2018 Capital Gain Dist will affect my ACA costs

[gayl]

Tiny little violin playing for all those whose assets are so large and throwing off so much income that their ACA subsidies might be endangered.

[emoji106]

 

[Rustward]

.

Really, Yes. In the olden days we paid about 50K in federal income taxes + SS in addition to that for self employed and medicare and it felt really good -- so good that we did not whine about it. Now we pay just over 2K in federal (no state here), and not whining about that either. We understand the tax laws and manage our income to keep taxes low -- per the tax code. Whenever we start SS distributions (eligible now) and later RMD's, the story will be much different, but we are unlikely to whine about it..

 

[Teacher Terry]

We could have ACA insurance and make under 62k. Instead we pay 12k/year for insurance through my past employer. So I live my values. DD, you are wealthy and can afford to pay but instead you are taking advantage of loopholes. Many people have no conscience.

 

[Fedup]

We could have ACA insurance and make under 62k. Instead we pay 12k/year for insurance through my past employer. So I live my values. DD, you are wealthy and can afford to pay but instead you are taking advantage of loopholes. Many people have no conscience.

Honestly, I think I would take advantage of the ACA too without my husband’s retiree health insurance. I think very few people would not. In general, I don’t have problem with subsidies.

But the loophole is created by the government, so even poor people like my kid gets nothing. Yet they don’t complaint ever, some guy here within our ER community with $5 million complaint frequently about our health care system, yet they pay almost nothing comparing to their wealth.
I would like them to shut up and appreciate their situation.

Maybe the complaints bothers me more than the subsidies.

 

[beowulf]

The only way I would say you are practicing what you preach is if you were capable of recieving ACA subsidy, but decided to forgo it and pay in full just because of your moral high ground. Otherwise, what I am seeing is very strong jealousy, and riding on what you consider high morals. Sorry pal. You really aren't there to make the call

From the Medicare website:

If you are currently enrolled in the Medicare program, you cannot enroll in an ACA plan from the Marketplace (called a Qualified Health Plan, or QHP, under the ACA) to supplement your Medicare coverage. In fact, it’s illegal for an insurance agent or producer who knows you have Medicare to sell you a Marketplace plan.

My take on this:

Apparently there are a few complex situations where you can have both, but what's the point? You would be paying twice for similar coverage and ACA coverage would be secondary. The loophole seems to be if you turn 65 and have ACA coverage already then you can sign up for Medicare coverage also. However, if you don't, you will pay a 10% a year premium penalty for Medicare that never stops - i.e. - you turn 65 with an ACA policy and turn down Medicare. At age 70 you decide the ACA plan is not as good as Medicare and you want to sign up. You will pay a premium of 50% of whatever the Medicare rate is at that time depending on your income and that 50% extra will remain as long as you live. This does not apply if you are still working over age 65 and are covered by employer health insurance. I think you have 90 days or so from when you stop working to sign up and avoid the penalty.

Contrary to some articles I have read about this topic, Medicare is a voluntary program - you are not required to have it. It's rare, but some folks have employer health care that continues into retirement. Then you have to worry about the company stopping that benefit or going under.

 

[Teacher Terry]

Fed up, I feel for people like your kids. We would be much better off using the ACA subsidies but I don’t feel it’s ethical. Living my values.

 

[Texas Proud]

You paid money to the insurer and the in turn the government paid you the money they would have paid the insurer...same result and came from the same source ...guess you are smarter then everyone else.
Q

I was responding to a stmt that people do not see that money as it was paid directly to the insurer... for me it was not... I agree that in the end the result is the same, but I was not sure what my income was going to be and just decided to settle up and get it all at tax time... I actually saw that money hit my bank account...



Quote:

People who receive the subsidy don't actually see any of that money - it goes directly to the ACA insurer. If they don't have a fully subsidy, they pay the difference.
​

 

[DAYDREAMER]

We could have ACA insurance and make under 62k. Instead we pay 12k/year for insurance through my past employer. So I live my values. DD, you are wealthy and can afford to pay but instead you are taking advantage of loopholes. Many people have no conscience.

This is the first post where somebody is stating that they could qualify for a subsidy but to chose to pay full price instead and live what they believe in. This I can respect. You believe in a principle and willing to pay what you feel is your fair share.

I could never allow myself to do this. My goal is to understand every legal loophole and understand every tax law to work to my advantage always. Illegally cheat the system, never.

 

[DAYDREAMER]

There has been mention of a forum member that has 5 million who complains about health care constantly? Who is this reference too? I read the forum quite frequently and never have read these posts?

