Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 02-07-2014, 04:23 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
Quote:
Originally Posted by NoOneGetsIt View Post
So if I don't have a pension and my income comes from ROTH or Cash, will I have to try to find income every year until I die to stay out of medicaid? This is the one stress I have right now keeping me from retiring...ugh!
NO.

You do not have to be on Medicaid regardless of your MAGI income as long as you have resources to pay the non-subsidized premiums.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-07-2014, 04:27 PM   #22
Recycles dryer sheets
NoMoreJob's Avatar
 
Join Date: Feb 2012
Posts: 410
Quote:
Originally Posted by gozer View Post
You can arbitrarily generate income by doing partial roth conversions. That's how I will keep qualifying for subsidies after this year. At least until our pensions actually kick in. Then we have enough income.

Research this. It may very well be a win-win in that you will be doing Roth conversions while in a very low tax bracket - very possibly lower than when you would otherwise take the money due to RMDs. It will also reduce your RMDs because your traditional IRA will be smaller by the amount of the conversions you do.
NoMoreJob is offline   Reply With Quote
Old 02-07-2014, 04:42 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Jan 2014
Posts: 1,174
If you do not wish to be on Medicaid and cannot generate enough qualifying income, over-estimate your income on the state/federal healthcare exchange to qualify for a private plan with ACA premium and cost-sharing subsidy. Then pay the over-estimation penalty listed in Table 1 on page 2 at the website below.

http://kaiserfamilyfoundation.files....13/01/8154.pdf
MBSC is offline   Reply With Quote
Old 02-07-2014, 08:23 PM   #24
Full time employment: Posting here.
 
Join Date: Jul 2013
Location: San Diego
Posts: 712
Quote:
Originally Posted by SCGamecock View Post
If you do not wish to be on Medicaid and cannot generate enough qualifying income, over-estimate your income on the state/federal healthcare exchange to qualify for a private plan with ACA premium and cost-sharing subsidy. Then pay the over-estimation penalty listed in Table 1 on page 2 at the website below.

http://kaiserfamilyfoundation.files....13/01/8154.pdf
The table you have indicated gives penalties for under estimation of income, not over estimation.
AllDone is offline   Reply With Quote
Old 02-08-2014, 07:08 AM   #25
Thinks s/he gets paid by the post
 
Join Date: Jan 2014
Posts: 1,174
Quote:
Originally Posted by AllDone View Post
The table you have indicated gives penalties for under estimation of income, not over estimation.
For the OP, the advance payment (subsidy) will be greater than the amount of subsidy ultimately entitled to upon reconciliation ($0) because the individual qualifies for Medicaid. The total subsidy does not have to be repaid, only the amount in the table. The amount in the table may be less than going outside the marketplace and purchasing a non-subsidized plan.
MBSC is offline   Reply With Quote
Old 02-08-2014, 08:09 AM   #26
Full time employment: Posting here.
 
Join Date: Jul 2013
Location: San Diego
Posts: 712
This article from a neutral website, WebMD, explains the Medicaid work around:

How Poor Might Qualify For Obamacare Subsidies In States That Don't Expand Medicaid - WebMD

I used to work for a very large primary care practice in a high income county. We contracted with MediCal (CA Medicaid) to take a certain number of patients per year. They weren't treated any differently from the Medicare, Medicare Advantage, or commercial patients. If your income is low enough to qualify for Medicaid, then sign up!
AllDone is offline   Reply With Quote
Old 02-08-2014, 08:49 AM   #27
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by AllDone View Post
This article from a neutral website, WebMD, explains the Medicaid work around:

How Poor Might Qualify For Obamacare Subsidies In States That Don't Expand Medicaid - WebMD

I used to work for a very large primary care practice in a high income county. We contracted with MediCal (CA Medicaid) to take a certain number of patients per year. They weren't treated any differently from the Medicare, Medicare Advantage, or commercial patients. If your income is low enough to qualify for Medicaid, then sign up!
Don't some states do means based testing for medicaid? Or is that a myth-conception.
__________________
Retired Jan 2014 at 48.
gozer is offline   Reply With Quote
Old 02-08-2014, 11:53 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
Quote:
Originally Posted by gozer View Post
Don't some states do means based testing for medicaid? Or is that a myth-conception.
They do, but I believe the states that expanded Medicaid will no longer be able to do that. States that did not expand Medicaid still might.

Also, states are required to seek reimbursement from estates of individuals who received Medicaid benefits at age 55 and older. (It's not required for individuals receiving benefits under age 55.) ACA didn't change this aspect of the law. So even if you have almost no income and can go on Medicaid, if you have a million dollars in the bank and receive Medicaid benefits at age 55 and older, the state will claim a chunk of that when you kick the bucket to recoup its costs.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 02-08-2014, 02:56 PM   #29
Full time employment: Posting here.
 
