My last post looked at the various ways that self-employed people in particular can limit their taxable income to stay on the right side of the ACA subsidy cliff, which has reached untenable heights for people in their late 50s and early 60s. We're at the point where getting on the wrong side of the subsidy-eligible line can mean $10,000-plus in extra health insurance costs for older shoppers in the individual market for health insurance.
The situation reflects broader societal dysfunction. We have a gaping hole in the safety net patched by an insanely diverse panoply of tax-sheltered accounts -- which some lucky and nimble affluent-but-not-rich people may hopscotch across to safety.
Take the case of a couple of 58 year-olds in a northeast city where the cost of living is high -- their modest dwelling is worth over $600k and taxed accordingly. The wife, Samara, is a hospital nurse, and the husband, Aman, is a solo consultant of some kind. Both have earnings in the $75k range. Thanks to assiduous feeding of their 401k retirement accounts (they've saved a bit over $1 million between them), their Adjusted Gross Income (AGI) is about $110,000 -- far below their gross, but far above the ACA's subsidy eligibility threshold of $64,960. That's not an issue for now, because they get good insurance through Samara's hospital job.
But what if Samara is hoping by age 62 or so to...not retire, but work per diem, or try an encore career? An unsubsidized ACA-compliant two-person bronze plan with per person deductibles in the $6-7000 range might cost them $1500 or $2000 a month by age 62. Can the couple get below the subsidy line without a radical cut in income? Can Samara escape health insurance-induced job lock?
The situation reflects broader societal dysfunction. We have a gaping hole in the safety net patched by an insanely diverse panoply of tax-sheltered accounts -- which some lucky and nimble affluent-but-not-rich people may hopscotch across to safety.
Take the case of a couple of 58 year-olds in a northeast city where the cost of living is high -- their modest dwelling is worth over $600k and taxed accordingly. The wife, Samara, is a hospital nurse, and the husband, Aman, is a solo consultant of some kind. Both have earnings in the $75k range. Thanks to assiduous feeding of their 401k retirement accounts (they've saved a bit over $1 million between them), their Adjusted Gross Income (AGI) is about $110,000 -- far below their gross, but far above the ACA's subsidy eligibility threshold of $64,960. That's not an issue for now, because they get good insurance through Samara's hospital job.
But what if Samara is hoping by age 62 or so to...not retire, but work per diem, or try an encore career? An unsubsidized ACA-compliant two-person bronze plan with per person deductibles in the $6-7000 range might cost them $1500 or $2000 a month by age 62. Can the couple get below the subsidy line without a radical cut in income? Can Samara escape health insurance-induced job lock?
