Maximizing Affordable Care Act Benefits: Strategies for Families with Assets

Families with significant assets may wonder if they can still qualify for subsidies under the Affordable Care Act (ACA). This blog provides a comprehensive guide to exploring strategies that can help you manage your income and assets to optimize your ACA benefits. Let’s dive into the specifics:

Understanding ACA Income and Asset Limits

To determine your eligibility for ACA subsidies, you need to consider your family’s modified adjusted gross income (MAGI) and total assets.

MAGI includes your income from all sources, such as wages, salaries, investments, and self-employment.

Total assets include your savings and investments, such as cash, stocks, bonds, and real estate. However, certain assets, such as your primary home and retirement accounts, may be excluded.

Strategies for Managing Income and Assets

1. Choose Dividend-Paying Stocks Wisely: Opt for dividend-paying stocks with lower yields. Consider companies that prioritize share buybacks or reinvestment over high dividend payments.

2. Explore Non-Dividends Investments: Invest in assets that typically don’t pay dividends, such as growth stocks or small-cap funds.

3. Maximize Retirement Savings: Contribute to retirement accounts like 401(k)s and IRAs to reduce your MAGI.

4. Manage Capital Gains: Avoid selling assets with significant capital gains in years when you expect to receive ACA subsidies.

5. Consider Charitable Giving: Increase your charitable contributions to reduce your taxable income.

6. Utilize Health Savings Accounts (HSAs): Contribute to HSAs to save for medical expenses tax-free and reduce your MAGI.

FAFSA Considerations for College Savings

For families with college-age children, maximizing ACA subsidies while minimizing college costs is a balancing act. Here are some strategies to consider:

1. Keep Assets Below FAFSA Cutoffs: Aim for total assets below 175% of the federal poverty level ($52,500 for a family of four in 2023) to qualify for the auto-max system and receive the maximum ACA subsidies.

2. Utilize 529 Plans Wisely: Contribute to 529 plans after maxing out your retirement accounts. Withdrawals from 529 plans used for qualified education expenses are tax-free and do not impact your FAFSA eligibility.

Seek Professional Guidance

Finding the right balance between ACA benefits and college savings can be challenging. Consider seeking professional guidance from a licensed insurance agent who can help you navigate these complexities and develop a customized plan that meets your specific needs.