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Article On OMY (One More Year) Syndrome
Old 09-24-2019, 10:19 AM   #1
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Article On OMY (One More Year) Syndrome

Go Curry Cracker is one of my favorite FIRE blogs. Here's an article just out today.

Article about OMY syndrome, investing, and backdoor Roth:

https://www.gocurrycracker.com/cost-...one-more-year/
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Old 09-25-2019, 08:56 AM   #2
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The article doesn't consider the costs of RE medical care. At least in the US, those costs can negate the tax benefits of Roth conversions and gain harvesting.
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Old 09-25-2019, 09:41 AM   #3
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The article doesn't consider the costs of RE medical care. At least in the US, those costs can negate the tax benefits of Roth conversions and gain harvesting.
With many states offering free medical care for residents, RE or not, why wouldn't a retiree relocate to one of those states, and then 'travel' to whatever state they want when they do not want to be in that free healthcare state?

My DGF gets 100% free medical, dental, vision, pharmacy and has a $1M+ NW. Her income is low. Anyone can relocate to MN (or other states) very easily, and not even have to be in the state much at all.
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Old 09-25-2019, 09:57 AM   #4
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With many states offering free medical care for residents, RE or not, why wouldn't a retiree relocate to one of those states, and then 'travel' to whatever state they want when they do not want to be in that free healthcare state?

My DGF gets 100% free medical, dental, vision, pharmacy and has a $1M+ NW. Her income is low. Anyone can relocate to MN (or other states) very easily, and not even have to be in the state much at all.

Do you mean states that went for Medicaid expansion?



Or if DGF is on an ACA plan, she is getting subsidies defined by Federal, not State laws. ACA plans don't have nationwide networks. In fact I think most snowbirds I've talked to wind up buying plans in each state in which they live part-year.
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Old 09-25-2019, 10:06 AM   #5
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Do you mean states that went for Medicaid expansion?

Or if DGF is on an ACA plan, she is getting subsidies defined by Federal, not State laws. ACA plans don't have nationwide networks. In fact I think most snowbirds I've talked to wind up buying plans in each state in which they live part-year.
Yes, medicaid expansion. My DGF checked on coverage out of state. Emergency care is 100% covered. Anything else can be planned when we are in the state. It may be covered as well. $0 premium, $0 deductible.

She just got a postcard this Spring. She can now get one free dental crown a year, two round trip rides to a health club each week, and a free electric toothbrush.

We will only be in MN about 4.5 months this year.
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Old 09-25-2019, 10:18 AM   #6
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In order to qualify for Medicaid, you must be a resident of the State. In addition, Medicaid has a Resource requirement, I.e. assets below a certain $ amount, unlike ACA. If her assets exceed 1 million, she would not qualify for Medicaid.
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Old 09-25-2019, 10:29 AM   #7
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In order to qualify for Medicaid, you must be a resident of the State. In addition, Medicaid has a Resource requirement, I.e. assets below a certain $ amount, unlike ACA. If her assets exceed 1 million, she would not qualify for Medicaid.
Being a resident of a state is easy. Just have a residence or mailing address. RVers do it all the time. In our case, she was already a resident. If a new person was to move here, all it takes is a change of address.

There is no asset test for MN Care, which is expanded medicaid. As long as the money is in a Roth or a IRA, or real estate there is no income generated from it. They do count depreciation as income.


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To qualify for MinnesotaCare, is there a limit on the amount of assets my family can have?
No. MinnesotaCare has no asset limit.

https://mn.db101.org/mn/programs/hea...acare/faqs.htm
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Old 09-25-2019, 12:11 PM   #8
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The income limits for Medicaid are pretty low. Personally I wouldn't want to live on < $17,000 income. I know other people do, but I'd rather pay for health insurance than have to restrict my spending that much.

The capital gains harvesting in the article sounds better than its been to me in real life. I knew I would be able to avoid federal taxes but now my state taxes are considerably higher than my federal since my state doesn't give any preferential treatment to capital gains.
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Old 09-25-2019, 12:46 PM   #9
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Being a resident of a state is easy. Just have a residence or mailing address. RVers do it all the time. In our case, she was already a resident. If a new person was to move here, all it takes is a change of address.

