Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 06-29-2012, 11:18 AM   #121
Full time employment: Posting here.
Calico's Avatar
 
Join Date: Apr 2012
Posts: 772
Animorph,

Thanks very much for posting that link; it's very helpful. Unlike a lot of documents I've seen which purport to "explain" PPACA, I can actually understand the material in the link.
__________________

__________________
Calico is offline  
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 06-29-2012, 11:29 AM   #122
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,404
Quote:
Originally Posted by Animorph View Post
From http://www.kff.org/healthreform/upload/7962-02.pdf

"
What is the amount of the tax credit provided to people?

...

Income Level Premium as a Percent of Income
Up to 133% FPL 2% of income
133-150% FPL 3 – 4% of income
150-200% FPL 4 – 6.3% of income
200-250% FPL 6.3 – 8.05% of income
250-300% FPL 8.05 – 9.5% of income
300-400% FPL 9.5% of income"

This looks a lot more linear than the calculator is coming up with.
Except for a very steep cliff at 400% of the poverty line. At that point it goes from a few thousand straight to zero. Should this aspect not change, people near that threshold may need to be careful and creative in their tax planning throughout the year. That last dollar could cost you thousands.

It's not like the credit is only $10 at 399% of the poverty line. It's usually still into the thousands, going suddenly to zero at 400%.
__________________

__________________
"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  
Old 06-29-2012, 11:56 AM   #123
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,792
Quote:
Originally Posted by ziggy29 View Post
Except for a very steep cliff at 400% of the poverty line. At that point it goes from a few thousand straight to zero. Should this aspect not change, people near that threshold may need to be careful and creative in their tax planning throughout the year. That last dollar could cost you thousands.

It's not like the credit is only $10 at 399% of the poverty line. It's usually still into the thousands, going suddenly to zero at 400%.
Yep. And that will depend on the what the second lowest "silver" plan costs, which we won't know for quite a while I guess. Though apparently the calculator has a guess.

9.5% of 400% of single FPL is $4244
9.5% of 400% of couple FPL is $5749

So whatever that cost is minus those limits is the tax bump.
__________________
Animorph is offline  
Old 06-29-2012, 11:57 AM   #124
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 745
Quote:
Originally Posted by ziggy29
Except for a very steep cliff at 400% of the poverty line. At that point it goes from a few thousand straight to zero. Should this aspect not change, people near that threshold may need to be careful and creative in their tax planning throughout the year. That last dollar could cost you thousands.

It's not like the credit is only $10 at 399% of the poverty line. It's usually still into the thousands, going suddenly to zero at 400%.
I tend to think this is one of those pieces that'll change.

Also, since it's based on the poverty line, it'll also be interesting to see how this works out if/when the poverty line increases.

The modeling will be interesting, since now you're not only trying to come in at 400% of PL, but the PL also changes, so you'll have to take that into consideration.

What I suspect will happen, at least for the REs out there, is that some years you'll go for the max subsidy and other years you'll get little/no subsidy. Especially if, on average, your income needs are greater than 400% PL.

So now you'll have multi-year tax planning, with the hope the tax code doesn't change much year over year...
__________________
Eat, Drink and Be Merry.
tulak is online now  
Old 06-29-2012, 12:00 PM   #125
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,404
Quote:
Originally Posted by kiki View Post
What I suspect will happen, at least for the REs out there, is that some years you'll go for the max subsidy and other years you'll get little/no subsidy. Especially if, on average, your income needs are greater than 400% PL.
That would make it a lot like the folks who itemize every other year and take the standard deduction every other year. You try to make two property tax payments -- one in January for the previous year, one in December for the current year -- in the year you itemize and none when you don't, and you might pay one mortgage payment exactly on January 1 to make 13 of them in a year when you itemize and 11 when you don't.

Fun times!
__________________
"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  
Old 06-29-2012, 12:15 PM   #126
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 2,884
I've been poking around the 'net and most sites say that the FPL percentage for the HC subsidies is an AGI number. Of course, it is the Internet, so reality could be another matter.

Hoping it's true! And, a lot can happen between now and 1/2014. A graduated percentage vs a cliff would hopefully be in future legislation.

