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Health Insurance Before Medicare: How Your Income Sets Your Premium · Align Your Retirement

• 0:00
  SPEAKER_00: Hey, welcome back to Align Your Retirement.
• 0:02
  SPEAKER_00: I'm Hazel Secko, CFP and CDFA, founder of Align Financial Solutions, a fee-only fiduciary financial planning firm for executive women.
• 0:10
  SPEAKER_00: Today's episode is about the one thing that stops more women from retiring early than any market fear.
• 0:16
  SPEAKER_00: Health insurance before Medicare.
• 0:18
  SPEAKER_00: And I'm going to show you a rule that most high earners are convinced doesn't apply to them, but often does.
• 0:24
  SPEAKER_00: Let's get into it.
• 0:25
  SPEAKER_00: Let me tell you about the wall that early retirement hits, the one nobody warns you about.
• 0:30
  SPEAKER_00: It's not the money running out, it's the gap between the day you stop working and the day you turn 65 and Medicare starts.
• 0:37
  SPEAKER_00: For a woman who wants to leave at 58 or 60, that's a five to seven year stretch where she has to buy her own health insurance.
• 0:45
  SPEAKER_00: And if you've ever had it through an employer, the sticker price is genuinely shocking.
• 0:51
  SPEAKER_00: Family coverage on your own can run well over$2,000 a month.
• 0:55
  SPEAKER_00: So here's what happens a woman who has more than enough to retire looks at the number, decides she can't, and works three more years purely for the health benefits.
• 1:06
  SPEAKER_00: I've watched it happen again and again.
• 1:08
  SPEAKER_00: And in most of those cases, it was based on a misunderstanding, a belief that because she has a seven-figure portfolio, she couldn't possibly qualify for any help buying coverage.
• 1:19
  SPEAKER_00: That belief is wrong.
• 1:20
  SPEAKER_00: And today I want to fix it because the assistance for marketplace health insurance isn't based on your assets at all.
• 1:26
  SPEAKER_00: It's based on the income you report.
• 1:28
  SPEAKER_00: And in the year you retire early, before Social Security, before required withdrawals, living partly off cash and savings.
• 1:36
  SPEAKER_00: That reported income can be a number you actually help set.
• 1:39
  SPEAKER_00: I call it the Magi dial.
• 1:41
  SPEAKER_00: Today, how the dial works, what changed for 2026, and how a woman with real money can still legitimately get real help if she plans it.
• 1:50
  SPEAKER_00: One note before we start, this is education, not personalized tax or enrollment advice.
• 1:55
  SPEAKER_00: The health insurance rules are genuinely in flux right now.
• 1:58
  SPEAKER_00: So I'm a certified financial planner, a CDFA, and a fee only fiduciary.
• 2:02
  SPEAKER_00: And I run aligned financial solutions.
• 2:04
  SPEAKER_00: One note before we start, this is education, not personalized tax or enrollment advice.
• 2:09
  SPEAKER_00: The health insurance rules are genuinely in flux right now.
• 2:12
  SPEAKER_00: So confirm the specifics for your enrollment year.
• 2:15
  SPEAKER_00: Grab something to write on.
• 2:16
  SPEAKER_00: Here's the frame, and it's the whole misunderstanding in one sentence.
• 2:19
  SPEAKER_00: The health insurance marketplace does not look at your net worth.
• 2:23
  SPEAKER_00: It looks at your income.
• 2:24
  SPEAKER_00: When you buy coverage on the ACA marketplace, Obamacare, the Exchange, whatever you call it, the premium help you might get is calculated from your modified adjusted gross income for that year.
• 2:36
  SPEAKER_00: Your Magi, not your bank balance, not your 401k, not your house.
• 2:40
  SPEAKER_00: Two women can have identical$2 million portfolios, and the one with lower reported income that year gets more help.
• 2:48
  SPEAKER_00: That's not a loophole.
• 2:49
  SPEAKER_00: That's just how the program was built.
• 2:51
  SPEAKER_00: And the whole thing comes down to a single number.
• 2:54
  SPEAKER_00: One line on your tax return decides whether you get real help or pay full price.
• 2:59
  SPEAKER_00: I'll give you the exact figure in about two minutes.
