Obamacare and early retirement

[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.

The view's good up here

Your response to mpeirce's post way above

....Agreed 100%.

I'll go away now.

Have a nice long ride on your high horse.

...Really? I posted something that deserved this?

If you had read the thread you'll see I posted the same response to mpeirce's post way above and you agreed 100% so I treated you similarly - after all, I would not want to discriminate. The difference is that mpeirce understood my intent was to give him a good-natured ribbing and you took offence.

 

[Snidely Whiplash]

The difference is that mpeirce understood my intent was to give him a good-natured ribbing and you took offence.

Clearly the difference being the that mpeirce's comments got that mine didn't.

 

[pb4uski]

Clearly the difference being the that mpeirce's comments got that mine didn't.....

I concede your point but thought you would have caught it in the earlier post. Sorry.

 

[Snidely Whiplash]

I concede your point but thought you would have caught it in the earlier post. Sorry.

And I apologize for my misinterpretation and the balance of my post that I have since deleted. You made a sincere effort to provide me with helpful information earlier (the catastrophic plan option) and I am appreciative.

 

[donheff]

All's well that ends well.

 

[ERhoosier]

.....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.....

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

Money to pay for subsidies is actually not being covered by other savings in the HC system as promised. Taxpayers will shoulder a huge burden. The non-partisan CBO estimates ACA will have a net US budgetary cost of roughly $150 BILLION per year by FY 2017 and cost the taxpayers roughly $1.4 TRILLION over the next decade (FY2014-2023).
https://www.cbo.gov/publication/44176

The health insurance industry has not had run-away profits. Their customer base has grown under ACA, so total profits have risen along with the increase in total sales. That does not mean the HI industry is profiteering. There is no evidence the HI industry is taking increasing pennies out of each HC dollar spent. ACA introduced the requirement of "actuarial value" for HI plans. IOW -HI plans must spend at least a certain % of premiums (based on metal levels) on health care of their insured folks. But best evidence is that most HI companies were basically meeting those targets already. Their profit margins have remained stable over past several years and are relatively low (~4%). In fact, the profit margins of other health-related industries (largely unaffected by ACA) are consistently MUCH higher (e.g. 20+% for Big Pharma, 12-15% for medical device makers, etc.).
Ezra Klein - Health-insurance industry: Still not that profitable

The cost & quality control initiatives you mention existed long before ACA. Medicare stopped paying to treat catheter-related infections back in 2008, yet this has had no 'real-world' effect on hospital payments.
No pay for UTIs has little effect on hospitals’ bottom lines - amednews.com
Likewise the readmission rate issue long preceded ACA. Bush signed legislation in 2003 and 2005 for Medicare to start collecting data and start cutting payments to hospitals not meeting certain quality indicators. The 2005 Deficit Reduction Act mandated hospital reporting of 30 day readmission rates for some illnesses. The 30 day readmission provisions in ACA were basically a restatement of existing laws.
http://www.cms.gov/Medicare/Medicar.../Downloads/Hospital_VBP_Plan_Issues_Paper.pdf
Unfortunately, the promise that lowering hospital readmission rates for certain ailments would reduce costs and improve outcomes has not worked out as predicted. In fact, for folks admitted with heart failure there is a tendency for hospitals with lower 30 day readmission rates to have HIGHER 30 day patient mortalities (perhaps since dead folks are never readmitted ).
JAMA Network | JAMA | Relationship Between Hospital Readmission and Mortality Rates for Patients Hospitalized With Acute Myocardial Infarction, Heart Failure, or Pneumonia

IMHO- Focus on making the ACA (or any other specific legislation) "work" or "not work" is unproductive political distraction. All legislation is subject to change. The focus should be on the big picture of making the US health care system provide the best possible care within the financial constraints that all national HC systems face these days.

 

[Buckeye]

Have you looked into catastrophic plans? They are similar to high-deductible plans but the deductibles are a bit higher (mine is $6,350). However the premium is 62% of the premium of a bronze plan from the same carrier and same network.

You can buy a cat plan even if you are over 30 if you lost your insurance due to ACA or if the premium for the lowest cost bronze plan exceeds 8% of your income.

We have them and have been quite happy but we are healthy and really haven't had any claims.

When you say '8% of your income," what line on your tax return are you referring to? Total income, adjusted gross income, taxable income?

 

[pb4uski]

When you say '8% of your income," what line on your tax return are you referring to? Total income, adjusted gross income, taxable income?

Obamacare modified adjusted gross income. For most people it will be tax-return AGI + tax-exempt interest + nontaxable SS. See http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pdf for further details.

 

[brewer12345]

Money to pay for subsidies is actually not being covered by other savings in the HC system as promised. Taxpayers will shoulder a huge burden. The non-partisan CBO estimates ACA will have a net US budgetary cost of roughly $150 BILLION per year by FY 2017 and cost the taxpayers roughly $1.4 TRILLION over the next decade (FY2014-2023).
https://www.cbo.gov/publication/44176

Pray tell, how does that compare to the military budget over the next decade?

 

[ERhoosier]

Pray tell, how does that compare to the military budget over the next decade?

My previous comment was in answer to those who claimed that ACA would save enough $$ to cover the subsidies, bring down the overall cost of HC, and be a net savings for the US Budget. It is now clear that those claims were in error and that the cost of ACA will have a very significant negative impact on the US Budget deficit.

