Roth conversion in year of Medicare enrollment (ACA subsidy)
Not sure this is within the scope of the IRA experts here!
A married couple age 64 receives ACA subsidies based on their income of roughly $80,000. Husband enrolls in Medicare in May, when he turns 65. Wife enrolls December 1, when she turns 65. Also in December, they perform a roughly $40,000 Roth conversion to reach the end of the 12% tax bracket.
Considering they’re both off ACA in December, and it’s a new change to income at that time, would they still need to repay some/all of their APTC (subsidy)?
Interested to hear your thoughts!
Permalink Submitted by Jay Wiedwald on Mon, 2023-05-22 19:58
I’d find some trustworthy 2022 tax software and run the situation through it, adjusting birthdates to make it behave like it was 2023. When completing the information that mimics form 1095A, treat insurance premiums as for two people through April and one person through November, and for the moment assume zero Advanced PTC. Then see what the ultimate PTC will be. Have the clients keep the Marketplace aware of their Medicare coverage whenever it occurs. BTW, for a couple with no dependents, the Roth conversion will likely erase all PTC. And below the point were the PTC is eliminated the effective marginal tax rate of the PTC is around 15%.