Affordable Healthcare Act and Medicaid

[Zantastic]

The question has been brought up a few times here, but I don’t believe that anyone actually had the answer to this question: If your income is low enough to qualify for Medicaid, do you have the option of buying a regular policy through the exchange and still get a subsidy? None of my searches have provided the answer. I'm currently living off of savings so I have a very low income but I don’t want to go the Medicaid route even though it would save money. I can do some Roth conversions to get over the income threshold, but first I'd have to convert my 401K to an IRA and I'm pretty happy with my 401K where it is with my former employer.

[MichaelB]

I'm guessing no - but it is only a guess. All exchanges will first determine eligibility, and if income is below the threshold it will probably redirect the application to the qualifying category.

[plex]

I can answer that.

It depends on what state you are in. Unlike with electing the type of exchange they will have, a state may put off the decision of whether or not to expand Medicaid. If they have not decided, until they do, in effect medicaid will not be expanded in that state. In any state that has not expanded medicaid, falling between 100-133% of FPV will qualify the household for the highest of the subsidies for the exchanges, if the household is at 99% or lower, they get nothing, and are basically left under the old system (in other words, nothing until your are old or on disability).

It is easier to list the states that are not participating, if you have no way of controlling your income and you need the subsidies, you simply cannot live in these states:

Never will participate: Idaho, South Dakota, Oklahoma, Texas, Louisiana, Alabama, Mississippi, Georgia, South Carolina, North Carolina, Virginia, Pennsylvania, Wisconsin (13)

Might not participate: Utah, Wyoming, Nebraska, Iowa, Kansas, Indiana, Tennessee, West Virginia, New Jersey, Maine, Alaska (11)

[Marc]

Quote:

Originally Posted by plex I can answer that. It depends on what state you are in. Unlike with electing the type of exchange they will have, a state may put off the decision of whether or not to expand Medicaid. If they have not decided, until they do, in effect medicaid will not be expanded in that state. In any state that has not expanded medicaid, falling between 100-133% of FPV will qualify the household for the highest of the subsidies for the exchanges, if the household is at 99% or lower, they get nothing, and are basically left under the old system (in other words, nothing until your are old or on disability). It is easier to list the states that are not participating, if you have no way of controlling your income and you need the subsidies, you simply cannot live in these states: Never will participate: Idaho, South Dakota, Oklahoma, Texas, Louisiana, Alabama, Mississippi, Georgia, South Carolina, North Carolina, Virginia, Pennsylvania, Wisconsin (13) Might not participate: Utah, Wyoming, Nebraska, Iowa, Kansas, Indiana, Tennessee, West Virginia, New Jersey, Maine, Alaska (11)

I think you answered the wrong questions. Even if the states indicated (and I haven't verified the list) do not expand medicaid, that does not mean that you will not get subsidies if at 133 (or possibly 100)% ro 400% of poverty level. Even if a state doesn't set up an exchange, the subsidies are still available from a federally run exchange.

Marc

[plex]

Quote:

Originally Posted by Marc I think you answered the wrong questions. Even if the states indicated (and I haven't verified the list) do not expand medicaid, that does not mean that you will not get subsidies if at 133 (or possibly 100)% ro 400% of poverty level. Even if a state doesn't set up an exchange, the subsidies are still available from a federally run exchange. Marc

Right, if one is trying to avoid Medicaid, the situation is the reverse. Past 133%, the exchanges are available in all states. In states where medicaid is not expanded, it goes down further to 100% (see list above). I personally will be avoiding Medicaid, regardless of what state I end up in, it isn't terribly difficult to do with any combination of dividends, capital gains, roth conversions, and 72t's. However, it sounds like the OP will not be able to do that without converting his 401k, so his only option is going to be a 72t, and if that does not generate enough, and he does not have taxable investments, he simply isn't going to be able qualify for ACA with subsidies.

So, in other words, if he can get above 133% through 72t's and taxables, he does not need to do anything else. If he can only reach the 100-132% range, he actually needs to be in a state that will not be expanding Medicaid, convert to an IRA, and then a Roth. If he cannot get above 100% no matter what he does, he will be disqualified from the exchanges with subsidies, and if he also wants to avoid Medicaid, he needs to be prepared to spend all his income on non-subsidized health insurance (which obviously isn't a viable plan).

[ERhoosier]

Quote:

Originally Posted by plex I can answer that. It depends on what state you are in. Unlike with electing the type of exchange they will have, a state may put off the decision of whether or not to expand Medicaid. If they have not decided, until they do, in effect medicaid will not be expanded in that state. In any state that has not expanded medicaid, falling between 100-133% of FPV will qualify the household for the highest of the subsidies for the exchanges, if the household is at 99% or lower, they get nothing, and are basically left under the old system (in other words, nothing until your are old or on disability).