 

[Teacher Terry]

You are purposely poking the bear so am done with this thread. Enjoy!

 

[Alan]

One million doesn't very far in today's HI climate...not much coverage.

Well before ACA I listened to a guy being interviewed on the radio. (During my long drive to work in Louisiana, so more than 15 years ago). He was a haemophiliac. His father had had to change jobs every 5 years or so and he was facing the same problem as an adult because 5 years was around the time his treatment hit the $1 million mark and the insurance stopped paying out.

 

[Dtail]

There has been mention of a forum member that has 5 million who complains about health care constantly? Who is this reference too? I read the forum quite frequently and never have read these posts?

I don't recall these posts either, at least not from a 5mm poster. Perhaps a 2-3mm poster with no monies in the stock market.

 

[MrLoco]

Seriously....those of you spouting "ethics" and "morality" when it comes to manipulating income to get an ACA subsidy just don't get it.
This is a financial forum concerning steps to take to retire early whether it is properly
allocating assets; when to take SS; or how to take advantage of an ACA subsidy to save money. You would be better suited posting on city data where the crybabies constantly whine about those who are better off than they are.
All you are doing is hijacking this thread with your own bs and not helping the OP at all.


This forum is a place to exchange ideas and learn from each other on strategies to make those retirement dollars stretch as far as possible as long as those strategies are legal and within the letter of the law.


I remember years ago, when looking for a CPA, I spoke to the one I now have. He said ," My job is to correctly file your taxes with the documentation you provide and to use every legal loophole allowed by the IRS to save you on taxes. And to represent you, at no extra charge, if you are ever audited based on a return I filed on your behalf. Anything less and I would not be doing my job." Hired him on the spot and he does my returns to this day. Never been audited.


Ohhhh...BTW...I am one of "those" with millions in assets and my wife and I receive an ACA subsidy of $11,000/year. We do this by having delayed taking our pensions until age 65; tax loss harvesting in our taxable accounts; and drawing from a large stash of short term instruments which do not generate excessive income. For a family of 2, I am able to have our income come to $60,000/year.....just below the cliff to get the subsidy!


And I sleep like a baby at night. Have a nice day!

 

[VanWinkle]

It's looking like the 2018 capital Gain distribution of the shares I own in Wellesley Admiral fund will throw me over the Income limit to qualify for ACA. Currently, vangaurd is showing a realized capital gain of $2.71/share. I like the Wellesley fund, and want to continue investing in it in the future, but come December, I need to take action as to not have my ACA subsidy affected.

Currently, I have a loss of $20k at today's share price and have owned the stock for more than a year now.

I see 2 options:
1. Sell the shares December 1, (before the distribution), wait 30 days to fulfill wash rule requirements, and buy the stock back at the reduced price January 1.

2. Wait to sell after the Dividends and Capital gains distribution are made (approx December 15), Sell all shares before year end, and buy back 30 days later, using the loss to offset the Capital gains distribution.

I am asking the financially savvy group here, which is the best path to take? What other things should I be considering?

Thank you in advance for helpful advice.

Holding Wellesley in a taxable account is the problem, just don't do it.

I own it in my IRA, but would never put it in taxable.

 

[VanWinkle]

I'm on Medicare since you said please. Before that self-employed family business...had employee/owner policy that started having less coverage and costing more money every year. Some people in this country couldn't afford any HI without ACA assistance and I'm in those people's corner.

WOW just wow!!

 

[flintnational]

Some continue to insist the ACA is a program for the poor and that those with assets receiving subsidies are using a loophole (and have called them immoral, unethical and cheap - still not cool).

1) The ACA is not a Program for the Poor

It's easy to disprove the "program for the poor" falsehood. First, the US already has a program for the poor, Medicaid. Per wikipedia, 74 Million Americans receive their healthcare from Medicaid. As others have mentioned, the ACA specifically excludes the poor. It was congresses intent to cover the poor under the existing and expanded Medicaid programs. Second, the income thresholds to receive subsidies under the ACA are well above the median family income in the US. It is not a program for the poor.

2) Subsidies are not a loophole

Congress did not include a means test for the ACA. They clearly have knowledge and experience implementing means testing. In fact, the real program for the poor, Medicaid, is means tested. Most benefits for the poor are means tested, including SNAP and public housing. On the other hand, benefits that include the middle class and the wealthy such as Social Security and Medicare are not means tested. Congress made their choice. They elected to make the ACA subsidies available without means testing similar to SS and Medicare. In the future, they may means test any or all of these programs. Currently, by design, not omission, none of these have a means test.