There is no asset test for MN Care, which is expanded medicaid. As long as the money is in a Roth or a IRA, or real estate there is no income generated from it. They do count depreciation as income.
Physical presence is required to establish residency in MN except for temporary absence due to illness and that the absence is expected to last no more than 6 months from the month of departure.
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Old 09-25-2019, 12:49 PM   #10
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Originally Posted by Elbata View Post
Go Curry Cracker is one of my favorite FIRE blogs. Here's an article just out today.

Article about OMY syndrome, investing, and backdoor Roth:

https://www.gocurrycracker.com/cost-...one-more-year/
The real cost is time that you will never get it back, IMO.
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Old 09-25-2019, 03:55 PM   #11
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In order to qualify for Medicaid, you must be a resident of the State. In addition, Medicaid has a Resource requirement, I.e. assets below a certain $ amount, unlike ACA. If her assets exceed 1 million, she would not qualify for Medicaid.

ACA modified Medicaid to remove resource and asset tests.



https://www.medicaid.gov/medicaid/el...ity/index.html
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Old 09-25-2019, 04:23 PM   #12
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The income limits for Medicaid are pretty low. Personally I wouldn't want to live on < $17,000 income. I know other people do, but I'd rather pay for health insurance than have to restrict my spending that much.
You don't have to restrict your spending to income. You can spend from your cash accounts and Roth account, and even the principal of your taxed brokerage investments isn't income, only the gains/dividends are income. So $17,000 of "income" could result in far more spending than that. For me, I am planning $24,000 of income (MAGI) on $50,000 of spending, which will get me decent ACA subsidies.

So, it will be a marketplace plan for me, not Medicaid. One of the concerns with Medicaid is that there's an estate recovery program for people 55 or over who use Medicaid where the state will claw back the cost of healthcare services you have used from your estate (and sometimes even if you didn't need any healthcare, such as with managed care services). Few states have updated their policies to specifically exclude clawback for healthcare expenses related to the Medicaid expansion.

On another note, if I used the GoCurryCracker suggestion of doing conversions from my 457B account to my Roth, that would increase my MAGI well over that $24,000 threshold and increase my premium, deductible, and max out of pocket healthcare costs significantly.
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Old 09-25-2019, 04:33 PM   #13
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I understand not all of what I can spend is income, but I have a lot of highly appreciated taxable accounts so I won't get a lot more than the taxable income. Trying to stay below Medicaid levels also would restrict any traditional IRA to Roth conversions.

Once I need ACA coverage I think I should be able to manage at 400% of poverty level to keep some subsidy, but 138% is pretty restrictive.
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Old 09-25-2019, 05:14 PM   #14
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Once I need ACA coverage I think I should be able to manage at 400% of poverty level to keep some subsidy, but 138% is pretty restrictive.

Not only that, but as narrow as most state's ACA networks are - Medicaid is worse. If you actually might use the insurance, its probably better to realize enough income to be on ACA.
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Old 09-25-2019, 05:17 PM   #15
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The real cost is time that you will never get it back, IMO.
This is it. When you are 20, another year is only 1.5% of your life. When you are 60, a year is 5% of your remaining life.


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The income limits for Medicaid are pretty low. Personally I wouldn't want to live on < $17,000 income. I know other people do, but I'd rather pay for health insurance than have to restrict my spending that much.
If you had a well-off BF, you could live much higher on the hog... That is the way my DGF does it. If we were ever married, or had kids together, it would not work. I cannot give her any money (that counts as income), but I can provide a place to live, meals, etc.

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Physical presence is required to establish residency in MN except for temporary absence due to illness and that the absence is expected to last no more than 6 months from the month of departure.
All you need is a mailing address and a MN driver's license or ID. There are a lot of people that spend more than six months away, and the State still consider's them a resident. There are many cases from the MN Dept of Revenue that ropes people back in.

If you do not have another state, and you declare MN your place of residence, that is all you have.
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