ACA premium anomaly.....thanks

[donheff]

Nun - are you getting Medicare under traditional rules or under the Obamacare expansion? If the former make sure your state has accepted the expansion before artificially raising your earnings with Roth conversions. If not careful you could fall into the gap where you earn too much to qualify for Medicaid and don't earn enough to qualify for an ACA supplement.

[jim584672]

ACA verses Medicaid depends on your state.

In NY most counties have Medicaid which is managed by "Medicaid Managed Care" companies. These are mostly the same insurance companies as the Exchange. The network in the Medicaid plans actually seems bigger than the Exchange plans. The difference being you would need to pay for a "Platinum" plan to even get close to the Medicaid plan.

[John Galt III]

But.. but.... but...I'll be the nattering nabob of negativity here. Let's say you were admitted yo the in-network hospital. Would the doctors who treated you have to be in-network? Are most or all of the staff there in network? If they bring in an out-of-network doctor? And then there's always the "He's only giving us a lousy Medicaid reimbursement, so let's not spend much time on this guy" worry. Maybe the poster whose gf was a nurse who feared Medicaid could give us some examples. I think one good thing for sure about Medicaid is that neither the Medicaid insurance carrier nor the providers are allowed to charge the patient anything at all, not even those hated "uncovered services" that often crop up in the bill while using regular insurance. If you choose the Medicaid route, please keep us apprised of your experiences, good or bad. Oh, almost forgot, there's that gray area of "Medicaid asset recovery" : a law that allows govt to recoup your Medicaid expenses from your estate. The best I can come up with for this is that in my state, Pa, they do have the law but do not enforce it, and do not plan on enforcing it in future, but that could change! I chose to increase my income to avoid Medicaid, and will have to spend an extra $520 in federal taxes, so I am desperately looking for evidence that Medicaid in Pa is awful and I have made the right decision!

[pb4uski]

Quote:

Originally Posted by John Galt III ....I chose to increase my income to avoid Medicaid, and will have to spend an extra $520 in federal taxes, so I am desperately looking for evidence that Medicaid in Pa is awful and I have made the right decision!

Perhaps you can find comfort in that since the taxes are the result of a Roth conversion you are not necessarily spending an extra $520 in taxes, you are just paying the $520 of taxes earlier than you (or your heirs) would have needed to since you would have had taxes on that income once RMDs start (plus you're getting tax-free growth in the Roth as a bonus).

[ExFlyBoy5]

Wow...how can ANY medical practice run when the reimbursement for Medicaid is SO LOW? I thought that the Tricare reimbursements were really low, but I think I was wrong. I always feel a little guilty when the Doc spends more than 10 minutes with me, because I know his business isn't making much of anything for my services.

[NW-Bound]

Let's see... At 10 min/patient or 6 Medicaid patients/hr, your poor doctor brings in $18.1 x 6 = $109/hr. He then has to "share" with his staff, pays rent, malpractice insurance, and who knows what else.

He must be very hungry to do this, and I don't think hunger makes good doctors although I know little about medicine.

[jim584672]

Quote:

Originally Posted by John Galt III But.. but.... but...I'll be the nattering nabob of negativity here. Let's say you were admitted yo the in-network hospital. Would the doctors who treated you have to be in-network? Are most or all of the staff there in network? If they bring in an out-of-network doctor? And then there's always the "He's only giving us a lousy Medicaid reimbursement, so let's not spend much time on this guy" worry. Maybe the poster whose gf was a nurse who feared Medicaid could give us some examples. I think one good thing for sure about Medicaid is that neither the Medicaid insurance carrier nor the providers are allowed to charge the patient anything at all, not even those hated "uncovered services" that often crop up in the bill while using regular insurance. If you choose the Medicaid route, please keep us apprised of your experiences, good or bad. Oh, almost forgot, there's that gray area of "Medicaid asset recovery" : a law that allows govt to recoup your Medicaid expenses from your estate. The best I can come up with for this is that in my state, Pa, they do have the law but do not enforce it, and do not plan on enforcing it in future, but that could change! I chose to increase my income to avoid Medicaid, and will have to spend an extra $520 in federal taxes, so I am desperately looking for evidence that Medicaid in Pa is awful and I have made the right decision!

I believe PA did not expand Medicaid until 1/1/2015, and the version they ended up with has concessions they negotiated before they would expand it.

Regular Medicaid and Medicaid Managed Care are two different things.
Under regular Medicaid the fee schedule is set and a many doctors will not take it.

Medicaid Managed Care is a network of doctors. The payment is a capitation fee per month, so plan XYZ is paid $800 per month per patient, for example. The plans have calculated their costs and negotiated the fee with the government.