Historically, when congress wants a program to gain wide spread popular support, they include as many citizens as they can in the program. Anyone that remembers the healthcare debate knows this was a major goal. Gaining popular support is why Medicare and SS include everyone even millionaires and billionaires. They designed the ACA similarly without a means test. Clearly forum members are following the law as congress designed and intended. The ACA is not for the poor and the lack of means testing is not a loophole.

It's okay to dislike any part of the ACA. In fact many of us like and dislike various parts of the law. Most acknowledge it is not perfect or even close to perfect. However, its not okay to distort the actual written law and then disparage forum members based on the distortion.

 

[ivinsfan]

WOW just wow!!

Wow what, I said I have great empathy for people who would go without HI if not for ACA and not nearly as much for people who have assets and come on here beating a dead horse to get free or heavily subsidized insurance.

Since it's public taxpayers who fund these things, my opinion is just as valid as anyone else's.

 

[pb4uski]

We could easily manage our finances to qualify for ACA subsidies but have chosen not to do so, but not because of any perceived moral issues.

We are in a failry unique situation where subsidies are not very valuable because we can buy catastrophic coverage that not age rated and is similar to bronze level coverage for $500/month for two.... the same cost as subsidized bronze level coverage... so subsidies have no net benefit for us.

We chose to prioritize low-tax cost Roth conversions over subsidies. When we first made the decision ACA subsidies were beneficial... to the tune of $4-5k a year... but we have saved ~$6,850/yr in tax over the last 6 years on Roth conversions (7.6% tax on average vs 22% if we had done them later).

 

[ivinsfan]

Some continue to insist the ACA is a program for the poor and that those with assets receiving subsidies are using a loophole (and have called them immoral, unethical and cheap - still not cool).

1) The ACA is not a Program for the Poor

It's easy to disprove the "program for the poor" falsehood. First, the US already has a program for the poor, Medicaid. Per wikipedia, 74 Million Americans receive their healthcare from Medicaid. As others have mentioned, the ACA specifically excludes the poor. It was congresses intent to cover the poor under the existing and expanded Medicaid programs. Second, the income thresholds to receive subsidies under the ACA are well above the median family income in the US. It is not a program for the poor.

2) Subsidies are not a loophole

Congress did not include a means test for the ACA. They clearly have knowledge and experience implementing means testing. In fact, the real program for the poor, Medicaid, is means tested. Most benefits for the poor are means tested, including SNAP and public housing. On the other hand, benefits that include the middle class and the wealthy such as Social Security and Medicare are not means tested. Congress made their choice. They elected to make the ACA subsidies available without means testing similar to SS and Medicare. In the future, they may means test any or all of these programs. Currently, by design, not omission, none of these have a means test.

Historically, when congress wants a program to gain wide spread popular support, they include as many citizens as they can in the program. Anyone that remembers the healthcare debate knows this was a major goal. Gaining popular support is why Medicare and SS include everyone even millionaires and billionaires. They designed the ACA similarly without a means test. Clearly forum members are following the law as congress designed and intended. The ACA is not for the poor and the lack of means testing is not a loophole.

It's okay to dislike any part of the ACA. In fact many of us like and dislike various parts of the law. Most acknowledge it is not perfect or even close to perfect. However, its not okay to distort the actual written law and then disparage forum members based on the distortion.

See I feel the lack of means testing wasn't a matter of public support but in fact was plain careless hurried lawmaking by people wanting to retain their seats in DC. Even SS which you mentioned includes higher payments for people with higher incomes. People pay the same % of their income into the Medicare system while working but if they have "higher" income they pay more for Medicare..

These programs have to be payed for by somebody eventually and my worry is the whole system will crash and we'll be back to square one.

So who is distorting the actual written law and BTW I have never said I consider doing this unethical but I have said it's unseemly and perhaps not for the greater good of this country to come on this board and make it your goal in life to pay almost nothing for your HI. I'm actually seeing more disparagement coming from the subsidy hunters on this thread.

 

[VanWinkle]

Wow what, I said I have great empathy for people who would go without HI if not for ACA and not nearly as much for people who have assets and come on here beating a dead horse to get free or heavily subsidized insurance.

Since it's public taxpayers who fund these things, my opinion is just as valid as anyone else's.

I said Wow because I couldn't really say what I was thinking and remain civil.

The world obviously looks different from a high horse.

Best to you,

VW

 

[braumeister]

I said Wow because I couldn't really say what I was thinking and remain civil.

