Unlocking the Benefits of ACA: Maximizing Premium Assistance with IRA Contributions

Understanding Marketplace Health Insurance Eligibility and Premium Assistance

The Affordable Care Act (ACA) established a health insurance marketplace where individuals and families can purchase health insurance plans. To make these plans more affordable, the ACA provides premium assistance to those who qualify based on their income.

Impact of Social Security Income on Premium Assistance

Social Security Disability Insurance (SSDI) income counts towards Modified Adjusted Gross Income (MAGI), which is used to determine eligibility for premium assistance. This means that individuals receiving SSDI may qualify for a lower level of premium assistance than those with equivalent income from other sources.

Exploring Options to Increase Premium Assistance

While Social Security income impacts MAGI, there are still strategies individuals can consider to potentially increase their premium assistance. One option is to contribute to an Individual Retirement Account (IRA). IRA contributions are typically deductible from MAGI, which can lower an individual’s taxable income and thus increase their eligibility for premium assistance.

IRA Contribution and MAGI Reduction

Contributions to traditional or Roth IRAs can reduce MAGI, making individuals eligible for higher levels of premium assistance. However, it’s important to note that IRA contributions are subject to income limits. For 2023, the income limit for traditional and Roth IRA contributions is $153,000 ($228,000 for married couples filing jointly).

Qualifying for a 94% Health Plan

To qualify for a 94% health plan, an individual’s household income must be between 150% and 250% of the federal poverty level (FPL). Using the 2023 FPL guidelines, this translates to an income range of approximately $21,960 to $36,600 for a single individual or $44,600 to $74,400 for a family of four.

By reducing their MAGI through IRA contributions, individuals may be able to lower their income below the 150% FPL threshold and qualify for a 94% health plan.

Seek Professional Guidance

Navigating the complexities of ACA eligibility and premium assistance can be challenging. It’s recommended to seek the assistance of a licensed insurance agent who can provide personalized guidance and help you maximize your savings.

By understanding the impact of IRA contributions on MAGI and exploring other strategies, individuals receiving SSDI may be able to increase their premium assistance and access more affordable health insurance coverage through the ACA marketplace.