Retire in your 30s and Get Subsidized Healthcare? I don't get it.

[Moemg]

I don’t want to put words in Moemg’s mouth but, I think the reference was to young folks making enough to not qualify for ACA subsidies, thus paying a “large” (compared to their current need) premium. That’s the interpretation to which I responded.

Absolutely correct !

 

[Hyper]

I have serious ethical issues with those who are sitting on major assets, but managing income in such a way as to game the ACA system (getting free government handouts while the national debt continues to climb). The lawyers who wrote ACA didn't foresee this legal loophole, or they thought it was so small, few would use it. IMHO, time for means testing for the ACA! I'm sure this will annoy those who are using the loophole, but seriously, why should America pay health expenses for those who retire early so that they can hold on their $? Doesn't really matter, as it's unlikely to last IMHO.

We're not on ACA, (yet). So it's perfectly fine for some to work 7 days wk 16-20 hrs a day for 30ish yrs paying taxes, (not everybody made their $ in the markets) and pay for what 10-20 others that do not pay their health care bills at the hospital? That's exactly what is happening now and in the past. We pay ridiculous HC bills to cover those who do not pay. Yea, fairly certain we've earned what ever subsidy we may get once we start using it!

 

[pb4uski]

I don’t want to put words in Moemg’s mouth but, I think the reference was to young folks making enough to not qualify for ACA subsidies, thus paying a “large” (compared to their current need) premium. That’s the interpretation to which I responded.

Ah, I see... but they can buy cheaper catastrophic coverage if they are under 30... $250/month in my state.

 

[ivinsfan]

Hey underwrite, Root of Good here. Hi!

If it consoles you any, just think of me as someone who "downshifted" his full time job as an engineer making $70k per year. I switched gears and dropped down to a (very very) part time job as a travel/early retirement blogger making $30k/yr plus $10k in dividend income. We legitimately live on $40k/yr and are living it up by my own subjective evaluation. Should I work a little harder just so I can pay some more taxes you think I should pay on my accumulated wealth?

To the extent that I work, I produce a decent quality product that literally dozens of people enjoy enough to come back week after week.

I'm earning money, spending money, and propping up the American economy. I am Making America Great Again single-handedly (well, technically I type with two hands).

I'm educating my kids so they can earn money and pay taxes to the best of their ability when they are on their own. Who do you think will be paying for your (and my) Social Security and Medicare eventually?

I pay thousands in FICA taxes (15.3% as a sole proprietor!!). I pay local property tax, sales tax, state income tax, and all kind of other taxes, duties, and license fees. And all that on $40k/yr income.

Is our system of taxation and spending equitable? I don't think so either. I've got a long list of grievances too. It's what keeps me showing up to the polls every other November and a time or two in between.

I'm a reader of your blog and IMO the problem is you have left out a couple of things. First everyone in this country who works pays all those taxes you mentioned. Retired people don't pay FICA but all but the lowest income pay taxes on their SS..so that doesn't make you special.


So your HI is one thing but you have been remarkably quiet in your blog about the plan you have to pay nothing on your student loans for that engineering degree.

You can't compare willingly borrowing money to get a degree to something so essential as health care. You agreed to pay the money back, decided to stop working and have no problem working the system.


And you brought up your kids so I guess it's fair to say that when go off to college depending on how many of your assets are squirreled away in TD accounts they will be getting very substantial govt aid for their schooling. Your kids are very bright and might get merit based aid but I'm pretty sure you will actively be looking for ways to have someone else pay for their college costs.

IMO you are not just "using govt plans" that are there to help people in times of trouble you are actively looking and participating for the purpose of only having to work "very very" part time. There is a difference and to pretend otherwise is inaccurate.

I enjoy your blog and will be the first to admit you live in a modest home, drive a modest vehicle and do not participate in "keeping up with the Joneses" which is just as important as taking advantage of government programs.

But you are being a little disingenuous with your comments here. Your blog is a good resource for people you might be looking for a way to retire early and it's nice you make some income from it.


I'm not a FUEGO basher, the path he has chosen is legit and open to everyone, but I do wonder sometimes about the ethics of it.

 

[GKieffer]

It's ok, I retired at the same age, moved overseas and do not use US Healthcare. He can have mine!

Where did you retire to? I can’t seem to get reliable information on where the best places are.

 

[brucethebroker]

Aren't there people who have paid zero income/FICA taxes, don't work and still get free health care from the Fed. Govt?

