They're millionaires, and they get Obamacare subsidies

[Theseus]

a "millionaire" infers "wealth", when in fact, a retired person with 1M invested, using a conservative 4% WR (which many including me don't feel is all that conservative considering how much risk one must take on to attempt to generate a 4% return) is living on 40K + SS if they get it.

40K + SS is not "rich"...

+1

And if the individual or couple are intending to self finance long term care, rather than assuming someone else will pick up the tab, expecting assets be depleted before being able to obtain ACA healthcare subsidy is rather self-defeating.

 

[Running_Man]

While I'm not on subsidy, I suspect that many on this forum, even those who are on subsidies, would concede that subsidies were not intended for wealthy retired folks but for low income folks who could not afford health insurance.

The fact that that some wealthy retired folks legally qualify is only because of the way Congress structured the subsidy requirements. If they were to make changes to eliminate subsidies to these people in most cases I suspect it would be a minor inconvenience but not a retirement killer.

Perhaps rather than means testing they could attach a multiplier to dividends, capital gains and Roth conversion income in the O-MAGI calculation. IOW, if for the purpose of the subsidy calculation that dividends, interest, capital gains and Roth conversions were tripled, then that would probably cull out any wealthy folks whose income is managed to qualify for subsidies.

I disagree that this was not intentional, in order for ACA to succeed it needs a large number of healthy applicants to make it financially feasible. It is a proven fact that wealthy people are healthier, by allowing them a back route into the ACA you drive up the applicants and increase the health of the pool. This will probably be addressed once the number of ACA users is high enough to sustain the plan, as it is struggling presently it will not be adjusted unless the entire plan is modified.

 

[pb4uski]

I disagree that this was not intentional, in order for ACA to succeed it needs a large number of healthy applicants to make it financially feasible. It is a proven fact that wealthy people are healthier, by allowing them a back route into the ACA you drive up the applicants and increase the health of the pool. This will probably be addressed once the number of ACA users is high enough to sustain the plan, as it is struggling presently it will not be adjusted unless the entire plan is modified.

The fact is that even without subsidies the wealthy would buy health insurance to avoid losing their wealth if they have an expensive health event. It would be stupid of them to risk tens or hundreds of thousands to avoid spending a few thousand.

I agree that they wanted healthy people in the pool, but we'll need to agree to disagree that they intentionally designed subsidies so the wealthy could take advantage of them to get more healthy folks in the pool. A bit of a silly argument methinks.

 

[LARS]

I suppose the one argument that might cause Congress to leave it alone is that to add in asset tests is to push the whole program much more into the realm of a "welfare" program, and no longer for mainstream America.


Sent from my iPad using Early Retirement Forum

 

[photoguy]

The fact that that some wealthy retired folks legally qualify is only because of the way Congress structured the subsidy requirements. If they were to make changes to eliminate subsidies to these people in most cases I suspect it would be a minor inconvenience but not a retirement killer.

I think from the threads on this board almost everyone planned to pay full freight on ACA plans.

But I'm not sure that subsidies for people with high "net worth" is unintended. At least not like the spousal SS loophole that was closed (estimated to be worth $50k on average). There was already an asset test for Medicaid and they could have used the same or similar process for ACA but didn't.

Perhaps rather than means testing they could attach a multiplier to dividends, capital gains and Roth conversion income in the O-MAGI calculation. IOW, if for the purpose of the subsidy calculation that dividends, interest, capital gains and Roth conversions were tripled, then that would probably cull out any wealthy folks whose income is managed to qualify for subsidies.

Maybe they think the current multiplier of 1x is sufficient. They clearly thought about this issue as they made adjustments to agi to include income from tax exempt bonds.

I'm guessing they thought the cost of enforcing an asset test would be too high relative to the benefit. With the spousal SS loophole it's trivial to eliminate but verifying net worth would be a nightmare. There would also be endless discussions about what assets to include (eg home or home equity, 401k) and it still wouldn't eliminate the issue (people would just shift to excluded assets)



Sent from my iPad using Early Retirement Forum

 

[rodi]

I think from the threads on this board almost everyone planned to pay full freight on ACA plans.

I know this is true in my case. My planned spending includes full premiums for healthcare.

 

[Texas Proud]

I think this is a bunch of nothing....


Remember the political climate.... Repubs want to repeal the whole bill, Dems want to keep it... neither side has any appetite to fix anything unless it is really broken....


I would be more worried that the whole thing would be repealed long before I would be of losing the subsidy....

 

[MichaelB]

Thanks for an interesting discussion
.
.