|
|
11-06-2016, 08:14 PM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
|
My DGF was able to retire at 44. She would definitely still be working if not for the ACA.
The ACA was a precursor to MinnesotaCare being adopted in its present form. She get a plan with $0 premium, $0 deductible. It covers healthcare, dental, vision, pharmacy, etc.
Why work if you do not have to?
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
|
|
|
|
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!
|
11-06-2016, 09:53 PM
|
#22
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
|
Quote:
Originally Posted by GTFan
Heh, this frugal couple with everything paid off lives on less than 150% FPL (reported MAGI) which makes the ACA a killer deal. We're in a low-cost area and have ways to make stuff like food and travel cheap too, so it's no biggie.
But I can see why a lot of ERs with way more investments and costs than I would be in a high bracket, insurance-wise. And the ACA is getting a lot more costly for those folks.
|
We're in a high cost of living area but also in the killer deal camp. Our premiums are well under $200 a month for a nice selection of plans with good hospitals and large provider networks to pick from. Our premiums will be about $20 lower a month next year. And because we have a couple of small businesses we've scaled down but kept going the health insurance premiums we do pay are a tax deductible business expense.
We use a HSA and have some business expenses besides the health insurance like a home office that give us a little more headroom on the 400% of FPL. Then if it looks like we need more cash in a given year we have a HELOC we use for extra cash to keep our MAGI under the cliff. The interest on the HELOC is less than the subsidy amounts so it works out.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
|
|
|
11-07-2016, 10:37 PM
|
#23
|
Recycles dryer sheets
Join Date: Nov 2013
Posts: 238
|
I don't understand how people that retire early manage to keep their MAGI so low. I have CDs and interest (very little dividends from stocks) and some rental income that put me close to the cap for subsidies. But I have to include all interest, even IRA interest, correct?
Sent from my KFTHWA using Tapatalk HD
|
|
|
11-07-2016, 11:15 PM
|
#24
|
Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 2,844
|
Quote:
Originally Posted by Debinnov a
I don't understand how people that retire early manage to keep their MAGI so low. I have CDs and interest (very little dividends from stocks) and some rental income that put me close to the cap for subsidies. But I have to include all interest, even IRA interest, correct?
Sent from my KFTHWA using Tapatalk HD
|
You do not include interest from an IRA unless you withdraw it.
|
|
|
11-08-2016, 04:18 AM
|
#25
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
More accurately, you have to include as income the entire IRA withdrawal amount.
It does not matter if your IRA has any interest or capital gain that year, or it has a loss.
If you do not withdraw, then there's no income and no tax, whether gain or loss.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
11-08-2016, 05:05 AM
|
#26
|
Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,511
|
Quote:
Originally Posted by NW-Bound
More accurately, you have to include as income the entire IRA withdrawal amount.
It does not matter if your IRA has any interest or capital gain that year, or it has a loss.
If you do not withdraw, then there's no income and no tax, whether gain or loss.
|
A little more accurately... you can/should reduce the taxable amount by the prorated tax basis in the IRA.
|
|
|
11-08-2016, 05:06 AM
|
#27
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
OK.
I was talking about traditional IRA, and was not thinking about after-tax IRA, nor Roth IRA.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
11-08-2016, 05:25 AM
|
#28
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: South central PA
Posts: 3,486
|
Quote:
Originally Posted by joesxm3
Not very scientific on my part, but the part of ACA that required letting you in on a policy even with pre-existing conditions had a significant effect on my thinking that ER would be possible.
I might have been misinformed, but I probably would have felt that the employer health insurance was too important to give up if I did not think that ACA made it possible to buy my own policy either on or off exchange.
|
I would still be plodding along working if it weren't for the ACA. The insurance companies can't hang you out to dry if you get sick. There are no pre-existing condition exclusions. Yes, it made it possible for me.
This year, facing a $20K/year premium, I may eventually have to go back to work anyway...
I had an aunt who quit cancer treatment and died early partly because had no insurance and ran out of money in the early 1990s.
|
|
|
11-08-2016, 06:27 AM
|
#29
|
Recycles dryer sheets
Join Date: Nov 2013
Posts: 475
|
Without pre-existing condition change, I wouldn't have made the jump. I've had a number of people ask me about how we deal with healthcare and they are surprised they have an option prior to medicare.
|
|
|
11-08-2016, 06:35 AM
|
#30
|
Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,604
|
I don't have pre-existing conditions, but I understand the risk to those in the individual market, under the old system.
The outcome of the 2012 presidential election and the likely upholding of the ACA was a key enabler of my actual ER in early 2013. MegaCorp HR was also asking me if I was ready to come back from my leave of absence (dependent care) at this time too so the timing was good.
DW still has employer coverage and retiree coverage awaits, but either of those could change at any time.
I didn't want to take the ER plunge until I was confident that "Medical Bankruptcy" was no longer a potential outcome. The ACA prohibitions on individual medical underwriting of premium rates combined with the must-issue rules facilitated this in our case.
