r/Fire • u/stevencartwright • Aug 13 '26
A Fire Beginner's Guide To ACA Health Insurance and subsidies
MAGI, FPL, subsidies, CSR, and what early retirees should know
I made this guide to help folks zoom out and see how the pieces fit together. Hopefully it helps those new to FIRE and healthcare make sense of the big picture. I see a lot of posts about individual strategies, but not as much about how everything fits together.
🚨 DISCLAIMER 🚨
I'm just a random dude on Reddit 😁 This is my attempt to make the ACA/FIRE connection easier to understand, based on official government sources and community discussions. I'm not a tax professional, insurance professional, or financial advisor. Check the current rules for yourself before making decisions.
If you're FIRE'd, you have the time 😁
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THE 5-MINUTE VERSION
- You can buy individual health insurance through the ACA Marketplace.
- Financial assistance is based largely on your expected household MAGI
(Modified Adjusted Gross Income) for the coverage year.
- MAGI isn't necessarily the same as how much you spend or withdraw
from your portfolio. Portfolio withdrawals ≠ MAGI.
- Your MAGI is compared with the Federal Poverty Level (FPL).
- Your MAGI can affect (1) what you pay for your monthly premium, and (2) what you pay when you actually use the insurance.
- There are two types of savings:
(1.1) Premium Tax Credit (PTC): The tax credit you're ultimately entitled to for the year, based on your actual MAGI when you file your taxes (the next calendar year).
(1.2) Advance Premium Tax Credit (APTC): An advance of that credit, paid to your insurance company during the year to lower your monthly Marketplace premium.
(2) Cost-Sharing Reduction (CSR): Financial help that reduces what you pay when you actually use your insurance.
- If you qualify for CSR, you must choose a Silver plan to receive it.
- For FIRE, healthcare can therefore interact with taxes and investment
decisions.
WHAT IS THE ACA?
The Affordable Care Act (ACA) created the Marketplace system for buying individual health insurance.
If you are retired before Medicare and don't have qualifying employer or government coverage, the Marketplace may be where you buy coverage.
Depending on your state,Marketplace enrollment may be handled through HealthCare.gov or a state-based Marketplace. Open Enrollment dates and enrollment procedures can therefore differ by state. Check your state's Marketplace for the dates that apply to you.
The Marketplace can provide financial help depending on your household, expected income and eligibility rules.
NEED HELP...?
Every state has Marketplace-certified assisters (also called Navigators, enrollment assisters, or certified application counselors) who provide free help with Marketplace applications and enrollment. They can help you understand the application, eligibility, available savings, and plan choices.
For a FIRE household with complicated MAGI questions (such as Roth conversions, capital gains, or coordinating tax planning with ACA subsidies) a tax professional may be more appropriate. Marketplace assisters are trained to help with Marketplace enrollment; they are not a substitute for individualized tax or investment advice.
HealthCare.gov — Find local Marketplace help:
https://www.healthcare.gov/find-assistance/
"ACA SUBSIDY" ACTUALLY MEANS TWO DIFFERENT THINGS
People often say " Premium Tax Credit" as though it is one benefit, but there are two pieces.
PREMIUM TAX CREDIT (PTC)
This is the federal tax credit that helps eligible people pay their Marketplace premiums.
ADVANCE PREMIUM TAX CREDIT (APTC)
When you apply through the Marketplace, you provide your best estimate of your household MAGI for the year. The Marketplace uses that information to determine whether you qualify for a Premium Tax Credit. If you choose to use that credit during the year to lower your monthly premium, that advance amount is called the Advance Premium Tax Credit (APTC).
The APTC is paid in advance during the year to the insurance company, reducing what you pay each month.
Example:
$600 monthly premium
- $350 APTC
= $250 monthly premium you pay
You can also choose to use only some or none of your estimated credit during the year and claim the rest when you file your tax return.
That can be useful if your MAGI is difficult to predict.
AGE, LOCATION, OTHER CONSIDERATIONS
ACA premiums generally increase as you get older, even if your MAGI stays the same.
ACA premiums and PTC can vary based on where you live. They vary on your local "rating area", which is generally your county. The Marketplace is state-based, so things like the overall Marketplace, state ACA premiums, and state healthcare rankings are discussed at the state level. But your actual premium and PTC are based on your local rating area within that state.
