How to Optimize Healthcare Costs for Early Retirees

If you’re an early retiree, you may be wondering how to optimize your healthcare costs. The Affordable Care Act (ACA) provides a number of options for health insurance coverage, but understanding your options can be difficult. In this blog post, we will discuss how to raise your MAGI to the poverty level in early retirement and provide helpful insights about ACA health insurance.

What is MAGI?

MAGI stands for modified adjusted gross income. It is a measure of your income that is used to determine your eligibility for certain government programs, including the ACA. For 2023, the federal poverty level (FPL) for a household of two is $18,310.

How to Raise Your MAGI

If your MAGI is below the poverty level, you may be eligible for ACA subsidies. There are a number of ways to raise your MAGI, including:

Converting traditional IRA or 401(k) to a Roth IRA. When you convert a traditional IRA or 401(k) to a Roth IRA, the amount you convert is added to your MAGI. This can be a good way to increase your MAGI quickly while taking advantage of tax-free withdrawals in retirement.
Taking qualified dividends. Qualified dividends are taxed at a 0% rate for most people. However, they are still included in your MAGI. This means that taking qualified dividends can help you increase your MAGI without increasing your tax bill.
Realizing capital gains. Capital gains are the profits you make when you sell an asset, such as a stock or bond. Realizing capital gains can help you increase your MAGI, but it can also trigger capital gains taxes.

How to Apply for ACA Subsidies

If your MAGI is below the poverty level, you may be eligible for ACA subsidies to help you pay for health insurance. To apply for subsidies, you will need to create an account on the website. You will then need to provide information about your income, family size, and other factors.


Optimizing your healthcare costs in early retirement is essential. By understanding your options and taking steps to raise your MAGI, you can qualify for ACA subsidies and reduce your healthcare costs. If you have any questions about ACA health insurance or how to optimize your healthcare costs, please contact our licensed agent help for more information.

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