Will the ACA boost retirement savings?

The CBO's new projection that the Affordable Care Act would lead to a labor force reduction equivalent to 2.3 million jobs by 2021 stems in part from an assumption that some people will be reluctant to boost their income because doing so may reduce or eliminate their ACA subsidies.

Perhaps. The ACA includes some subsidy cliffs -- break points at which reporting an extra dollar of income will sharply increase the cost of insurance.  But besides earning less, there are other ways to reduce one's taxable income that should be available even to many lower-income workers.

Submerged state update: Obamacare's gift of the MAGI

[UPDATE, 10/24/13: Per "Freelancer" comment below, there are multiple definitions of MAGI in the tax code, and in the initial post I used the wrong one. Erroneous info marked below. If you got here by search and are simply looking for info about how to calculate MAGI in the ACA, go to Freelancer's post or to this summary sheet of what income to include/exclude]

[UPDATE 2, 12/23/13: Now that actual plans, prices and subsidies can be viewed, I have a series of posts exploring various income/subsidy scenarios. Last in series here. ]

Covered California, the state entity enthusiastically administering the state's health care exchanges, offers not only posted price estimates for the different plans offered in the exchanges, sorted by age and income, but also a personal cost calculator, in which you punch in the number of people in your household, their ages, and your family income to get an estimate of both the cost of a mid-level silver plan and your subsidy.

One fact worth mulling is that the income on which the subsidy is based is the Modified Adjusted Gross Income (MAGI) based on IRS filings. That's a reminder that the premium subsidy is another tax cut (offset in large part by increased taxes on the wealthy, employers, medical device makers and others). The ACA's premium support is one more benefit credited negatively, by lowering the tax bill, the social service mechanism of choice for a tax-averse polity.  Bowing to preferred conservative methods, we've added another subaqueous pillar to the Submerged State.

The "m" in MAGI is important, however, as it modifies the adjusted gross income (AGI) we're all familiar with on our tax forms by adding important deductions back into the total -- e.g., student loan interest, tuition, IRA contributions, and the deduction for half the self-employment tax. The "m" in some measure avoids piling subsidy on subsidy, or augmenting one incentive with another.

The use of MAGI rather than AGI is bad news for the self employed, who I assume make up a large proportion of those who make enough money to qualify for  premium subsidies but who lack access to employer-provided health insurance. But it could be worse.