How to Adjust Your MAGI to Maximize ACA Health Insurance Subsidies

The Affordable Care Act (ACA) provides financial assistance to help people afford health insurance. This assistance is based on your Modified Adjusted Gross Income (MAGI), which is your income for the year before certain deductions and adjustments are made.

If you want to get the best possible subsidies on your health insurance, you need to adjust your MAGI so that it falls within the 134-200% of the Federal Poverty Level (FPL) range. This range gives you access to the best subsidies and cost-sharing reductions (CSRs).

There are many ways to adjust your MAGI. Here are a few ideas:

– Contribute to a retirement account. Contributions to a 401(k) or IRA will reduce your MAGI.
– Make a Roth conversion. Converting a traditional IRA to a Roth IRA will increase your MAGI in the year of the conversion, but it will not be taxable in the future.
– Invest in high-dividend stocks. Dividends are not taxed in the year they are received, so they will not increase your MAGI.
– Sell assets. Selling assets, such as stocks or real estate, can generate capital gains, which will increase your MAGI.
– Withdraw money from a savings account. Withdrawals from a savings account will not increase your MAGI.

It’s important to note that you should not try to lower your MAGI too much. If your MAGI is too low, you may lose your eligibility for subsidies.

If you’re not sure how to adjust your MAGI, you can talk to a tax advisor or a licensed insurance agent. They can help you figure out the best way to lower your MAGI and get the best possible subsidies on your health insurance.

What Happens If Your Income Changes?

If your income changes during the year, you need to report the change to the Marketplace. The Marketplace will adjust your subsidies accordingly.

If you make more money than you expected, you may have to pay back some of the subsidies you received. However, you will not have to pay back more than the amount of the subsidies you received.

If you make less money than you expected, you may be eligible for more subsidies. The Marketplace will adjust your subsidies accordingly.

It’s important to report any changes in your income to the Marketplace as soon as possible. This will help you avoid any surprises when you file your taxes.

Conclusion

Adjusting your MAGI can help you get the best possible subsidies on your health insurance. By following the tips in this article, you can lower your MAGI and get the coverage you need at a price you can afford.