Withdrawal Strategies With Obamacare

[photoguy]

You can be sure when the political climate is correct, they will perp walk a multi-millionaire getting health insurance for $29 (subsidized by the middle class) on the nightly news. I guess this would help open the door to net worth scrutiny.

How would a journalist know who was (a) getting the subsidy and (b) a multi-millionaire. This information would have to be volunteered by the recipient although I suppose in a country of 300M someone may do this.

 

[FANOFJESUS]

You can be sure when the political climate is correct, they will perp walk a multi-millionaire getting health insurance for $29 (subsidized by the middle class) on the nightly news. I guess this would help open the door to net worth scrutiny.

A person can be a multi-millionaire and get medicare with no problem. They can even get the cheapest rate if their income is low enough. Their are many programs that look at income only. But don't worry to much because many times to do this the multi-millionaire would lose more income than the benefits are worth.

 

[explanade]

I think it would be a good idea for those who are fired with substantial assets but still gets ACA subsidies to not crow about them.

Keep it on the down low.

 

[Fermion]

I think it would be a good idea for those who are fired with substantial assets but still gets ACA subsidies to not crow about them.

Keep it on the down low.

I agree with that, although it is probably ok for us to discuss on here...the gen pop who would be outraged don't for the large part manage to save or bother thinking much about retirement (and thus would not be reading anything on here).

I would be happy if they fix this "flaw" after they fix the other 18,000 things that are unfair in the tax code.

 

[Onward]

The income is estimated for 2014 but verified against exsiting and/or with additional documentation if requested.

http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/income-verification-8-5-2013.pdf

Blunt Wrong on Income Verification

Those are helpful links. Thanks.

 

[foxfirev5]

I think it would be a good idea for those who are fired with substantial assets but still gets ACA subsidies to not crow about them.

Keep it on the down low.

Great idea, but I'll even bet there are a few on this forum that couldn't keep this secret.

 

[2B]

I can just imagine exposes about 'millionaires receiving ACA subsidies.' There are certainly enemies of Obamacare and these kinds of anecdotes could be used to stoke more outrage.

I expect these articles to start around March 2014. They will alternate with articles about people with subsidized plans still unable to afford their copays even the subsidized ones.

 

[2B]

Great idea, but I'll even bet there are a few on this forum that couldn't keep this secret.

There are too many threads where people declare their intent to manipulate their income to get the subsidy. I see no reason for people not to arrange their finances to minimize their taxes and maximize government benefits. It's along the same lines as transferring IRA money to a Roth to fill up the 15% tax bracket to avoid paying 25% when doing RMD.

 

[M Paquette]

I expect these articles to start around March 2014. They will alternate with articles about people with subsidized plans still unable to afford their copays even the subsidized ones.

I wonder if they'll do a big news special on me, the "guy with no job going to his government-paid doctors appointment and dining on lobster"? Finally a shot at fame!


(I probably won't qualify for a subsidy, but it is fun to think about a bunch of reporters filming my wastrel ways all day...)

 

[pb4uski]

The ironic part, is if I do nothing - no LTCG or Roth conversions - we would be eligible for Medicaid ("free" so-so medical care provided by the government) and would pay zero in income taxes because we would essentially be living off of savings and our taxable account income is mostly qualified dividends.

So LTCG and/or Roth conversions result in us to paying for health insurance (even if subsidized), state income taxes and getting less government benefits than I would otherwise. So why would society condemn my voluntarily paying more tax and taking less government benefits than I would if I did nothing?

 

[steelyman]

It might be a good day to turn off the news.

 

[M Paquette]

It might be a good day to turn off the news.

This!

DW is already being bombarded with questions from her parents about what we'll do if... (Existing policy is cancelled as of Dec 31, 2013. That's a done deal. I don't even want to THINK about going through underwriting again.)

I need a case of meds now. "Angry B@stard" might be a good choice...

 

[pb4uski]

What is frustrating to me is even putting the implications of a shutdown aside, I think delaying Obamacare for a year or altogether now would be more disruptive than leaving it in place. Health insurers would need to scramble to price the extension of existing plans or create new plans, small businesses that have made plans would need to change them, and probably a lot of implications I can't think of. So while I'm not a fan of the ACA, to try to delay or get rid of it at this late stage would probably cause more problems than it would solve.

 

[MichaelB]

Why don't we get back on topic and to T-Al's original question, which is withdrawal strategies.

 

[ripper1]

But that is bound to happen. They made Obamacare means-tested via income and not net worth. So you are going to have cases of high net worth and low income people that will get Obamacare subsidies. Besides, the entire thread called "Withdrawal Strategies With Obamacare" seems like all about a 'engineered' MAGI.

Net worth also should be part of the means-tested. Does it seem fair for a retired couple making just over 4x poverty to be paying way more than someone who is worth a couple of million who can control their income.

 

[NoMoreJob]

Net worth also should be part of the means-tested. Does it seem fair for a retired couple making just over 4x poverty to be paying way more than someone who is worth a couple of million who can control their income.

Well let's think about that.

Let's say that the couple making just over 400% derives that income from pensions.

A 'millionaire' couple living off their investments and withdrawing a 'safe' 4% per year would require around $1.5 million. Since both couples must be relatively young or they would be on Medicare, the 'safe' withdrawal rate would likely be closer to 3% which would require around $2 million.

The 'millionaire' couple carries much more risk since their cash flow is not guaranteed and likely subject to the whims stock and bond markets.

So I don't know, maybe it's not so unfair after all.

 

[Rustward]

Well let's think about that.

Let's say that the couple making just over 400% derives that income from pensions.

