They're millionaires, and they get Obamacare subsidies

[UtahSkier]

Not much new here... but applies to many of us

I have yet to abandon my grandfathered plan, but I am making plans for that day.


This one weird trick can help even rich people buy Obamacare at sharply reduced prices. Really.

A number of wealthy individuals, some of whom were "disgusted" with Obamacare when it first went into effect, nonetheless are now taking advantage of federal financial aid available under that health-care law to help significantly reduce their monthly insurance premiums.


They're millionaires, and they get Obamacare subsidies

 

[MichaelB]

This has been discussed many times here, many members receive premium assistance.

 

[Big_Hitter]

She seems like a smart FA and I don't say that often

means testing subsidies wouldn't be practical

 

[Senator]

When my GF and I retire this year, she has ~.6M in assets. She will get nearly free health insurance, compliments of the State of MN. $20 a month, $0 deductible for medical, vision, dental, pharmacy and even rides to and from the appointments.

I am a multi-millionaire, I get free health insurance from the VA.

It's not uncommon. Do not blame the people for taking advantage of a program, blame the program if you do not like it.

 

[Big_Hitter]

Do not blame the people for taking advantage of a program, blame the program if you do not like it.

big time - the best deal for seniors is the 3/1 ratio rule

 

[Walt34]

I am simply shocked, just shocked, that people would structure their income to reduce expenses.

Lessee, where else have I heard of people doing that?

 

[LARS]

This could throw a wrench in a lot of ER/Obamacare plans...

First article out in the mainstream press that I can remember where the anomaly of "millionaires" getting subsidy from Obamacare. Interesting to see if this becomes more prevalent and Congress decides to do something about the "loophole"...

They're millionaires, and they get Obamacare subsidies


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[rodi]

This article was pretty silly for anyone actually paying attention.

Next they'll be complaining that some folks with $1M in assets actually are getting health care from medicare?

Or complaining that people with kids get child tax credits. Or that folks who pay mortgage interest can deduct it.

It's all part of the tax code. Smart people claim the credits and deductions that are applicable.

 

[HadEnuff]

a "millionaire" infers "wealth", when in fact, a retired person with 1M invested, using a conservative 4% WR (which many including me don't feel is all that conservative considering how much risk one must take on to attempt to generate a 4% return) is living on 40K + SS if they get it.

40K + SS is not "rich"...

 

[Souschef]

a "millionaire" infers "wealth", when in fact, a retired person with 1M invested, using a conservative 4% WR (which many including me don't feel is all that conservative considering how much risk one must take on to attempt to generate a 4% return) is living on 40K + SS if they get it.

40K + SS is not "rich"...

Good Point!
I will be doing taxes for seniors and low income people with the AARP-IRS program starting Monday. In my classes we had a long discussion about the impacts of Shared Responsibility Payments and premium assistance. This year if you are uninsured, the SRP (penalty) is $975. Next year it goes up to over $2000.

 

[ivinsfan]

I wonder how much money you would need to be indifferent to health care costs. Certainly you'd need more then one million dollars. Without health insurance, a million in health care costs could be a drop in the bucket.

I suspect eventually there could be some means testing applied,at 62 and on private insurance it won't have an impact on me, but some of our early ER's with families could be very impacted. I suspect 5 years from now Obamacare will look very different.

 

[HadEnuff]

I wonder how much money you would need to be indifferent to health care costs. Certainly you'd need more then one million dollars. Without health insurance, a million in health care costs could be a drop in the bucket.

I suspect eventually there could be some means testing applied,at 62 and on private insurance it won't have an impact on me, but some of our early ER's with families could be very impacted. I suspect 5 years from now Obamacare will look very different.

they might even stop calling it "Obamacare".

 

[ivinsfan]

they might even stop calling it "Obamacare".

 

[UpAnchor]

a "millionaire" infers "wealth"

That's so often true. And in this instance the author made sure to reinforce that perception by using "millionaire", "wealth" and "rich" nearly interchangeably within the first two paragraphs. But then we knew that going in based on the title. As usual, the best part is the comment section though even that wore thin before long. I guess I'm less easily entertained than in the past.

 

[photoguy]

It's all part of the tax code. Smart people claim the credits and deductions that are applicable.

+1

I'm not even sure why anybody would be upset up about this. The average ACA subsidy is something like $3-4k. That's peanuts when talking about tax breaks.

 

[LARS]

I wonder if you folks are underestimating the PR affect of this to members of Congress. To me it falls into a similar category of recent changes Congress made to Social Security by eliminating file and suspend. Didn't impact a lot of people but Congress went after it anyway.


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[UtahSkier]

I wonder if you folks are underestimating the PR affect of this to members of Congress. To me it falls into a similar category of recent changes Congress made to Social Security by eliminating file and suspend. Didn't impact a lot of people but Congress went after it anyway.


