[USER]

We are a family of 4 and just FIRE’d starting in 2025 in Illinois. We can control our AGI through various means.

We are looking into the ACA marketplace for insurance, and they ask for expected AGI.

We would like to keep AGI around 65k. In ACA if we do that, then the kids automatically get put into IL’s Medicaid.

We have to bump to estimate up to basically 100k to keep them off of Medicaid.

The kids have some medical issues, and we checked and coverage for them on Medicaid is bad for us and their current specialists.

If we estimate 100k AGI, but actually have 65k AGI, what happens with taxes for 2025?

From what I’ve read come tax time we would get the different in what we should have paid back in taxes since we will be overpaying according to our AGI.

My main concern is they should have been on Medicaid, but were not, and instead were on an ACA plan.

Also, since this is our first year of FIRE we are not actually sure what will happen, for all I know we may be forced to have 100k AGI…

Anyone have experience with this?

[Patrick]

If you had to, could you get up to $100k? I.e. do some Roth conversions or something?

Hopefully someone else can confirm, but when I first researched ACA I saw posts where if you overestimate your income then they refund your overpayment on your tax refund, but also if you fall into the Medicaid territory then you lose all the subsidy because you should have been on Medicaid, and that’s your problem.

I hope I’m wrong but it made me make sure it wouldn’t happen.

[Andrea]

I’m surprised by this, as Illinois Allkids program is one of the most robust children’s Medicaid programs in the country with extensive coverage.

Is this because their current specialists will not take Medicaid?

[Lindsay]

Find a licensed agent – their advice is free (my spouse is an agent in CA).

If you can’t find one you trust try The Retirement Nerds on YouTube – not an endorsement but he seems like a really genuine guy and clearly knows his stuff.

[Shawn]

My understanding is that there isn’t a penalty for guessing wrong. It will adjust on your tax return.

I’ve only been asked once to justify my income, because I was off by a lot.

[Author]

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