Join Date: Jul 2013
Location: San Diego
Posts: 712
Quote:
Originally Posted by gozer View Post
Don't some states do means based testing for medicaid? Or is that a myth-conception.
. All states still do means testing, but the ones that accepted expansion, now provide Medicaid to people who make up to 138% of FPL and they no longer can require other special conditions. Prior to Medicaid expansion, many states required Medicaid enrollees to also meet special requirements such as pregnancy, parents of minor children, chronic disability, etc. as well as meet varying levels of income and asset limits.

Note, also, that subsidies begin at 100% of FPL, so if you fall in the 100-138% FPL range, you have your choice in expansion states, but Medicaid will be the cheapest option for you.
AllDone is offline   Reply With Quote
Old 02-08-2014, 03:16 PM   #30
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
No expert here but I think in the Medicaid expansion states the elimination of asset tests only applies to healthcare insurance. Nursing home, other LTC and assistance programs are still subject to asset limits.
MichaelB is online now   Reply With Quote
Old 02-08-2014, 09:29 PM   #31
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 10,656
Quote:
Originally Posted by gozer View Post
Until you turn 65 and get on Medicare, then none of this matters anymore. I just retired last week. I'm 48, so I have about 17 years of this nonsense. 7 years trying to keep my income high enough to get subsidies, but low enough to minimize/eliminate federal taxes. Then 10 years of trying to minimize income enough to still get subsidies, while converting as much IRA to roth as I can while staying in the 15% income tax bracket so that my capital gains rate is 0.

I guess it helps if you sort of enjoy the game.
Can you tell me more about holding off Roth conversions for 7 years?
sengsational is offline   Reply With Quote
Old 02-09-2014, 06:58 AM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,318
When you think about it this dilemma is not a bad one to have. It used to be early ERs worst fear was being locked out of health insurance. Now they are worried about the stigma of accepting free HI instead of just getting a subsidy.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
donheff is offline   Reply With Quote
Old 02-09-2014, 09:14 AM   #33
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,796
Confusingly, "means testing" seems to be used 2 ways in the press- testing income & testing assets. IIRC, Medicaid is (& almost always has been) income tested but only some states still have asset limits. It has been argued that since so few have large assets but minimal income, asset-testing/auditing Medicaid recipients is not cost-effective (EXCEPT for LTC issues).
Special conditions have historically been imposed by some states as part of Medicaid eligibility, but chronic disability per se is generally a Medicare issue. With certain combinations of age, disability, and low income, some folks qualify for both Medicare & Medicaid (as primary & secondary HI).
ERhoosier is offline   Reply With Quote
Old 02-09-2014, 12:34 PM   #34
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by sengsational View Post
Can you tell me more about holding off Roth conversions for 7 years?
In the almost 7 years before our pensions kick in, we can easily pay nothing in federal income taxes. This is while enjoying a fairly comfortable life style living off cash, bonds and using up the carry forward loss from the great recession when we sell stocks from our taxable portfolio. We could do IRA to Roth IRA conversions while trying to stay in or near that tax free mode. Prior to ACA, this seemed the obvious choice to me.

However, healthcare subsidies under ACA have become a third variable that must be considered. We get 14K in tax-free muni bond fund interest per year and some capital gains distributions from funds that we can't easily control. So we have some things that already qualify as MAGI. This means our IRA to Roth IRA conversions will be further minimized if we want to maximize healthcare subsidies under ACA. Convert too much and healthcare premiums go up and/or I lose cost sharing subsidies. 10K in premium subsidy and up to another 0-12K in cost sharing subsidies depending on actual medical usage in the given year.

So the game, or linear algebra problem for the math inclined, becomes at what point do we convert just enough IRA to Roth IRA to maximize tax free money later, while not losing healthcare subsidies or paying too much taxes now. Since future tax rates and value of cost sharing subsidies are unknown, there is some guess work in all this.
__________________
Retired Jan 2014 at 48.
gozer is offline   Reply With Quote
Old 02-11-2014, 09:49 AM   #35
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 10,656
I wish I remembered enough about my undergrad to model the decision using linear programming. Might be a fun side-project. But thanks for calling out the pension event...one which I don't have..or actually do have, but its small enough to be ignored for now. Although I don't have as many things providing income, we're on the same page with spending after tax funds and controlling income and the associated taxes. Nice to know I'm not the only one with carry forward losses as far as the eye can see, hehe!
sengsational is offline   Reply With Quote
Old 02-12-2014, 02:25 PM   #36
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by sengsational View Post
I wish I remembered enough about my undergrad to model the decision using linear programming. Might be a fun side-project. But thanks for calling out the pension event...one which I don't have..or actually do have, but its small enough to be ignored for now. Although I don't have as many things providing income, we're on the same page with spending after tax funds and controlling income and the associated taxes. Nice to know I'm not the only one with carry forward losses as far as the eye can see, hehe!
When the market was down around 2008, I made an effort to realize losses by selling most of my taxable portfolio. The losses out weighed the gains. 45 days later I bought back into ETF index type funds which were more tax efficient than much of what I had been invested in prior to this move. I shifted to almost all index fund type things. Muni bond fund is the only major exception.