Not quite sure 'bout this. As I understand it ACA requires all states use specific MAGI calculation (IRS Code 36Bd2, or roughly AGI + tax-exempt int + dependents income +foreign income) for eligibility for subsidies & (apparently) Medicaid.

http://www.kff.org/healthreform/upload/8194.pdf

SCOTUS ruled states do not have to expand Medicaid to 133% of Fed poverty level, but I cannot find if they overturned ACA's requirement for uniform calculation of Medicaid eligibility.

[MichaelB]

Quote:

Originally Posted by ERhoosier SCOTUS ruled states do not have to expand Medicaid to 133% of Fed poverty level, but I cannot find if they overturned ACA's requirement for uniform calculation of Medicaid eligibility.

SCOTUS ruled the States are not required to implement, so they can continue with their current Medicaid eligibility rules if they choose.

[plex]

Quote:

Originally Posted by ERhoosier Not quite sure 'bout this. As I understand it ACA requires all states use specific MAGI calculation (IRS Code 36Bd2, or roughly AGI + tax-exempt int + dependents income +foreign income) for eligibility for subsidies & (apparently) Medicaid. http://www.kff.org/healthreform/upload/8194.pdf SCOTUS ruled states do not have to expand Medicaid to 133% of Fed poverty level, but I cannot find if they overturned ACA's requirement for uniform calculation of Medicaid eligibility.

What you cited doesn't appear to address the point however of what happens when a state chooses not to expand Medicaid.

From several sources that I have read, the Supreme Court ruling basically made it optional for a state to expand Medicaid or not. From further reading, it became evident that a partial expansion was sought, by states such as Indiana and Wisconsin, but this was not possible, so a state must either choose to go all in, or stay out.

The sources further state that should a stay stay out, anyone under the poverty line will stay uninsured. For example:

The Supreme Court surprise: Medicaid ruling could reduce coverage

Relevant part:

"What the Supreme Court said today was: States do not have to participate in that part of the law. If they want to leave their Medicaid program as is, there will not be a penalty. What was once a guaranteed insurance expansion is now left to the discretion of the states."

[photoguy]

Thanks for bringing up this issue. It was something that I had been thinking about but hadn't looked at in depth. I guess this will mean a lot more earnings management and perhaps even tax gain harvesting to make sure income for the year exceeds 133% of FPL (for a couple, this is $20,628).

Given that the credits are advanceable, I wonder what will happen for folks who are eligible for a subsidy but then loose their job and have their income fall under the 133% limit? Is the government really going to revoke their subsidy?

[ERhoosier]

Quote:

Originally Posted by MichaelB SCOTUS ruled the States are not required to implement, so they can continue with their current Medicaid eligibility rules if they choose.

WOW. Sounds like potential to really hurt many folks right near poverty line in some States

[bUU]

Quote:

Originally Posted by plex Never will participate: Idaho, South Dakota, Oklahoma, Texas, Louisiana, Alabama, Mississippi, Georgia, South Carolina, North Carolina, Virginia, Pennsylvania, Wisconsin (13)

I wonder whether many of these states will swap out of these categories later, once the politics of the issue changes within their states:

February 24, 2013 - Texans petition governor, lawmakers to join Medicaid expansion | Amarillo Globe-News

February 18, 2013 - SD legislators to review Medicaid expansion | The Daily Republic

February 22, 2013 - Virginia Medicaid expansion deal in works | The Washington Post

[Zantastic]

Thanks for everyone's input. I'm in California which is expanding Medicaid.

There probably aren't too many people in my position (low income, but not wanting the Medicaid freebie), so the politicians probably haven't given this issue much thought. But wouldn't it make a lot more sense to be able to opt out of Medicaid but still be eligible to purchase insurance through the exchanges?

[samclem]

Quote:

Originally Posted by Zantastic But wouldn't it make a lot more sense to be able to opt out of Medicaid but still be eligible to purchase insurance through the exchanges?

Not if a person can be put onto Medicaid for less money. Sure, you might wait a LONG time to see a doctor and you might not like what happens when you see her, but that's not Medicaid's problem.

[MichaelB]

Quote:

Originally Posted by Zantastic Thanks for everyone's input. I'm in California which is expanding Medicaid. There probably aren't too many people in my position (low income, but not wanting the Medicaid freebie), so the politicians probably haven't given this issue much thought. But wouldn't it make a lot more sense to be able to opt out of Medicaid but still be eligible to purchase insurance through the exchanges?

Access to all of the health care options will be driven by eligibility. If you are asking for access to an option for which you do not meet the eligibility criteria, you should probably expect a difficult time.

[Zantastic]

It hadn't occurred to me that Medicaid would cost the government less money than a subsidized individual plan. Interesting.