This all makes it difficult to predict exactly what your PTC and net premium will be if you're considering moving to another state or even within a state. You have to look at the premiums and benchmark Silver plan in that location. The benchmark Silver plan AKA second-lowest-cost Silver plan ( SLCSP) is the standard reference point used to calculate the PTC for an area.
There is no simple relationship between a “cheap place to retire,” the best ACA subsidy, and good healthcare. The ACA calculation is its own weird system. A location may have low ACA premiums, decent APTC subsidies, while still ranking poorly for clinical care or having limited access to certain specialists.
THE BIG ONE: WHAT IS MAGI?
Modified Adjusted Gross Income (MAGI) is the income measure used for Marketplace purposes.
Household MAGI: For ACA purposes, household income generally includes your MAGI, your spouse's MAGI if filing jointly, and, in some circumstances, the MAGI of dependents who are required to file a federal tax return. This means a dependent's income can sometimes affect your ACA subsidies.
The IRS defines MAGI as:
Federal tax-return AGI
+ certain excluded foreign income
+ nontaxable Social Security benefits
+ tax-exempt interest
= MAGI
Supplemental Security Income (SSI) isn't included.
For many people, MAGI is the same as or very close to AGI.
PORTFOLIO WITHDRAWALS AND INVESTMENT INCOME
Portfolio withdrawals ≠ automatically MAGI.
For many people, Form 1040, line 11 (Adjusted Gross Income) is the starting point for MAGI. A portfolio withdrawal isn't automatically added to your MAGI just because you withdrew the money.
In a taxable brokerage account, some or all of the proceeds can represent your original investment ( your basis). The taxable part generally comes from the realized gain or loss.
Meanwhile, dividends and interest can count as income even if you never withdraw them.
HealthCare.gov tells Marketplace applicants to include expected income such as.:
- interest
- dividends
- capital gains
- most traditional IRA/401(k) withdrawals
- other taxable income
HealthCare.gov also identifies qualified Roth IRA withdrawals as not being counted as income for the Marketplace estimate.
So two retirees could each spend $80,000 but have very different MAGI.
It does not mean investment withdrawals are automatically tax-free. Different accounts and transactions have different rules.
WHAT IS FPL?
Federal Poverty Level (FPL) is a government income benchmark used for programs including Marketplace financial assistance.
You will see numbers such as:
150% FPL
200% FPL
250% FPL
400% FPL
The dollar amount depends on household size and the applicable year.
FPL FOR THE MARKETPLACE:
For a given Marketplace coverage year, the applicable FPL is based on the federal poverty guidelines in effect for that year's Open Enrollment.
For 2026 Marketplace coverage, that means the 2025 poverty guidelines.
For a one person household in the 48 contiguous states and Washington, D.C.:
- $15,650 MAGI = 100% FPL
- $23,475 MAGI = 150% FPL
- $31,300 MAGI = 200% FPL
- $39,125 MAGI = 250% FPL
- $62,600 MAGI = 400% FPL
For example, if your 2026 Marketplace MAGI is $23,475, you are at 150% FPL.
Alaska and Hawaii have higher federal poverty guidelines.
Don't copy an FPL dollar figure from an old Reddit post without checking the year.
If you're married filing jointly, don't simply double the numbers. Your household size and combined household MAGI affect the calculation.
WHAT IS CSR, AND WHY CAN IT BE A BIG DEAL?
The Premium Tax Credit (PTC) helps with the insurance premium.
Cost- Sharing Reduction helps reduce what you pay when you actually use the insurance.
It can reduce:
- deductible
- copays
- coinsurance
- out-of-pocket maximum
If you qualify for CSR, you MUST choose a Silver Marketplace plan to receive those extra savings.
CSR is generally available from 100% or 138% of FPL ( depending on your state), up to 250% of FPL. The strongest CSR benefits are at lower income levels, with the benefits becoming less generous as income rises.
If you choose Bronze or Gold instead, you can still receive the Premium Tax Credit if you're eligible, but you will not receive those CSR savings.
Example: two Silver plans:
-Plan A-
Monthly premium $200
Deductible $3,500
Out-of-pocket max $10,600
-Plan B-
Monthly premium $250
Deductible $750
Out-of-pocket max $2,300
Plan B costs $50 more each month.But if you actually need substantial healthcare, Plan B could be dramatically cheaper overall.
HealthCare.gov gives the same basic lesson: compare what you'll pay for the entire year, not just the premium.
