[USER]

What qualifies as income for ACA health insurance purposes? Is it all investment account distributions (401K, Roth, Brokerage) assuming no wage income?

Does anyone planning to use this just plan to keep additional money in HYSA or money market account to not exceed threshold as you approach FIRE?

[Shaun]

It has to show on your 1099 though so it only counts if you withdraw money from those accounts as I understand it.

I’m using savings and dipping into some shares I got from an ESSP.

As long as you stay under $75k the cost is really good as it’s subsidized.

[Joy]

We have lots of money in CDs and money market accounts. Plus, we have after tax investment accounts. That was our plan to keep taxable income low enough to qualify for ACA maximum subsidies.

We keep taxable income to under $45k and pay nothing for our health insurance.

Plus, we have a super low deductible and max out of pocket.

[Shawn]

It counts interest, capital gains and dividends. Not all distributions technically but most of it. Putting money in a HYSA or Money Market is fully taxable for ACA purposes so that makes it worse.

If you invest in ETFs that don’t distribute much that would help.

Something like BOXX could be used instead of a money market. Be mindful of taxes when you do sell.

Also, Muni bonds won’t help because the ACA does count that as income as well.

[Tom]

Basically taxable events are counted by ACA.
An IRA distribution is a taxable event.

A withdrawal from a HYSA would not be but the interest on that account would be counted. Etc…

[Heather]

Unless you’re planning on keeping $500k+ in the savings account, you’ll run out fairly quickly and if you’re putting that much in a HYSA, the loss in potential earnings will outstrip the amount you’d pay for health insurance.

It’s not all or nothing with subsidies.
Rates being this high are very very recent.

Just a few years ago it was nearly impossible to find a HYSA giving even 2%.

[Author]

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