Getting an ACA Subsidy

[RunningBum]

It seems that the original poster disappeared two days and thirty posts ago, after posting this:



I'm still not sure whether he understands the significance of a Roth conversion or its impact on future tax liabilities.

Well, if he comes back, all he has to do is read (and understand) the posts that pointed this out. Doesn't matter to me if he does or not.

 

[sengsational]

I know the OP came, called us a "typical forum" and left (lol), but I had a point to make that I didn't see made....I needed to keep above 250% FPL to stay out of Medicaid range. If I fell below that, then in my geography at least, you turn into a second class healthcare citizen (not too many docs accept it), and you need to get approved by the state, and they can reject you. So I would stress to anyone trying to understand this puzzle that managing income is essential for your health, and the health of your bank account.

 

[jim584672]

I know the OP came, called us a "typical forum" and left (lol), but I had a point to make that I didn't see made....I needed to keep above 250% FPL to stay out of Medicaid range. If I fell below that, then in my geography at least, you turn into a second class healthcare citizen (not too many docs accept it), and you need to get approved by the state, and they can reject you. So I would stress to anyone trying to understand this puzzle that managing income is essential for your health, and the health of your bank account.

I am puzzled by this. Why would you need >250 FPL to stay out of Medicaid, which is between 0 to 138 FPL? >250 outs you outside of any cost sharing in the Silver plans.

 

[Fermion]

Cost sharing is not Medicaid. To the doctor or hospital, your silver plan without cost sharing pays them exactly the same as a silver plan with cost sharing.

Increasing your income just to make sure you don't qualify for cost sharing is...how do I put this nicely? Stupid.

 

[sengsational]

I am puzzled by this. Why would you need >250 FPL to stay out of Medicaid, which is between 0 to 138 FPL? >250 outs you outside of any cost sharing in the Silver plans.

I don't know why. It didn't make any sense to me either. The statement "I needed to keep above 250% FPL to stay out of Medicaid range" was my personal experience. That's why I stated it that way, rather than in a general way. To shed more light on my experience...I went through the sign-up process on the federal exchange many, many, MANY times, only to get "snagged" by Medicaid. There's supposed to be a breakpoint at various places, including 230%, I think. I tried them all. And the only way I could keep my family and I out of Medicaid range was to go above 250%.

Folks like to point out how awesome a silver plan with cost sharing is. For me, though, cost sharing doesn't do much since the three of us might have a total of four or five doctor visits a year. Even if these visits were 100% free, that doesn't make up the difference between the cost of a Bronze plan and a Silver. That's not to say I won't revisit the analysis every enrollment period! Basically I'm buying the max out of pocket, and the negotiated rates, and I know that's not true for many that use more health care services.

I think what makes it confusing to talk about is that in different states, with different health insurance needs, there are so many variables that generalization can be problematic.

 

[jim584672]

I think I know what happened. Because you have children they qualified for Medicaid/CHIP at a FPL over 138. You would still go into a metal plan.

BTW, the sweet spot on Silvers is <200 FPL, anything more and cost sharing is greatly reduced.

 

[Texas Proud]

I don't know why. It didn't make any sense to me either. The statement "I needed to keep above 250% FPL to stay out of Medicaid range" was my personal experience. That's why I stated it that way, rather than in a general way. To shed more light on my experience...I went through the sign-up process on the federal exchange many, many, MANY times, only to get "snagged" by Medicaid. There's supposed to be a breakpoint at various places, including 230%, I think. I tried them all. And the only way I could keep my family and I out of Medicaid range was to go above 250%.

Folks like to point out how awesome a silver plan with cost sharing is. For me, though, cost sharing doesn't do much since the three of us might have a total of four or five doctor visits a year. Even if these visits were 100% free, that doesn't make up the difference between the cost of a Bronze plan and a Silver. That's not to say I won't revisit the analysis every enrollment period! Basically I'm buying the max out of pocket, and the negotiated rates, and I know that's not true for many that use more health care services.

I think what makes it confusing to talk about is that in different states, with different health insurance needs, there are so many variables that generalization can be problematic.

I did not put any income down on my sign up and will try and get the money back when I file tax returns (with all the caveats of a SC decision)...

But, I agree with you on the difference in cost of a Silver and Bronze... the cost for me and my family is between $400 to over $1000 per month... I can buy a lot of doctor visits for $400 per month...

Now, if thing go 'pear shaped', then it might have been a bad decision.... but that would take two of us hitting max deductible...