CSR can make a Silver plan particularly attractive when you expect to use healthcare.
The exact CSR savings depend on your MAGI and the specific Silver plan.
HSA STRATEGIES TO CONSIDER
If you're eligible for CSR compare the Silver plans (including HSA eligible Silver plans) with Bronze HSA plans. Don't assume Bronze + HSA is automatically better. CSR can make a Silver plan substantially more valuable.
Don't assume every Bronze plan is HSA eligible. Check the plan's details.
If you're eligible to contribute to an HSA, contributions can reduce your AGI/MAGI.
HSA money can be invested and left to grow rather than used for medical expenses. You may have heard that they are "triple tax advantaged". Contributions can be tax-deductible, investment growth can be tax free, and withdrawals for qualified medical expenses can be tax free.
If you pay qualified medical expenses out of pocket, keep those receipts! You can potentially reimburse yourself from the HSA years later, provided (1) the expense occurred after the HSA was established and (2) wasn't previously reimbursed or deducted. The reimbursement is tax-free and does not increase MAGI.
METAL LEVELS
Bronze, Silver, Gold, Platinum coverage levels are NOT ratings of medical quality.
They describe how you and the insurance company generally split the costs of covered care.
If you qualify for CSR, Silver becomes especially important because that is where the extra cost-sharing savings are available.
Different plans within the same metal level can still have very different:
- deductibles
- copays
- coinsurance
- out-of-pocket maximums
- provider networks
CHECK THE PROVIDER NETWORK
Don't choose a plan based only on the premium, deductible, and out of pocket max. Check whether your doctors and hospitals are in-network.
If you travel frequently or spend a lot of time outside your home state, check how the plan handles care outside its coverage area.
WHY FIRE PEOPLE CARE ABOUT MAGI
A normal employee often has limited control over taxable income.
An early retiree can have more flexibility.
A FIRE household might have:
- taxable brokerage assets
- traditional IRA/401(k) assets
- Roth accounts
- cash
- dividends
- interest
- unrealized gains
- realized gains
The way these assets are used can produce different amounts of taxable income. Understand the consequences before making large taxable transactions.
META-STRATEGY: ESTIMATING THE NEXT YEAR
The Marketplace application and your tax return are dealing with different years.
For example:
November 2026 → estimate 2027 MAGI → choose 2027 insurance
↓
2027 → actual 2027 income happens → update your estimate if necessary
↓
Early 2028 → file your 2027 taxes → actual 2027 MAGI is known → reconcile your 2027 Premium Tax Credit
Your 2026 tax return, which you file in early 2027, settles your 2026 Marketplace coverage. It does not replace the 2027 MAGI estimate you made when enrolling for 2027.
That is why tracking MAGI during the year matters: you're making an estimate of the year ahead, then later reconciling that estimate against what actually happened.
FIRE PLANNING CONSIDERATION: TRACK MAGI
Don't wait until tax filing (the next calendar year) to discover what your MAGI was.
Track:
- dividends
- interest
- realized gains
- realized losses
- retirement-account distributions
- Roth conversions
- other taxable income
MY SIMPLE EXAMPLE (based on my (simple) situation)
Open enrollment for 2027 starts in November 2026. I can look at my Vanguard 2026 year-to-date statement and see roughly how much I've received in dividends, interest, and realized gains or losses. Fortunately, my investments are rather simple and are with one brokerage.
I then use that as a starting point for estimating my 2027 MAGI. I'll adjust it for anything I already know will be different in 2027, such as a planned Roth conversion, large investment sale, or unusual distribution.
I enter that estimate into the Marketplace application for 2027.
Then, during 2027, I keep an eye on the actual numbers. If I realize that my expected MAGI has changed significantly, I update my Marketplace application. This can change the amount of Advance Premium Tax Credit (APTC) I receive for the remaining months of the year. It does not retroactively change the APTC I already received.
For example, if I received $400 per month in APTC for the first six months and then realize my MAGI will be higher than expected, updating my application could reduce the APTC for the remaining six months. This helps reduce the chance of having to repay a large amount when I file my taxes.
If my expected MAGI falls, the opposite can happen: my APTC for the remaining months could increase.
Finally, when I file my 2027 taxes in 2028, I know my actual MAGI and reconcile the entire year's APTC with the PTC I was actually entitled to.
DOCUMENTS TO HAVE HANDY
You don't necessarily need to upload documents when you apply. The Marketplace may verify your information electronically. But be prepared to provide documents if asked.