A 'millionaire' couple living off their investments and withdrawing a 'safe' 4% per year would require around $1.5 million. Since both couples must be relatively young or they would be on Medicare, the 'safe' withdrawal rate would likely be closer to 3% which would require around $2 million.

The 'millionaire' couple carries much more risk since their cash flow is not guaranteed and likely subject to the whims stock and bond markets.

So I don't know, maybe it's not so unfair after all.

I am not going to directly vote on this one way or the other, but some of the millionaires may have made it by taking substantially more risk and working a hell of a lot harder. There is no such thing as total equity for all.

 

[Telly]

Back on the OT about Withdrawal Strategies...

We presently have a group plan through DW's employer. Not cheap, but a heck of a lot better than private individual insurance (been there, done that, ouch!). As long as DW works till age 65, which she wants to, we're set for insurance coverage. Unless something happens to prevent this, never say never. So ACA offers the first hope for a "Plan B" for us.

I took a quick look at our 2012 tax return, if I subtract out DW's wages, our AGI would be well below 15K! Sounds good? I don't think so. Seems we would have to have our AGI equal to or exceed the FPL for two people (I don't have an exact FPL $ for that) to qualify to use ACA. Otherwise, we fit into the hole above Medicaid (no expanded Medicaid here). Medicaid is obviously out anyway, due to assets

So for ACA to work as a possible Plan B, we would have to boost our AGI!
Seems someone here was talking about that recently, but I cannot find the thread, and at the time that I read it, I didn't understand. I have gotten a bit smarter in the last few days on ACA, now I understand.
We could raise our AGI by doing IRA to Roth conversions.

Does anyone know the FPL dollar amount for two people?
Anyone else in this bottom-end category, or thinking of it for a Plan B if you lose your present wages income and group insurance?

 

[NoMoreJob]

Does anyone know the FPL dollar amount for two people?

Here you go.....

http://www.medicaid.gov/Medicaid-CH...wnloads/2013-Federal-Poverty-level-charts.pdf

 

[Telly]

Here you go.....

http://www.medicaid.gov/Medicaid-CH...wnloads/2013-Federal-Poverty-level-charts.pdf

Thanks! Now I've got numbers I can play with.

 

[NoMoreJob]

Otherwise, we fit into the hole above Medicaid (no expanded Medicaid here). Medicaid is obviously out anyway, due to assets

First, the asset test will likely no longer apply to you. Read this...

Understanding Obamacare: How will asset limits for Medicaid change? | syracuse.com

And second, I don't know what you're referring to when you allude to the "hole" above Medicaid. I know of no "hole." If your state has not expanded Medicaid then you will be eligible for premium subsidy above 133% FPL and Medicaid at or below 133%. If your state has expanded Medicaid to 138% FPL then you will qualify for subsidy above that level. That's my understanding anyway.

 

[Telly]

...........And second, I don't know what you're referring to when you allude to the "hole" above Medicaid. I know of no "hole." If your state has not expanded Medicaid then you will be eligible for premium subsidy above 133% FPL and Medicaid at or below 133%. If your state has expanded Medicaid to 138% FPL then you will qualify for subsidy above that level. That's my understanding anyway.

This: https://www.healthcare.gov/what-if-my-state-is-not-expanding-medicaid/#state=texas

Just a snip from it:

The U.S. Supreme Court later ruled that the Medicaid expansion is voluntary with states. As a result, some states are not expanding their Medicaid programs as of January 1, 2014.
Many adults in those states with incomes below 100% of the federal poverty level fall into a gap. Their incomes are too high to get Medicaid under their state’s current rules. But their incomes are too low to qualify for help buying coverage in the Marketplace.

Anyway, I really would not want to touch Medicaid unless due to some horrible event our circumstances crashed and burned and its ashes were scattered by the four winds hither and yon. Boosting AGI via Roth conversions to qualify for ACA sounds like a Plan B. Like most plan B's, rarely have to use them, and (knock on wood!), our vulnerability window is measured in years now, not a decade. But thanks for the info.

 

[MichaelB]

First, the asset test will likely no longer apply to you. Read this...

Understanding Obamacare: How will asset limits for Medicaid change? | syracuse.com

And second, I don't know what you're referring to when you allude to the "hole" above Medicaid. I know of no "hole." If your state has not expanded Medicaid then you will be eligible for premium subsidy above 133% FPL and Medicaid at or below 133%. If your state has expanded Medicaid to 138% FPL then you will qualify for subsidy above that level. That's my understanding anyway.

If your state did not approve the expanded Medicaid program, eligibility is subject to other conditions and limited to children, some elderly and disabled. Lower income people without disability are not eligible for Medicaid.

Here is a KFF summary of Medicaid expansion by state http://kff.org/health-reform/state-...nding-medicaid-under-the-affordable-care-act/

 

[landover]

If your state did not approve the expanded Medicaid program, eligibility is subject to other conditions and limited to children, some elderly and disabled. Lower income people without disability are not eligible for Medicaid.

Here is a KFF summary of Medicaid expansion by state Status of State Action on the Medicaid Expansion Decision, as of September 16, 2013 | The Henry J. Kaiser Family Foundation

I think a more pressing concern is how to get a minimum income, above the maximum medicaid income level if one is living in a state where Medicaid is not expanded. This may be true in a down year, now one need to estimate around mid-year if there is going to be enough income this year, if not then start looking for part-time job .

 

[NoMoreJob]

If your state did not approve the expanded Medicaid program, eligibility is subject to other conditions and limited to children, some elderly and disabled. Lower income people without disability are not eligible for Medicaid.

Here is a KFF summary of Medicaid expansion by state Status of State Action on the Medicaid Expansion Decision, as of September 16, 2013 | The Henry J. Kaiser Family Foundation

Sorry for the misinformation and thank you for correcting it.