The US military budget (with its own inefficiencies) is a whole 'nother discussion.
But to try to answer your question:
Latest CBO info is for FY 2013.
http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf
US Defense Spending (military) in FY2013 was $626 B, or 18% of total US budgetary spending. The Defense budget for FY 2015 is likely to be at least 9% less at under $570B.
US House Passes Appropriations Bill, Senate Looks Deadlocked | Defense News | defensenews.com

This is much less than US gov't spends on healthcare.
Health Human Svcs (HHS, inc Medicare/Medicaid) 2013 budget spending (net of Medicare premiums) was $886 B, or 25+% of US Budget. This is likely to increase 11% by FY 2015 to $1 Trillion.
http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf

Most ACA costs (inc non-Medicaid subsidies, admin costs, etc.) are spread across other areas in the Budget so tough to tease out specific figures. But it is pretty clear, from above figures, CBO ACA analyses, and military & dependent HC costs included in Defense budget, that US gov't HC spending will be more than double military spending for next FY and beyond.

 

[photoguy]

My previous comment was in answer to those who claimed that ACA would save enough $$ to cover the subsidies, bring down the overall cost of HC, and be a net savings for the US Budget. It is now clear that those claims were in error and that the cost of ACA will have a very significant negative impact on the US Budget deficit.

The CBO is claiming that ACA will reduce the deficit. From your link: "Taking the coverage provisions and other provisions together, CBO and JCT have estimated that the ACA will reduce deficits over the next 10 years and in the subsequent decade." Also from Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act | Congressional Budget Office the CBO claims that to repeal ACA would actually add $109B to the deficit.

A big chunk of this is from various tax increases and reductions in medicare spending and not through more effective healthcare (so the taxpayer is still on the hook as you state but at least there's a big line item for $700B corresponding to reductions in Medicare spending). However, as a positive sign, in the April 2014 updated estimate (http://www.cbo.gov/sites/default/files/45231-ACA_Estimates.pdf) "CBO and JCT have revised downward their projections of insurance premiums for policies purchased through the exchanges in 2016 by roughly 15 percent, and CBO has revised downward its projection of total Medicaid spending per beneficiary in 2016 by roughly half that percentage."

On the other hand, I'm not sure how much confidence one can put in any of these estimates. The CBO breaks down the cost by year and the most expensive years are at the end (e.g. only $36B in 2014 vs $156B in 2024). I don't know how accurate CBO ten year projections have been in the past but I'm skeptical that anyone can do more than a SWAG.

 

[FIRE'd@51]

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.

Could you elaborate on this? I thought California had some form of guaranteed-issue insurance for those who couldn't get insurance in the private market. Also, there's HIPAA, which, although expensive, would allow you to buy insurance without riders or waiting periods.

 

[brewer12345]

So we will spend 7 trillion on the military over the next decade, assuming we don't start any wars. I for one am very tired of paying for a bunch of overgrown boys to play soldier and then be told there is no money left for stuff that matters.

 

[M Paquette]

Could you elaborate on this? I thought California had some form of guaranteed-issue insurance for those who couldn't get insurance in the private market. Also, there's HIPAA, which, although expensive, would allow you to buy insurance without riders or waiting periods.

Oh, the state high risk pool. Yeah, there was that. Bit of a wait, though, and hard to get...

Being able to buy insurance with exclusion riders disqualified applicants. Also, one had to be without insurance for 6 months to apply. Successful applicants were put on a waitlist until an opening appeared. In 2008, when I was looking for coverage, the program covered 13,000 Californians, about 2% of the medically uninsurable at the time.

Benefits from the high risk pool were capped at $75,000 a year. Premiums for those able to get onto the program were set at 125% of commercial rates for comparable coverage.

Here's an article from 2008 describing the state of the high risk pool at the time: Few can use state high-risk pool for uninsured - Los Angeles Times

The HIPAA conversion coverage would have applied to a COBRA + Cal-COBRA plan once her had exhausted the plan at three years out, but before 63 days had lapsed, provided we were on an employer plan which could be continued from 18 months of COBRA coverage through an additional 18 months of Cal-COBRA, at a rate of 175% of the price of the Cal-COBRA plan.

Only plans which met specific requirements such as being handled by an entirely in-state HMO can continue from COBRA to Cal-COBRA. Exactly one (1) plan from my employer could be so continued, so I moved to it prior to retirement, just in case. (And people wonder why I was building Zwicky decision boxes and event trees for retirement healthcare planning...)

The annual cost of insurance for our family, without copayments or deductibles, for calender year 2011 using the HIPAA conversion option would be $22,280.76. With annual age and cost adjustments this year's cost for insurance alone would be about $27,000 annually. At the projected annual rate increase we were seeing prior to the ACA law passage, the medical insurance cost for the last year before Medicare eligibility would be $44,200 annually.

As I mentioned in my post, I do not think I would be retired now if I had to take that particular path.

 

[samclem]

So we will spend 7 trillion on the military over the next decade, assuming we don't start any wars. I for one am very tired of paying for a bunch of overgrown boys to play soldier and then be told there is no money left for stuff that matters.

Take it up with your elected representatives. Those "overgrown boys" you apparently disdain don't send themselves anywhere, or decide what they get paid.
And I'm sure they'd say: You are welcome.

 

[MichaelB]

Thanks for an interesting discussion
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Porky Pig Cartoon Ending "That's All Folks!" - YouTube