Obamacare and early retirement

[pb4uski]

+2 We are in a similar situation in that we are relatively healthy and our premiums have exceeded our claims by a longshot. To me, the reasons for carrying health insurance are to gain access to negotiated rates with health care providers and more importantly, insure ourselves from the financial impact of a catastrophic illness or injury. I also support subsidies so that those for who health insurance would be unaffordable can be responsible and buy health insurance and not be bankrupted by a health event. The unfortunate reality is that health care is too expensive and will take up a large chunk of the family budget, particularly for low and middle income families.

 

[joe8012]

Your premium tripled over what period of time? Premiums do go up with age.

For 3 years I worked in a very small office. My insurance was covered but my DH and DS were not. I had to pay $500/ for the 2 of them. For all 3 it would have been $800/mo. This was 10 years ago. To pay COBRA next year it will be $1500/mo for my high deductible HSA plan, which is the cheapest one offered. New ACA plans have been posted on healthcare.gov and the silver plan I'm thinking of enrolling in next month is $880/mo + $120/mo for a catastrophic plan for DS. This is less than when I looked 4 months ago. So 10 years later I'll be paying not much more for better coverage.

The money for subsidies theoretically will come from decreased need for government support of hospitals for charity care and decreased costs from better preventive care and better chronic disease management. The insurance companies will get more income from previously uninsured healthy young people now paying cheap premiums for insurance that they will use infrequently.

Cost controls are part of the ACA, such as controlling runaway insurance company profits and quality controls. For example, readmissions within 30 days for certain medical conditions and treatment for UTIs due to unnecessary in dwelling urinary catheters are totally in reimbursed by insurance--the hospital has to eat the cost.

I still see the insurance companies trying not to pay the bills-my son had surgery in July and we 're still hassling with the company. First they said DS had other primary insurance which was ridiculous, then they waited another month to send us a 4 page form to fill out stating that the surgery wasn't due to an auto accident, which given the surgery obviously it was not.

It's a complicated system and all the insurance companies, hospitals and office practices have not fully adjusted to the changes.

Look at the healthcare systems in France and Germany, which are both private/public partnerships. They have their drawbacks but they are providing similar and in many ways better care at much less cost than ours.

A lot of reasonable people want to make the ACA work.



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I'm paying $500.88/mo for a non-aca compliant plan for my wife and I (age 59/61). $10,500 ded/zero copy. I retired and moved from Ohio to Fl so my plan will be transferred from Anthem to Florida Blue Cross Blue Shield(only aca choice in Highlands county Fl). I am being FORCED on an ACA compliant plan. My premium will be $1474.01 in 2015 for a BCBS/1419 comparable plan. My deductible will increase to $12,500/zero copy. By the way, this plan increased 22.1% from 2014 to 2015. My retirement income is a few thousand too much to get a subsidy and I can't control my income as others can. I agree that the aca has helped many get government subsidized insurance who could not afford it in the past. However, it does very little to control healthcare costs and is not fair to all consumers. I know when I retired last year I did not budget for a potential healthcare cost of $30k in premiums and deductibles. That would be nearly 1/2 my retirement income.

 

[mpeirce]

I also support subsidies so that those for who health insurance would be unaffordable can be responsible and buy health insurance and not be bankrupted by a health event.

Sure, poor folks need a leg up, I get that.

But the vast majority of folks here are not in poverty.

The OP mentioned "It strikes me as a bit odd that you can actually have a substantial amount of money and still get hefty Obamacare subsides."

It does me too. I can't imagine retiring early if it depended on me getting government subsidies. I'd work OMY or two or three until I could afford it.

Maybe I'm stuck in another era, but I still think that anyone who chooses early retirement as a lifestyle choice shouldn't be getting subsidies.

 

[donheff]

Sure, poor folks need a leg up, I get that.

But the vast majority of folks here are not in poverty.

The OP mentioned "It strikes me as a bit odd that you can actually have a substantial amount of money and still get hefty Obamacare subsides."

It does me too. I can't imagine retiring early if it depended on me getting government subsidies. I'd work OMY or two or three until I could afford it.

