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What counts as "income" for PPACA (Obamacare) subsidies?

Bogleheads • View forum - Personal Finance (Not Investing) - www.bogleheads.org
Apparently there is a substantial "cliff" for subsidies provided for starting next year as part of PPACA (Obamacare) health insurance exchanges. Below 400% of the poverty rate (~$46K for individual, ~$94K for family of 4) premiums of "silver" level plans are capped at 9.5% of income. The subsidies (or not) could be very material for someone planning retirement spending, particularly for early retirees that aren't yet Medicare eligible. Here is one purported calculator: . It shows that for a family of 4 with 53-year-old head of household the cliff increases their insurance premium from $8,901 to over twice that at the un-subsidized $18,475. Crossing the cliff takes a single person aged 53 from $4,372 to $7,826 in premium.

My question is: what counts as "income" for calculating eligibility for these subsidies? Presumably withdrawals from ordinary 401Ks or IRAs would do, but withdrawals from Roth plans not? How about dividends from tax-exempt muni bonds? Cap gains offset by cap losses? This must be concisely stated somewhere in terms of the various IRS definitions of income but I couldn't google up anything specific.

I could imagine that depending on the answers that a fair bit of "gaming" to end up with an income below the cliff could end up being commonplace to save $3.5K to $9K.

(no political or sky-is-falling comments please - I'm asking a straightforward question about the law as it stands, and don't want to get this thread locked. Thanks in advance.)
Date: Feb 4, 2013   


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