As far as Estate Recovery, if a person is in regular Medicaid and never gets sick, their "tab" would be $0. Medicaid Managed Care is calculated at the capitation rate per month, so even if a person never gets sick, they still owe the totaled capitation fees. This would apply for anyone from 55-64 yo. Creative estate planning (Life Estate Deeds, avoiding probate court) can mitigate this claw back.

[EastWest Gal]

A couple of issues with Medicaid. Straight Medicaid, hardly anyone takes. Medicaid managed care is sort of like regular insurance.
The good: You don't pay premiums, you don't have copays or they are ridiculously low, drugs are cheap.
The bad: 1. It's fine if you doctor takes Medicaid. They should treat you exactly the same. There may be some limitations on the new, fancier and expensive drugs, but usually that doesn't matter.
The ugly: If you are on Medicaid managed care, after age 55 and until age 65, your estate will be required to pay back all of your premiums.
The very ugly: The state doesn't disclose what those premiums are. The state sends your executor information months later and your estate has to pay back all the premiums it paid on your behalf.

Second point, unless you have no money in taxable accounts, you will have income. You use your AGI, not your income after exemptions and deductions to figure your ACA subsidy. What is your interest, dividend, and capital gains income this past year? Can you assume a similar amount in 2015? That is part of your AGI. I don't know your situation. But to qualify for Medicaid in PA a single adult has to have income under about $16100. And I don't see a gap between earning too much to qualify for Medicaid and not enough to qualify for a premium tax credit. Someone mentioned a gap. There is no gap as far as I can see. Once you hit the income where you no longer qualify for Medicaid, the tax credit is substantial.

[NW-Bound]

Quote:

Originally Posted by nun Yes I agree, but I'm a pinko bleeding heart liberal and prone to guilt. I will probably end up using the 15% tax bracket to do IRA to ROTH conversions.

Speaking of guilt, I have friends and relatives at both sides of the political spectrum, so can tell that it has nothing to do with your political inclination. If people think that they are entitled to something as the law says, most will take it. Of course falsifying data is fraudulent and illegal. But morally, it is harder to see what is right or wrong.

We have not used any public assistance since finishing my undergraduate. I do not think of a graduate student loan as public assistance since I had to pay it back. And we never claimed unemployment, because we stopped work by our own will. We goofed off and did not intend to find job, and I did not want to lie.

I just applied for ACA for 2015, and will get some subsidy. Although our expenses are way above the subsidy level, our income is not. The simple reason is that 3/4 of our stash is in tax deferred IRA and 401k accounts, and we cannot get at it yet without paying penalty. So, even pre-ACA, I have been spending down my after-tax savings first, and that has already been taxed, except for the dividend generated from those.

Without the subsidy, I would be better off with my pre-ACA plan; its premium is lower than the ACA plans, because when we started 8 years ago, we were clean with no pre-existing conditions.

If the subsidy gets reduced or cancelled, I am going to be kicking myself for giving up the pre-ACA plan.

[John Galt III]

Quote:

Originally Posted by pb4uski Perhaps you can find comfort in that since the taxes are the result of a Roth conversion you are not necessarily spending an extra $520 in taxes, you are just paying the $520 of taxes earlier than you (or your heirs) would have needed to since you would have had taxes on that income once RMDs start (plus you're getting tax-free growth in the Roth as a bonus).

Thanks! That is a good way to think about it.

[John Galt III]

Quote:

Originally Posted by jim584672 I believe PA did not expand Medicaid until 1/1/2015, and the version they ended up with has concessions they negotiated before they would expand it. Regular Medicaid and Medicaid Managed Care are two different things. Under regular Medicaid the fee schedule is set and a many doctors will not take it. Medicaid Managed Care is a network of doctors. The payment is a capitation fee per month, so plan XYZ is paid $800 per month per patient, for example. The plans have calculated their costs and negotiated the fee with the government. As far as Estate Recovery, if a person is in regular Medicaid and never gets sick, their "tab" would be $0. Medicaid Managed Care is calculated at the capitation rate per month, so even if a person never gets sick, they still owe the totaled capitation fees. This would apply for anyone from 55-64 yo. Creative estate planning (Life Estate Deeds, avoiding probate court) can mitigate this claw back.

Jim58, Not meaning to hijack... Thanks. I did not know about the capitation fee. And yes, Pa had it's own version of "expanded" Medicaid that was supposed to take effect 1/1/2015, and was eliciting groans from current Medicaid patients. Brand new governor though, is talking about getting rid of it and replacing it with something. I'm not clear on what the replacement will be. I gave up researching it after I did the Roth conversion.

