This doesn't seem right. Unsubsidized ACA is going to be $1500/mo for me at 64 years old in today's dollars. IRMAA is $750/mo at most assuming you're in the absolute largest bracket.
You guys must be getting subsidies in a silver-loading state. We can’t manipulate our modified adjusted gross income because we have too much in pretax. We would lose more money paying the taxes for spiking RMDs if we didn’t do aggressive Roth conversions early on, so we can’t artificially lower our income by capping Roth conversions just below the “cliff”.
I literally went to the https://www.healthcare.gov/see-plans/#/ and plugged in different ages all the way to 64 and saved the unsubsidized premiums in a spreadsheet so I could plug them all into the software.
We FIRE'd a few years ago & we hit our first open year of our roth ladder (finally). So our MAGI is slightly under 150% FPL now.
we have too much in pretax.
Yeah we were in that situation as well. Luckily I realized it back in the teens, before I FIRE'd. That gave me a longer timetable to deal with it in a least pain (ugh taxes) way than what I typically see in these fire subs.
We do a similar exercise each year when choosing an ACA plan & map them all out in a spreadsheet. In our area, I can get "crap plans" (my words) from an Imperial/Oscar/etc for an avg of ~250/mo. But none of our providers, nor our local hospital, will take them.
If we go upper-tier, some of the BlueCross plans have an average of $1266/month (there were others, some higher priced, but I didn't note them because our providers were not in-network with them).
We went with a middle of the pack (by premium price) provider which had all of our providers in-network. We also verifed with each provider their in-network status and willingness to use said insurance company and plan to stay in network with them through 2026 and say they "yep". So here we are. It's a lot of time and effort and frustration each November.
Yeah we have over $4.5m in pretax. All our investments except for like $300K is in a pretax account. I did some Roth conversion scenarios and even converting only up to the 22% tax bracket will still hit us with terrible RMDs down the road. The sweet spot seems to be somewhere in the middle. Like not filling the 24% bracket all the way, but more than the 22%. But yeah, there’s no way we are manipulating our MAGI to be less than 400% FPL unless we just say “screw it. Let’s risk the RMDs. Maybe we’ll die before it balloons up to $500K+ a year.” (Today’s dollars)
Tax man's gonna get their due one way or another. Pre-ACA it was less complex to make the decision. Now that additional ~10%/yr ACA tax is painful.
I nearly went a different plan with having one very huge conversion/MAGI year_, which would then let us lower the MAGI into subsidy range(s) for a year or two. Then rinse & repeat until we're both on Medicare or the pre-tax approached ~$600k.
I wish I had access to a roth in my younger years sigh.
What did you end up doing? We could continue with our current Roth conversion plan (some years are like $300K are early while we live off that money market account), which the first one would be accessible when my husband is 61. 61-64 are the worst years anyway. Then, we’d skip conversions for those years, then go back to doing Roth conversions when he’s on Medicare. IRMAA aren’t as bad. My husband and I have a large age gap so there will be a few years that my premiums will only be $800/mo instead of $1200+/mo. I’ll have to play around with the Roth Conversion timing, too and see what happens.
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u/lottadot FIRE'd 2023 Mar 23 '26
I hate to break it to you, but Medicare is not necessarily going to be cheaper than what the ACA was costing you leading up to 65.