I would rather subsidize those who have worked (and paid taxes) in the past and may still work at least part time.

BTW, where is the outrage about people (non employed spouses) who are eligible for SS spousal benefits who have not paid in? The employed spouse did not pay "double" FICA taxes for the non-employed spouse to get benefits, right?

Let's be careful who we criticize.

 

[flintnational]

I am shocked! Shocked I say, to learn people will navigate governmental programs/the tax system to reap the most benefits from them. It's almost as if there are inherent downsides to letting governments manage money. I am truly shocked.

 

[ivinsfan]

Aren't there people who have paid zero income/FICA taxes, don't work and still get free health care from the Fed. Govt?

I would rather subsidize those who have worked (and paid taxes) in the past and may still work at least part time.

BTW, where is the outrage about people (non employed spouses) who are eligible for SS spousal benefits who have not paid in? The employed spouse did not pay "double" FICA taxes for the non-employed spouse to get benefits, right?

Let's be careful who we criticize.

the original poster started off the blog talking about younger people leaving their jobs and getting virtually free health care...it is what is ,so far there hasn't been any personal bashing so lets try and keep it that way....

 

[Blueskies123]

There are millions of people in rural America that make less than $40K and work full time. They need ACA. If he does not get insurance and gets injured you will pay for it anyway and or he may never fully recover. He may return to full time work if he ever wants to provide for a family or his retirement.
I would not let it bother me. Lots of people use food stamps and welfare of one kind of another. As long as he does work and he is smart enough to get insurance he will hopefully become more productive in a few years. If not, then he will be very poor in his old age.

 

[Moemg]

Ah, I see... but they can buy cheaper catastrophic coverage if they are under 30... $250/month in my state.

Not available where they live .

 

[Smitty700]

My COBRA health coverage, which costs me $700 / month for me and my wife, ends at the end of this year. In my area, the cheapest Bronze ACA policy is about $1700 / month without subsidies. (Thanks, Affordable Care Act.) In order not to pay $1000 more per month for this affordable care, I'm structuring my income to stay within the limits for subsidies.

I'm reasonably well off. My wish would be to continue paying $700 / month of my own money for my health care. But the government has made that impossible, so now the taxpayers get to pay for my care instead.

What a great system.

 

[daylatedollarshort]

And you brought up your kids so I guess it's fair to say that when go off to college depending on how many of your assets are squirreled away in TD accounts they will be getting very substantial govt aid for their schooling. Your kids are very bright and might get merit based aid but I'm pretty sure you will actively be looking for ways to have someone else pay for their college costs.

Not Fuego here, but in our state the max household income limit for state college grants is almost $100K a year for a family of 4, so the program is intended to help middle class households and not just the very poor. Plus the local high schools and colleges all sponsor college financial aid nights, even in an area with higher than average household incomes and home prices, so it is not like families taking advantage of these programs are doing anything considered morally shady, at least by local community standards.

 

[jimbee]

My COBRA health coverage, which costs me $700 / month for me and my wife, ends at the end of this year. In my area, the cheapest Bronze ACA policy is about $1700 / month without subsidies. (Thanks, Affordable Care Act.) In order not to pay $1000 more per month for this affordable care, I'm structuring my income to stay within the limits for subsidies.

I'm reasonably well off. My wish would be to continue paying $700 / month of my own money for my health care. But the government has made that impossible, so now the taxpayers get to pay for my care instead.

What a great system.

A big part of the premium change may be the insurance pool you're in now, compared with the ACA pool. At your job, the pool is probably full of healthy individuals that don't need as much health care on average. The ACA pool probably isn't, so the premiums will cost significantly more.

 

[ivinsfan]

A big part of the premium change may be the insurance pool you're in now, compared with the ACA pool. At your job, the pool is probably full of healthy individuals that don't need as much health care on average. The ACA pool probably isn't, so the premiums will cost significantly more.

or perhaps your employer is paying part of the Cobra and the OP is paying 100% of cost...

 

[MichaelB]

Many (most) large group / employer plans are age-neutral, so the premium is the same for all members regardless of gender or age. ACA allows age based pricing with a 3X range between min and max price. Not sure about anyone’s specific situation, but a 50-ish person going from an age neutral employer plan to individual marketplace will probably be shocked.

