As our return to Colorado approaches, I have started researching what health plans will look like for us. We will be buying a plan through the Affordable Care Act marketplace, 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. That is a non-starter for us because it would look incongruent as hell to be on medicaid with our net worth. It’s great 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.

After playing with the income levels on the CO marketplace website, below are the key thresholds. Their site says their income tool is an “estimate” of savings, so I wouldn’t bank on these exact values. They should however be in the ballpark of the real threshold values.

• $0 to $45,541: Colorado Medicaid is provided and no subsidized marketplace plans are available
• $45,542 to $87,451- Subsidized ACA plans available, but your kids will be on CHP+ rather than your chosen health plan
• $87,452 to $128,601 – CHP+ is unavailable, so all family members will be on the same subsidized health plan
• >= $128,602 – Over the subsidy cliff, only full price plans available

Of these thresholds, the spot we are targeting is the third bullet, the $87,452 to $128,601 range. I’ll just refer to that as the $88K income level from here on.

We are targeting that income level because we don’t want the kids to be on CHP+. It’s actually fantastic insurance from what I understand, but 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. When you convert money from a pre-tax account (i.e. money earned on which you didn’t pay taxes), into a post-tax account like the Roth, the converted money becomes ordinary income.

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 $46K. It’s about $6,600 more in taxes.

On the flip side, the plans at the $88K income level have lower premiums, which seems counterintuitive. This is because the subsidies are set based on the benchmark silver plan, and with all four of us factored in at the $88K income level, the plans are more expensive which leads to a higher subsidy amount. At the $46K income level it sets the benchmark based on plans for just two adults since the kids are on CHP+. A plan for two adults costs less, leading to a lower benchmark and subsidy. Ultimately we save $1,656/year in premiums at the $88K level.

The net extra cost is $4,770 to move up to the $88K bracket. A full comparison of the two scenarios is shown below. While the $88K income level does cost more, we end up with more money converted into a Roth growing tax free forever. Also the health insurance plans we end up with just feel right since we aren’t on a public assistance program. To me that alone is worth the cost.

Fire Sustainable?

Unfortunately simply choosing to incur more expense doesn’t make it practical. The full cost of the taxes for the Roth conversion must be accounted for, and must fit within a 4% withdrawal rate in order to be sustainable. In this case, the taxes for the $88K income scenario are $8,346/year or $695.50/month.

I really didn’t know if we could fit that into our budget because I haven’t crunched any numbers recently on our investment totals. It turns out we can’t fit it in, which doesn’t surprise me given we were barely FIRE if at all. However, we’re not far off, and we’re really close enough that I’ll consider it workable. Adding in the $695.50 per month puts us at a 4.17% withdrawal rate.

We only need to find about $200 in savings per month to get under 4%. In reality the child tax credit ($4K for two children) gets us that and more, although I don’t typically count my tax credits before they appear on my taxes.

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