• 3:02
  SPEAKER_00: Why does almost every successful woman assume the opposite?
• 3:05
  SPEAKER_00: Because everywhere else in her financial life, having more money means qualifying for less.
• 3:10
  SPEAKER_00: Financial aid, most needs base anything, net worth counts against you.
• 3:15
  SPEAKER_00: So she pattern matches.
• 3:16
  SPEAKER_00: I'm wealthy, therefore I won't qualify.
• 3:19
  SPEAKER_00: Health insurance subsidies break that pattern, and that single wrong assumption is a thing keeping her at a desk.
• 3:25
  SPEAKER_00: She's ready to leave.
• 3:26
  SPEAKER_00: Now, before I give you that number, you need to know why that limit is back at all.
• 3:31
  SPEAKER_00: Because for a few years, it wasn't there.
• 3:33
  SPEAKER_00: Part one.
• 3:34
  SPEAKER_00: What changed for 2026?
• 3:35
  SPEAKER_00: The cliff is back.
• 3:37
  SPEAKER_00: Let me be straight with you because this changed and a lot of older advice online is now wrong.
• 3:42
  SPEAKER_00: For a few years, there were enhanced pandemic era subsidies that removed the income cap entirely.
• 3:49
  SPEAKER_00: Even high earners could get some help, and nobody paid more than about 8.5% of income for a benchmark plan.
• 3:55
  SPEAKER_00: Those enhanced subsidies expired at the end of 2025.
• 4:00
  SPEAKER_00: For 2026, we're back to the older, harsher structure.
• 4:04
  SPEAKER_00: And the big feature of that structure is a cliff.
• 4:07
  SPEAKER_00: Here's the cliff, and here's the number I promised you.
• 4:10
  SPEAKER_00: Write this one down.
• 4:11
  SPEAKER_00: The line sits at four times the federal poverty level.
• 4:15
  SPEAKER_00: For 2026, that's roughly$63,000 for a single person and about$84,600 for a couple.
• 4:23
  SPEAKER_00: Confirm the exact figure for your household and your enrollment year because it moves annually.
• 4:28
  SPEAKER_00: Below that line, you can qualify for premium tax credits that meaningfully cut your cost.
• 4:34
  SPEAKER_00: Go$1 over, and in 2026, the help can disappear entirely.
• 4:40
  SPEAKER_00: That's why it's called the cliff, not a slope.
• 4:42
  SPEAKER_00: Here's the part people miss, and it's the harsher one.
• 4:45
  SPEAKER_00: If you take the credit in advance all year and then land over the line at tax time, you pay every dollar of it back.
• 4:53
  SPEAKER_00: The repayment caps that soften this for lower income households don't apply once you're above the cliff.
• 5:00
  SPEAKER_00: So this isn't set it and forget it.
• 5:02
  SPEAKER_00: It's a number you watch all year.
• 5:04
  SPEAKER_00: So the honest headline is not you'll automatically get subsidies.
• 5:08
  SPEAKER_00: It's this.
• 5:09
  SPEAKER_00: Whether you get help now depends almost entirely on keeping your reported income under that line.
• 5:14
  SPEAKER_00: And in an early retirement year, that's a game you can actually play.
• 5:18
  SPEAKER_00: Which brings us to the dial.
• 5:20
  SPEAKER_00: The reason a millionaire can legitimately show a modest income in the exact year she needs to.
• 5:26
  SPEAKER_00: Part two The Magi dial.
• 5:28
  SPEAKER_00: How a wealthy woman shows low income.
• 5:30
  SPEAKER_00: Here's the move, and it's completely legitimate.
• 5:33
  SPEAKER_00: In early retirement, where your spending money comes from determines your reported income, and different sources hit your magi very differently.
• 5:41
  SPEAKER_00: Think about what you can live on in a bridge year.
• 5:44
  SPEAKER_00: Cash in the bank, money you already pay tax on, spend without adding to your magi.
• 5:48
  SPEAKER_00: The original principle in a taxable brokerage account is in text again when you sell.
• 5:53
  SPEAKER_00: Only the gain is, and you can often manage which gains you realize and when.
• 5:58
  SPEAKER_00: Roth withdrawals.
• 5:59
  SPEAKER_00: If you have them and they're qualified, don't count towards that income number at all.
