Help me understand the ACA Cliff

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Help me understand the ACA Cliff

Post by rec7 » Sun Dec 03, 2017 11:33 pm

If one man makes 48k and a second man makes 49k is the difference that much with the ACA?
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

User avatar
MichaelRpdx
Posts: 343
Joined: Sat Feb 27, 2010 7:18 pm
Location: Portland, Oregon
Contact:

Re: Help me understand the ACA Cliff

Post by MichaelRpdx » Sun Dec 03, 2017 11:40 pm

Yes, it's huge.
You go from substantial subsidy to none. If you are insuring through the ACA and can control your income this is very important.

Zane Benefits has a chart that shows the threshold for family sizes up to eight persons.

Below 400% of the Federal Poverty level the subsidy change is fairly gradual.
Be Appropriate && Follow Your Curiosity

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 12:02 am

When I use this link https://www.healthinsurance.org/obamaca ... alculator/
To go from 47k to 48k you lose $132 a year where I live
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

scrabbler1
Posts: 2229
Joined: Fri Nov 20, 2009 2:39 pm

Re: Help me understand the ACA Cliff

Post by scrabbler1 » Mon Dec 04, 2017 12:19 am

rec7 wrote:
Sun Dec 03, 2017 11:33 pm
If one man makes 48k and a second man makes 49k is the difference that much with the ACA?
As someone who has barely qualified for an ACA subsidy the last 3 years, I will likely not qualify for one in 2017 because of a huge, unexpected spike in my income (due to a large LTCG distribution) later this month, boosting my income over the MAGI limit to receive a subsidy.

The subsidy I would have qualified for will be around $730. This is based on the difference between the maximum HC contribution of ~$4,270 ($48,200 x 0.0969) and the estimated SLCSP of ~$5,400. For me, the cliff is the $730 subsidy I will no longer qualify for. If the SLCSP is higher, the cliff will be higher, too.
Last edited by scrabbler1 on Mon Dec 04, 2017 12:45 am, edited 1 time in total.

curmudgeon
Posts: 1631
Joined: Thu Jun 20, 2013 11:00 pm

Re: Help me understand the ACA Cliff

Post by curmudgeon » Mon Dec 04, 2017 12:41 am

There are wild amounts of variations in how much subsidy you might get. Depends on what plans are available in your state, income, your age (older has higher premiums), phase of the moon :twisted: etc. In my case we are a married couple, so the cliff is around $64K. Next year if we go over the cliff, we would lose about $16,000 in subsidy (depending on the plan we choose).

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 8:56 am

From what I can tell it looks like a very gradual cliff as your income goes up.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 11:49 am

Bumping
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

User avatar
MP123
Posts: 772
Joined: Thu Feb 16, 2017 3:32 pm

Re: Help me understand the ACA Cliff

Post by MP123 » Mon Dec 04, 2017 11:56 am

rec7 wrote:
Mon Dec 04, 2017 12:02 am
When I use this link https://www.healthinsurance.org/obamaca ... alculator/
To go from 47k to 48k you lose $132 a year where I live
But what happens when you go to $49k?

I don't know where you live but you can also try the US averages here: https://www.kff.org/interactive/subsidy-calculator/

Once you go over the cliff there is no subsidy and you have to pay the full premiums. They can be very high especially in your 50s and early 60s.

pangea33
Posts: 46
Joined: Mon Jan 16, 2017 11:57 am

Re: Help me understand the ACA Cliff

Post by pangea33 » Mon Dec 04, 2017 12:12 pm

I have employer sponsored health coverage, but I wanted to see what the cliff looks like in my state.

Married couple in NC with no kids, M=43 F=46.

Silver plan at $64,900 ~ $300 a month for both.

Silver plan at $65,000 ~ over $1100 a month.

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 12:19 pm

pangea33 wrote:
Mon Dec 04, 2017 12:12 pm
I have employer sponsored health coverage, but I wanted to see what the cliff looks like in my state.

Married couple in NC with no kids, M=43 F=46.

Silver plan at $64,900 ~ $300 a month for both.

Silver plan at $65,000 ~ over $1100 a month.
I am not seeing these big jumps but I am on the lowest cost bronze plan.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

Dinosaur Dad
Posts: 125
Joined: Wed Feb 22, 2017 6:05 pm
Location: Connecticut

Re: Help me understand the ACA Cliff

Post by Dinosaur Dad » Mon Dec 04, 2017 12:20 pm

It's huge here in Connecticut...Bronze plan for family of three is roughly $23,000.
"Take calculated risks - that is quite different from being rash." | General George S. Patton

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 12:24 pm

OK I ran the numbers again at 48k I was at 122 at 49k it went to 431 for the cheapest bronze. It is a $309 difference. That is a big deal.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

User avatar
munemaker
Posts: 3524
Joined: Sat Jan 18, 2014 6:14 pm

Re: Help me understand the ACA Cliff

Post by munemaker » Mon Dec 04, 2017 12:37 pm

rec7 wrote:
Sun Dec 03, 2017 11:33 pm
If one man makes 48k and a second man makes 49k is the difference that much with the ACA?
Yes, the amount is "that much" and exactly how much depends partly on where you live.