[John Galt III]

Quote:

Originally Posted by EastWest Gal A couple of issues with Medicaid. Straight Medicaid, hardly anyone takes. Medicaid managed care is sort of like regular insurance. The good: You don't pay premiums, you don't have copays or they are ridiculously low, drugs are cheap. The bad: 1. It's fine if you doctor takes Medicaid. They should treat you exactly the same. There may be some limitations on the new, fancier and expensive drugs, but usually that doesn't matter. The ugly: If you are on Medicaid managed care, after age 55 and until age 65, your estate will be required to pay back all of your premiums. The very ugly: The state doesn't disclose what those premiums are. The state sends your executor information months later and your estate has to pay back all the premiums it paid on your behalf. Second point, unless you have no money in taxable accounts, you will have income. You use your AGI, not your income after exemptions and deductions to figure your ACA subsidy. What is your interest, dividend, and capital gains income this past year? Can you assume a similar amount in 2015? That is part of your AGI. I don't know your situation. But to qualify for Medicaid in PA a single adult has to have income under about $16100. And I don't see a gap between earning too much to qualify for Medicaid and not enough to qualify for a premium tax credit. Someone mentioned a gap. There is no gap as far as I can see. Once you hit the income where you no longer qualify for Medicaid, the tax credit is substantial.

EastWest Gal, Thank you for the Medicaid info. I did not know that very few doctors took the straight Medicaid version. Here in Pa I think I would only be eligible for the managed care version of it, via ACA. About the estate recovery : I don't think the ACA website mentions anything about that, and they really ought to. The people I talked to here in Pa govt about Medicaid didn't know about the recovery law! And yes, I know about the $16,xxx minimum MAGI number to qualify for an ACA plan. I had to do a Roth conversion to bump my income up to $16,200. So I do get a nice subsidy. About the gap: Pa did not expand Medicaid until 1/1/2015 so in 2014 there was that precarious gap of non-coverage. But you're right, no gap anymore.

[nun]

Well after applying for health insurance with the state and receiving a Medicaid card I now find that I have been automatically enrolled in a health plan without lifting a finger. I still have my ex-employer's plan that is a cadillac one that I pay $450 a month for and now the Medicare plan that I pay nothing for......I'm doubly insured. The state wants my 1040 and verification of my income. My latest 1040 is from 2013 when I was working so I advised them that I only have investment and net rental income and took them through how I estimated my 2015 MAGI. We'll see what they say and I won't give up the cadillac plan just yet.

FYI my Medicaid plan is in MA and through Neighborhood Health Plan (NHP). My PCP is in network as are hospitals like Mass General, Beth Israel and Brigham and Women's, so I have no worries about standard of hospitals. As MA is now going away from "fee for service" reimbursement I'm not sure how that impacts the treatment I will get on the Medicaid plan.

[ERhoosier]

Quote:

Originally Posted by John Galt III How exactly is the "level of service" different on Medicaid? This question has intrigued me. I do believe it is substandard, but some insurance brokers have assured me it is just as good as regular insurance, except for finding a doctor who accepts it. Oh well, I suppose a lack of doctors who accept it could be reason enough to avoid it.

It's not just the smaller provider networks. In many areas the range of services covered by Medicaid is less than most private insurance, such as for specialty drug coverage, durable medical equipment, physical therapy, etc.
Medicaid Benefits | Medicaid.gov
In fact, Medicaid outpatient drug coverage is technically optional under Federal reg's, although IIUC all states offer at least some coverage.
Prescription Drugs | Medicaid.gov
And in practice many providers who "accept" Medicaid tend to limit the proportion in their practice. As in private insurance gets an appt tomorrow, Medicaid gets an appointment 2 months from next Thursday.

With current state of ACA HI premium and cost-sharing subsidies at MAGI 138% FPL, I agree 100% with others wishing to get an Exchange plan vs going on Medicaid.

[Throwdownmyaceinthehole]

Also, just look at how much you use health care, if you are healthy and don't use the insurance you pay exactly how much you use it, which is nothing. If you have medical issues, then bump up your income. DH and I both went to the doc just one time this year for basic check ups. Would have had no problems being on Medicaid.

[EastWest Gal]

Quote:

Originally Posted by ERhoosier And in practice many providers who "accept" Medicaid tend to limit the proportion in their practice. As in private insurance gets an appt tomorrow, Medicaid gets an appointment 2 months from next Thursday. .

A doctor cannot legally or ethically base their appointment schedule on the patient's insurance. They cannot legally give better care to private pay patients than Medicaid patients.

What they do is limit the number of patients on a Medicaid HMO to a certain number. That group of patients is called a panel. The Medicaid HMO also limits the panel size too. It has to approve the panel size too. It prevents the doc from having a huge panel, then never seeing the patients.