I follow the rules, so I have no expectation of anything other than what the Affordable Care Act provides. And the way I understand it now, I just need to plan my income carefully to make sure I don't fall into the Medicaid category.

[bUU]

Quote:

Originally Posted by plex Might not participate: Utah, Wyoming, Nebraska, Iowa, Kansas, Indiana, Tennessee, West Virginia, New Jersey, Maine, Alaska (11)

Another update:

February 26, 2013 - Christie Says He Will Accept U.S. Money to Expand Medicaid | NY Times

[John Galt III]

Just to be clear about what people mean by the words "expanding medicaid". Here in Pa, I take it to mean that one's income would be allowed to be some limited amount higher than the current $7,200 per year max, and also that the asset test would be done away with.


Since Pa so far is opting out of the "medicaid expansion", I would have to look for more annual income than I currently have, to get up to the minimum income needed to get accepted into an exchange plan (with a nice fat subsidy).

I would not qualify for Pa's existing "unexpanded medicaid" due to having assets and slightly too much annual income.

[calwatch]

Buried in the ACA regulations it describes how repayment is to occur for someone making under the 100% amount, basically calling for a maximum $300/$600 repayment provided the decision to declare a subsidy was made and accepted by the exchange.

http://www.gpo.gov/fdsys/pkg/FR-2012...2012-12421.pdf

1.36B-2(b)(6)

(6) Special rule for taxpayers with
household income below 100 percent of
the Federal poverty line for the taxable
year. A taxpayer (other than a taxpayer
described in paragraph (b)(5) of this
section) whose household income for a
taxable year is less than 100 percent of
the Federal poverty line for the
taxpayer’s family size is treated as an
applicable taxpayer if—
(i) The taxpayer or a family member
enrolls in a qualified health plan
through an Exchange;
(ii) An Exchange estimates at the time
of enrollment that the taxpayer’s
household income will be between 100
and 400 percent of the Federal poverty
line for the taxable year;
(iii) Advance credit payments are
authorized and paid for one or more
months during the taxable year; and
(iv) The taxpayer would be an
applicable taxpayer if the taxpayer’s
household income for the taxable year
was between 100 and 400 percent of the
Federal poverty line for the taxpayer’s
family size.
(7) Computation of premium
assistance amounts for taxpayers with
household income below 100 percent of
the Federal poverty line. If a taxpayer is
treated as an applicable taxpayer under
paragraph (b)(5) or (b)(6) of this section,
the taxpayer’s actual household income
for the taxable year is used to compute
the premium assistance amounts under
§ 1.36B–3(d).

[...]
§ 1.36B–3 Computing the premium
assistance credit amount.

[...]

(d) Premium assistance amount. The
premium assistance amount for a
coverage month is the lesser of—
(1) The premiums for the month for
one or more qualified health plans in
which a taxpayer or a member of the
taxpayer’s family enrolls; or
(2) The excess of the adjusted
monthly premium for the applicable
benchmark plan over 1/12 of the
product of a taxpayer’s household
income and the applicable percentage
for the taxable year.


This refers to a chart for which the maximum allowable premium for someone under 133% of FPL is 2.0% of "household income".

If this did not apply, then the other trigger would kick in under the regulation for maximum repayment allowed by income bracket, which again has no minimum.

§ 1.36B–4 Reconciling the premium tax
credit with advance credit payments.

(3) Limitation on additional tax—(i)
In general. The additional tax imposed
under paragraph (a)(1) of this section on
a taxpayer whose household income is
less than 400 percent of the Federal
poverty line is limited to the amounts
provided in the table in paragraph
(a)(3)(ii) of this section (or successor
tables). For taxable years beginning after
December 31, 2014, the limitation
amounts may be adjusted in published
guidance, see § 601.601(d)(2) of this
chapter, to reflect changes in the
consumer price index.

Below is the table that shows the maximum repayment $300 for single taxpayers ("subject under 1(c)") and $600 for all others.

[Martha]

Quote:

Originally Posted by ERhoosier WOW. Sounds like potential to really hurt many folks right near poverty line in some States

Yup. Several million people get nothing. And the states with the greatest populations of poor and uninsured people were the states that tended to reject the expansion.

[Birdie Num Nums]

Quote:

Originally Posted by Zantastic It hadn't occurred to me that Medicaid would cost the government less money than a subsidized individual plan. Interesting. I follow the rules, so I have no expectation of anything other than what the Affordable Care Act provides. And the way I understand it now, I just need to plan my income carefully to make sure I don't fall into the Medicaid category.

I'm in a similar boat. Low interest/dividends from savings were my sole source of taxable income this year, which would put me in the Medicaid category in 2014 (assuming state doesn't disqualify me because of "large" saved assets). But I'd rather get a subsidized individual policy than Medicaid. Maybe I'll be planning for Christmas 2014 part-time employment to raise my income accordingly.