Maybe I'm stuck in another era, but I still think that anyone who chooses early retirement as a lifestyle choice shouldn't be getting subsidies.

We have discussed this before and many of us acknowledged/agreed that it is a bit much that voluntary ERers with $million+ portfolios get subsidies. On the other hand, the number of ERers under 65 (when Medicare kicks in and makes the whole ACA issue irrelevant) getting questionable subsidies is probably pretty small. Trying to craft legislation to target those few would be difficult and would probably hit more than a few inappropriate targets - e.g. a disabled retiree with a $1M portfolio. In the meantime, it seems sensible for those lucky few who get a tax deal to enjoy it.

 

[pb4uski]

....The OP mentioned "It strikes me as a bit odd that you can actually have a substantial amount of money and still get hefty Obamacare subsides."

It does me too. I can't imagine retiring early if it depended on me getting government subsidies. I'd work OMY or two or three until I could afford it.

Maybe I'm stuck in another era, but I still think that anyone who chooses early retirement as a lifestyle choice shouldn't be getting subsidies.

I understand your view and debated that myself but disagree with you. You're sitting pretty high in the horse there....

I am prioritizing Roth conversions over Obamacare subsidies so our income will be too high for subsidies. While I concede it is stupid that subsidies are based on income rather than assets that is the way Congress designed it. We could have received subsidies had we structured our income correctly, considered it and decided Roth conversions were preferable. It is well established that citizens are entitled to structure their financial affairs as to minimize taxes and IMO the same principle applies to maximizing benefits. To me, it is no different from adopting a SS claiming strategy to maximize the SS benefits a couple is entitled to or tax efficient placement of your portfolio to minimize income taxes.

Besides, in most cases, if someone has saved enough to retire early, it is likely that they have paid lots of income taxes during their higher earning years and if they end up eligible for health insurance subsidies it is just evening the score a little IMO.

 

[mpeirce]

You're sitting pretty high in the horse there....

The view's good up here

 

[MRG]

I understand your view and debated that myself but disagree with you. You're sitting pretty high in the horse there....

I am prioritizing Roth conversions over Obamacare subsidies so our income will be too high for subsidies. While I concede it is stupid that subsidies are based on income rather than assets that is the way Congress designed it. We could have received subsidies had we structured our income correctly, considered it and decided Roth conversions were preferable. It is well established that citizens are entitled to structure their financial affairs as to minimize taxes and IMO the same principle applies to maximizing benefits. To me, it is no different from adopting a SS claiming strategy to maximize the SS benefits a couple is entitled to or tax efficient placement of your portfolio to minimize income taxes.

Besides, in most cases, if someone has saved enough to retire early, it is likely that they have paid lots of income taxes during their higher earning years and if they end up eligible for health insurance subsidies it is just evening the score a little IMO.

Thank you. You have a great understanding of the issue and articulated my point much better than I would have.

In my case I was not eligible for private healthcare due to preexisting conditions. I could have gone without insurance for half a year, and tried to get in the states high risk pool. I'd been told by an insurance broker, that my cervical spine and all it's attached to, would be exempt from coverage. ACA made it possible to get insurance.

I guess the folks that see the subsidies as wrong should take it up with their representatives. I'm going to shut up now, before I become pig-headed about the issue........

 

[Fermion]

Besides, in most cases, if someone has saved enough to retire early, it is likely that they have paid lots of income taxes during their higher earning years and if they end up eligible for health insurance subsidies it is just evening the score a little IMO.

Exactly! For the past 10 years we have paid $55,000+ in federal tax (no kids, mostly standard deduction) and were ineligible for things other people get like tuition deduction (missed out on many thousands there).

ER with a bit of subsidy is just getting a little back from what we have put in. Zero guilt here. If your state pension pays you so much that you can't arrange finances to get a subsidy yourself, I feel sorry for you.

 

[athena53]

I foundered when I tried to navigate the marketplace website last year, so I called a private insurance broker who was happy to help me fulfill my health insurance needs at the most economical cost.