Right now, I can think of about 6,000 good reasons to toggle yourself below the 400% line!!
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline  
Old 06-29-2012, 12:17 PM   #127
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,149
Quote:
Originally Posted by marko View Post
If I'm using the Kaiser calculator correctly, incomes under $100K are generally yield a net out of pocket cost for HC at about 6-9% of income (wish they'd have a 'family of 2' button).

Is this so? Is this gross income or AGI??

Agreed with another poster: this should bring about all sorts of 'income management' schemes!
I hoping that when this all shakes out that there will be a calculator that includes the few of us that are married but only need coverage for one, not both. I'm still not sure if I should use just my income or our combined income (or maybe half of combined??).

But in the big picture, when I lose my coverage from DH's retiree plan on 1-1-14 I will be able to buy coverage at a reasonable price.

I'm very satisfied with that.
__________________
Married, both 61. DH retired June, 2010. I have a pleasant little part time job.
Sue J is offline  
Old 06-29-2012, 12:53 PM   #128
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Northern New England
Posts: 13,074
Quote:
Originally Posted by marko View Post
I've been poking around the 'net and most sites say that the FPL percentage for the HC subsidies is an AGI number. Of course, it is the Internet, so reality could be another matter.

Hoping it's true! And, a lot can happen between now and 1/2014. A graduated percentage vs a cliff would hopefully be in future legislation.

Right now, I can think of about 6,000 good reasons to toggle yourself below the 400% line!!
If it is AGI then you can put those good reasons in your health savings account.
__________________
pb4uski is online now  
Old 06-29-2012, 01:03 PM   #129
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Posts: 8,100
Quote:
Originally Posted by JOHNNIE36 View Post
The whole thing gets more confusing as you go along. For instance, I heard a number of talking heads say today that this is not a mandate.
It really isn't complicated or new. The Act doesn't force anyone to buy insurance. It assesses a penalty (or tax if you will) if you don't carry insurance. The tax is a lot less than the cost of insurance. All that is new is that CJ Roberts articulated the reality fairly clearly in explaining why the so called mandate is Constitutional under the government's broad taxing authority.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline  
Old 06-29-2012, 01:06 PM   #130
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,105
Quote:
Originally Posted by ziggy29 View Post
That would make it a lot like the folks who itemize every other year and take the standard deduction every other year. You try to make two property tax payments -- one in January for the previous year, one in December for the current year -- in the year you itemize and none when you don't, and you might pay one mortgage payment exactly on January 1 to make 13 of them in a year when you itemize and 11 when you don't.

Fun times!
I see this happening for me now that I will begin an every-other-year pattern of itemizing and taking the standard deduction due to being able to make estimated state income tax payments in December or January, thereby putting zero or two of them within the same calendar year (like your property tax example). Between that and the erratic nature of cap gains distributions, I expect the subsidy to vary wildly from year to year.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline  
Old 06-29-2012, 01:14 PM   #131
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 38,969
Quote:
Originally Posted by donheff View Post
The Act doesn't force anyone to buy insurance. It assesses a penalty (or tax if you will) if you don't carry insurance. The tax is a lot less than the cost of insurance.
Here is a summary of the penalty/tax, which goes into effect in 2014, then increases in 2015 and 2016:
Attached Images
File Type: jpg Penalty.JPG (37.2 KB, 33 views)
__________________
Numbers is hard.

The problem with the world is that the intelligent people are full of doubts while the stupid ones are full of confidence. - Charles Bukowski

Retired in 2005 at age 58, no pension

REWahoo is offline  
Old 06-29-2012, 01:21 PM   #132
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Northern New England
Posts: 13,074
Quote:
Originally Posted by scrabbler1 View Post
I see this happening for me now that I will begin an every-other-year pattern of itemizing and taking the standard deduction due to being able to make estimated state income tax payments in December or January, thereby putting zero or two of them within the same calendar year (like your property tax example). Between that and the erratic nature of cap gains distributions, I expect the subsidy to vary wildly from year to year.
Yeah, I'm beginning to wonder if it might make sense to put my income producing assets in a trust where I am the trustee and beneficiary and I can control distributions from the trust to manage my income and optimize the subsidy. Under that scheme, the volatility would be in the trust but not in my income. Taxes shouldn't change much because to the extent that I retain income in the trust the trust would have to pay tax on that income. It might be an interesting way to manage the income volatility of capital gains and distributions. Haven't put much more thought than what you see here into it though.
__________________
pb4uski is online now  
Old 06-29-2012, 03:35 PM   #133
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,427
Quote:
Originally Posted by Animorph View Post
From http://www.kff.org/healthreform/upload/7962-02.pdf

"
What is the amount of the tax credit provided to people?


