Younger Retirees Face Phantom Tax on Marketplace Health Insurance
Tuesday, 3 September 2024, 12:02
Phantom Tax Explained
Younger retirees often find themselves unexpectedly liable for a phantom tax, which can significantly affect their financial stability. This tax arises from the way Marketplace health insurance subsidies are calculated, particularly when assessing the household's Modified Adjusted Gross Income (MAGI).
How to Avoid Phantom Tax
- Stay Informed: Understanding how income impacts subsidies can help retirees make informed health insurance decisions.
- Consult Financial Advisors: Seeking advice from financial experts can provide tailored strategies for managing income effectively.
- Utilize Health Savings Accounts: Contributing to HSAs can lower taxable income, reducing the risk of the phantom tax.
Action Plan
- Review your income sources annually.
- Adjust your healthcare plans based on expected income changes.
- Keep detailed records to aid in accurate reporting.
Implement these strategies to mitigate the risks associated with the phantom tax and ensure a smoother financial transition into retirement.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.