 

[papadad111]

Very true. Best to study your HI plan options VERY carefully before pulling the FIRE trigger. Since Medicaid is state-based program, most do not generally provide out of state coverage. In many regions most ACA plans, not just the cheaper ones, have limited networks which often do not include out of area coverage except for true emergencies. Main reason I'm still w#rking is for access to decent HI, IOW a reasonably broad network & true nation-wide coverage. Under most any ACA Plan offered in my region, if I were to need urgent but not "emergency" care while traveling/visiting I would be stuck paying 100% of the bill. Almost all ACA plans in my region offer NO out of network coverage, and the few that do have OON OOPmax (HSA family plans) of $40-60K!!! One goal of ACA was to offer a choice of nationwide plans in each region, but that is sadly still not the case for many. Wish that changes in my region for 2016 but I'm not hopeful based on early press from state insurance commission

Are u in Indiana and if so where approximately in the state ?

 

[GTFan]

Not even impoverishment will get you care in Texas if you are a childless adult 18-64 (the undeserving poor), since Texas did not expand Medicaid. Texas doesn't even have a "medically needy" exception for this group. So if a 52 year old spends down all assets to $0, Texas will pay nothing for care. The person would have to be deemed "disabled" and have income under 15% FPL with almost no assets to get coverage. In the 30 states that expanded, the only test is a <138 FPL income test for childless adults 18-64.

Not to mention that in many states Medicaid is not accepted by a lot of providers because they're losing money on those patients. In GA (my state) Medicaid is only useful to the truly poor and then only if they also have children because there's no way you're getting it otherwise. Not that you'd want to.

Managing income to stay below 200% FPL and then get a cost-shared Silver is the way to go as you aptly point out, assuming you want the best coverage at the lowest cost. Many folks here are happy with a Bronze or catastrophic plan because they're healthy and want more income from their port, and that's ok too.

 

[DonL]

It seems that the original poster disappeared two days and thirty posts ago, after posting this:

Maybe if any of the posts after that had anything to do with the question I would check more often

And I wasn't interested in discussing Roth IRAs

 

[Murf2]

Well, I'm learning from you guys even if the OP isn't.

Could someone please explain the "cost sharing" you are referring to?

Thanks,
Murf

 

[brewer12345]

Well, I'm learning from you guys even if the OP isn't.

Could someone please explain the "cost sharing" you are referring to?

Thanks,
Murf

Basically if your MAGI is under 250% FPL you get goodies on top of premium subsidies. So instead of a $5k deductible it might be $2k or $200 depending on how low your MAGI is.

 

[MRG]

+1
Insted of a 5k deductable mine is 1k, instead of $20 copay mine is $5, both due to cost sharing. Instead of paying $700 a month premium I pay $350, this part is subsidies. So if you can manage a under 250% FPL there may be a benefit.

Of course one must look at both the near term savings of subsidies and cost sharing vs. the long term tax benefits of doing IRA rollovers and Roth conversions. I think that what many people have been trying to communicate.

 

[Murf2]

Thanks guys! Sorry if I'm derailing the OP's thread but if you could indulge me at bit longer.

How/when is the eligibility for cost sharing determined? Is it something that I would need to track and work for or is it fairly automatic in it's administration?

"Of course one must look at both the near term savings of subsidies and cost sharing vs. the long term tax benefits of doing IRA rollovers and Roth conversions. I think that what many people have been trying to communicate."

I assume this refers to the Roth conversion being taxable and thus included in your MAGI, correct? Only my IRA accounts would be subject to RMD and not my Roth ira, right?

So in my case, If I was able to live at 250 FPL using funds from my taxable accounts which are mostly LTG. I would only be able to do Roth conversions up to a MAGI of <250 FPL total, correct?

We will most likely never be above the 15% bracket so I assume I don't really need to worry much about RMD. Is this correct?

Finally, could anyone point me to good resources regarding specifics of retirement planning for lower net worth people. It seems most of the info I can find is aimed at people with higher net worth than I.

Thanks again!
Murf

 

[MichaelB]

Thanks guys! Sorry if I'm derailing the OP's thread but if you could indulge me at bit longer.

Don't worry about it. The OP started another thread and then announced he was going to look in another forum. (see here) Ask away.

Here are some links that will help you
How MAGI is determined http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pd and http://www.fas.org/sgp/crs/misc/R41997.pdf

Premium credits and cost sharing are discussed here http://www.fas.org/sgp/crs/misc/R41137.pdf The entire paper is useful, cost sharing is discussed beginning page 14.

 

[brewer12345]

On my state's exchange, when I plugged in different MAGI numbers for policy and premium estimates I got to see different premium subsidy amounts and different OOP/deductible/copays depending on my forecast income level when looking at the same policy. I imagine that you could do the same with the national exchange or your state's exchange.