• 6:03
  SPEAKER_00: So a woman can spend$100,000 in a year, funding a very comfortable life while her reported income, the number the marketplace measures, stays modest enough to sit under the cliff.
• 6:15
  SPEAKER_00: Contrast that with the choices that spike your magi, pulling from a traditional pre-tax 401k or IRA, which is fully taxable, realizing big capital gains all at once, turning on Social Security early, and the one this season keeps circling back to a Roth conversion, which counts as income the year you do it.
• 6:34
  SPEAKER_00: None of those are bad, but each one turns the dial up and near the cliff that matters.
• 6:39
  SPEAKER_00: So the picture flips.
• 6:40
  SPEAKER_00: It's not I have too much money to get help.
• 6:43
  SPEAKER_00: It's in the years before Social Security and required withdrawals, I have unusual control over the one number that decides whether I get help.
• 6:51
  SPEAKER_00: That control is the asset.
• 6:53
  SPEAKER_00: Most people never know they have it.
• 6:55
  SPEAKER_00: If you want the sequencing behind this written down, the executive women's retirement tax playbook is free and linked below.
• 7:01
  SPEAKER_00: And keep watching though, because the next part is where most people get this wrong.
• 7:05
  SPEAKER_00: But here's where it gets genuinely tricky because the same dial runs two strategies that want opposite things.
• 7:13
  SPEAKER_00: Part three, the conflict, subsidies versus Roth conversions.
• 7:17
  SPEAKER_00: This is the part that separates a real plan from a clever tip.
• 7:21
  SPEAKER_00: Regular listeners know that a low-income early retirement year is also the golden window for Roth conversions.
• 7:28
  SPEAKER_00: Moving pre-tax money to Roth while your tax rate is low, so it grows tax-free forever.
• 7:33
  SPEAKER_00: We did a whole episode on it.
• 7:34
  SPEAKER_00: Here's the collision.
• 7:35
  SPEAKER_00: A Roth conversion raises your magi.
• 7:38
  SPEAKER_00: The very same low-income year that could earn you health insurance subsidies is the year you'd most want to fill up with conversions.
• 7:46
  SPEAKER_00: You often can't max both at once.
• 7:48
  SPEAKER_00: Dollars of conversion can cost you dollars of subsidy.
• 7:52
  SPEAKER_00: There is no universal right answer.
• 7:54
  SPEAKER_00: It's a math problem and it's personal.
• 7:56
  SPEAKER_00: If premium subsidies would save you, say$10,000 or$15,000 this year and a big conversion would blow past the cliff, maybe you do a smaller conversion this year and protect the subsidy.
• 8:07
  SPEAKER_00: Or maybe the long-term tax savings from a full conversion clearly win and you skip the subsidy on purpose.
• 8:14
  SPEAKER_00: The point is a which one.
• 8:15
  SPEAKER_00: It's that they have to be decided together on one sheet of paper for each year of the bridge.
• 8:21
  SPEAKER_00: Do them in separate conversations, and you'll accidentally sabotage one with the other.
• 8:26
  SPEAKER_00: This is exactly the kind of multi-year choreography that a rushed December decision or a robo tool or a well-meaning friend will get wrong.
• 8:33
  SPEAKER_00: It's the whole reason coordinated planning exists.
• 8:36
  SPEAKER_00: Before I show you what a real plan looks like, tell me in the comment which one you'd pick.
• 8:41
  SPEAKER_00: The subsidy this year or the conversion?
• 8:43
  SPEAKER_00: There's no wrong answer, and the split usually surprises people.
• 8:46
  SPEAKER_00: So let's make it concrete what a well-run bridge year actually looks like.
• 8:50
  SPEAKER_00: Part four, what a well-planned bridge year looks like.
• 8:54
  SPEAKER_00: Let me pull it together with a hypothetical composite.
• 8:56
  SPEAKER_00: A 59-year-old former marketing executive, about$2.3 million saved, some in a 401k, some in a taxable brokerage account, a chunk in cash, a small Roth.
• 9:07
  SPEAKER_00: She wants to retire now and bridge six years to Medicare.
• 9:11
  SPEAKER_00: Here's a version of the plan.
