If your income rises above the limit, even by just $1, your premium costs will soar. You won't qualify for subsidies, but that's the least of it. You will also lose the protective cap that held your premium cost to no more than 9.5 percent of your income. Instead, you'll have to pay the full market price. Take a couple reporting $62,040 in income, which is within the subsidy range. They might be charged $5,000 for a Silver plan, says Karen Pollitz, senior fellow at the Kaiser Family Foundation, which studies health care policy. If they earn an extra dollar (an income of $62,041), they'll lose their price protection. They might have to pay as much as $15,000 for the same policy, in some states.
To hold down your cash flow, Aaron Eidelman, a tax partner at the accounting firm McGladrey in New York, has some suggestions:
- Accept slightly less work.
- Send bills for consulting projects in late December so that they will be paid in January.
- Take deductible expenses in the current year.
- Take a smaller amount out of your individual retirement account.
Even if you don't qualify for a subsidy, there's a ceiling on what the insurance companies can charge. The premiums still aren't cheap, but they're lower than they used to be. Before the ACA, people in their early 60s paid four to six times more for similar coverage than people in their early 20s did, Pollitz says. Now, you'll pay a maximum of three times more. In your early 50s, you'll pay no more than twice as much. In a few states, everyone pays the same.
If you have two homes, the right place to buy insurance is in the state where you hold your official residence.
Unless you qualify for a hardship exemption, you're generally required to have coverage or else pay a penalty. That might stick in your craw. On the other hand, if you become seriously ill, you won't be a financial burden on the medical system, the taxpayer or your family. And, you'll stay healthier up to age 65, when you can gratefully sink into the arms of Medicare.
Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW.
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