Reducing AGI to qualify for Public Health Insurance

Finance
1

We will be a family of 4 in April, and I am looking at insurance options - especially for the kids. We have qualified for the Washington state public health insurance in the past for our son (which is a screaming deal by the way) but are now in Colorado, with a higher income. I am slightly above the max cutoff based on full salary, so I have some questions about “lowering” that number in order to qualify.

The cutoff is 260% of the federal poverty level. So I am assuming that I need to contribute enough to a 401k or a IRA to bring my AGI down below that threshold (which is probably what we would be doing anyhow). Are there other strategies? Anything else to look out for? Thank you!

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4

If they use the federal AGI, remember that your moving expenses (assuming this year) are deductible and don’t require that you itemize. Every dollar spent on the move, within their guidelines, comes directly off of your income.

5

From this website:

The Affordable Care Act provides a simplified method for calculating income eligibility for Health First Colorado and Child Health Plan Plus (CHP+) based on what is called Modified Adjusted Gross Income (MAGI). The MAGI rules apply to eligibility determinations for CHP+ and most Health First Colorado programs, except for those programs for individuals over 65 years old and/or for people who have a disability. The use of MAGI standardizes income eligibility rules across all states.

So it seems that would be Federal AGI? Which should correspond to line 37 on my 1040?

6

Here’s a 1 page guide on MAGI for ACA:

(1st google hit)

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7

The strategy that I use to reduce my MAGI is to open a CD with all the money that I have. The next week I go to the bank and close the CD. Of course, I am hit by a huge penalty. However, I just got a huge deduction. Line 30, penalty for early withdrawal of savings.

Cheaper that actually paying for health insurance.

8

Thanks, I found similar stuff (but less helpful) in my search. Mainly wanted to confirm I am understanding what I am reading correctly - and this confirms it!

9

I can’t tell if you are serious or not… if so, quite hilarious. However I would prefer to find ways to do this without lining my banks pockets, or insurance providers pockets.

10

Upping your retirement contributions would be the easiest way that’s free, in that it doesn’t incur an expense.

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11

Also, if your income is low enough you might try to get your income low enough to qualify for the saver’s credit, $62,00 AGI for someone married filing jointly.

3 Likes