The amount of the tax credit that a person can receive is based on the premium for the second lowest cost silver plan in the exchange and area where the person is eligible to purchase coverage. A silver plan is a plan that provides the essential benefits and has an actuarial value of 70%. (In PPACA, a 70% actuarial value means that on average the plan pays 70% of

the cost of covered benefits for a standard population of enrollees.) The amount of the tax credit varies with income such

that the premium that the premium a person would have to pay for the second lowest cost silver plan would not exceed a
specified percentage of their income (adjusted for family size), as follows:

Income Level Premium as a Percent of Income
Up to 133% FPL 2% of income
133-150% FPL 3 4% of income
150-200% FPL 4 6.3% of income
200-250% FPL 6.3 8.05% of income
250-300% FPL 8.05 9.5% of income
300-400% FPL 9.5% of income"



There are other provisions for selecting the plan cost and out-of-pocket cost expectations depending on income levels.

This looks a lot more linear than the calculator is coming up with.

I remember looking this info from KFF last year. Let me explain how I was planning on gaming the system. Now most years my income is above the 51.4K limit for Hawaii, but not all years so I can take a tax loss, make a large charitable contribution, pre pay taxes etc to get myself below the threshold. I won't be able to this every year (at least I hope not) but probably every 2nd or 3rd year.

Kaiser has a tiered program Bronze-Platinum. As aside for a while I was covered by my ex girlfriends Platinum plan it was great basically free health care. My current plan is a silver plan. However, it lacks many of the coverages that are now mandated (birth control comes to mind but there are others.) Now Kaiser can continue offering my existing plan because it is grandfather in to existing members. Not sure about if they can offer it to new members or not. But I suspect that what Kaiser will actually do is make their existing Gold plan the new silver plan, make mine Bronze and drop the Bronze plan (which is basically catastrophic coverage with limitations that wouldn't fly under ObamaCara).

The current price difference between the silver and gold plan is >$150/month. However, in years where I can get my AGI below 51K I'll be able to upgrade to better health plan for a minimal amount $200-$300 a year thanks to the subsidies. So you are right it isn't like earning the extra dollar will cost the full $4K, but it certainly worth to do a bit of manipulation to save $1500. So essentially the poorer I am the better my health care insurance will be.
__________________
clifp is offline  
Old 06-29-2012, 03:54 PM   #134
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,588
I wonder if any site has listed the 60 plus new taxes embedded in the over 3,000 pages otherwise I may have to print the 3,000 plus pages. I'm sure most may not apply but some will to some people.......like the 3.4% surcharge on dividend and interest income for couples making over 250K that is in addition to the increase due to the expiration of the Bush Tax Cuts.
__________________
sheehs1 is offline  
Old 06-29-2012, 03:55 PM   #135
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: On the road again
Posts: 20,931
Quote:
Originally Posted by pb4uski View Post
Yeah, I'm beginning to wonder if it might make sense to put my income producing assets in a trust where I am the trustee and beneficiary and I can control distributions from the trust to manage my income and optimize the subsidy. Under that scheme, the volatility would be in the trust but not in my income. Taxes shouldn't change much because to the extent that I retain income in the trust the trust would have to pay tax on that income. It might be an interesting way to manage the income volatility of capital gains and distributions. Haven't put much more thought than what you see here into it though.
As long as it is a revocable trust and you are alive it is one tax return for you and the trust.
__________________
MichaelB is online now  
Old 06-29-2012, 04:29 PM   #136
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Purron's Avatar
 
Join Date: Nov 2007
Posts: 5,585
Quote:
Originally Posted by clifp View Post
I remember looking this info from KFF last year. Let me explain how I was planning on gaming the system. Now most years my income is above the 51.4K limit for Hawaii, but not all years so I can take a tax loss, make a large charitable contribution, pre pay taxes etc to get myself below the threshold. I won't be able to this every year (at least I hope not) but probably every 2nd or 3rd year.
Now I'm thinking of how to encourage people in my local community to support the animal shelter and come out ahead financially
__________________
I purr therefore I am.
Purron is offline  
Old 06-29-2012, 04:37 PM   #137
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: On the road again
Posts: 20,931
Quote:
Originally Posted by sheehs1 View Post
I wonder if any site has listed the 60 plus new taxes embedded in the over 3,000 pages otherwise I may have to print the 3,000 plus pages. I'm sure most may not apply but some will to some people.......like the 3.4% surcharge on dividend and interest income for couples making over 250K that is in addition to the increase due to the expiration of the Bush Tax Cuts.
This from the Kaiser Family Foundation summary. Nowhere near 60. More like 6, if you count new taxes and changes in tax rates.

