Managing MAGI for ACA subsidies

[MRG]

Quote:

Originally Posted by Floridatennisplayer Seems like jumping through a lot of hoops just for crappy insurance.

Given the alternative is no insurance it's a great deal! Yeah maybe the formulary is smaller and there's less specialists but what's the alternative? I had a 5 hour ER visit for 35k a couple years ago. Insurance made it $1500.

[ivinsfan]

Quote:

Originally Posted by golfnut We'll be in this situation in less than 2 years. Just curious how this works when one person is on MC and the other buys hc thru the market place. What is the MAGI cliff in this situation? Right now, my wife and are paying very little here in Illinois for a bronze plan. This is because we are keeping our MAGI in the $60,xxx range. Not sure how this will work in 2 years when I'll be on MC.

Likely result will be that you pay the same amount for ACA that you do now and you will pay for your Medicare and Supplement, your costs will go up....the cliff stays almost the same since you have two people in the family..start checking your numbers it's easy to model.

[RunningBum]

People aren't jumping through hoops for health insurance, they are jumping through hoops for the subsidy.

[MichaelB]

Quote:

Originally Posted by RunningBum People aren't jumping through hoops for health insurance, they are jumping through hoops for the subsidy.

Exactly.

[Floridatennisplayer]

Well.....that is the title of the thread.

[RunningBum]

I shouldn't even bother.

[VanWinkle]

Quote:

Originally Posted by RunningBum People aren't jumping through hoops for health insurance, they are jumping through hoops for the subsidy.

I agree with your statement 100%, but some are jumping through the hoops for the pre-existing exemption also.

[pb4uski]

Quote:

Originally Posted by Floridatennisplayer Seems like jumping through a lot of hoops just for crappy insurance.

I don't see it as crappy insurance at all.... I guess that it depends on what your expectations are.

If you expect health insurance to pay for every bill then it is crappy.

I buy health insurance to protect my net worth from a six-figure illness or medical event and to be able to get negotiated prices for medical services... for that, high deductible health insurance works fine.

In my state in 2018, a gold plan for two is $4,053 a year more than a bronze plan, but the OPM is only $5,700 less for two.... so not very different.

Our medical claims are typically less than $1k a year so a "crappy" plan works great for us.... low cost but protects our nestegg from the cost of a catastrophic illness.

P.S. We don't do subsidies... we pay the full price of a catastrophic plan.

[bingybear]

Quote:

Originally Posted by RunningBum I don't think you can look at a snapshot of someone's portfolio/diversification and assume it is bad. Deferring as much income as possible may have been the right decision for high wage earners, even if it means forgoing a subsidy. Until the ACA was actually introduced, I don't really remember a means-tested summary being considered, so I don't think you can really call it bad preparation for anyone. I think most of us understand that if you're going to retire before 59, you probably need more than just a deferred income retirement account. But I'd guess many made plans to work until 59.5, at which point they could start tapping retirement accounts, or 62, when they can add SS. Suddenly that plan got thrown for a loop with higher medical insurance offset for a subsidy then hadn't planned on having to qualify for. I guess I'm taking offense to the word "bad" as it implies poor planning to me. I think it's more of an unfortunate tax diversification situation caused by a shift in tax laws that wasn't easy to predict.

I will agree that "bad" was likely not the right word. I did not really plan for tax diversity. We RE @ 53 (2 years after pacemaker) with a chunk of taxable and chunk in TIRA, but little in roths. My focus now is roth conversion so RMD + taxable income will cause high taxes after 70.5 and especially after one of us pass.
I'm trying to correct for my bad planning. The new tax law may provide better conversion opportunities for me.

[MichaelB]

Quote:

Originally Posted by Floridatennisplayer Well.....that is the title of the thread.

There are many informative threads on ACA and MAGI, with lots of good suggestions. This discussion is less MAGI and more T-IRA withdrawal. That is, how to fund one’s lifestyle from a taxable IRA while remaining eligible for ACA subsidy - when the budget needed exceeds the MAGI income limits. There really isn’t much room there, as seen by the discussion and real absence of options.

Using taxable IRAs to accumulate ones retirement savings was not a bad strategy. Once at retirement, though, it does leave one with very few options to manage the tax bite.

[Carol1862]

Quote:

Originally Posted by golfnut We'll be in this situation in less than 2 years. Just curious how this works when one person is on MC and the other buys hc thru the market place. What is the MAGI cliff in this situation? Right now, my wife and are paying very little here in Illinois for a bronze plan. This is because we are keeping our MAGI in the $60,xxx range. Not sure how this will work in 2 years when I'll be on MC.