For income, useful documents can include:
- Most recent federal tax return (1040)
- W-2s and 1099s
- Recent pay stubs
- Social Security benefit statements
You may also need:
- Social Security Numbers
- Current health insurance information
- Employer health coverage information
- Citizenship or immigration documents, if applicable
You will electronically consent to the Marketplace using your
information to determine eligibility. It may verify income and family
size with IRS and other information with government agencies.
If you're asked for documents, your notice will say exactly what is
needed and the deadline.
FIRE PLANNING CONSIDERATION: ASK ....
Before year-end, ask:
"What do you currently expect my taxable dividends, interest, distributions, and realized gains/losses to be for the year?"
A brokerage's "estimated annual income" figure can be useful, but it is not your final taxable income.
FIRE PLANNING CONSIDERATION: TAX-LOSS HARVESTING
Realized investment losses can offset realized capital gains subject to tax rules.
That can sometimes help manage MAGI.
But don't make a bad investment decision just to save on healthcare.
FIRE PLANNING CONSIDERATION: TIMING CAPITAL GAINS
A large realized gain can increase MAGI.
If you have legitimate flexibility about when to realize a gain, it can be useful to know what that gain does to your Marketplace situation.
FIRE PLANNING CONSIDERATION: ROTH CONVERSIONS
Roth conversions can be excellent retirement tax planning.
But a taxable Roth conversion generally increases income for the year and can therefore affect Marketplace financial assistance.
For an early retiree, consider:
current tax consequences
+
future tax consequences
+
ACA Marketplace consequences
FIRE PLANNING CONSIDERATION: CHOOSING WHERE SPENDING COMES FROM
FIRE planning often considers whether spending can come from sources that don't create the same amount of taxable income.
This is ordinary tax planning, not a reason to hide income or misreport a Marketplace application.
DON'T MAKE ACA YOUR ONLY INVESTMENT STRATEGY
ACA optimization is a secondary consideration.
Do what is right for your portfolio, even if it increases MAGI. This includes selling investments, tax-loss harvesting, roth conversions, etc.
THE 2026 CHANGE TO PREMIUM TAX CREDIT
The temporary expansion of the Premium Tax Credit that applied through 2025 is no longer in effect for 2026.
For 2026, the general PTC income range is back to:
100% through 400% of the applicable FPL.
That means going above 400% FPL can matter enormously.
There is another major 2026 change:
For tax years after 2025, there is NO repayment cap on excess APTC.
In other words, if you receive too much Advance Premium Tax Credit (APTC) during 2026 and your final tax return shows you were entitled to less, the IRS says you must repay the full excess.
This makes accurate income estimates and monitoring more important in 2026.
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DON'T INTENTIONALLY UNDERESTIMATE INCOME
When you apply for Marketplace coverage, you estimate your MAGI for the coverage year.
Make your best good-faith estimate. If your expected income changes materially, update the Marketplace. This is especially important in 2026 because there is no longer a cap on repayment of excess APTC.
If your MAGI is genuinely uncertain, you can also choose to receive only some or none of the estimated APTC during the year and claim the allowed credit when you file.
OTHER PREMIUM TAX CREDIT ELIGIBILITY RULES
Depending on your state, very low MAGI may put you in Medicaid rather than Marketplace coverage with PTC/CSR. In some states that haven't expanded Medicaid, people below 100% FPL can fall into a coverage gap. The rules vary by state.
Income isn't the only requirement for the Premium Tax Credit.
Other rules can involve:
- household/family size
- tax filing status
- whether someone can claim you as a dependent
- eligibility for certain employer coverage
- eligibility for government coverage such as Medicare, Medicaid, CHIP or TRICARE
- being enrolled in Marketplace coverage
This guide focuses on the FIRE/MAGI part because that is the part early retirees often have the most control over.
