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Old 06-30-2012, 09:08 AM   #41
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I have a pretty wide definition of rational

$20k/year may be rational. $200k/year is not. Once you've been diagnosed with an expensive illness in the current individual system, you are screwed. There is nothing preventing you from being dropped at the next policy renewal.

Term life insurance is sold as guarrenteed renewable for this reason. You wouldn't want your insurer to be able to cancel your policy the year after you were diagnosed with cancer, but that is how medical insurance is sold.

I don't think the ACA will change average health care costs much. They will continue their upward trend. But it should allow individuals to effectively buy medical insurance. They aren't really able to do that now.
As far as I am aware of health insurance company cannot drop you upon policy renewal just because you have an illness they do not want to pay for. From what I understand company can only drop you if you misrepresented your health status upon application, or they drop that policy from your state. Meaning everyone in your individual "group" are also dropped. Your premium increase also has to be the same as everyone else in your "group" also. Does this mean I trust them 100%? No, but according to the law anyways......
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Old 06-30-2012, 09:13 AM   #42
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As far as I am aware of health insurance company cannot drop you upon policy renewal just because you have an illness they do not want to pay for. From what I understand company can only drop you if you misrepresented your health status upon application, or they drop that policy from your state. Meaning everyone in your individual "group" are also dropped. Your premium increase also has to be the same as everyone else in your "group" also. Does this mean I trust them 100%? No, but according to the law anyways......
Yes. I believe that's how it is. The difficulties are if you have an illness, and you wish to switch to another policy (perhaps because of premium increases, or coverage options) but you feel locked in from fear of failing another underwriting with the new illness as a pre-existing condition.
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Old 06-30-2012, 09:17 AM   #43
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Too afraid to do anything right now, though, so I will continue w*rking and stuffing 50 percent of my pay into my 401K.
While you are waiting, maybe use the time to investigate the quality and availability of the services available in your location under Medicaid. We don't know exactly how things will change in the near future, but the number of people eligible fro Medicaid is about to expand significantly, and there's little reason to believe the number of healthcare providers accepting it will increase soon. Same number of docs, increased number of patients: I think you know what that means.
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Old 06-30-2012, 09:24 AM   #44
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To add a little drama and storytelling...

For me, the way I picture my sitution is that w*rking, the office is the shark infested water. Currently, I'm on my life raft called a HSA, paddling towards the land called Medicare. In 2014, I see this other raft called ACA. Do I jump on that ACA raft, or stick to HSA? Only time will tell...
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Old 06-30-2012, 09:29 AM   #45
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While you are waiting, maybe use the time to investigate the quality and availability of the services available in your location under Medicaid. We don't know exactly how things will change in the near future, but the number of people eligible fro Medicaid is about to expand significantly, and there's little reason to believe the number of healthcare providers accepting it will increase soon. Same number of docs, increased number of patients: I think you know what that means.
Right. And from what I've read so far, I think if I earn enough in addition to my pension and CD interest, say from a part time job which does not offer health ins, to put my income over 133 (?) percent of poverty level, I can then buy into the health insurance exchange, for a possibly better insurance than medicaid.
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Old 06-30-2012, 09:44 AM   #46
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Originally Posted by easysurfer

Yes. I believe that's how it is. The difficulties are if you have an illness, and you wish to switch to another policy (perhaps because of premium increases, or coverage options) but you feel locked in from fear of failing another underwriting with the new illness as a pre-existing condition.
That is why when I took out my policy. I took it to the limit on what I could afford out of pocket and still stay under the HSA rules. I think another potential problem in the current individual market is if you wanted to move out of state and have developed a condition since you purchased your premium. You could be trapped in that state as you would probably have to undergo underwriting again, also.
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Old 07-01-2012, 04:06 PM   #47
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According to the calculator we'd save around $8000 a yr. That would be nice.
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Old 07-01-2012, 04:09 PM   #48
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The increased taxes due to Obamacare (coming in as early as 2013) is also going to but a wrench in the whole ER planning

What ObamaCare Means for Your Taxes - SmartMoney.com

"Right now, the maximum federal income tax rate on long-term capital gains and dividends is only 15%. Starting in 2013, the maximum rate on long-term gains is scheduled to go up to 20% and the maximum rate on dividends is scheduled to increase to 39.6% as the so-called Bush tax cuts expire.

But that's not all. Also starting in 2013, all or part of the net investment income, including long-term capital gains and dividends, collected by higher-income folks can get socked with an additional 3.8% "Medicare contribution tax." Therefore, the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%) and the maximum rate on dividends will be a whopping 43.4% (versus the current 15%). Yikes!"

Going to be much harder to accumulate wealth under these new taxes...
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Old 07-01-2012, 04:24 PM   #49
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The increased taxes due to Obamacare (coming in as early as 2013) is also going to but a wrench in the whole ER planning

What ObamaCare Means for Your Taxes - SmartMoney.com

"Right now, the maximum federal income tax rate on long-term capital gains and dividends is only 15%. Starting in 2013, the maximum rate on long-term gains is scheduled to go up to 20% and the maximum rate on dividends is scheduled to increase to 39.6% as the so-called Bush tax cuts expire.

But that's not all. Also starting in 2013, all or part of the net investment income, including long-term capital gains and dividends, collected by higher-income folks can get socked with an additional 3.8% "Medicare contribution tax." Therefore, the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%) and the maximum rate on dividends will be a whopping 43.4% (versus the current 15%). Yikes!"

Going to be much harder to accumulate wealth under these new taxes...
The article is very misleading since it mixes in expiration of the large Bush Tax cuts (which is unlikely to occur, in any event) with the small changes effected by Obamacare leaving the impression (for some, including you I assume based on your quote) that Obamacare itself will throw a major wrench in the tax works.