This is probably one of the best planned out moves I ever made. Every year since, 3K comes off my income because I have more carry forward loss left, than realized gain for that year. Since I was in the 28% and sometimes 33% marginal tax bracket, it was a nice amount saved each year on top of wiping out any capital gains. I took the losses when I was in a higher tax bracket and paying higher capital gains. Going forward I will be paying 0% capital gains. Which is why resetting my cost basis on that money doesn't bother me at all. When I made the move I was hoping for a 5% capital gains rate based on the tax laws at that time. But at least for now, it's 0%. Jackpot.
__________________
Retired Jan 2014 at 48.
gozer is offline   Reply With Quote
Old 02-13-2014, 01:20 PM   #37
Thinks s/he gets paid by the post
wmc1000's Avatar
 
Join Date: Apr 2013
Location: Gosport, IN
Posts: 1,214
The ACA subsidy makes it possible for me to retire this year but I have actively decided to wait until 2016 to make certain that the subsidy component doesn't go "up in smoke" after the first year or two if it becomes too onerous due to the lack of "healthy individuals" signing up. The potential ER scenario of health costs going from $4000 a year to $18,000 a year without a subsidy program is not one I want to experience.
wmc1000 is offline   Reply With Quote
Old 02-13-2014, 02:03 PM   #38
Dryer sheet aficionado
 
Join Date: Oct 2013
Posts: 37
Having worked briefly for the IRS, I worry about the conversations I overheard regarding filers who seemingly/knowingly over or under estimate taxable income. But fortunately, I can choose to do a Roth conversion, and will do one each year until Medicare age 65. I targeted a $14,000 MAGI, which precludes Medicaid eligibility, regardless of what Missouri does with or without expansion or alleged "reform," and maximizes the premium and cost-sharing subsidies for the plan and network I desired.

The modest additional amount of taxes I owe in April has already been dwarfed by the savings in medical expenses, because I bought a BCBS Silver plan with a $250 deductible and a $500 out-of-pocket max. (Not an option for many, I'll admit. I just want to offer proof that not everyone on the exchange faces thousands in out of pocket costs -- far from it.)

In fact, I am within $100 of meeting the OOP max for the year, because of ONE trip to the dermatologist last week, to have two basal cells removed. All I owe is 10% of the allowable charges, whereas last year I would have owed ALL the allowable charges, (yes, thousands) because my old deductible was $5000. On Jan 2, 2014, I met my deductible, at the pharmacy (of course!)

The biggest challenge I faced in ER used to be estimating and budgeting for medical expenses... that's one spreadsheet I'm happy not to need anymore!
Rpharmer is offline   Reply With Quote
Old 02-13-2014, 03:43 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
Quote:
Originally Posted by Rpharmer View Post
I targeted a $14,000 MAGI...

The modest additional amount of taxes I owe in April has already been dwarfed by the savings in medical expenses, because I bought a BCBS Silver plan with a $250 deductible and a $500 out-of-pocket max. (Not an option for many, I'll admit. I just want to offer proof that not everyone on the exchange faces thousands in out of pocket costs -- far from it.)
Proof isn't needed, but you have to have a *very* low income to have cost sharing this low.

Sure, if you have enough Roth and already taxed savings to live on while you only generate $14K in taxable income you can do this.

That's not most people.

Just change that income from $14K to a still very modest $30K, and all the Silver plans in Missouri shoot up to deductibles of $1750+ and OOP maxes of $3600+.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Question on Massachusetts Healthcare exchange Sarah S Health and Early Retirement 5 10-08-2013 06:25 PM
Question about new healthcare reg for retiree Pete Health and Early Retirement 5 10-03-2010 12:18 PM
Simplecare no-insurance healthcare cute fuzzy bunny FIRE and Money 2 04-05-2004 08:28 AM

» Quick Links

 
All times are GMT -6. The time now is 06:00 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.