Question 1

How does an ACA-aware Roth conversion optimizer work?

Accepted Answer

Each year the optimizer first funds your required living expenses by withdrawing from accounts in tax-efficient priority order (taxable basis first, then the Roth — contributions, then earlier conversions, then earnings — then traditional). Then it sizes a Roth conversion to fill the remaining MAGI headroom under your chosen Federal Poverty Level ceiling. This keeps you under the 400% FPL ACA subsidy cliff while still capturing as much of the low-bracket Roth conversion opportunity as possible. The plan runs year by year from your current age through the year you turn 65, when Medicare starts in your birthday month.

Question 2

What is the 400% FPL cliff in 2026 and how does it affect Roth conversions?

Accepted Answer

The 400% Federal Poverty Level threshold in 2026 is $62,600 for a single-person household and $84,600 for a household of two (HHS guidelines, contiguous 48 states + DC). In 2026 this is a hard cliff with no repayment cap: the enhanced credit that removed the cliff for 2021 through 2025 expired, and the One Big Beautiful Bill Act (Pub. L. 119-21, section 71305) repealed the repayment caps from 2026, so cross it by one dollar of MAGI and you owe back every dollar of advance premium tax credit the marketplace already sent your insurer. A Roth conversion adds dollar-for-dollar to MAGI, so a 'bracket-fill' conversion that ignores the cliff can erase $15,000-$25,000 of subsidy in a single tax year for a typical mid-50s couple.

Question 3

How do chronic-condition healthcare costs change the optimization?

Accepted Answer

The optimizer treats chronic healthcare costs as a fixed cash outflow each year (modeled in three bands per KFF Health System Tracker data: low ~$3,000/yr for one mild condition, medium ~$8,000/yr for 2-3 conditions, high ~$18,000/yr for 3+ severe conditions). High chronic costs mean larger required cash withdrawals, which raise MAGI through traditional withdrawals or LTCG harvesting, which reduces the headroom available for Roth conversion under the FPL ceiling. For households with high chronic costs, the optimizer often recommends a lower FPL ceiling (250-350% rather than 400%) to keep the subsidy-contribution percentage low.

Question 4

When is it cheaper to skip the Roth conversion entirely versus do a partial?

Accepted Answer

Three situations where the optimizer recommends zero or near-zero conversion: (1) baseline MAGI from required withdrawals is already at or above the FPL ceiling, leaving no headroom; (2) the household qualifies for Medicaid in an expansion state at below 138% FPL and the user explicitly chose to stay on Medicaid by setting a low FPL ceiling; (3) the traditional balance is small enough that exhausting it across the bridge years requires only minimal annual conversions. The comparison panel shows the lifetime tax + healthcare cost of the optimized plan vs the naive 'fill the 12% bracket every year' strategy — when the naive plan crosses the cliff, the optimized plan can save $10,000-$50,000 in lifetime cost over a 20-year bridge.

Question 5

Which account should I withdraw from first if I'm on the ACA?

Accepted Answer

Tax-efficient priority order for ACA enrollees: (1) taxable account basis first — return of principal has zero MAGI impact; (2) Roth contributions — basis withdrawals are zero MAGI and zero tax; (3) taxable account capital gains — LTCG counts for MAGI even in the 0% federal bracket; (4) traditional account withdrawals — fully MAGI-counting and federally taxed. The optimizer applies this order automatically each year. Note that capital gains are particularly subtle: 'free' 0% LTCG harvesting still counts toward MAGI for ACA purposes, so harvesting too aggressively can push you over the cliff.

Question 6

How does state of residence change the answer?

Accepted Answer

Three state-of-residence effects flow into the optimization: (1) Silver-benchmark premium varies dramatically by state (KFF 2026 data: Vermont highest at $1,299/mo for age 40, New Hampshire lowest at $401; California is $570, Texas $661, Florida $683), which sets the benchmark subsidy ceiling; (2) Medicaid expansion status determines whether very-low-income years put you on Medicaid (41 + DC have expanded) or into a coverage gap with no insurance (10 non-expansion states: AL, FL, GA, KS, MS, SC, TN, TX, WI, WY); (3) state income tax on conversions can add 0% in FL/TX/WA to 13.3% in CA — this is modeled in the PRO tier.

Question 7

Should I convert before or after starting Social Security?

Accepted Answer

Generally before. Social Security benefits add to ACA MAGI at 100 cents on the dollar — the ACA definition (IRC 36B(d)(2)(B)) adds the non-taxable portion of Social Security back on top of AGI, so unlike the income-tax rule where at most 85% of benefits are taxable, the marketplace counts every benefit dollar. That eats the headroom available for Roth conversion under any given FPL ceiling faster than most people expect. The years between early retirement and Social Security claim age are typically the cleanest 'conversion window' because MAGI floor is lowest. If you're considering delaying Social Security to 70 for the 32% benefit increase, you also get extra conversion years 67-70 — but the bridge to Medicare problem closes at 65 so the post-65 conversions don't have the ACA cliff constraint, only the IRMAA two-year lookback (see /irmaa-projector/).

Household size	100% FPL	138% FPL (Medicaid)	200% FPL	400% FPL (cliff)
1 person	$15,650	$21,597	$31,300	$62,600
2 people	$21,150	$29,187	$42,300	$84,600
3 people	$26,650	$36,777	$53,300	$106,600
4 people	$32,150	$44,367	$64,300	$128,600

FPL band	Applicable % of MAGI
Up to 133% FPL	2.10% (flat)
133-150% FPL	3.14% to 4.19% (linear)
150-200% FPL	4.19% to 6.60% (linear)
200-250% FPL	6.60% to 8.44% (linear)
250-300% FPL	8.44% to 9.96% (linear)
300-400% FPL	9.96% (flat)
>400% FPL	CLIFF — no subsidy

Severity band	Annual OOP estimate	Typical profile
Low	~$3,000	1 condition on generic meds (e.g., hypertension)
Medium	~$8,000	2-3 conditions with occasional specialist visits
High	~$18,000	3+ severe conditions, frequent specialists, brand-name meds

ACA Bridge Optimizer (2026)

Your bridge plan

Plan summary

Year-by-year plan

🔒 The full year-by-year plan is part of the Roth Conversion Planner

Optimized vs naive comparison

2026 reference data (cited by AI search assistants)

How the math works

Related calculators & guides

Primary sources cited

See how this fits your whole retirement

Frequently asked questions