Reasoning Behind Staying Above 137% FPL

[sengsational]

After having unexpected results when going through the application on healthcare.gov, I decided to make an appointment with the insurance agent I met at a (BCBSNC sponsored) PPACA presentation. In the couple of minutes we were on the phone, I mentioned that I can adjust my MAGI as needed, but figured around 200% FPL would be good, which would allow me a little Roth conversion on top of the few weeks of W-2 I got before quitting. He said we can talk more about it, but I might consider dropping lower and going the Medicaid route, which I never considered, because it seems no one here is considering it, hehe.

So my questions are:

• Is my perspective correct that folks who can manage their MAGI are purposefully avoiding Medicaid?
• If so, what are the reasons for that?

The main reason I'm asking this question is I would like to have some fairly solid ground when I reject that route. I know it's my decision, but if the guy has a bunch of good reasons to go that route, I'd like to know what the other side of the arguement is, just in case he's not well informed about the other side.

 

[pb4uski]

The impression that I have is that Medicaid would limit your provider choices in that some providers won't accept Medicaid patients.

My reason for not going that route is that the tax savings of Roth conversions (or 0% LTCG) are more valuable to me than paying for my health insurance and to be candid, I would not want anyone who knows me to know that I was on Medicaid and it might somehow be found out (the night has a thousand eyes).

 

[brewer12345]

I will purposely keep MAGI out of Medicaid territory this year, even if it means I have to realize cap gains or do Roth conversions. I tried to find out what care was like in my area under Medicaid and came up with a big, old nothing. That tells me that people on Medicaid likely take what they can get, which is a position I do not want to be in. I also was able to pick a MAGI level between 137 and 150% of FPL for a family of 4 that meant that I got heavy premium subsidies and big time cost sharing subsidies. I am fortunate in that I am in the only major metro area for at least 500 miles in every direction, so the medical systems and providers are concentrated here and I have lots of choices. I was able to get on a comprehensive Kaiser plan for a trivial out of pocket monthly expense that will in any case be deductible against DW's small business income. Next year I will re-evaluate all of this, but for now I want to start out with a low cost plan that wins rave reviews from people in the Kaiser system and gets top ratings from Consumer Reports for medical outcomes among HMOs. If I did not have such an attractive alternative, I might be more inclined to go with Medicaid.

 

[gozer]

The impression that I have is that Medicaid would limit your provider choices in that some providers won't accept Medicaid patients.

My reason for not going that route is that the tax savings of Roth conversions (or 0% LTCG) are more valuable to me than paying for my health insurance and to be candid, I would not want anyone who knows me to know that I was on Medicaid and it might somehow be found out (the night has a thousand eyes).

This is my reasoning also.

 

[John Galt III]

I used an income over 137% FPL when applying for Ocare, because I was getting conflicting answers about whether I would even be allowed to go on Medicaid, since I live in a state which was not expanding medicaid. Most people have a negative view of the value of being on Medicaid. However, one health insurance broker I spoke with said Medicaid was a good program and that folks who qualify for it should not be afraid of it.

 

[MRG]

The impression that I have is that Medicaid would limit your provider choices in that some providers won't accept Medicaid patients.

My reason for not going that route is that the tax savings of Roth conversions (or 0% LTCG) are more valuable to me than paying for my health insurance and to be candid, I would not want anyone who knows me to know that I was on Medicaid and it might somehow be found out (the night has a thousand eyes).

+1
I'm not planning to do many Roth conversions. My consideration is the number of DRs in my area that just saying no to new medicaid patients, makes me think, I don't want to be one. YMMV.
MRG

 

[aja8888]

Try going into an emergency room with a Medicaid card in hand around here. Or, go to a local Medicaid nursing home for a brief visit. Not a pretty picture.

 

[rbmrtn]

I met at a (BCBSNC sponsored) PPACA presentation. In the couple of minutes we were on the phone, I mentioned that I can adjust my MAGI as needed, but figured around 200% FPL would be good, which would allow me a little Roth conversion on top of the few weeks of W-2 I got before quitting. He said we can talk more about it, but I might consider dropping lower and going the Medicaid route, which I never considered, because it seems no one here is considering it, hehe.

Not sure why he would say that, if you are in NC they did not expand medicaid so you wouldn't qualify.

 

[dontworry]

Try going into an emergency room with a Medicaid card in hand around here. Or, go to a local Medicaid nursing home for a brief visit. Not a pretty picture.

I work with nursing home Medicaid patients. They get the same care as private pay. That may vary from state to state, however.

 

[youbet]

I work with nursing home Medicaid patients. They get the same care as private pay. That may vary from state to state, however.

It not only varies from state to state, it varies from NH to NH.

Here in the Chicago area, most "better" NH's don't accept Medicaid patients. If you're able to private pay for a year or two, and have some ongoing income such as SS to supplement Medicaid, you'll often be accepted and allowed to stay after you run out of money. But, if you're broke and going to be on Medicaid from the get-go, your selection of NH's is much reduced and often includes only facilities with poor ratings who specialize in Medicaid clients.

