$200 Over 400% FPL - Question

Nov 3, 2015

  1. TwoLabs
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    TwoLabs Super Genius

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    I have someone who's retirement income is literally $200 above the cutoff for a $600 per month subsidy. She has no way of shutting off those pensions.

    It can't be as simple as establishing an IRA and making a small tax exempt contribution to it, could it? I know that in the end I'm going to refer her to her CPA for all accounting advice, but I just thought I'd see if anyone out there has any ideas.

    Thanks!
     
    TwoLabs, Nov 3, 2015
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  2. AllenChicago
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    AllenChicago Guru

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    Would this person's subsidy actually be $600 per month if his/her income were $201 (per month?) lower? The closer one gets to the 400% ceiling, the smaller the subsidy.
     
  3. Ann H
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    Ann H Guru

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    Absolutely it is that simple. Now, an IRA may not work if they are retired, but perhaps an HSA deduction, or rental income loss, or business loss. Take a look at a Federal Form 1040. Anything on PAGE ONE of the 1040 that is a deduction or expense would also reduce their MAGI. If I had a client that was $200 a year above the cutoff for a $600 PER MONTH subsidy, I would be sending them to their accountant, too, because s/he would probably take 2 minutes to find a legal way to reduce MAGI income.
     
    Ann H, Nov 3, 2015
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  4. Yagents
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    Yagents Guru

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    This is a prime example how an agent can add value, become a hero, and gain a client for life. It's a no brainer to put this kind of person in an HSA plan, and contribute whatever amount to get below the 400% legally. HSA's don't require earned income (like IRA's).

    I have many clients on this cliff, and have the ability to pull the trigger, after the tax year has ended (can contribute up to April tax filing like an IRA).

    I have some clients getting $10,000 of APTC on the 400% cliff. If they contribute just $1000 to $8600, and they keep the 10k in their pocket.
     
    Yagents, Nov 4, 2015
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  5. Ann H
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    Ann H Guru

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    I did three of those today.

    Two cases were subsidized. Client got APTC and CSR. Adjust MAGI for an HSA contribution and the income goes down. So APTC goes up. Sometimes CSR changes, but you don't want it to go so low that the deductible is below the IRS's minimum deductible to qualify for an HSA.

    The other case is OFF exchange. Couple was paying $1791 per month for COBRA. An OFF exchange HSA PPO with national network costs $1024. Put the remaining money in an HSA (with catch-up contributions for over 55), and they have a winner. I would love to have this particular client for life. He has money and pays his bills regularly. And for some odd reason he thought I was a genius. So, I guess he's mentally insane, but otherwise I'm lovin' it.
     
    Ann H, Nov 4, 2015
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  6. Yagents
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    Yagents Guru

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    I had one prospect today, that wanted to pay an extra $450 month for a plan OFF exchange, so he could run more premium tax deductions through his Schedule C.

    Cost for $6450 Humana PPO HSA was $1050/mo.
    Cost for $4000 then 100% UHC HSA Nav Plus was $1500/mo.

    Even though he's be saving close to $5500 a year, more than enough to cover the difference in deductible and even pay for one of the deductibles, he was still focused on the tax deduction. Keep in mind he funds his HSA to the max to cover the deductible.

    Why would you want to just throw away $5500, just so you could tax deduct it. Even after the deduction, the after tax cost would still be over $3000 that he just gave away.

    I think he finally saw the light. Especially after mentioning the idea of a gap accident/CI policy at $52/mo instead to plug the higher deductible.

    Yes, I try to talk my clients down on premium, and yes I get a reduced commission..........but he'll never leave me in the future.
     
    Yagents, Nov 4, 2015
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