HELPFUL LINKS
HealthCare.gov — What counts as income
https://www.healthcare.gov/income-and-household-information/income/
HealthCare.gov — Cost-sharing reductions in practice
https://www.healthcare.gov/lower-costs/save-on-out-of-pocket-costs/index.html
HealthCare.gov — Total yearly costs
https://www.healthcare.gov/choose-a-plan/your-total-costs/
HealthCare.gov — Reconciling premium tax credits
https://www.healthcare.gov/taxes-reconciling/index.html
IRS — Premium Tax Credit FAQs
Health insurance for FIRE [Financial Independence Retire Early]
https://www.bogleheads.org/forum/viewtopic.php?t=265639
Health insurance during F.I.R.E and before age 65?
https://www.bogleheads.org/forum/viewtopic.php?t=416881
Minimizing ACA Cost
https://www.bogleheads.org/forum/viewtopic.php?t=466627
Weekly ACA 2026 Open Enrollment FAQ/Megathread
https://www.reddit.com/r/Fire/comments/1qatilp/weekly_aca_2026_open_enrollment_faqmegathread/
ACA subsidies vs. Roth Conversions
https://www.reddit.com/r/financialindependence/comments/1rtwdmm/aca_subsidies_vs_roth_conversions/
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u/Unauthorized_Mustard Aug 13 '26
Bookmarked this and shared it with my spouse. The hardest thing in my planning is figuring this out.
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u/hefa_freelance Aug 13 '26
same here. what a mess USA healthcare is...
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u/Unauthorized_Mustard Aug 13 '26
Amazing what Medicare for All or something similar would do to the job market. A lot of people are hanging on into their 60s for Medicare.
The opportunities that would open up for younger people as those folks retired would be great.
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u/LurkLurkleton Aug 13 '26
Yeah but then employers wouldn't be able to chain employees to their shitty jobs by holding their healthcare hostage.
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u/valleybrew Aug 14 '26 edited Aug 14 '26
In my state to get the max number of options you want to be at 138-149% of the federal poverty level for MAGI. That maxes benefits/grants and still allows you to select from multiple plans. Under 138% only gives you one option (Medicaid). For someone who FIREs with lots of assets this is a very tight window and takes planning.
In non-medicaid expansion states there is also a danger zone where you don't qualify for ACA because of low income yet don't qualify for medicaide because of too much income. Such a mess!
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u/Unauthorized_Mustard Aug 14 '26
In that 2nd paragraph you said Medicare twice and I think you mean Medicaid.
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u/n00bdragon FIREd 2026 age 37 Aug 14 '26
Good point to note for people in Medicaid expansion states is that you can use Roth conversions to achieve 100% FPL without actually realizing any gains at all.
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u/Momordicas Aug 14 '26
My god please just pass medicare for all already and simplify this bullshit
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u/ukaeh Aug 14 '26
Right? This is soooooooo much bullshit you need a whole team of people and a phd just to break even from getting robbed and/or having a second job in retirement wtf
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u/Momordicas Aug 14 '26
It is bullshit. Everyone deserves healthcare and if we do it through one big pooled insurance (Medicare for All) it's much cheaper per person. Cut out the middlemen in healthcare access. Retire when you fucking can instead of dealing with these insane calculations
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u/Fickle-Emu3370 Aug 13 '26
Great info! I'd just add that starting this year, all Bronze plans also count as HDHP and you can fund an HSA to help pay for them (or sit there invested). Fidelity offers very cheap HSA plans.
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u/pdxnative2007 Aug 13 '26
Make sure it actually says HSA.
My state has a plan listed under bronze but has a note that it's non-HSA compatible. Upon closer inspection, it is a coordinated care model that only has providers within the county.
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u/CompleteTruth Aug 13 '26
Any idea if funding an HSA helps to lower MAGI?
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u/Rom2814 Aug 15 '26
Really check the deductible and think about the likelihood you need healthcare.
In my area, Bronze plans are cheaper but have $13k+ deductibles. If you have health issues you may be better off getting a Gold plan with a higher premiums but far lower deductibles.
I thought I’d go with a bronze plan so I could leverage the HSA to lower MAGI, but we hit our deductible most years because my wife has ongoing health issues and this year we both had ER visits.
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u/Fickle-Emu3370 Aug 15 '26
Yeah, all this stuff is so state-dependent now! It really makes it harder to make sense of.
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u/fauxmadrid Aug 13 '26
Unless I missed it somewhere, for the MAGI section, I’d suggest emphasizing that it is household income that matters. If you have, for example, adult children covered under your plan and they have income, that would be included in the MAGI. I’m dealing with this now with a 24-year old son in graduate school.
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u/kjmass1 Aug 13 '26
The college years seem super complicated with any of their income, household size, insurance out of network at school, and if they qualify for a plan on their own. Need a whole write up for it.