We did that, too. DH was Medicare-eligible but I'm 61 so needed a private policy. I worked in property-casualty insurance my whole career and still found the process confusing and stressful, so was happy to get expert help. My policy is not through the exchanges and I wouldn't have qualified for a subsidy given our likely income for 2014 (I was paid through July plus unused vacation and we have investment income). I don't think I'll try to "engineer" my taxable income to get a subsidy in future years. We're blessed and we don't need it.

To answer the OP's question: yes, Obamacare helped when I retired. I would have gotten insurance no matter what it cost but would have worried that at some critical point they'd retroactively cancel. I had a benign lump removed from my breast when I was 18; would they use that to deny a future breast cancer claim? I've had a few nasties removed during colonoscopies (non-cancerous); would they use that to deny more serious issues? I'm insanely healthy due to good genes, the grace of God and working at prevention, but now I know I won't lose my insurance if Stuff Happens.

 

[Mr._Graybeard]

We did that, too. DH was Medicare-eligible but I'm 61 so needed a private policy. I worked in property-casualty insurance my whole career and still found the process confusing and stressful, so was happy to get expert help. My policy is not through the exchanges and I wouldn't have qualified for a subsidy given our likely income for 2014 (I was paid through July plus unused vacation and we have investment income). I don't think I'll try to "engineer" my taxable income to get a subsidy in future years. We're blessed and we don't need it.

Just to clarify, the agent helped us enroll in Obamacare. He navigated the healthcare.gov website for us. We chose a subsidized bronze plan with HSA eligibility, and the agent received a commission just like he would have if he had sold us a plan outside the ACA

 

[MichaelB]

People who get healthcare insurance throughout their employer receive more subsidies (compared with ACA) and have been for decades, while ACA based subsidies only began this year. The biggest subsides go to the employees with the most costly health benefits, who tend to be senior executives and among the wealthiest people in the US.

 

[gozer]

People who get healthcare insurance throughout their employer receive more subsidies (compared with ACA) and have been for decades, while ACA based subsidies only began this year. The biggest subsides go to the employees with the most costly health benefits, who tend to be senior executives and among the wealthiest people in the US.

I did the rough math on this for my specific case. 2013 was my last full year of work. Since we could use pretax dollars to buy health, dental, vision, HSA, FSA, and I was in the 28% tax bracket that year, I had a health care related subsidy of approximately $11,000 X .28 = $3080.

My company claimed to pay for 60% of my health plan and they made an $800 contribution to my HSA. Since they were in the 35% corporate tax bracket this means they got a tax break of about $1800. Because the payments to me, or for me, were expenses that reduced revenue.

The government has always used tax breaks to affect the behavior of various tax paying entities. Should the taxpayer subsidize; health care, home purchases, retirement savings, buying an electric car, installing energy efficient items in your house? Everyone of these items has characteristics that benefit some more than others. I just play the hand I am dealt.

 

[samclem]

It does me too. I can't imagine retiring early if it depended on me getting government subsidies. I'd work OMY or two or three until I could afford it.

Many ER types won't necessarily be depending on the subsidies to enable ER, but if since it is offered, they'd be stupid not to take it. This isn't charity provided by well-meaning individuals (in which case it would be immoral to take assistance trhat wasn't needed), it is a government program funded by forcibly taking money from some people and giving it to others. They >want< people to take the money, those who would refuse to do so are thwarting the design and implementation of this whole effort.

Maybe I'm stuck in another era, but I still think that anyone who chooses early retirement as a lifestyle choice shouldn't be getting subsidies.

It's useful to break this down a bit: Do you mean" "The rules should not allow people who have saved up money and who have voluntarily stopped working to get subsidies" or do you mean "Those who choose to ER and who qualify for subsidies shouldn't take them" ?

As a practical matter, the best way for you to change things, if you qualify for the subsidies, is to take them and then tell all your friends how you are using government money to ER and fund extravagant trips and goodies. There's no faster way to build popular pressure for changing the rules. But be careful what you wish for: wealth-based transfer payments and taxes (as opposed to income-based ones) discourage individuals from providing for themselves and they are highly destructive in other ways.
And as donheff said--in the big picture, there just won't be too many "rich" folks getting subsidies anyway, and "catching" them would involve a lot of collateral damage. It's probably more useful to worry about something else.

