the $400 that costs $12,000
Before 65, one extra dollar of income can cost you thousands in health insurance.
This one is for anyone who stops working before Medicare starts at 65.
Retire early and you buy your own health insurance until Medicare picks you up.
Depending on your income, the government helps pay that premium, and the help ends at a hard line.
That line is 400% of the federal poverty level.
For 2026 it's $62,600 for one person and $84,600 for a couple.
A dollar under it and you get help with the premium.
A dollar over it and the help goes to zero, all of it.
The numbers: a couple in their early 60s with $84,600 of income pays about $700 a month, and the credit covers the rest.
At $85,000 the credit is gone and they pay the whole premium, which at that age commonly runs $20,000 or more a year.
$400 of extra income, about $12,000 more out of pocket that year.
So if you're converting 401(k) money to a Roth in those years, the conversion counts as income here.
So does a capital gain you take on purpose.
Before 65, that insurance line usually sits below the top of the 12% bracket, so it stops you before your tax bracket does.
It counts your income before the standard deduction comes off, and it counts every dollar of Social Security, even the part you're not taxed on.
An HSA contribution lowers it, and so does a deductible IRA contribution if you or your spouse still have earned income.
I keep an HSA alongside my 401(k) and Roth, and that contribution comes off before this line is measured.
Look up the 400% number for your household size before you convert a dollar.
As promised, income over wealth in under a minute.
- Dan
This one is for anyone who stops working before Medicare starts at 65.
Retire early and you buy your own health insurance until Medicare picks you up.
Depending on your income, the government helps pay that premium, and the help ends at a hard line.
That line is 400% of the federal poverty level.
For 2026 it's $62,600 for one person and $84,600 for a couple.
A dollar under it and you get help with the premium.
A dollar over it and the help goes to zero, all of it.
The numbers: a couple in their early 60s with $84,600 of income pays about $700 a month, and the credit covers the rest.
At $85,000 the credit is gone and they pay the whole premium, which at that age commonly runs $20,000 or more a year.
$400 of extra income, about $12,000 more out of pocket that year.
So if you're converting 401(k) money to a Roth in those years, the conversion counts as income here.
So does a capital gain you take on purpose.
Before 65, that insurance line usually sits below the top of the 12% bracket, so it stops you before your tax bracket does.
It counts your income before the standard deduction comes off, and it counts every dollar of Social Security, even the part you're not taxed on.
An HSA contribution lowers it, and so does a deductible IRA contribution if you or your spouse still have earned income.
I keep an HSA alongside my 401(k) and Roth, and that contribution comes off before this line is measured.
Look up the 400% number for your household size before you convert a dollar.
As promised, income over wealth in under a minute.
- Dan