Keeping it in that range mine went up about $100 a month (was about $25). Silver plan. Bronze will be less.

[Carol1862]

Quote:

Originally Posted by pb4uski I don't see it as crappy insurance at all.... I guess that it depends on what your expectations are. If you expect health insurance to pay for every bill then it is crappy. I buy health insurance to protect my net worth from a six-figure illness or medical event and to be able to get negotiated prices for medical services... for that, high deductible health insurance works fine. In my state in 2018, a gold plan for two is $4,053 a year more than a bronze plan, but the OPM is only $5,700 less for two.... so not very different. Our medical claims are typically less than $1k a year so a "crappy" plan works great for us.... low cost but protects our nestegg from the cost of a catastrophic illness. P.S. We don't do subsidies... we pay the full price of a catastrophic plan.

For a few years we paid full amount too. Then my husband needed surgery (cancer, thankfully curable). He was very close to MC age. Price on ACA would have been about $20,000. (High deductible plus out of pockets, drs not all in plan, meds). Cost on MC...$250, mostly for medication. He waited a short time and had surgery first week on MC. The biopsy, which showed cancer, cost us a couple of thousand on ACA.

You are absolutely correct, though, in that it’s insurance and we are covering ourselves for catastrophic illness. Just frustrating when MC pays it all and for almost $2000 a month we had to pay so much ourselves.

[pb4uski]

^^^ the price of freedom prior to age 65.

[slowsaver]

Sorry if I'm hijacking this thread, but I just want to check if my own plans are correct: Using HealthSherpa.com and CoveredCa.com, it appears that if I keep my MAGI at $60k/yr, then I can get high-deductible (Bronze) Kaiser insurance for both my DH and I for $0 or $2/mo (full subsidy). But If I increase MAGI to $65k/yr, then I lose all subsidy. Does that sound correct (for California)?

I got worried because some other commenter mentioned needing to keep MAGI under $20k/yr for full subsidy.

[RunningBum]

Quote:

Originally Posted by slowsaver Sorry if I'm hijacking this thread, but I just want to check if my own plans are correct: Using HealthSherpa.com and CoveredCa.com, it appears that if I keep my MAGI at $60k/yr, then I can get high-deductible (Bronze) Kaiser insurance for both my DH and I for $0 or $2/mo (full subsidy). But If I increase MAGI to $65k/yr, then I lose all subsidy. Does that sound correct (for California)? I got worried because some other commenter mentioned needing to keep MAGI under $20k/yr for full subsidy.

400% FPL is the same for all states but AK and HI. For 2018, the MAGI number for you is $65,480 (verify for yourself). As you increase from $60K to $65,480, your subsidy is a little less, but still (probably) significant. But if you go over that, you get no subsidy. The cliff.

Edited to add: The point at which you get full subsidy varies greatly even within a state, due to the costs of the plans available to you. Someone else may need to keep their income under $20K, and they may even be in CA, but for you it could be $60K.

[MBSC]

Quote:

Originally Posted by RunningBum Quote: Originally Posted by slowsaver Sorry if I'm hijacking this thread, but I just want to check if my own plans are correct: Using HealthSherpa.com and CoveredCa.com, it appears that if I keep my MAGI at $60k/yr, then I can get high-deductible (Bronze) Kaiser insurance for both my DH and I for $0 or $2/mo (full subsidy). But If I increase MAGI to $65k/yr, then I lose all subsidy. Does that sound correct (for California)? 400% FPL is the same for all states but AK and HI. For 2018, the MAGI number for you is $65,480 (verify for yourself). As you increase from $60K to $65,480, your subsidy is a little less, but still (probably) significant. But if you go over that, you get no subsidy. The cliff.

To clarify, $65,480 is the 2018 poverty guideline that will be used for 2019 ACA plans for household size of two. The guideline was released on January 13, 2018 which is after 2018 ACA AEP ended.

$64,960 is the 2017 poverty guideline being used for 2018 ACA plans. Currently, there is no subsidy at $65k for a household of two. It was released on January 26, 2017 to be used for 2018 ACA AEP. The ACA uses the prior year poverty guideline due to the release date.

[ShokWaveRider]

The $17k - $20k is for the MAXimum subsidies. In our case for 2018 it is $2k per month or $24k per year.

[Dtail]

Quote:

Originally Posted by ShokWaveRider Depends where you live. In Florida in our county, the last 3 years of Silver plans have been STELLAR! $0 Premium, $2400 MOOP. Excellent Doc. and Spec. networks, Zero complaints here. Way better than some of our friends work insurance. As far as getting the Max subsidy, IMHO one may as well get it while it lasts.

Same here in FLA.