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u/cakeandwhiskey Aug 14 '26
Yes! If your kids work and they’re counted in your household their income counts in the MAGI. Ugh!
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u/IntelligentFire999 Aug 13 '26
One more thing: if you already have an HSA account, save your medical receipts. You can reimburse yourself in a later year (say, in 2027) for those expenses - withdrawals from HSA are not taxed, and do not count towards your ACA MAGI. You can spend it towards really anything (groceries, for e.g.). Which means you dont have to sell stocks (and realize taxable gains) - essentially all this means lower MAGI, and hence higher subsidies.
I am on COBRA in 2026, and I am saving all those receipts so I can reimburse in 2027 or later if need be.
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u/NetherIndy Aug 14 '26
I get what you meant about the "spend it on anything". I look at our accumulated unreimbursed HSA-eligible spending in the past as "emergency tax-free, MAGI-increase-free cash". Same is also true of Roth IRA contribution basis $. Basically, we ride our MAGI near the 390-395% mark. If we had a sudden larger expense show up (furnace blows up, foundation, car repair) we've got those sources to tap without messing up our MAGI plan. Car replacement, too, though there might be some temptation in that case to use low-APR financing over a couple years just to spread the MAGI hit.
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u/IntelligentFire999 Aug 14 '26
Agreed. The 390-395% is a handy rule. In a way, for retired folks, HSA is now your emergency account with 0 MAGI impact.
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u/stevencartwright Aug 13 '26 edited Aug 14 '26
Good strategy. I think I can add this to a new section as an HSA receipt strategy.
I don't think you can spend those funds on groceries, though. 🤨5
u/24tg Aug 14 '26
I think they mean you can spend the reimbursed money from the receipts on groceries (or whatever you want), not that you can get reimbursed for groceries. The reimbursement still has to be from a qualified medical expense.
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u/alpacaMyToothbrush FI !RE Aug 14 '26
I don't think you can spend those funds on groceries, though. 🤨
You absolutely can't. I think they meant that if you don't spend from your HSA, you can reimburse yourself for medical expenses later.
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u/Rando35367 Aug 13 '26
This is a great post. Thank you for putting it together. I hope you can update it when/if changes are made to the laws. Definitely saving this post for planning!
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u/NetherIndy Aug 13 '26
One frequently pleasant and perverse surprise pops out of the way APTCs are calculated vs. age-based rating. If you're targeting 399% of the poverty level (ACA-Chubby-FIRE?), your benchmark plan (second cheapest Silver in your area) will be roughly the same premium through your life. 9.5-10% of MAGI or $704/month right now for a married couple in the lower 48. BUT, if Bronze/HSA works for you? A couple both age 40 would pay $275 a month for the plan I'm currently on. By 57, though (and up to 64), the exact same plan is $0.00 with the exact same income! Again, you'd never think health insurance would get substantially cheaper as you age. It shouldn't! But that's how the APTC skews the market.
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u/To_The_Nerdery Aug 13 '26
This is really great information. Also, compared to any other normal modern country with a normal modern healthcare system, this amount of time and effort to manage all of this is utter insanity. It makes me sad
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Aug 17 '26
[removed] — view removed comment
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u/stevencartwright Aug 17 '26 edited Aug 17 '26
Oh, nice. I've seen that mentioned before in this sub, but have never used it.
I added it to the helpful links section.
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u/Zphr 48, FIRE'd 2015, Friendly Janitor Sep 01 '26
Please remove it. We do not allow people to benefit from self-promo in here.
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u/stevencartwright Sep 01 '26
Done. 🫣
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u/Zphr 48, FIRE'd 2015, Friendly Janitor Sep 01 '26
Thank you! It's a great post and I have started recommending it others. I'll include a link in the Weekly Open Enrollment megathreads later this year.
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u/Zphr 48, FIRE'd 2015, Friendly Janitor Sep 01 '26
Rule 2/No Self-Promo/Spam - No self-promotion or spam. Please see our rules (https://www.reddit.com/r/Fire/about/rules/) and reach out via modmail if you have any questions or concerns.
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u/OhZoneManager Aug 14 '26
For many, the extra taxable income up to 400% FPL through Roth conversions will be better long-term financially than trying to meet the 250% FPL for assistance.
Not a promise, just that it tends to work in your favor this way. 😎👍
Otherwise, well written summary.