To be sure, the ACA does make some tax changes which we should be aware of. But they effect high wage earners more than most ERers and it is downright dishonest for people (like the author of the linked piece in my opinion) to conflate them with the expiration of the Bush tax cuts.
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Old 07-01-2012, 05:01 PM   #50
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ACA just adds the 3.8% tax to investment income that is over the $250k limit. No question high-income families will get hit, but most will not see this tax. Just don't sell everything at once.
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Old 07-01-2012, 06:13 PM   #51
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But that's not all. Also starting in 2013, all or part of the net investment income, including long-term capital gains and dividends, collected by higher-income folks can get socked with an additional 3.8% "Medicare contribution tax." Therefore, the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%) and the maximum rate on dividends will be a whopping 43.4% (versus the current 15%). Yikes!"
Oh, don't throw me in that there briar patch!

I'd love to be paying that extra 3.8% tax. Holy cr*p, Batman! $250,000 a year in just taxable account dividend income? Please hurt me some more... Anyone remember the top dividend tax rate from a decade ago? Two decades ago? Three? Yet somehow most of us retired folks managed to save for retirement.

Marginal top bracket rates have less of an effect than some would like us to believe. Budgeting and living below ones means are powerful tools.
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Old 07-01-2012, 06:15 PM   #52
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Oh, don't throw me in that there briar patch!

I'd love to be paying that extra 3.8% tax. Holy cr*p, Batman! $250,000 a year in just taxable account dividend income? Please hurt me some more...
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Old 07-01-2012, 06:35 PM   #53
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Oh, don't throw me in that there briar patch!

I'd love to be paying that extra 3.8% tax. Holy cr*p, Batman! $250,000 a year in just taxable account dividend income? Please hurt me some more... Anyone remember the top dividend tax rate from a decade ago? Two decades ago? Three? Yet somehow most of us retired folks managed to save for retirement.

Marginal top bracket rates have less of an effect than some would like us to believe. Budgeting and living below ones means are powerful tools.
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+1
You guys got it all wrong. It's not surcharge medicare tax on $250K of investment income, it's on the additional investment income above $250K. The first $250k pays regular rates.

I'm not sure we could get by ... but I'd sure like a shot at it.
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Old 07-01-2012, 06:58 PM   #54
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ACA just adds the 3.8% tax to investment income that is over the $250k limit. No question high-income families will get hit, but most will not see this tax. Just don't sell everything at once.
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Oh, don't throw me in that there briar patch!

I'd love to be paying that extra 3.8% tax. Holy cr*p, Batman! $250,000 a year in just taxable account dividend income?
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You guys got it all wrong. It's not surcharge medicare tax on $250K of investment income, it's on the additional investment income above $250K. The first $250k pays regular rates.

I'm not sure we could get by ... but I'd sure like a shot at it.
Many who call for open season on the "filthy rich" might be surprised at how flexible that definition will turn out to be. You can bet the loads of retirees depending on little more than SS see ER's on this board as filthy rich and deserving of some confiscatory taxation--for the sake of fairness. Quit the rat-race early to spend your life as you want=fine. Stay in the traces for another couple decades=you're a fat goose worthy of the knife.

So,to the OP's point: Yes, the new legislation makes it more attractive to bail out early. Better to join the grasping pack than to be their dinner.
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Old 07-01-2012, 07:06 PM   #55
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I guess fairness has an income limit. You can bet the loads of retirees depending on little more than SS see ER's on this board as filthy rich and deserving of some confiscatory taxation--for the sake of fairness. Many who call for open season on the "filthy rich" might be surprised at how flexible that definition will turn out to be. Quit the rat-race early to spend your life as you want=fine. Stay in the traces for another couple decades=you're a fat goose worthy of the knife.

So,to the OP's point: Yes, the new legislation makes it more attractive to bail out early. Better to join the grasping pack than to be their dinner.
As my accountant recently told me: "the trick is to look like one of them while being one of us"
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Old 07-01-2012, 07:26 PM   #56
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I think most folks here are using the Kaiser website Health Reform Subsidy Calculator - Kaiser Health Reform which does limit the review to a 'family of four'.

A quick look at the 'single user' shows a similar break until about $46K of taxable income.
DH will be 65 in 2014 so I'm looking at single adult info. Has anyone read whether my income is considered to half our total income if none of it is earned income? I couldn't find any info.
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Old 07-01-2012, 07:32 PM   #57
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All right folks, let's all take a step back. Mea culpa for my off topic post, but let's stay away from the rich vs everyone else stuff and just talk about PPACA and how it affects us.
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Old 07-02-2012, 03:03 AM   #58
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I guess I actually should have made the thread about changes in taxes in general.

Regardless of whether the tax increase is directly related to the new healthcare or not, it will definitely play a major role in FIRE planning.

I think it could make sense to sell any long term winners by the end of this year to avoid paying at a higher tax rate.
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Old 07-02-2012, 06:41 AM   #59
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I guess I actually should have made the thread about changes in taxes in general.
Bankerwithabrain, you are free to start another thread to discuss taxes if you wish, but let's please keep this thread on topic, which is how the PPACA fits with early retirement. This topic is timely and many members are interested, and bringing in taxes will change the subject.
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Old 07-02-2012, 06:57 AM   #60
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Living in MA with Romneycare I've watched the ACA debate with a little distance. There are two big problems with the MA system: cost and the difficulty in paying the premiums if you are over the $35k (single person) threshold to get the subsidized Commonwealth Care. Still 98% of MA residents have healthcare and 74% like Romneycare.

For me it definitely makes ER easier as I know that I can buy a 2k/5k policy for just under $400 a month. Not cheap, but it's knowable and I get it by simply applying on the state's website where I can compare prices and levels of coverage. I also know that I cannot be denied coverage.
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