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Old 09-05-2013, 04:34 PM   #21
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I think he means the money was not taxed going in contributed by the employer, and the earnings were compounding tax free at the 8% fantasy rate that pensions get. So all money coming out has never been taxed.

This would be opposed to a person whose retirement is mostly planned around a taxable account where perhaps money has accrued over the years from interest and dividends thus has already been taxed?

I know personally we have over $350,000 that has already been taxed...I could pull it out of the CDs, Ibonds, and a few of the index funds with no tax due. In other words, I could provide a $50,000 income stream for the next 7 years on already taxed money...qualifying me to be on Medicaid if I wanted.
That is correct Fermion, and thanks, you explained it better than I did.
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Old 09-05-2013, 04:36 PM   #22
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During my working years my contributions to my pension was all pretax dollars, like a 401k. But now I am receiving the pension, I am now paying full federal income tax on the monthly pension. They take it out like a paycheck.
Got it. And I take it you are getting a fixed pension benefit and don't have the discretion to reduce the benefit to qualify for Obamacare subsidies.

If you are just barely over, you might be able to buy a HDHI plan and set up a HSA and then make HSA contributions to bring you under the limit. Or if you have capital losses you could harvest them to help you get under.
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Old 09-05-2013, 04:41 PM   #23
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I don't know if it is worth it or not, but at the very least you could harvest losses and gains on alternating years, so that one year with your pension you are under the cap and the next year you are way over.

I think you would need to play with individual stocks to get this to work well...I haven't had much luck harvesting losses from index funds. I am sure if you bought 100 stocks you could find 10 of them every other year that had declined or advanced more than the pack.
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Old 09-05-2013, 04:41 PM   #24
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Got it. And I take it you are getting a fixed pension benefit and don't have the discretion to reduce the benefit to qualify for Obamacare subsidies.

If you are just barely over, you might be able to buy a HDHI plan and set up a HSA and then make HSA contributions to bring you under the limit. Or if you have capital losses you could harvest them to help you get under.
I am too far gone to get under. I do have my HDHI and HSA and guard it like a first born child as it is the only tax deduction I have other than my mortgage. I think the only option I have for a subsidiary would be to marry a young pretty lady who doesn't work and has 4-5 little kids needing a daddy. Wait.... young and pretty won't be worth it with a bunch of rug rats just to claim the credit!
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Old 09-05-2013, 05:15 PM   #25
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I am too far gone to get under. I do have my HDHI and HSA and guard it like a first born child as it is the only tax deduction I have other than my mortgage. I think the only option I have for a subsidiary would be to marry a young pretty lady who doesn't work and has 4-5 little kids needing a daddy. Wait.... young and pretty won't be worth it with a bunch of rug rats just to claim the credit!
I hate to rain on your parade of rug rats, but they (exemptions) and all schedule A deductions are after MAGI. You HSA and CG losses are before.
If you can it might help to pile on more income this year if it would reduce your income for next year, even if you jump up to the 25% bracket. My estimate was that for every $1 I earn in the subsidy range, I would pay 15% tax and lose 15% in subsidies, for a total of 30%!!
Something to think about....
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Old 09-05-2013, 05:16 PM   #26
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In many states it might not even need to be a lady.
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Old 09-05-2013, 05:18 PM   #27
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I hate to rain on your parade of rug rats, but they (exemptions) and all schedule A deductions are after MAGI. You HSA and CG losses are before.....
Yes, but FPL is based on family size so the hurdle would increase and his income would not. But his headaches would.
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Old 09-05-2013, 06:21 PM   #28
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Yes, but FPL is based on family size so the hurdle would increase and his income would not. But his headaches would.
That was the math I was using PB. I played with calculator and would get an Obamacare subsidy. But, I would still pay more in total insurance costs than just paying full freight on my own. Plus I wouldn't need to pay for the headache medicine.
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Old 09-05-2013, 06:25 PM   #29
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I know personally we have over $350,000 that has already been taxed...I could pull it out of the CDs, Ibonds, and a few of the index funds with no tax due. In other words, I could provide a $50,000 income stream for the next 7 years on already taxed money...qualifying me to be on Medicaid if I wanted.

Best check the asset limitation in WA state before contemplating that move.
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Old 09-05-2013, 06:31 PM   #30
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Best check the asset limitation in WA state before contemplating that move.
I just wanted a subsidy, not Medicaid, but I was under the impression that asset testing was being eliminated under Medicaid expansion and ACA. Do you have other info?
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Old 09-05-2013, 07:23 PM   #31
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I just wanted a subsidy, not Medicaid, but I was under the impression that asset testing was being eliminated under Medicaid expansion and ACA. Do you have other info?
I stand corrected. I have been living under a rock. I did not realize until now ACA was intended to allow multi-millionaires a way to milk the system by receiving "free" medical aid by jockeying their assets and going on MEDICAID.
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Old 09-05-2013, 10:42 PM   #32
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I stand corrected. I have been living under a rock. I did not realize until now ACA was intended to allow multi-millionaires a way to milk the system by receiving "free" medical aid by jockeying their assets and going on MEDICAID.
Why would anyone want to go on Medicaid?
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Old 09-07-2013, 07:19 PM   #33
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I met a woman who is part of the team drafting NY state's health care exchange. She said the IRS has stated that they will not allow any other agency access to their records, so for now at least, providing income information for the purpose of exchange subsidies is completely on the honor system (unbeknownst to anyone).
Information from the woman saying that the IRS will not allow any other agency to access their records is not correct. IRS files can be legally shared with other federal and state agencies. Happens all the time.
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Old 09-10-2013, 04:42 PM   #34
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My HI provider had an ad on the radio about some online tools they had to compare plans in anticipation of the exchange opening. One cool tool is that you put in your subscriber number and it shows you a side-by-side comparison of your current 2013 plan vs the closest similar 2014 plans to be offered (by that carrier) under the exchange.

Still digesting it but it seems that for the most similar plan that the premium will only be ~$50/month more than what I currently pay, but I'll be eligible for ~$300/month Obamacare subsidy so my net cost will decline by $250/month if I manage my income right.

2014 plan will have lower deductibles but include co-pays (none now) and higher maximum out-of-pocket costs. Since our actual health care usage is typically way under the deductibles, I don't think the coverage differences will change our actual medical costs aside from the insurance premiums much at all.

Overall good news for me.
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