If you are in the market for securing Affordable Care Act health insurance for 2018, there are many things to consider and act on RIGHT NOW that can save (or cost you) thousands in premiums next year.
There are several factors regarding your income (46 examples off the top of my head in fact) that weigh heavily into calculating how much you will pay next year. Factors that you may or may not be aware of that will play heavily into how much (or how little) you must invest in your health insurance.
When you venture out onto the marketplace application, you will need to be armed with a solid estimate of your household income for the year. The savings that you do or do not receive will be based on your EXPECTED household income for the year that you want coverage, not the year you are applying.
This all centers on a number which you will be asked to calculate, your Modified Adjusted Gross Income (MAGI). This is “the figure used to determine eligibility for premium tax credits and other savings for Marketplace health insurance plans and for Medicaid and the Children’s Health Insurance Program (CHIP). MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.” www.healthcare.gov 2017
Navigating all of this can be confusing and downright overwhelming for most of us and the tendency is to just bury our heads in the sand and hope for the best.
But before you start hyperventilating, have a look at the tips we have presented in this article. Although certainly not intended to be a comprehensive list of strategies, they are the low hanging fruit available to you and well worth a good look.
1. Interest on Savings and Bonds
This is the first type of income that you may be collecting that can affect your health coverage costs in 2018. Interest on savings and bonds is counted towards income and your income is what largely sways how big your premiums are going to be.
TIP: Consider selling bonds and repositioning your savings into tax-deferred investments.
2. Dividends and Capital Gains
Just like interest on savings and bonds, your capital gains and dividends will factor into your estimated household income on your marketplace application.
TIP: Consider selling non-qualified stocks, mutual funds, and other investments prior to 2018.
3. IRA and 401k Distributions
Contrary to many people’s belief that these may be non-taxable, unlike ROTH IRAs, these too are income that you must plan ahead for to avoid taxable distributions.
TIP: Consider paying 2018 large bills in 2017, ie insurance property tax etc.
4. Rental and Self Employment Income
The Affordable Care Act uses net rental and self-employment income to calculate your premium savings.
TIP: Got some big expenses coming up that you were thinking about incurring this year? Maybe some business purchases? Think again. Consider paying expenses and business purchases in 2018 instead of 2017 to help reduce your overall household income.
5. Roth Distributions
Distributions from a ROTH are non-taxable and are not calculated as a factor in your household income (score!).
TIP: Consider a ROTH conversion prior to December 31st of this year.
Remember, whatever you do or don’t do, you need to make these changes before the end of this calendar year to take advantage of them for 2018. If you have any questions, or would like to discuss the bigger picture in more detail, hit the button below to book a short phone call with me and I would be happy to chat about your options over the phone.