Getting an ACA Subsidy

[Animorph]

I've figured out the answer and will post it (BTW turns out this is a typical forum)

We withdraw $22000 from our 401ks, which counts as income (don't think I will pay a penalty but even if I do it is a savings).

...

It doesn't really matter if I spend the money withdraw from the 401k instead of using cash savings or put it into Roth IRA far as this topic is concerned.

Thanks to those who helped in the question!!!

Just to add my weight to the Roth conversion side:

As far as getting the subsidy, a 401k withdrawal or a 401k to Roth IRA conversion will both generate income.

You pay the same tax either way also.

However, with a simple 401k withdrawal you may pay a significant penalty (if you don't qualify for the rule of 55). The Roth conversion can be performed at any age without a penalty. Plus a simple 401k withdrawal removes value from your tax-privileged 401k account and moves it into your taxable account. A Roth conversion keeps your money in a tax-privileged account.

Reducing the value of your 401k now may help your tax situation when you turn 70 and have to start RMD's, as pb4uski has pointed out.

 

[Texas Proud]

From what I seen, BCBS has a good network if they are offering the whole network. However, I have seen on the ACA where they strip down the network. In the latter case it is often not as good. Really need to look at the overall network offered on the plan you are looking at. If you don't select the correct plan to look at, you may see the wrong network.

This is true of more than just BCBS. Get one of the lawyers on this forum who can't talk themselves into retiring to check the plan out for you!

My problems is you do not know the network is good or bad until it is too late... in theory you can look at docs in your network, but in reality it is quite hard... also, you usually only look local... so you do not know anything about farther away....


Healthcare is still broken... and getting more so... and it is expensive.... and getting more so....

 

[bingybear]

My problems is you do not know the network is good or bad until it is too late... in theory you can look at docs in your network, but in reality it is quite hard... also, you usually only look local... so you do not know anything about farther away....


Healthcare is still broken... and getting more so... and it is expensive.... and getting more so....

you know, in many ways it STILL IS. there are a couple items here. one, people working for companies don't see the full cost because the company pays most of it in many cases. This causes a false concept of cost in much of the public.
Next, age on the exchange is a variable, but preexisting conditions are not (I guess not in a company either). But companies still are trying to play games to make more money... part of the general game of business.

The subsidy issue is more governmental. I think ER was missed in the process. Likely good for ER.

 

[Surfer60]

If you have no income then in most cases you'll be eligible for Medicaid. You don't need to be disabled.

It might be a good time for you to do Roth conversions to create just enough income to qualify for subsidies and pay minimal taxes on the Roth conversions and avoid a tax torpedo later in life when SS and RMDs kick in.

One thing though... depending on where you are sailing Medicaid or an ACA policy might not do you any good so look into it.

Unlike ACA, Medicaid has tight limits on assets in most, if not all states. I'm in Texas, and you're talking impoverishment to qualify. So the other posters are right to advise simply managing AGI to qualify for an ACA subsidy. And great point about the partial Roth conversion. If you've got to show some income for ACA, definitely use the conversion to provide it and still keep the tax preference. Regarding the question about networks, BCBS Texas has a good PPO network but a very limited HMO network. I suspect other Blues are similar.

 

[jim584672]

Unlike ACA, Medicaid has tight limits on assets in most, if not all states. I'm in Texas, and you're talking impoverishment to qualify. So the other posters are right to advise simply managing AGI to qualify for an ACA subsidy. And great point about the partial Roth conversion. If you've got to show some income for ACA, definitely use the conversion to provide it and still keep the tax preference. Regarding the question about networks, BCBS Texas has a good PPO network but a very limited HMO network. I suspect other Blues are similar.

Not even impoverishment will get you care in Texas if you are a childless adult 18-64 (the undeserving poor), since Texas did not expand Medicaid. Texas doesn't even have a "medically needy" exception for this group. So if a 52 year old spends down all assets to $0, Texas will pay nothing for care. The person would have to be deemed "disabled" and have income under 15% FPL with almost no assets to get coverage. In the 30 states that expanded, the only test is a <138 FPL income test for childless adults 18-64.

 

[MichaelB]

Anyone know if the nationwide network Bluecross Blueshield health insurance policies are any good? I too am trying to figure out how to juggle our money to get an ACA subsidy, though I think our MAGI will naturally fall somewhere between 25K & 50K before income tweaks.

