healto care through the marketplace and/or a subsidy. For hourly wage earners like myself, it makes it a little difficult.
My son that lives with me had a medicare card and lost it upon turning 21 lost it in June looking at Obama care at a reduced rate 3 in my home my income is the only income I am retired under 20,000 confused on how to get this insurance
I’m a flaming liberal but what I’m paying for insurance, just for myself, is enough to turn me into a conservative. My husband is retired, I’m self-employed, our 19-year-old daughter is in college. My husband receives Medicare, daughter gets TennCare, so the insurance we bought through the ACA is just for me; we’re paying $380 a month for a bronze plan with a $5500 deductible. No subsidy, although according to your chart we should be receiving $980 a year. That’s bad enough, but last week when SCOTUS confirmed the ACA, NPR interviewed a woman in Texas who said, had the court ruled the other way, her monthly premiums would have “doubled to more than $800 a month.” That means she’s receiving more than $400 a month in subsidies and for that kind of money, I’m guessing she’s got a platinum plan. Which fits right in with our neighbors who work under the table, don’t report their income, and have a subsidy that lets them pay $90 a month for a gold plan with a minimal deductible. It’s not right. I like to believe I have a social conscience, but the way this system is geared isn’t right.
I agree. I do get a subsidy but my plan amount has risen every year even though my income has not changed. My premium less subsidy will be 2 and half times what it was this year( if I still qualify for the same amt of subsidy). If I go to lower plan, it would not cover my health care needs.
Elisabeth says,
“I’m a flaming liberal but what I’m paying for insurance, just for myself, is enough to turn me into a conservative.”
Obama has done that, to many people.
I flipped over 30 years ago, when I applied for a subsidized mortgage through the state.
Our income easily qualified, but my wife and I lived very frugal for the first 3 years of marriage,
the money we saved was earning 10% and this put us over the maximum to qualify for the subsidized loan. So because we tried to get ahead, we were penalized. Instead of a 9% loan
we looked at a 16-3/4% loan. Yes, this was around 1984, 16-3/4% was the going mortgage rate.
P.S. I forgot to tell you I live in Marion,OHIO 43302 when I asked my first question above sorry,
Hi I am retiring early in a opers plan I had 26yr but my back kept giving me trouble, if I stayed the full 30 plan no reduced benefits, but I am in a tradional penison reduced benefit plan, with a plop I would get 1,048 dollars a month without plop 1,092 amounth, I have no iras, no cd, my husband is on ss and a penison which together we will be making 30,000 ayr he has no investments of anything either, do I qualify for low income help with health insurance? well thanks and have a great day’
Also live in FL, married with no kids. Premiums are $998 per month which is 11976.00 per year. Since our actual income is around $62000, based on your scenario, the maximum we should have to pay is 9.5% of our income. So, we should be paying $5890.00 per year. Seems more like we would be paying 19% of our actual income. Please note, this plan has a deductible of 9500, and out of pocket of 11500. So we would have to pay $23476.00 out of pocket (this includes the monthly premium) before insurance paid 1 dime. Sorry, this is by no means AFFORDABLE.
Damn, that is a lot! Perhaps raise the deductible?
I’m looking at $1,550 a month for two with no kids. Crap!
There is something flawed about your analysis. As a single person, age 60, I moved from CO back to MD 2 years ago. While rebuilding my business here in MD, the subsidies were a lifeline. In 2015 I paid $178 in premium per month for a Silver Plan, had no deductible, and a $2500 OOP Max. Now that my AGI will be a “whopping” $53,000 approximately for 2015, my premium for a Silver Plan will go up to $750 per month, with a $1600 deductible, and an OOP Max of $6550. I have health issues, and they’re not from not taking care of myself through the years. They are through no fault of my own. So I have to be careful about the policy I pick. There was very little difference on the overall OOP between the Bronze and the Silver, only the Bronze plan has far worse coverage, and I will have huge unpredictable expenses likely for most of the year. It is not affordable for me to have an AGI of $53,000 and be paying about 25% of that out in OOP medical expenses and premiums.
Hi Julie,
I don’t know if your response was to me or not.
I just poked in all the data at The ACA website.
You can confire my numbers or put in yours.
Start here, >https://www.healthcare.gov/< then hover on ‘GET ANSWERS’, when the box opens find in the center column, ‘PREVIEW PLANS AND PRICES. Click on that and start entering data as ask, you will see some items can be skipped to get to the final numbers.
I entered my zip, 32405 for my family of four, 60yrs, 55yrs, 24yrs and 21yrs. non smokers or any of those other boxes. I used $60,000 as my MAGI. (Modified Adjusted Gross Income)
The result for the least expensive premium, BCBS Esential 1452 plan is $177 month. The subsidy for that plan is $1,224 per month or $14,688 per year, I would be responsible for the premium of $2124 per year, plus deductible and OOP expenses. I think you have one misthink, Out of Pocket includes the deductible.
So I could get $14,688 of subsidy.
It was convenient that you show no data for the less than amounts. Actually (as in Texas) the amount is 0. Those families pay the full price. Texas did not accept the Medicaid to fill the gap between the state plan and the ACA.
Sorry to be so long, I registered here with an email I rarely check.
“It was convenient that you show no data for the less than amounts.”
Well ya, I guess it was, but you can do your own research for any family, zipcode, and income
that you desire. Doesn’t take 3 minutes.
Start here, >https://www.healthcare.gov/< then hover on 'GET ANSWERS', when the box opens find in the center column, 'PREVIEW PLANS AND PRICES. Click on that and start entering data as ask, you will see some items can be skipped to get to the final numbers.
I entered my zip, 32405 for my family of four, 60yrs, 55yrs, 24yrs and 21yrs. non smokers or any of those other boxes. I used $60,000 as my MAGI. (Modified Adjusted Gross Income)
The result for the least expensive premium, BCBS Esential 1452 plan is $177 month. The subsidy for that plan is $1,224 per month or $14,688 per year, I would be responsible for
the premium of $2124 per year, plus deductible and OOP expenses.
So I could get $14,688 of subsidy.
I see this article was written around July 2013, I’m in Fl., when I looked at the silver plan for my family of four, in 2014, the cost was $13,800, and with an AGI of $60,000 I was told I would get a $6,100 subsidy. $13,800 – $6,100 = $7,700 which is just about what I am paying on my existing policy. My existing policy wouldn’t be so high except, as the Obamacare regulations started in 2012, I had an 18.4% increase, then in 2013 I had a 19.2% increase then in 2104 I had a 24% increase.
Now in 2015, we are hearing families that were promised a certain subsidy, are now getting a tax bill because the subsidy was not as high as they were told. I believe once enough Obamanauts sign up, the subsidy will slowly slide away.