The comment about trade-offs will really depend on your personal financial circumstances. I am 41, but I have such a large amount of my assets in traditional IRAs that I need to be cognizant that every year I pig out on subsidies is another year I am making a potential RMD tax bomb bigger. If you don't have a ton of traditional IRA assets, this will not be a consideration for you.

 

[Tom52]

Just heard on the news, SC rules 6 to 3 to keep Obamacare subsidies. Nice to hear since I take advantage of them.

 

[Hermit]

So anyone got any ideas on how DD can finagle the system so she gets a subsidy? She is single, 25, and making about 35k per year. We plugged her numbers into the state calculator and she is entitled to $4 subsidy. The 35k is barely enough for her to rent an apartment - but only if she has a roommate!

 

[papadad111]

So anyone got any ideas on how DD can finagle the system so she gets a subsidy? She is single, 25, and making about 35k per year. We plugged her numbers into the state calculator and she is entitled to $4 subsidy. The 35k is barely enough for her to rent an apartment - but only if she has a roommate!

Be happy you raised a productive member of society and doesn't need handouts !! Her earnings will increase as she gets older. At 25 she could

1. target a career / company that offers health insurance, or

2. pick up a side hustle to earn a bit more to cover the cost of monthly premiums.

I can't imagine premiums are more than $300 bucks/ month for a 25 year old - she could earn that with a part time weekend job - baby sitting, dog walking, selling stuff on eBay.

I'd also review her monthly budget - we're talking 50-70 bucks a week ! She lives at home now ?

What does she spend 2500 (approx take home) per month -- on what ?

Continue to teach our kids to fish. Not wait in line for a fish ....

 

[Ian S]

So anyone got any ideas on how DD can finagle the system so she gets a subsidy? She is single, 25, and making about 35k per year. We plugged her numbers into the state calculator and she is entitled to $4 subsidy. The 35k is barely enough for her to rent an apartment - but only if she has a roommate!

MAGI is the key. Can she contribute to an IRA or 401k? That would reduce MAGI and increase the subsidy.

 

[NW-Bound]

Be happy you raised a productive member of society and doesn't need handouts !! Her earnings will increase as she gets older. At 25 she could

1. target a career / company that offers health insurance...

+1

... I can't imagine premiums are more than $300 bucks/ month for a 25 year old - she could earn that with a part time weekend job - baby sitting, dog walking, selling stuff on eBay...

Premiums for young people are very low. When we dropped our children who were in their 20s from our pre-ACA policy, the premium dropped something like $50-75 for each of them. Granted, our deductible was high at $10K/year, but young people only need insurance for catastrophic reasons, unlike geezers on this forum who need all kinds of health care.

So, if my children did not have good employer group insurance like they have now, and if they needed help, I would talk them into buying a high-deductible plan, then help them with paying that deductible if they get that sick to need the health care.

 

[Hermit]

MAGI is the key. Can she contribute to an IRA or 401k? That would reduce MAGI and increase the subsidy.

That is an interesting thought. She contributes to a Roth IRA. Off the top of my head, I would think it would serve her better in the long run to continue with the Roth rather than contributing to regular IRA for a greater subsidy.

 

[NW-Bound]

Premiums for young people are very low. When we dropped our children who were in their 20s from our pre-ACA policy, the premium dropped something like $50-75 for each of them. Granted, our deductible was high at $10K/year...

Oops. I forgot that one feature of ACA is that it raises the premium for youngsters to pay for geezers' coverage. Scratch what I wrote.

 

[bingybear]

That is an interesting thought. She contributes to a Roth IRA. Off the top of my head, I would think it would serve her better in the long run to continue with the Roth rather than contributing to regular IRA for a greater subsidy.

Contribute to an HSA will help... Roth... no. For the younger the subsidy might not be as good as the underlying premium is lower.

 

[pb4uski]

So anyone got any ideas on how DD can finagle the system so she gets a subsidy? She is single, 25, and making about 35k per year. We plugged her numbers into the state calculator and she is entitled to $4 subsidy. The 35k is barely enough for her to rent an apartment - but only if she has a roommate!

She can get a bigger subsidy but contributing to a 401k or deductible IRA or HSA but none of those really work since she needs the money for living expenses.

Has she shopped for a catastrophic policy? In most states they are less expensive but are more bare-bone coverage, but still would provide some preventative care and protect her from a huge medical bill if she had a serious illness.

Having a 26 year old, I insist that he have health insurance but more for my benefit. I would not want to be in a situation where he has a serious medical issue and doesn't have insurance and I need to make a tough decisions whether or not to foot the bill to get him the care he needs. Actually, I'd be willing to pay for the HI to protect me from that situation (but don't tell him that )