I'm retired and in my first year made exactly the type of mistake discussed here where you end up owing a large bill on taxes later. The root of the problem is that the ACA asks you to "predict" your income at the beginning of the year and if you end up making more than your prediction, you end up paying massive "tuition" for the learning experience.

Learn from my mistake. The root of the problem is predicting and then locking in taxable income at the beginning of the year for living expenses.

The solution? By ACA rule, you've got to predict your income at the start of the year. However, there is no rule that says you need to make your taxable distributions for that year at the beginning also… it's just a practical reaction. Now I do all my taxable distributions in December after I know what income has transpired throughout the year. This creates a conundrum – how did I cover living expenses? In my case, I pre-funded that first year with tax-free Roth assets (which do not count towards AGI). Then December rolled around and after accounting for small income opportunities I received that year (dividends, side-hustles, whatever) I topped off my predicted income with taxable assets. Now, this distribution done in December funds my expenses for the FOLLOWING year. Repeat. It was painful to take a whole year of expenses from my Roth that first year – but the flexibility it creates to generate income through the year is enormous.

GREAT episode as always! I'm a current Federal employee and still 5.5 years from minimum retirement age (which would allow me to retire with gov health care). But… I'm already FI and really just done with working. This episode scared me back into thinking I need to stay working - the ACA sounds so complicated and expensive! 😞

**Question**: if I have a spouse who is still working and is eligible for health insurance through her employer, how does that affect the eligibility for health insurance subsidies?

Thanks for the wonderful episode, very informative!

**Question**: If still working, can your 401(k) be used to lower taxable income and potentially maintain premium tax credits in addition to the HSA?

This will be our lowest income year, probably ever, as we both have recently retired. Husband will sign up for social security in June. So all we have coming in until then is interest income, dividends, rental income, and a small annuity. We have lots of money in our "bridge" bucket to get us to IRA withdrawals, social security, medicare, etc. House is paid off, and our living expenses are reasonable..

We WERE going to sell the rental but it won't happen this year – we're having a hard/impossible time getting our tenant out, and I LOVE LIVING IN CALIFORNIA, but GOT DAMN they make it hard to evict.

So I just updated our ACA income info based on *not* receiving capital gains from the rental sale this year, and our monthly premium for the Bronze HDHP is now $0! If we did sell the rental, the capital gains from the sale would increase our monthly premiums to $2,200. We might just hang on to the rental for a few more years…

Not gonna lie, I feel a slight pang of guilt for getting healthcare for free when other people have it so crazy hard. But as Brad often mentions, in FI, we learn the rules and we play by them.

This was a fantastic listen, thank you Cody and Brad! It's hyper-relevant to me given that I'm approaching 2 years in FIRE, using an ACA plan. Because I've been in this headspace for so long, a few things jumped out at me that might benefit the larger community (or maybe the larger community can point out errors in my reasoning which would benefit me 😂)

Firstly: there was some discussion of the pros and cons of just not getting insurance and just going with the "cash pay rate". This is risky! Recently a family member had to have a procedure that was quoted by the hospital at the idiotic, insane, totally fictitious price of $43,000. There was a delay in the pre-approval and I asked what would the cash pay rate be. They told me $10,000. Seemed like a "discount", but when all was said and done (the pre-auth came through), the insurance negotiated rate ended up being $2,000. What it made me realize is the value of insurance is not just that it pays some expenses but that it negotiates for non-ridiculous rates in the first place!

Secondly: for those of us (1/16th of Americans) who live in the state of New York, please know that some of the general information online DOES NOT APPLY in this very unique state of ours. Premiums don't increase with age as they do everywhere else except Vermont and DC. Private off-exchange insurance is, as far as I could tell, illegal here and does not exist. The income range to qualify for PTC isn't 100%-400% of FPL, and it isn't 138%-400% of FPL like in the "expansion states", it's actually 250%-400% of FPL since they have this thing called the Essential Plan which is a bit like Medicaid-lite. And if you want to take advance PTC here, you have to report your income **monthly** which is dangerous because for those of us in FI, we may not have any income for a month and they may resultingly take us off the ACA plan and put us on Medicaid! (I am not sure this is a NY-specific thing actually, but when I called the state insurance office to ask, they told me that's how it works!)

As a result I do use the strategy talked about in the episode of taking no APTC and just getting everything back at year end. A bit of a white knuckler (especially since as you mentioned, many tax accountants don't know what to do with the 1095-A and Form 8962, I actually had to switch accountants because my existing one was totally unaware of this and would have entirely failed to get me any PTC refund!)

This was a great listen. We keep debating if my husband can / should continue to work for the government as rules change.

The episode didn’t discuss the use of low interest loans (heloc, security backed LOC, etc.) to help manage and smooth out income.

Paying a little interest seems like a no brainer if you are approaching the 400% cliff.

One item that is not touched on is "Expanded Medicaid". For some reason, this is treated like the third rail. I don't understand why.

Advantages to Expanded Medicaid: FREE HEALTH CARE! No deductible, no out of pocket max, no co-pays. It also includes vision and dental.

In my area, which would be considered a suburban area in a mostly rural state, I have a ton of providers to choose from. Maybe there is a limited choice in other states/areas.

Financially, most states do not look at assets for this program. Your stated income just has to be below 138% FPL. So for an individual in 2025, $21,597. If you are newly retired, and are drawing down savings, taxable brokerage accounts, etc., it is fairly easy to stay under the limits. Zeroing out healthcare expenses in the first years of retirement also allows more of your money to grow, giving you a larger cushion once you have to switch over to ACA or other insurance.

I would love to see this addressed in a podcast. Or at the very least, mentioned as an alternative.

Scott Trench at Bigger Pockets Money wrote a good article on this topic:

[Why Healthcare Costs rise Sharply with Age In Early Retirement – And Why Early Retirees Need a Bigger Buffer than the 4% Rule – BiggerPocketsMoney](https://biggerpocketsmoney.com/why-healthcare-costs-rise-sharply-with-age-in-early-retirement-and-why-early-retirees-need-a-bigger-buffer-than-the-4-rule/)

What are your thoughts on “capital gains harvesting” prior to retirement and paying 15% capital gains to increase my cost basis to be able to control my income better in early retirement to stay below the 400% FPL to take advantage of ACA subsidies. I have a fair amount of money in my taxable account, but the bulk of it is a relatively low cost basis. I am trying to figure out if it is worth prepaying tax at capital gains rates is offset by the benefit of the ACA subsidy.

Health care in the US is insane. Healthy people spending 20k a year just on premiums is nuts. I like the way Brad pointed out to check your W2 because you might be shocked to see how much of what could be in your pocket instead your employer is paying to these insurance companies. What happens if you can’t afford the premiums, go without insurance than have a catastrophic injury and owe like 500k. Can you get on a payment plan or do they come after you for the whole thing?

Fantastic episode, Cody and Brad! This episode is very timely for me. I retired early and my husband is retiring early THIS MONTH! We currently have employer based coverage through the end of the month and need to consider our health insurance options.

I would love to hear a follow up episode for those in the FIRE community who have self-employment income. There are lots of tax goodies in the US tax code for the self employed.

Lastly, I feel the need to stick up for CPAs, Enrolled Agents, and other experienced tax professionals. To suggest that we only look backward, don't do tax planning throughout the year, may not notice that our client has fallen off the PTC cliff, and/or do nothing to mitigate the effects is misleading.