Quote:
Impose a tax on individuals without qualifying coverage of the greater of $695 per year up to a maximum of three times that amount or 2.5% of household income to be phased-in beginning in 2014.

Exclude the costs for over-the-counter drugs not prescribed by a doctor from being reimbursed through an HRA or health FSA and from being reimbursed on a tax-free basis through an HSA or Archer Medical Savings Account. (Effective January 1, 2011)

Increase the tax on distributions from a health savings account or an Archer MSA that are not used for qualified medical expenses to 20% (from 10% for HSAs and from 15% for Archer MSAs) of the disbursed amount. (Effective January 1, 2011)

Limit the amount of contributions to a flexible spending account for medical expenses to $2,500 per year increased annually by the cost of living adjustment. (Effective January 1, 2013)

Increase the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes; waive the increase for individuals age 65 and older for tax years 2013 through 2016. (Effective January 1, 2013)

Increase the Medicare Part A (hospital insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly and impose a 3.8% tax on unearned income for higher-income taxpayers (thresholds are not indexed). (Effective January 1, 2013)

Impose an excise tax on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage (these threshold values will be indexed to the consumer price index for urban consumers (CPI-U) for years beginning in 2020). The threshold amounts will be increased for retired individuals age 55 and older who are not eligible for Medicare and for employees engaged in high-risk professions by $1,650 for individual coverage and $3,450 for family coverage. The threshold amounts may be adjusted upwards if health care costs rise more than expected prior to implementation of the tax in 2018. The threshold amounts will be increased for firms that may have higher health care costs because of the age or gender of their workers. The tax is equal to 40% of the value of the plan that exceeds the threshold amounts and is imposed on the issuer of the health insurance policy, which in the case of a self-insured plan is the plan administrator or, in some cases, the employer. The aggregate value of the health insurance plan includes reimbursements under a flexible spending account for medical expenses (health FSA) or health reimbursement arrangement (HRA), employer contributions to a health savings account (HSA), and coverage for supplementary health insurance coverage, excluding dental and vision coverage. (Effective January 1, 2018)

Eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments. (Effective January 1, 2013)
__________________
MichaelB is online now  
Old 06-29-2012, 04:44 PM   #138
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Northern New England
Posts: 13,074
Quote:
Originally Posted by MichaelB View Post
As long as it is a revocable trust and you are alive it is one tax return for you and the trust.
Actually as I have thought of this more and my concern is volatility of income perhaps a better solution is to move tax deferred monies into equities (currently bonds) and fixed income into my taxable accounts (currently equities). That would hopefully avoid a late year capital gains distribution blowing up my plan.
__________________
pb4uski is online now  
Old 06-29-2012, 05:11 PM   #139
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: On the road again
Posts: 20,931
Quote:
Originally Posted by pb4uski View Post
Actually as I have thought of this more and my concern is volatility of income perhaps a better solution is to move tax deferred monies into equities (currently bonds) and fixed income into my taxable accounts (currently equities). That would hopefully avoid a late year capital gains distribution blowing up my plan.
I often wonder about this. There have been times when I would have sold if the equities were tax deferred, and avoided major loss. But there are other times when I would have sold and missed out on some growth. My market timing skills are not that good.

My suspicion is in our case maximizing investment returns will continue to be more important than qualifying for a tax credit, but that may change. We need to see what qualifies as income. We need more details!
__________________
MichaelB is online now  
Old 06-29-2012, 05:14 PM   #140
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,699
Do you really need to set up some formal trust?

For people who FIRE'd, don't you determine your annual income by how much you sell out of your taxable accounts for that year, plus the cap gains distributions and dividends for that year?
__________________

__________________
explanade is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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


 

 
All times are GMT -6. The time now is 09:10 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.