In an HMO model, the doc gets paid per patient per month, whether or not the patient is seen. The payment is based on age, at least in pediatrics, do you get more for the first two years because there are so many well baby appointments. So if the panel is too large for the doc to manage it, the care suffers but the doc gets more money.

BTW, in my state there is one Medicaid HMO that pays better than a particular private HMO. The thing that makes no sense to me is that poorly paying HMO actually has the highest premiums on our ACA website.

Inpatient medicine is a different animal altogether. Our state Medicaid caps physician payment to $1250 total for an entire hospital stay. If a baby is born extremely prematurely and is in the hospital for three months, then the max the doc gets paid for the entire hospital stay is $1250. That's roughly $10/day per doc. Since there is more than one doc it adds up to a bit more but it is a ridiculous system.



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[gauss]

I have seen several posts from folks who would like to increase their income to avoid not qualifying for the (subsidized) exchange and being stuck with Medicaid.

In reviewing the IRS tax forms pertaining to ACA and advanced premium credits for 2014, they appear to address the scenario where ones income is below 100% of the poverty level. There appears to be an exception to paying back the advanced premium credit if the exchange accepted someone based on the answers given during the registration questions.

The idea would be then to try to figure out how you can get the exchange to project your income high enough to qualify (and passing the laugh test).

The idea would be to perhaps inflate ones income via projecting possible Roth conversions that would safely get you above the 100% or 133% FPL level. Then along the way during the year, perhaps you have a change in heart and don't actually perform the Roth conversions and then your actual income is below the threshold. The draft IRS forms show under this scenario that you would have 0 liability to repay the advance premium credit.

I have not personally been through the full registration process on an exchange so I am not sure that if they allow this type of scenario. If it is allowed, perhaps that would be of use to folks here.

I apologize if this has already been discussed in the past.

-gauss

[John Galt III]

Gauss, Thanks for the post. Yes, the scenario was discussed in a previous thread, but it doesn't hurt to bring it up again for current readers. I was slightly tempted to just not do the Roth conversion for 2014, to avoid the taxes, and hope my ACA would not be affected (my income would be below the $16,xxx threshold without the conversion), but after someone pointed out that I would have to pay the taxes on it eventually anyway, in same bracket, I felt better about doing the conversion. No worries about gray areas. BTW, I went to a free "ACA information" visit at H & R Block yesterday, and asked about the asset recovery laws for Medicaid (govt billing your estate for Medicaid premiums). The H and R person had never heard of it. Another gray area for anyone age 55 to 64 considering Medicaid from the ACA. I don't recall the ACA website mentioning anything about asset recovery.

[nun]

When I started looking at state exchange programs it was really just out of curiosity. My ex-employer's plan that costs me $450 a month is good insurance.....a bit expensive, but the premium will go down to $100/month in 18 months time when I reach retirement age, so I kept it thought last year for convenience, continuity and to avoid all the teething troubles in ACA's first year. So when open enrollment came around I wanted to see what was on offer. I entered my MAGI estimates.....about $35k for 2014 as I worked for a couple of months and $10k for 2015 as I only have investment and rental income and some large deductions and I didn't include potential rollovers to ROTHs. Well that shunted me into Medicaid and the whole process has a momentum all of it's own. I got a card, got placed with a health insurer after I called to ask about the benefits but specifically told the nice lady on the phone I already had insurance and would call back if I decided to go ahead. Now they have asked for income verification and I sent back the information almost out of curiosity to see what happens. One of the income categories was "Inheritances and gifts". I actually did get a small inheritance in 2014, and I wrote back to say that as assets aren't a determining factor for the Medicaid plan I am one and inheritances don't contribute to MAGI I would not tell them the value of the inheritance, but had estimated the income it would contribute towards my MAGI.

I also have a claim for state premium assistance for my existing insurance that I was encouraged to submit by one representative. So it looks like there will be one of 4 outcomes

1) just stick with my existing ex-employer insurance.....and do rollovers to ROTH
2) get Medicaid plan and pay nothing for premiums, cancel existing insurance and keep my income below the 133% FPL.
3) get some assistance from the state to pay my ex-employers insurance premiums......ironically the state was my ex-employer
4) Do some rollovers to bump my income up above the 133% FPL, tell the state about this, get off Medicaid and apply for an exchange health plan and get the subsidy.

It's complex, but I'm grateful to have access to good coverage and have the choices.

[ziggy29]

It's kind of a mess, and having a plan on the Marketplace where it's critical that we don't exceed 300% of FPL, I have juggling, too -- but in the opposite direction. I pretty much saw this coming; as things are now the ACA's subsidy and cost sharing mechanisms are carving out a new financial services niche -- helping people "engineer" that Goldilocks level of income -- not too low, not too high, but "just right".