And it's extremely important that we all remain civil here.
Please.
Thank you.

 

[flintnational]

See I feel the lack of means testing wasn't a matter of public support but in fact was plain careless hurried lawmaking by people wanting to retain their seats in DC. .

This may be the reason. But I suspect not. It is very easy to include the statement, "Those with assets above x excluding primary residence are not eligible". And, if it were an oversight or hurried law making, they have had several years and several different congresses that could have changed it. I also worry about the countries finances. And, I generally do not support governmental programs for the middle class and wealthy. But, that is not the world we live in. Change the world, change congress, change the laws. But until then, we should not disparage members that are playing by the existing rules. Remember, they are being vilified because they are "wealthy". So, by definition, they are also paying (or have paid) substantial taxes that support benefits that go to the poor, middle class and wealthy.

All we have is the tax system as written. If we let citizens guess at congresses intent or oversight, many would not pay what they owe. Saying, "surely congress did not mean to tax me this much". Historically, our duty as citizens has been to support both sides of the tax law, taxes and benefits, as written. We have mechanisms in place to change the tax laws if we do not like them. And, they are routinely changed.

 

[MichaelB]

With so many posts discussing the ACA, it’s worth remembering subsidies were just one part of a much more comprehensive initiative. The ACA was a series of measures that covered the desigh of health plans, established minimum essential health benefits and access, emergency care, pediatric care and coverage, pharmaceutical coverage. The purpose was, first and foremost, to enable access to comprehensive health care coverage for all eligible persons.

Comprehensive health care coverage is very costly. The average family policy costs more than 30% of the median gross household income. That is unaffordable for the average family, hence the subsidies. My guess is the subsidy cutoff was a difficult choice driven entirely by financial limitations.

It’s worth keeping in mind that the employer provider health care still enjoys an effective tax benefit that costs taxpayers more than any of the ACA initiatives - or any other tax initiative in the US. In this case, the greatest subsidies go to the highest earners, who pay the highest marginal rates. Math works that way.

Why has there always been such emotion around the discussion of ACA subsidies when greater tax benefits have been paid for health care? I think everyone would be better off by collectively working to make health care accessible and affordable, period.

 

[pb4uski]

See I feel the lack of means testing wasn't a matter of public support but in fact was plain careless hurried lawmaking by people wanting to retain their seats in DC. Even SS which you mentioned includes higher payments for people with higher incomes. ....

While some of it may have been hurried lawmaking or carelessness, I think the lack of means testing was simply that it was administratively much easier to only include an income test. While we debate the means testing issue here in the whole scheme of things the number of those of substantial means receiving subsidies are the proverbial angel on a pinhead so it wasn't worth the effort and complexity of including a means test and chance losing a crucial vote because of the added complexity it created.

On the second point, while people with higher incomes do get higher payments under SS because they paid in more, because of bend points, those who pay in less get higher benefits in relation to what they paid in and people who paid in more get less in relation to what they paid in... so SS benefits are definitely skewed to favor the less fortunate at the detriment of the more fortunate... to content otherwise is just ignorant of how the bend points work.

 

[ivinsfan]

This may be the reason. But I suspect not. It is very easy to include the statement, "Those with assets above x excluding primary residence are not eligible". And, if it were an oversight or hurried law making, they have had several years and several different congresses that could have changed it. I also worry about the countries finances. And, I generally do not support governmental programs for the middle class and wealthy. But, that is not the world we live in. Change the world, change congress, change the laws. But until then, we should not disparage members that are playing by the existing rules. Remember, they are being vilified because they are "wealthy". So, by definition, they are also paying (or have paid) substantial taxes that support benefits that go to the poor, middle class and wealthy.

All we have is the tax system as written. If we let citizens guess at congresses intent or oversight, many would not pay what they owe. Saying, "surely congress did not mean to tax me this much". Historically, our duty as citizens has been to support both sides of the tax law, taxes and benefits, as written. We have mechanisms in place to change the tax laws if we do not like them. And, they are routinely changed.

No that wouldn't have been simple to apply a means test and use the tax return mechanism, that's my entire point. FAFSA uses means testing all the time but requires an entirely separate type of form. Are you actually reading my comments, I've clearly said it is the law but I don't think it cool for some posters to come here and ask for tips on how get the lowest possible prices for HI even to the extent of counting how many days you need to be out of the stock market, in other words just selling stocks to create paper losses for free HI. I've said this isn't really the spirit of the law IMO. I never they were "bad" or doing anything wrong according to the law. And if the costs of ACA torpedoes subsidies some people will really suffer from it.