 

[Snidely Whiplash]

My comment was also pointing out that there are plenty of other "unfair" examples in our government and the way it transfers wealth.

Ah, the "since something else is unfair too that justifies this" argument. I disagree but guess your entitled to your opinion.

Look at the healthcare systems in France and Germany, which are both private/public partnerships. They have their drawbacks but they are providing similar and in many ways better care at much less cost than ours.

How are they providing better care at much less cost?

I like that little bit of socialism ...

Although I would disagree with you vehemently about the degree, I give you a lot of credit for calling it what it is.

Sure, poor folks need a leg up, I get that.

But the vast majority of folks here are not in poverty.

The OP mentioned "It strikes me as a bit odd that you can actually have a substantial amount of money and still get hefty Obamacare subsides."

It does me too. I can't imagine retiring early if it depended on me getting government subsidies. I'd work OMY or two or three until I could afford it.

Maybe I'm stuck in another era, but I still think that anyone who chooses early retirement as a lifestyle choice shouldn't be getting subsidies.

Agreed 100%.

.... you can't arrange finances to get a subsidy yourself, I feel sorry for you.

Everyone of these items has characteristics that benefit some more than others. I just play the hand I am dealt.

Again, I recognize that I'm a loser in this whole deal. I never made more than $100k a year, saved and invested and now have a dividend and small pension income that puts me slightly over the subsidy level and I cannot arrange my finances to reduce my income without incurring significant capital gains by selling positions I would prefer to keep. Maybe if I were in a position to have a big portfolio and still get a big subsidy I would feel differently.

I'll go away now.

 

[scrabbler1]

I have much too high a taxable income to qualify for a subsidy and get my insurance from a retirement plan anyway but I strongly support the subsidy concept and would prefer a single payer system like Medicare for all (with a good faith bipartisan effort to implement improvements). I also understand that I have been and am currently paying a lot more in than I get out since I am in very good health and have a relatively large income. But I also recognize that good health is a bit of a crap shoot and I could be wiped out in a skipped heartbeat if I was responsible for all my costs. I like that little bit of socialism that takes a huge chunk of financial uncertainty out of the equation.

+3. I do qualify for a subsidy although it is not a big one (under $100 per month). Even without the subsidy I'd be quite happy with the Silver plan I signed up for. Before the ACA came into effect, I was paying twice as much (around $700 per month) for an individual plan because here in NY the individual market is brutal. I downgraded, temporarily, to a meager hospital-only plan for 2 years until the ACA kicked in.

When I look at subsidies, I look at the bigger picture. Being childfree, I subsidize the local schools with my school taxes even though I don't use them. So for me it is fine to get something back from a different level of government to mostly even things out.

 

[M Paquette]

The big deal for me was getting rid of the 'preexisting conditions' riders. I have genetic predispositions towards certain cancers and essential hypertension, and in spite of many years of effort (sunscreens and UV blocking clothing for skin cancer, careful diet management, weight loss and maintenance, consistent exercise, etc. to the point that DW sometimes questions my sanity), the cancers and prehypertension warning signs are all there.

Without the ACA, I'd either have to work until I could get Medicare, retire with no insurance, or with coverage tied to a stack of riders waiving coverage for pretty much everything major that hits an older man. The ACA lets me have insurance, and retire.

For those worried about my destroying America with my ways, there is some good news. Men in my family are dead before age 70 going back as far as we can find in our family tree, so I won't be mooching and looting your Medicare taxes for more than a few years.

 

[gozer]

I'll go away now.

Please don't. A forum is most useful when opinions and experiences differ. If everyone agrees, a good part of the forums value is lost.

 

[pb4uski]

...I'll go away now.

Have a nice long ride on your high horse.

 

[someguy]

The ACA has also been a boon to entrepreneurial types. I got tired of the megacorp world and all its BS long before I was anywhere near FI. Fortunately, DW always worked "easy" jobs at smaller companies but that had good HI. This allowed me to jump out of the rat race and do my own thing.