From what I seen, BCBS has a good network if they are offering the whole network. However, I have seen on the ACA where they strip down the network. In the latter case it is often not as good. Really need to look at the overall network offered on the plan you are looking at. If you don't select the correct plan to look at, you may see the wrong network.

This is true of more than just BCBS. Get one of the lawyers on this forum who can't talk themselves into retiring to check the plan out for you!

In many states BCBS offers three types of plan on the marketplace exchanges: HMO, limited network, and national network (Bluecard). They appear to be rolling out this approach across the country. Humana and Aetna also offer plans with national networks.

Health insurance is regulated by each state, and insurers offer different plans (with much different prices) around the country.

 

[MBSC]

Not even impoverishment will get you care in Texas if you are a childless adult 18-64 (the undeserving poor), since Texas did not expand Medicaid. Texas doesn't even have a "medically needy" exception for this group. So if a 52 year old spends down all assets to $0, Texas will pay nothing for care. The person would have to be deemed "disabled" and have income under 15% FPL with almost no assets to get coverage. In the 30 states that expanded, the only test is a <138 FPL income test for childless adults 18-64.

Your statements have been put into graphic form in Figures #2 and #3 of the article below.

Link: Where Are States Today? Medicaid and CHIP Eligibility Levels for Adults, Children, and Pregnant Women | The Henry J. Kaiser Family Foundation

 

[rbmrtn]

Many states have now restricted balance billing. HMOs seem to be better in this respect as almost all states restrict balance billing for HMOs, but PPOs vary. Only AK seems to have no restriction. Here's the table from Kaiser

State Restriction Against Providers Balance Billing Managed Care Enrollees | The Henry J. Kaiser Family Foundation

 

[pb4uski]

Unlike ACA, Medicaid has tight limits on assets in most, if not all states. I'm in Texas, and you're talking impoverishment to qualify. ....

Not even impoverishment will get you care in Texas if you are a childless adult 18-64 (the undeserving poor), since Texas did not expand Medicaid. Texas doesn't even have a "medically needy" exception for this group. So if a 52 year old spends down all assets to $0, Texas will pay nothing for care. The person would have to be deemed "disabled" and have income under 15% FPL with almost no assets to get coverage. In the 30 states that expanded, the only test is a <138 FPL income test for childless adults 18-64.

Good to know. I'm in a state that expanded Medicaid so there is no assets test.

 

[jim584672]

Actually the DAB (Disabled, Blind, or Elderly) group still has a resource / income test, just not the 18-64 expanded group.

 

[brewer12345]

Very true. Best to study your HI plan options VERY carefully before pulling the FIRE trigger. Since Medicaid is state-based program, most do not generally provide out of state coverage. In many regions most ACA plans, not just the cheaper ones, have limited networks which often do not include out of area coverage except for true emergencies. Main reason I'm still w#rking is for access to decent HI, IOW a reasonably broad network & true nation-wide coverage. Under most any ACA Plan offered in my region, if I were to need urgent but not "emergency" care while traveling/visiting I would be stuck paying 100% of the bill. Almost all ACA plans in my region offer NO out of network coverage, and the few that do have OON OOPmax (HSA family plans) of $40-60K!!! One goal of ACA was to offer a choice of nationwide plans in each region, but that is sadly still not the case for many. Wish that changes in my region for 2016 but I'm not hopeful based on early press from state insurance commission

Perhaps you could stop with the scaremongering? I am sorry you live in a benighted state that has decided that access to healthcare for everyone is a horrible thing to be disencouraged at all costs. Some of us live in more enlightened states where the gubmint either has decided not to crap on its citizens or is at least less competent at getting in the way. There are lots of places where the dire stuff you spew regularly is not the case.

I am in year two of ACA coverage. Last year we had low income and got a generous subsidy with cost sharing. We had excellent coverage and care from a healthcare organization I had not previously dealt with, but am mightily impressed by. This year is a high income year so we have no subsidy. The premiums are spicy and the deductible is caliente, but the care and coverage are from the same excellent organization.