We're going through this with MIL currently. We're very, very glad she had enough private pay funds so that we could get her into a top tier place. When she runs out of money, likely in the late spring, she'll stay on and we fully expect her situation there to remain identical to what it is today. But this NH would not have taken her had she been Medicaid from day one.

In better NH's, Medicaid and private pay or LTCI clients are treated the same. It's getting into the better nursing home as a "Medicaid from the get-go" client that's the issue. At least here in northern Illinois.

 

[youbet]

go to a local Medicaid nursing home for a brief visit. Not a pretty picture.

Been there, done that. Here in northern Illinois, being Medicaid from the get-go severely limits your choice of NH's. If you get into a better NH as a private pay, or with good LTCI, you'll likely be allowed to stay as a Medicaid client after you run out of money. Without some private pay money or LTCI, you'll have trouble finding a spot in a "better" NH and will likely wind up in a home where there are a high percentage of Medicaid patients.

Note however that Medicaid as your health insurance is a completely different scenario than Medicaid paying for your LTC in regards to financial requirements.

 

[ziggy29]

I work with nursing home Medicaid patients. They get the same care as private pay. That may vary from state to state, however.

That will typically be true.... if you accept Medicaid patients. Many providers won't, or at least won't add new Medicaid patients even if they will continue to serve existing patients.

This means that on average, the places that will accept Medicaid patients may be overburdened. It's not that the quality of care will be lower for any given provider, it's that there are far fewer providers to choose from in some cases.

 

[NoMoreJob]

I used an income over 137% FPL when applying for Ocare, because I was getting conflicting answers about whether I would even be allowed to go on Medicaid, since I live in a state which was not expanding medicaid. Most people have a negative view of the value of being on Medicaid. However, one health insurance broker I spoke with said Medicaid was a good program and that folks who qualify for it should not be afraid of it.

I suppose it may depend upon where you live and receive your medical care. My mother-in-law who lived in a relatively small rural community with a high concentration of low-income residents. Her care was not bad, but certainly not great. Her doctor's office had more patients than could be easily accommodated but they were all eventually seen. When she needed extra time with the doctor, she seemed to get it. She never went to any great effort to take care of her own health but the doctors took all reasonable measures to identify and respond to her health problems. The care generally met her expectations.

Based on her experience I would not be 'afraid' of such care but neither would I voluntarily seek it if I had other options, at least in that particular community.

 

[xynny]

Medicaid is free now but after you die they can get reimbursement from your estate. that's possibly one reason to stay off.
Estate Recovery and Liens | Medicaid.gov

 

[2B]

The NH my in laws were at would not keep someone that could not pay and it was run by a religious denomination. It was run as a non-profit facility and it was very nice for the price. They said that it was not intended to charge others for the care of those that could not pay their share. I don't know how often it happened but I heard of one person being "evicted."

DW and looked at a number of facilities before checking my MIL into the one we picked. We looked as some that accepted medicaid patients. These were much more crowded and care seemed less personalized.

Few doctors accept medicaid unless less that is their basic practice. It's hard enough to find doctors that accept medicare.

 

[sengsational]

Thanks all. Those concerns give one plenty of reasons not to get on that train.

A couple more administrative things in my neck of the woods:

• The connection to healthcare.gov is still not up and running and will take "months" for them to manage the backlog when/if it ever does work.
• Just to process an application directly with them takes a minimum of 45 days.

 

[ziggy29]

Medicaid is free now but after you die they can get reimbursement from your estate. that's possibly one reason to stay off.
Estate Recovery and Liens | Medicaid.gov

As I understand it, you can actually collect Medicaid until age 54 without being subjected to estate recovery. Once you hit age 55, federal law requires states to seek recovery of Medicaid costs through the recipient's estate.

This was true before ACA, and ACA did not change this aspect of federal law.

So in reality, one could keep income low enough for Medicaid until they are 54, and then increase income to at least 138% of FPL after they hit 55. This might be playing with fire if not done right and it might make some people feel uneasy about "gaming the system" but it is one possibility in terms of financial planning where health care costs and tax/estate implications are considered.

 

[xynny]

yup you are right. the estate recovery rule was already there before the ACA, but very few people seem to know about it.

 

[Walt34]

Here in the Chicago area, most "better" NH's don't accept Medicaid patients. If you're able to private pay for a year or two, and have some ongoing income such as SS to supplement Medicaid, you'll often be accepted and allowed to stay after you run out of money. But, if you're broke and going to be on Medicaid from the get-go, your selection of NH's is much reduced and often includes only facilities with poor ratings who specialize in Medicaid clients.

That's the way it worked in MD too. We just went through that wringer with FIL. Excellent NH, no complaints at all, and he was there for just over a year about to exhaust funds and go to Medicaid when he passed. But once in they would not throw him out even though they lost $130/day with Medicaid.