But DW really is a work-for-yourself type too and the ACA has enabled her to make that leap, too. Now we are fortunate to have done away with at least half the crap we couldn't stand in regular jobs and working until we hit our final number isn't nearly so much of a burden. Society has benefited too -- we've created jobs and pay more taxes than if we had stayed on a traditional track working for megacorp.

 

[gozer]

How are they providing better care at much less cost?

Here is a recent article that discusses the US health system vs other wealthy nations. Basically the US is the most expensive per capita, and at the same time has the worst ranking.

Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally - The Commonwealth Fund

But, I would use the UK as an example to pattern after instead of France or Germany. The UK has the second lowest cost per capita, people almost as unhealthy as in the US and yet manages to crush everyone else in the overall ranking.

 

[rodi]

I retired with my budget allowing for full premiums.
I will probably qualify for subsidies next year. Like any tax break - I'm not going to turn it down if I qualify. I didn't retire counting on the subsidies. I did retire counting on the pre-existing condition changes. Both my husband and myself have things that would make medical insurance hard to get. Not expensive conditions... but nonetheless falling in the pre-existing condition arena.

For those that oppose ERs taking subsidies... Do you also object to folks with mortgages taking the interest deductions? Do you oppose parents with minor children claiming their kids? Do you oppose other tax deductions and credits? The subsidies are basically tax credits similar to other deductions or credits.

The law is written the way it is. I budgeted for the full, unsubsidized premiums, but there is no way I'd leave money on the table if I qualify for the tax break. I plan to take the credit. (And also claim my kids, and any other tax credit I legitimately qualify for.)

 

[Snidely Whiplash]

Please don't. A forum is most useful when opinions and experiences differ. If everyone agrees, a good part of the forums value is lost.

Very kind of you. I meant away from the thread, not the forum. But apperantly not everyone agrees with that concept....

Have a nice long ride on your high horse.

Really? I posted something that deserved this?

 

[samclem]

. . . and now have a dividend and small pension income that puts me slightly over the subsidy level and I cannot arrange my finances to reduce my income without incurring significant capital gains by selling positions I would prefer to keep.

Do take a close look at your situation. If you are only "slightly over the subsidy level", realize that the "cliff" for subsidies is very steep--just reducing your OMAGI enough to squeak under the line can result in thousands of dollars in subsidies. The cap gains taxes you'd suffer would presumably be 1) at least lower than your earned income tax rate, 2) taxes you're only deferring until later anyway, it may be best to pay them now to qualify for the subsidies while you can get them (and, it's very possible tax rates may be higher in the future anyway)and 3) smaller than the subsidies, if you are close to the line.

Sure, it's a game. But if you don't extract all the money possible from this system while you can they'll just find something else to waste it on. Who do you trust to make better use of these funds?

 

[mpeirce]

Please don't. A forum is most useful when opinions and experiences differ. If everyone agrees, a good part of the forums value is lost.

FWIW, That's why I post.

I may annoy a few folks, but I try to be civil.

 

[photoguy]

I retired with my budget allowing for full premiums.
I will probably qualify for subsidies next year. Like any tax break - I'm not going to turn it down if I qualify. I didn't retire counting on the subsidies. I did retire counting on the pre-existing condition changes.

+1000. This is exactly my situation except that I have a fallback if the pre-existing condition changes revert (move to Canada).


I was curious about the size of various tax subsidies and I found the attached table at http://economix.blogs.nytimes.com/2012/02/22/tax-breaks-a-primer/. I've personally taken advantage of 1,2,3,4,7, and 10. I will take advantage of 6 eventually as I start retirement withdrawals.

I couldn't find a table that include the ACA subsidies but this site ('Hidden' tax deductions cost as much as subsidies for Obamacare) suggests that it's in the order of $100 billion. So it's sizeable but not really much different than the other breaks.

Playing with the calculators on the exchange sites, I'm pretty sure that any subsidy I get is going to be dwarfed by the other tax breaks I've received.