 

[daylatedollarshort]

We have mainly the same doctors we've had for years and the same highly rated local hospital with our ACA plan. We had to change eye doctors so far and that is all. We have expanded Medicaid here in California (no asset test), though we are on a Bronze plan ourselves. We're quite happy and apparently our experience is not unique -

"More than 80% of U.S. residents who obtained health insurance through the Affordable Care Act's exchanges say they are satisfied with their coverage, according to a new Commonwealth Fund survey, The Hill reports (Sullivan, The Hill, 6/12)"

"Further, 93% of Medicaid beneficiaries who enrolled in the program through an ACA exchange said they were satisfied with their plans, according to the survey....In addition, 91% of residents with ACA coverage who have used their plans reported they are satisfied with their provider network...The survey also found that 53% of individuals with exchange coverage previously had been uninsured. "

Survey Finds 81% of U.S. Residents Satisfied With ACA Coverage - California Healthline

 

[MRG]

I went from Megacorp's COBRA gold plated plan to a wide network with national coverage platinum exchange plan for 50% less money.

This state is not enlightened, my selections were from 3 decent insurers. I went with what is considered in this area to be the best. I know YMMV.

 

[ERhoosier]

Perhaps you could stop with the scaremongering? I am sorry you live in a benighted state that has decided that access to healthcare for everyone is a horrible thing to be disencouraged at all costs. Some of us live in more enlightened states where the gubmint either has decided not to crap on its citizens or is at least less competent at getting in the way. There are lots of places where the dire stuff you spew regularly is not the case.

I am in year two of ACA coverage. Last year we had low income and got a generous subsidy with cost sharing. We had excellent coverage and care from a healthcare organization I had not previously dealt with, but am mightily impressed by. This year is a high income year so we have no subsidy. The premiums are spicy and the deductible is caliente, but the care and coverage are from the same excellent organization.

Pointing out fact is not "scaremongering". My comments clearly did NOT refer to the situation in all regions or for all ACA plans. Fact is that there are potential pitfalls in HI for FIREs. It is prudent to use due care in understanding the features of any HI plan before signing up. And vast majority of HI options are region specific.

BTW- the state I reside in has a lower % of uninsured than ave, as it did pre-ACA (at least according to data from Kaiser).
Rates of Uninsured by State Before & After Obamacare | WalletHub®
Better than ave rate of uninsured is not the best, but the state has clearly not "decided that access to healthcare for everyone is a horrible thing to be disencouraged at all costs". In fact, earlier this year the Feds granted the state a waiver for a longstanding and fairly successful (hopefully sustainable) program of expanded HI and HC services for low income folks not well served by traditional Medicaid. Again, not perfect but hardly "crapping" on its citizens.

 

[Dreaming of Freedom]

My state only has 2 providers, Coventry & BCBS. Coventry only has plans with local providers, so going with a BCBS nationwide plan is my only option if I want in-network access to healthcare services outside of my metro area. We plan to travel the US quite a bit in retirement, so having in-network access to doctors in .other cities in the US is important to us.

 

[ziggy29]

One of the issues is that the "cheapest" subsidized ACA plans tend to be HMOs, which IMO are close to garbage. I was on an ACA plan from the beginning until the end of last month, and while I was eligible for some subsidy during that time, I opted not for the cheapest plan, but to pay nearly $100 a month more for a PPO. That tells you what I think of HMOs in general, especially those where out-of-state coverage is iffy at best. (Keep in mind that an HMO usually requires you first see your PCP for everything and they are the "gatekeeper" to specialists and everything else. Makes needing care out of state a lot of "fun".)

 

[ERhoosier]

One of the issues is that the "cheapest" subsidized ACA plans tend to be HMOs, which IMO are close to garbage. I was on an ACA plan from the beginning until the end of last month, and while I was eligible for some subsidy during that time, I opted not for the cheapest plan, but to pay nearly $100 a month more for a PPO. That tells you what I think of HMOs in general, especially those where out-of-state coverage is iffy at best. (Keep in mind that an HMO usually requires you first see your PCP for everything and they are the "gatekeeper" to specialists and everything else. Makes needing care out of state a lot of "fun".)

Not a huge HMO fan either, but I would not paint 'em all with the same brush. From available objective measures (member surveys, rate of complaints/suits, etc.) some are good while others.....well not so good. As with most things- YMMV based on your specific circumstances.

Re earlier posts re BCBS- BCBS is not a single insurance co, but (from their website) a "system of 36 independently operated BCBS member companies" and a program for Federal employees. Just because BCBS system operates nationally does not mean every BCBS individual HI plan offers nationwide coverage for non-emergency care.
Health Insurance Companies & Plans | Blue Cross Blue Shield | BCBS.com
AFAIK, each area is handled by only one of these independent BCBS licensee companies. BCBS coverage features can vary widely between states, as well as between individual health plans. Even within BCBS- YMMV.