Here is a good article on optimizing the ObamaCare subsidies:
http://gocurrycracker.com/obamacare-opt ... #more-5063

Here is a link to an ObamaCare subsidy calculator that you may find useful:
https://www.kff.org/interactive/subsidy-calculator/

FireHorse
Posts: 73
Joined: Sat Nov 25, 2017 7:03 pm

Re: Help me understand the ACA Cliff

Post by FireHorse » Mon Dec 04, 2017 12:53 pm

It all depending on the income. then how do we define income?
We understand that SS is an income? Is dividend/interest an income? Is stock gain an income?

User avatar
neurosphere
Posts: 2980
Joined: Sun Jan 17, 2010 1:55 pm

Re: Help me understand the ACA Cliff

Post by neurosphere » Mon Dec 04, 2017 12:56 pm

ln09348 wrote:
Mon Dec 04, 2017 12:53 pm
It all depending on the income. then how do we define income?
We understand that SS is an income? Is dividend/interest an income? Is stock gain an income?
Here ya go: https://www.healthcare.gov/glossary/mod ... come-magi/

scrabbler1
Posts: 2229
Joined: Fri Nov 20, 2009 2:39 pm

Re: Help me understand the ACA Cliff

Post by scrabbler1 » Mon Dec 04, 2017 12:59 pm

ln09348 wrote:
Mon Dec 04, 2017 12:53 pm
It all depending on the income. then how do we define income?
We understand that SS is an income? Is dividend/interest an income? Is stock gain an income?
For the purpose of determining an ACA subsidy, income includes tax-exempt interest, cap gains and CG distributions, and qualified dividends, as well as the untaxed portion of SS. It's called MAGI, or Modified Adjusted Gross Income. A huge LTCG distribution will push me over the cliff, sadly.

User avatar
MP123
Posts: 772
Joined: Thu Feb 16, 2017 3:32 pm

Re: Help me understand the ACA Cliff

Post by MP123 » Mon Dec 04, 2017 1:24 pm

rec7 wrote:
Mon Dec 04, 2017 12:24 pm
OK I ran the numbers again at 48k I was at 122 at 49k it went to 431 for the cheapest bronze. It is a $309 difference. That is a big deal.
And those premiums are for a relatively young person. Try them again for a 60 year old. :shock:

ARB57
Posts: 89
Joined: Sun Aug 07, 2011 4:00 pm

Re: Help me understand the ACA Cliff

Post by ARB57 » Mon Dec 04, 2017 1:47 pm

Hamilton County, Florida (I don't live there, but thought about moving there once)

MAGI $48,200 Annual Subsidy $16,068
MAGI $48,300 Annual Subsidy $0

This is for a 60 something male.

HoosierJim
Posts: 451
Joined: Wed Mar 24, 2010 7:11 pm

Re: Help me understand the ACA Cliff

Post by HoosierJim » Mon Dec 04, 2017 1:53 pm

You should say also there is a reverse "cliff" if you adjust your 401K, SEP, Individual 401k, IRA, tax loss harvest , etc and a second order effect if you choose a plan that is HSA compatible and you use it.

Look at previous Boglehead post: Ways to reduce magi

User avatar
munemaker
Posts: 3524
Joined: Sat Jan 18, 2014 6:14 pm

Re: Help me understand the ACA Cliff

Post by munemaker » Mon Dec 04, 2017 5:18 pm

ln09348 wrote:
Mon Dec 04, 2017 12:53 pm
It all depending on the income. then how do we define income?
We understand that SS is an income? Is dividend/interest an income? Is stock gain an income?
For ObamaCare, income is defined as MAGI (modified adjusted gross income). Take your AGI (adjusted gross income), the last line on form 1040 front page, and add any tax exempt interest you earned to it.

User avatar
munemaker
Posts: 3524
Joined: Sat Jan 18, 2014 6:14 pm

Re: Help me understand the ACA Cliff

Post by munemaker » Mon Dec 04, 2017 6:00 pm

rec7 wrote:
Mon Dec 04, 2017 8:56 am
From what I can tell it looks like a very gradual cliff as your income goes up.
When you hit 400% of Federal Poverty Level (FPL), you reach the cliff, and there is nothing gradual about it.

rec7
Posts: 2369
Joined: Tue Oct 28, 2008 7:22 pm

Re: Help me understand the ACA Cliff

Post by rec7 » Mon Dec 04, 2017 7:19 pm

munemaker wrote:
Mon Dec 04, 2017 6:00 pm
rec7 wrote:
Mon Dec 04, 2017 8:56 am
From what I can tell it looks like a very gradual cliff as your income goes up.
When you hit 400% of Federal Poverty Level (FPL), you reach the cliff, and there is nothing gradual about it.
I understand now I am not use to financial cliffs. Very tricky when selling funds. I miss the old days when health insurance and selling funds were two different transactions.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

Post Reply