For me, having $600k in HYSA to live from 52 to 59.5 is hugely beneficial as well. Many underestimate the need for after-tax savings prior to drawing retirement savings (which all feeds into the FPL calc...) 😉
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u/TrojanHorse6934 Aug 14 '26 edited Aug 14 '26
The HYSA is key. We retired in early 2021 with $300k in a HYSA. Kept MAGI under 150% until this year so insurance costs were negligible for 5 years. We have now run that account down low so time to refill the piggybank. I just made a massive cap gain sale to cover the next bunch of years. With the ACA cliff, a dollar over is the same as going waaaaay over. Bite the bullet once every X years I suppose depending on long until you make it to 65.
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u/newtidderisdoodoo Aug 14 '26
I think I understand this intuitively, but are you able to share some of the calculations that support your statement?
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u/7min Aug 14 '26
One caveat when choosing a plan: check provider networks and verify out-of-state coverage, if applicable.
In our state, only a few (very expensive) plans cover non-emergency charges when traveling out of state or country, and some have limited networks such that even if you were to stay in-state, the closest in-network doctor is hours away.
You might say “I’m staying in one place,” but lots of stories of folks going over state lines after fires/hurricanes/etc and insurance denying care as out-of-network.
ALSO, depending on your state, there is also a MINIMUM INCOME you must make to qualify for ACA—i.e., in Florida, if your income for the year drops below the poverty line, you are ineligible for ACA and must go on Medicaid (which I believe you still aren’t eligible for due to assets, so you’re SoL).
It’s a mess, yes. And how normal, busy people navigate this is a miracle.
We did ACA for many years while self-employed, and the balancing act worked for us until i went back to work…but I retired this year and now the plan options are so bad (and expensive)! In some states, it’s HMOs or nothing…which isn’t going to work if you retire to travel.
So, we left the country and signed onto a global plan (that covers 180 days in US).
Remains to be seen how it’ll pan out and whether it was a wise or foolish decision.
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u/tea_hottea Aug 14 '26
What global plan did you go with? And 2nd question...(and please feel welcomed to not answer)...did you all have any prior pre-existing conditions? TY
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u/7min Aug 14 '26
Cigna with a super high deductible, it’s basically emergency insurance. But worst-case scenario with ACA was ~36k all-in, and 20 for global. And best case (no usage) was 26k for ACA and COBRA vs 9k for the international plan with US cover.
We have pre-existing conditions (and oldish), so we can’t get care covered if any of those flare up. May be able to amend in future years, but not guaranteed. So that’s another caveat, good call on asking about that!
If you reach out to any of the global insurance sales people, be sure to use a burner email/number, though—they are unrelenting sales people. Good in that they will do everything they can to get you insured, but it can be overwhelming.
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u/tea_hottea Aug 14 '26
Thank you. This was very helpful. We’ve done medical tourism in Bangkok and the experience was very positive. I think we’d pay out of pocket if we needed to for the pre-existing things.
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u/stevencartwright Aug 14 '26
Thanks, I will add those two points in the guide.
Lots of good comments that I didn't think of.
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u/spinz89 Aug 13 '26
Commenting just so I can come back to this when I'm more sober.
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u/Upstairs_Baby8424 Aug 13 '26
You’ll come back sober, read how insanely stupid this system is, and then get drunk again to numb the pain.
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u/tyen0 Aug 13 '26
There is a "save" option on the menu below each comment, btw.
I also appreciate, "more sober", not "sober". I just made a manhattan myself :)
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u/Pure_Resort9840 Aug 14 '26
Thank you! This is wonderful! Has anyone put together something like this for FAFSA and FIRE?
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u/sy6063 Aug 14 '26
To be precise, I would change the quote "CSR is generally available only up to 250% of FPL." to "CSR is generally available from 100% or 138% depending in the states up to 250% of FPL.". The writing has highlighted the 400% cliff. I think there is also a lower threshold (100%/138%FPL) to meet in order to get ACA subsidies. Under the lower threshold, you have to apply Medicaid, which is a different program. Many states start to have work requirements for people receiving Medicaid under 65.
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u/Parking-Banana-212 Aug 15 '26
This is great, thanks for putting it together. i would suggest doing a tldr version of it too, it would be easier for the masses to comprehend
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u/stevencartwright Aug 15 '26
You're welcome. I did put the 5-minute summary at the top. I don't think I could compress it more than that. It may become too "lossy" if I do.
There are so many more rabbit holes to go down, too, so I had to be sure I didn't make it too large.