 

[ziggy29]

As far as BCBS goes, in my zip code BCBSTX is, and has been, the ONLY "competitor" on the Exchange. No wonder my premium went up 26 percent last year, and I'll bet it will be a lot again this year though I won't likely be on it.

 

[brewer12345]

Pointing out fact is not "scaremongering". My comments clearly did NOT refer to the situation in all regions or for all ACA plans. Fact is that there are potential pitfalls in HI for FIREs. It is prudent to use due care in understanding the features of any HI plan before signing up. And vast majority of HI options are region specific.

Actually, it is scaremongering. Every time someone asks about ACA you pipe up with unleavened doom and gloom. It does not take a space monkey to figure out that you have an axe to grind. How about instead something along the lines of: "coverage, costs and options vary greatly by location. In some places they are really poor/expensive and in other places they are very good. You will need to see what options are available near you and remember to read policy details and investigate the depth of coverage networks before you buy."

 

[MRG]

.. Snip..

Re earlier posts re BCBS- BCBS is not a single insurance co, but (from their website) a "system of 36 independently operated BCBS member companies" and a program for Federal employees. Just because BCBS system operates nationally does not mean every BCBS individual HI plan offers nationwide coverage for non-emergency care.
Health Insurance Companies & Plans | Blue Cross Blue Shield | BCBS.com
AFAIK, each area is handled by only one of these independent BCBS licensee companies. BCBS coverage features can vary widely between states, as well as between individual health plans. Even within BCBS- YMMV.

True, that is their structure. It's been that way forever. Since the topic is ACA subsidies what's the point? Their structure is the same regardless how you got the insurance.

Guess what, they all use different technology stacks, outsource to different 3rd party providers.... How does the minutiae of their structure impact me as a consumer?

 

[MichaelB]

This is still a sensitive topic for many members. Hopefully we can express our views and comment on those of others without offending. Let's try to keep it friendly.

"coverage, costs and options vary greatly by location. In some places they are really poor/expensive and in other places they are very good. You will need to see what options are available near you and remember to read policy details and investigate the depth of coverage networks before you buy."

That's a good way to put it.

 

[MichaelB]

As far as BCBS goes, in my zip code BCBSTX is, and has been, the ONLY "competitor" on the Exchange. No wonder my premium went up 26 percent last year, and I'll bet it will be a lot again this year though I won't likely be on it.

Florida BCBS also aggressively raised rates on their individual plans last year. I built a spreadsheet that tracked all the individual policies and premiums before and after the increases, as well as the Medigap policies and premiums, for all major insurers. BCBS raised their Medigap policies less than 2% while individual plans were >20%. Perhaps they badly underestimated the individual market. There is no scrutiny (in Fl) of the individual policies, however, so it's also possible they increased the price to cross subsidize their Medigap offerings. What is fascinating is how the same product - their national BlueCard policy with the same coverage - saw such different pricing among the states this past enrollment period. I expected the same policy with the same network to have more pricing consistency around the country.

Health insurance is still very much marketplace that demands a well informed consumer.

 

[ERhoosier]

I have no "axe to grind". I have strived to keep all of my comments factual. All seem to agree that HI options (Exchange, Medicaid, private, employer, whatever) vary significantly by individual circumstances (inc region, finances, health, etc.). We also seem to agree that all should carefully consider their specific HI options before signing up for a health plan (or a specific HI carrier). I have repeated seen the VERY painful consequences (financial and otherwise) to making poor assumptions &/or choices in a HI plan both pre- and post-ACA. The purpose of my comments has not been to "grind an axe" but to hopefully prevent others from suffering such consequences. As MichaelB said, HI is still very much a marketplace favoring the well-informed consumer. And, as in any marketplace, the ill-informed consumer can still suffer.

 

[brewer12345]

Making poor assumptions/decisions about anything involving money is always painful. Not sure why you are singling out health insurance.

 

[Slow But Steady]

It seems that the original poster disappeared two days and thirty posts ago, after posting this:

I've figured out the answer and will post it (BTW turns out this is a typical forum)

I'm still not sure whether he understands the significance of a Roth conversion or its impact on future tax liabilities.