Beware of the Hidden Tax on Affordable Care Act Insurance Subsidies, Warns Advisor
As Americans compare health plans on the Affordable Care Act insurance marketplaces, financial experts are warning about the potential impact of a "phantom tax" for marketplace enrollees. It can be challenging to accurately gauge eligibility for subsidies, and certain financial strategies like Roth IRA conversions or selling assets can unexpectedly affect eligibility and result in higher tax bills. Accurate income forecasting is crucial when applying for ACA subsidies, as underestimating income can lead to repayment obligations. It is advised to run projections and reconsider popular tax moves before enrolling in subsidies.