Sent from my iPad using Early Retirement Forum

Good point. As MichaelB pointed out, we have been discussing that around here for years. This was the first main stream article I've come across discussing these "gaming" strategies...

 

[brucethebroker]

Obamacare subsidy does not consider wealth, only income. No questions about net worth, assets, etc., only current income, which can be reduced by business expenses (for the self employed), IRA and HSA contributions. I guess the pointy heads in Washington consider only people making large incomes to be in the evil 1%, whatever.

A couple with $75k in income each year could reduce it to $60k or less, with IRA and HSA contributions and business deductions. That would qualify for some subsidy (62K or less for couples).

If said couple were "paper millionaires", and they can live on $62k or less (net income), they would qualify.

Crazy!

 

[Gumby]

I wonder if you folks are underestimating the PR affect of this to members of Congress. To me it falls into a similar category of recent changes Congress made to Social Security by eliminating file and suspend. Didn't impact a lot of people but Congress went after it anyway.

Precisely. This is how we got the Alternative Minimum Tax -- because 155 people with adjusted gross income of greater than $200,000 paid no income tax in 1969.

 

[Senator]

I'm not even sure why anybody would be upset up about this. The average ACA subsidy is something like $3-4k. That's peanuts when talking about tax breaks.

Exactly. In fact, it keeps people working. You can work, continue to pay some taxes, and get a subsidy. Even contribute to a retirement account.

The other option is people do not work to accumulate anything, and get a lot more than an ACA subsidy. People would retire before they ever started working when you create a high work penalty.

 

[papadad111]

First article out in the mainstream press that I can remember where the anomaly of "millionaires" getting subsidy from Obamacare. Interesting to see if this becomes more prevalent and Congress decides to do something about the "loophole"...

They're millionaires, and they get Obamacare subsidies


Sent from my iPad using Early Retirement Forum

Exactly right Lars. Politicos will go after this as a way to show they are on d job - put in their effort to "fix" the problems and close the loopholes

means testing probably just a matter of time.. But we all knew that when the subsidies were first started - not because of millionaires but overall the structure of subsidies is still unsustainable.

I've seen a few articles but nothing as mainstream as CNBC and am sure it will gain publicity since it is an easy spin on "rich vs poor" ...and that sort of "injustice" sells clicks.

I'm waiting for the deluge of articles to suggest means testing for health care subsidies the same way SNAP , subsidized sec 8 housing, free cellphones, utility bill assistance and other "welfare" programs have means testing.

The USA loves to attack those who work hard and save their money. The crab pot mentality has taken hold here ... It's no longer admired to achieve the American Dream but rather it's ridiculed and demonized to be or become "rich" or "wealthy".

 

[Gone4Good]

This "problem" mostly solves itself if we can get the economy back to a place where 2% real interest rates are the norm rather than a fond memory. A big part of the reason that multi-millionaires may qualify for subsidies that kick in at 4x the poverty level is that taxable investment returns are currently so low.

At the moment a 50/50 portfolio consisting of the S&P 500 and Vanguard's bond index yields income of just over $20K per $1 million invested. Hopefully that won't last forever.

On the politics side, in a world where "middle class" has consistently been defined as earning somewhere around or above $200k annually for presidential political purposes, no one is really interest in sticking it to folks with portfolio's in the $1-$3 million range.

This is kind of a non-issue.

 

[pb4uski]

While I'm not on subsidy, I suspect that many on this forum, even those who are on subsidies, would concede that subsidies were not intended for wealthy retired folks but for low income folks who could not afford health insurance.

The fact that that some wealthy retired folks legally qualify is only because of the way Congress structured the subsidy requirements. If they were to make changes to eliminate subsidies to these people in most cases I suspect it would be a minor inconvenience but not a retirement killer.

Perhaps rather than means testing they could attach a multiplier to dividends, capital gains and Roth conversion income in the O-MAGI calculation. IOW, if for the purpose of the subsidy calculation that dividends, interest, capital gains and Roth conversions were tripled, then that would probably cull out any wealthy folks whose income is managed to qualify for subsidies.

 

[mystang52]

This article was pretty silly for anyone actually paying attention.

Next they'll be complaining that some folks with $1M in assets actually are getting health care from medicare?

Or complaining that people with kids get child tax credits. Or that folks who pay mortgage interest can deduct it.

It's all part of the tax code. Smart people claim the credits and deductions that are applicable.

Well said. Bravo.

 

[Which Roger]

What is the "one weird trick" that is mentioned in the first sentence?

It would have been a lot simpler if the author had simply stated that these people, just like everybody else, claim all applicable tax deductions and tax credits, so that they pay every cent that the owe the government, but not a penny more.