-gauss
|
|
|
11-08-2016, 06:42 AM
|
#31
|
Moderator
Join Date: Oct 2010
Posts: 10,723
|
Quote:
Originally Posted by Debinnov a
I don't understand how people that retire early manage to keep their MAGI so low. I have CDs and interest (very little dividends from stocks) and some rental income that put me close to the cap for subsidies. But I have to include all interest, even IRA interest, correct?
|
If the retiree has little in the way of non tax advantaged assets (i.e. has it 'all' in IRA, Roth, 401k, etc and doesn't have income generated from non tax advantaged assets), then it's pretty easy, given a source of Roth or even HELOC funds. You pull as much as you can from IRA/401k while controlling income level, and pull the rest of your needs from the Roth or HELOC. This retiree can set the income level anywhere they want. The 'cost' is that, generally speaking and if tax rates stay the same, pulling Roth funds later is better (tax-free compounding). The cost of the HELOC is the interest rate, but rates are very low and the payoff of PTC can be very high.
|
|
|
11-08-2016, 07:30 AM
|
#32
|
Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,884
|
Quote:
Originally Posted by joesxm3
Not very scientific on my part, but the part of ACA that required letting you in on a policy even with pre-existing conditions had a significant effect on my thinking that ER would be possible.
I might have been misinformed, but I probably would have felt that the employer health insurance was too important to give up if I did not think that ACA made it possible to buy my own policy either on or off exchange.
|
+1
Without the ACA, either my wife or I would have to remain employed just for health insurance, as opposed to being able to retire in our early 50s.
|
|
|
11-08-2016, 08:01 AM
|
#33
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
Quote:
Originally Posted by ziggy29
I still worry about the rising cost of subsidies busting the budget.
... I put in two people (DW and me), $42,000 income, ages 51 and 48. In my ZIP code all we have is BCBSTX and we have no PPO options. But an HSA-eligible Bronze option would cost us $51 per month ($991 before subsidy). So that's $940 a month we'd get in subsidy -- about a quarter of our income for a BRONZE plan! ... But is it something we'll be able to keep affording as a nation? Not sure.
|
+1
Where I am, a 60-year old couple with a joint MAGI of up to the 400% FPL of $64K will get a subsidy of $1,628/month or $19.5K/year. That's because an HMO Silver plan is $24K/year, and with a $14.1K deductible.
That subsidy money has to come from somewhere. Like from people who are working and already have employer insurance? Like my children?
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
11-08-2016, 08:17 AM
|
#34
|
Thinks s/he gets paid by the post
Join Date: Apr 2013
Location: Ormond Beach
Posts: 1,407
|
|
|
|
11-08-2016, 08:18 AM
|
#35
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
Quote:
Originally Posted by NW-Bound
That subsidy money has to come from somewhere. Like from people who are working and already have employer insurance? Like my children?
|
Cadillac tax and other ACA funding mechanisms
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
11-08-2016, 08:23 AM
|
#36
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
Quote:
Originally Posted by Big_Hitter
Cadillac tax and other ACA funding mechanisms
|
Do they balance out?
It is obvious that the ACA subsidy has grown to much larger than it was first envisioned. Do the taxes automatically grow to match?
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
11-08-2016, 08:40 AM
|
#37
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
Quote:
Originally Posted by NW-Bound
Do they balance out?
It is obvious that the ACA subsidy has grown to much larger than it was first envisioned. Do the taxes automatically grow to match?
|
I'll have to do some research. The Cadillac tax was one of the only real funding mechanisms for ACA and has come under fire recently, primarily from unions, as they have some of the most generous health plans. The tax was recently delayed one year.
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
11-08-2016, 11:00 AM
|
#38
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
|
Quote:
Originally Posted by NW-Bound
+1
That subsidy money has to come from somewhere. Like from people who are working and already have employer insurance? Like my children?
|
Wouldn't some of the money come from the tax penalties paid by those who forgo buying health insurance? Those are the potential free riders who cost the overall health care system without paying into it otherwise. If they tend to be the younger, healthier people, then their failure to buy health insurance puts upward pressure on insurance rates for everyone else, and that drives up the subsidies. So it makes sense to have their tax penalties go back into the system to offset the costs they are putting onto everyone else.
__________________
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!"
|
|
|
11-08-2016, 11:06 AM
|
#39
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
|
Quote:
Originally Posted by Debinnov a
I don't understand how people that retire early manage to keep their MAGI so low. I have CDs and interest (very little dividends from stocks) and some rental income that put me close to the cap for subsidies. But I have to include all interest, even IRA interest, correct?
|
Besides the answers in the previous posts (Roth withdrawals, HSA, HELOC, tax deferred retirement account income, business expenses), for some households with expenses at or near the cliff, it might be more beneficial to focus more on optimizing / lowering expenses and getting the ACA tax credits instead of part-time work for extra income. The extra income is usually taxable (federal income tax, social security and maybe state income tax), often adds in job and commute expenses, too, and might mean a loss of $10K - $20K in ACA tax credits.
For example, if you are near the cliff and have a house cleaning service, if the money you need to withdraw from retirement accounts or sell stocks in an after tax account to pay the house cleaners puts your MAGI over the ACA cliff, it might be cheaper to clean your house yourself.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
|
|
|
11-08-2016, 12:29 PM
|
#40
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2014
Posts: 7,045
|
Part of the problem I see is that the deductibles can be so high that people will have insurance and then can't afford to use it. We pay 10k /year for retiree coverage but at least it is affordable to use.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|