As our return to Colorado approaches, I have started researching what health plans will look like for us. Given we will no longer be traveling internationally, we cannot continue using Cigna Global. We will be buying a plan through the Affordable Care Act marketplace in our state, Connect For Health Colorado. In our FIRE situation this is more involved that simply going to the website, entering our info, and selecting a plan. If we did that we would end up on medicaid due to our low income level, and we aren’t willing to be on medicaid. It would look incongruent as hell with our net worth. It’s effective insurance from what I understand, but it’s not meant for us.

Marketplace Income Thresholds

Aside from the lowest medicaid threshold of income, there are other levels of assistance in the CO ACA marketplace. Your income level determines which of these public assistance programs you are eligible for, and what subsidies if any you will receive. This makes income planning very important when preparing to select a marketplace plan.

Below are the key income thresholds for a family of four found by testing the limits of their estimator tool.

• $0 to $45,541: Colorado Medicaid is provided and therefore no subsidized marketplace plans are available
• $45,542 to $87,451– Subsidized ACA plans are available, but children are not eligible for them and will instead be on CHP+. Within this tier is where you (the adults) can find the most cost savings via premium discounts and cost-sharing reductions (CSR). These extremely affordable CSR discounts are known as Silver 73, 87, and 94.
• $87,452 to $128,601 – CHP+ and CSR are unavailable in this range, but premium discounts are still available. All family members including children will be on the same subsidized health plan.
• >= $128,602 – Over the subsidy cliff, only full price plans available

Of these income thresholds, we are targeting the $87,452 to $128,601 range. I’ll just refer to that as the $88K income level from here on. The reason for targeting that income level is that we don’t want the kids to be on CHP+. It’s actually fantastic insurance from what I understand and provided at near-zero cost. However, like medicaid, it doesn’t feel right having them on an assistance program with our net worth.

The difference between medicaid, CHP+, and receiving subsidized premiums may be nothing more than a philosophical distinction. While a subsidy is also “assistance” of some form, it feels more like a benefit provided by the tax code. Using medicaid or CHP+ in contrast feels like a program we’re on.

Our Income

Neither JC or I have been employed this year, since this wouldn’t be much of a FIRE experiment if we were. Our income at the end of 2026 as it stands right now would only total ~$20K. This is from rental profit, interest, and dividends. That puts us firmly in medicaid territory where we don’t want to be, so we have to adjust our income.

Roth Conversion

Even just a few years ago, adjusting my income would have been a foreign concept to me. It never would have occurred to me that I had any control over my income outside of what I made at a job.

The tool at our disposal to increase our income is a Roth conversion. After converting my 401K to an IRA, we will be converting part of that IRA into a Roth IRA. That converted money counts as ordinary income in the year the conversion takes place.

Incurred Costs

In order to get over the $88K threshold to avoid medicaid and CHP+, we will need to convert around $67K of IRA to Roth IRA. The down side is that converting that much requires paying more in taxes than converting the much smaller amount to get to the $46K level.

In terms of monthly insurance premiums, the estimator tool will lead you to believe the plans at the $88K income level have lower premiums. This initially helped soften the blow in my mind of moving up to the $88K level, but these savings are not what they seem.

At the $46K level the kids are eligible for CHP+ and therefore aren’t eligible for subsidized marketplace plans. If you check the “needs health coverage” box for the kids, the tool is including them into your marketplace plan at an unsubsidized rate and inflating the cost.

The reality is the kids would need to be unchecked to indicate “not needing health coverage”, since they are covered by CHP+. This then opens up the incredible plans under Silver 94 cost share reduction (CSR) for the adults. The CSR provides the bargain of a lifetime at $18.08/mo, and an incredibly low deductible and max OOP.

Moving up to the $88K bracket is unfortunately a double hit of increased costs – $1,772/year more in premiums, and $6,575/year more in taxes. That’s a total hit of $8,347 over what the $46K income level would cost, and with far higher deductibles and max out of pocket. A full comparison of the two scenarios is shown in the table at the bottom of this post.

While the $88K income level does cost more, the health insurance plans we end up with just feel right. It will sit better in my conscience knowing we aren’t gaming the system to exploit a public assistance program.

FIRE Sustainable?

Incurring more expense to take the philosophical high road doesn’t necessarily make it practical. The full cost of the higher premium and taxes for the Roth conversion must be accounted for, and must fit within a 4% withdrawal rate in order to be FIRE sustainable. In this case, the taxes for the $88K income scenario are $8,100/year or $675/month. Our health/dental premiums will be $242 combined. That monthly total of $917 requires over $275K of investments to sustainably support it.

After crunching our latest investment totals and adding these increased costs into our budget, it turns out we can just barely fit it in under a 4% withdrawal. However, it’s so tight that we have to factor in the $4,400 child tax credit to sneak through at a 3.86% withdrawal rate. Without the tax credit we are at a 4.17% withdrawal rate. This is pretty tight considering we still have to see how our costs in CO have changed in the year since we’ve been gone. We may be greeted with higher homeowner/car insurance, food costs, etc.

Health Insurance Is A Side Benefit

This feels like a lot of work in order to get the health coverage we want. To make this feel right to me, it has to be reframed and seen from a different angle. The other angle is that we are performing an IRA to Roth IRA conversion as the main objective, above any other purpose. This is a rare time in our life where we are at the lowest tax bracket we’ve been in for the last 27 years, having spent most of my career in the 22% bracket. It is in our best interest to convert as much IRA money to Roth as we can afford to convert.

The max amount we can afford to convert is $67K, with the child tax credit just barely keeping us under 4% in withdrawals after paying the taxes. A real oddity and coincidence is that $67K is also the amount we have to convert in order to boost our income to the level needed to get to the insurance we want. It’s actually a very fortunate coincidence that those are the same number.

The benefits of performing this conversion are:

1. The converted money grows tax free and is eventually accessible tax free
2. Withdrawals from a Roth can help us avoid the social security tax torpedo once we begin receiving social security
3. The large conversion begins a very sufficient sized Roth ladder which is an important tool for FIRE. It will allow us to access the converted money (just the principle) tax free and penalty free in five years.
4. And oh yeah, this happens to give us access to a high quality heavily discounted medical plan

Light At The End Of The Tunnel

Eventually our kids will become adults, and we will no longer have to dodge CHP+. The age when that happens in ACA terms is 19. Assuming the kids still need health insurance through us, when BC is 19 we will then have four adults applying. At that point we would tune our income to the $46K level and get this steal of a plan:

That’s eight years in the future, and by that time we will have converted around $606K of IRA into Roth IRA, not including growth during that time. That Roth ladder money is far more than we actually need to bridge the gap to 59.5. At that point in time it will be a relief to reduce our budget by over $900/month, drop our FIRE number substantially, and get WAY better health coverage in the process.

2026 ACA – $46K vs $88K Comparison Details