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u/Local_Blackberry_317 Aug 17 '26
So very grateful for this post/summary, which I'll be bookmarking. Will be going into 2027 on ACA on my own in retirement, moving away from my employer paying my premiums through an ICHRA this year. Seeking information on the risks/benefits of filing separately, married vs. joint. Hubbie is taking SS and earns some income as a gig-woodworker (staying below ~$20,000ish). Will filing separately help me keep the MAGI down for the potential tax credits? Any resources to point me to would be great...
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u/Broken_DAG Aug 18 '26
Thanks for putting this together. It may take me couple of weeks to understand everything, Very valuable resource.
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u/mcbobgorge Aug 13 '26
Didn't know that about alaska/hawaii. Alaska's FPL is significantly higher. Someone needs to start /r/alaskafire
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Aug 13 '26
[removed] — view removed comment
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u/Zphr 48, FIRE'd 2015, Friendly Janitor Aug 13 '26
Rule 8/Limits on AI/bot content and unsupported AI/bot complaints - Your submission has been removed for violating our community rule against AI/bot content or unsupported AI/bot complaints. If you feel this removal is in error, then please modmail the mod team. Please review our community rules to help avoid future violations.
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u/LurkLurkleton Aug 13 '26
I'm starting this next year. One thing I was wondering was whether it would be financially better to get a bronze and invest the max amount in an HSA and leave it untouched for as long as possible or go with a silver plan with cost sharing reduction.
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u/Chet100 Aug 14 '26
Did not process all of it. Let's say I retire at 58 and for next 4 yrs I use my savings to survive....no 401k withdrawals.. Is my MAGI zero? No other supplemental income as I plan to sell my rentals....
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u/sea35 Aug 14 '26
Yes ,at least close to 0 because you still get some interest.
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u/Chet100 Aug 14 '26
Ok thank you...this is great post whoever created it...need to save it
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u/stevencartwright Aug 14 '26
Selling your rentals can generate taxable capital gains and increase your MAGI. I have one too I want to sell 😄
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u/hefa_freelance Aug 14 '26
note that some states also have a min MAGI requirement otherwise you don't even qualify for ACA. I know Texas has this based on my research.
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u/Stymus Aug 13 '26
Great work. I’ve been planning to make a summary like this; now I don’t have to. 👍
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u/CaptchaCrunch Aug 13 '26
Commenting to bookmark
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u/MizunoKaze Sep 09 '26
So, my question would be this: This is all well and good if you think you're getting close to pulling the FIRE lever, but what if you're near the beginning of your journey? Health care is the biggest thing I'm trying to figure out. I'm in a fairly low cost of living area, but because of that, it feels like health care could easily be the biggest annual expense. If, say, I want to retire in 10-15 years, surely the plans currently shown to me wouldn't even resemble what would be available then, right?
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u/MizunoKaze Sep 09 '26
Also, am I understanding correctly that even if I ended up retiring with MAGI low enough for Medicaid, that's no longer an option? I feel like I have a ton of questions, especially since I absolutely panic when I hear the worst case scenario: unsubsidized plans with premiums literally almost my entire current salary.
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u/whocaresreallythrow Aug 15 '26
FIREd 401K multi-millionaires claiming welfare subsidies intended for the poor.
Tell me the system is fucked without telling me the system is fucked.
Ya. Crazy shit.
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u/Imnotsureanymore8 Aug 13 '26
Two things:
I love it when millionaires cosplay as impoverished folks to get cheap insurance.
You aren't FI if you need health insurance subsidies to RE.
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u/Stymus Aug 13 '26
You are more than welcome to pay more than your legal share.
Exxon doesn’t need subsidies but it takes them. Why? Its leadership has a fiduciary responsibility to its shareholders to maximize profit with any legal means.
Should individuals operate differently? This is no different than optimizing your tax strategy.
Don’t like it, how about a single-payer system like most western countries?
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u/eliminate1337 28M/27F | $2.9m NW Aug 14 '26
The ACA marketplace is explicitly not for the impoverished. You have to earn 100% FPL to be eligible. Medicaid is for the truly impoverished.
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u/Business_Valuable_89 Aug 14 '26
I love it when ignorant people feign knowledge. Thanks for playing though.
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u/jawapy Aug 13 '26
Great post, if someone needs an example of how this is too complicated, read this (not your fault OP, you are doing a great job)!