• 9:12
  SPEAKER_00: In the early bridge years, she funds her lifestyle largely from cash and from selling brokerage holdings where most of what she's withdrawing is her original principle.
• 9:22
  SPEAKER_00: Keeping realized gains modest.
• 9:23
  SPEAKER_00: Social Security stays off.
• 9:25
  SPEAKER_00: She's letting it grow to 70 anyway, which we've talked about as longevity insurance.
• 9:30
  SPEAKER_00: That keeps her measured income under the cliff.
• 9:32
  SPEAKER_00: So she qualifies for meaningful premium help during exactly the year's coverage is most expensive.
• 9:38
  SPEAKER_00: She still does small, deliberate Roth conversions size to fill up the room beneath the cliff without going over.
• 9:45
  SPEAKER_00: Then once she's on Medicare at 65 and the subsidy question goes away, she can open up larger conversions before required minimum distributions begin.
• 9:54
  SPEAKER_00: Here's the part I want you to sit with.
• 9:56
  SPEAKER_00: Nothing about her money changed.
• 9:58
  SPEAKER_00: Same portfolio, same person, one version.
• 10:01
  SPEAKER_00: She can't afford to retire and works to 65 for the insurance.
• 10:06
  SPEAKER_00: The other, she retires at 59, gets help paying for coverage, and moves money to Roth on a schedule because someone ran the income across all six years at once.
• 10:16
  SPEAKER_00: The difference wasn't more money, it was a dial.
• 10:19
  SPEAKER_00: One honest caveat.
• 10:21
  SPEAKER_00: This is genuinely intricate.
• 10:22
  SPEAKER_00: The rules are shifting year to year, and a mistake near the cliff is expensive.
• 10:27
  SPEAKER_00: This is education to show you it's possible, not a DIY instruction sheet.
• 10:31
  SPEAKER_00: Run your actual numbers and confirm current rules on your state's marketplace before you count on anything.
• 10:37
  SPEAKER_00: The landing.
• 10:38
  SPEAKER_00: Let me bring it home.
• 10:39
  SPEAKER_00: The reason a lot of accomplished women don't retire when they could is a health insurance fear built on a false assumption that their savings disqualify them from help.
• 10:50
  SPEAKER_00: Savings don't, income does.
• 10:51
  SPEAKER_00: And in the bridge years before Social Security and required minimum distributions, your income is more of a dial than a fixed fat.
• 10:59
  SPEAKER_00: For 2026, the rules got stricter.
• 11:02
  SPEAKER_00: The cliff is back, so this isn't automatic anymore.
• 11:05
  SPEAKER_00: It's a planning move.
• 11:06
  SPEAKER_00: Keep your measured income under the line, and you can unlock real help in the most expensive coverage years of your life, as long as you coordinate it with your Roth conversions instead of letting the two fight.
• 11:18
  SPEAKER_00: So the question isn't, am I too rich to retire early?
• 11:21
  SPEAKER_00: It's have I planned the one number that decides?
• 11:25
  SPEAKER_00: You're probably not too wealthy.
• 11:27
  SPEAKER_00: You might just be unplanned, and unplanned is fixable.
• 11:30
  SPEAKER_00: Before you go, if you know a woman who's staying in a job, she's ready to leave purely for the health benefits, send her this episode.
• 11:37
  SPEAKER_00: It might change your math.
• 11:39
  SPEAKER_00: The income planning behind it, the bridge you're sequencing, the Roth coordination is in my free guide.
• 11:44
  SPEAKER_00: The Executive Woman's Retirement Tax Playbook, linked in the show notes.
• 11:48
  SPEAKER_00: And if you want your own bridge to Medicare actually mapped, where your income lands, whether you'd clear the cliff, how to fund the gap, the link to book a free align call is right there too.
• 11:58
  SPEAKER_00: One conversation, no pressure, no product sales.
• 12:01
  SPEAKER_00: I'm a fee only fiduciary.
• 12:03
  SPEAKER_00: Whether we work together or not, you'll walk away knowing whether early retirement is closer than you thought.
• 12:07
  SPEAKER_00: I'm Hazel Secko, CFP and CDFA.
• 12:10
  SPEAKER_00: Retirement is too important to wing.
• 12:12
  SPEAKER_00: Talk to you next time.