What makes this worse is most people in employer plans have no real understanding of the total cost of health insurance or the complexity of policies. Going from employer to individual is like a having a bucket of ice water poured on your head - except it gets colder every year and doesn’t stop ‘til age 65.

 

[Texas Proud]

Aren't there people who have paid zero income/FICA taxes, don't work and still get free health care from the Fed. Govt?

I would rather subsidize those who have worked (and paid taxes) in the past and may still work at least part time.

BTW, where is the outrage about people (non employed spouses) who are eligible for SS spousal benefits who have not paid in? The employed spouse did not pay "double" FICA taxes for the non-employed spouse to get benefits, right?

Let's be careful who we criticize.

To be fair it should only be 1 1/2 (not double) as the non working spouse does not get the same as the working one... but only half...

 

[ivinsfan]

To be fair it should only be 1 1/2 (not double) as the non working spouse does not get the same as the working one... but only half...

not even that much it's half of the contributing spouses benefit at FRA..no step up to half the full 70 benefit..

 

[FUEGO]

Not Fuego here, but in our state the max household income limit for state college grants is almost $100K a year for a family of 4, so the program is intended to help middle class households and not just the very poor. Plus the local high schools and colleges all sponsor college financial aid nights, even in an area with higher than average household incomes and home prices, so it is not like families taking advantage of these programs are doing anything considered morally shady, at least by local community standards.

Pretty much. Financial aid for college and affordable care act subsidies are firmly middle and even upper middle income welfare (and I mean that in a non-pejorative sense). Our family would get thousands in ACA subsidies even if I was spending $200k/yr (as long as my MAGI ends up <$115k).

I find some of the comments on this thread a little strange. We're on a forum solely dedicated to the pursuit of not working to our fullest potential for the last 3-5 decades of our lives. Typical topics on this forum include minimizing what you pay the government while maximizing what you receive back from the government (in various forms). SS, taxes, RMDs, Roth conversions, tax gain/loss harvesting, ACA subsidies, medicare, govt pensions <-- all topics that, when resolved to the most basic elements, are all about us individually getting the most back from government largesse while paying as little as legally possible.

I would encourage everyone to work as long as possible, pay as many taxes as possible, and refuse any benefits from the government so the rest of us layabouts can sit on our duffs! Because that is what is ethical, right? If you have a million or two in the bank, you clearly don't need SS, Medicare, or other handouts. So for the sake of the rest of us, go ahead and skip the signup process for those welfare programs. Or admit you're no different from the rest of us here on this forum seeking to optimize our finances in a legal way.

 

[Huston55]

My COBRA health coverage, which costs me $700 / month for me and my wife, ends at the end of this year. In my area, the cheapest Bronze ACA policy is about $1700 / month without subsidies. (Thanks, Affordable Care Act.) In order not to pay $1000 more per month for this affordable care, I'm structuring my income to stay within the limits for subsidies.

I'm reasonably well off. My wish would be to continue paying $700 / month of my own money for my health care. But the government has made that impossible, so now the taxpayers get to pay for my care instead.

What a great system.

I’m sorry you’re faced with this undesirable choice. But, it’s largely due to your state’s choices regarding the ACA, especially declining to expand Medicaid.

https://www.cnbc.com/2015/05/29/texas-pays-a-big-price-for-saying-no-to-medicaid-expansion.html

“The decision by Texas to reject expansion of Medicaid, the government health-coverage program for the poor, will prevent the state from receiving an estimated $100 billion in federal cash over a decade, at the same time its hospitals are eating $5.5 billion in annual costs for treating uninsured people, a new National Public Radio report details. (Tweet This)

Those uncompensated costs in turn are being covered by taxes and insurance premiums paid by the state's businesses and residents, who are also footing the bill for expanding Medicaid in 29 states and the District of Columbia that agreed to accept federal funds to offer coverage to nearly all poor adults. The Medicaid expansion states, as a rule, have seen a marked decline in their uninsured rates and the amount of costs their hospitals incur in caring for people without insurance.”

This article is a bit dated but, I think the basic mechanisms still hold true. And, it’s especially tough to be in Texas or any other state which resisted the ACA at every turn because, regardless of one’s political leanings or health care preferences, being caught in the middle (like the ~ 1 million uninsured Texans) is no fun at all.

 

[Offgrid Organic Farmer]

... We pay ridiculous HC bills to cover those who do not pay.

I am going through radiation treatments for my cancer. My oncologist went on a rant the other day, about how many patients they get who are in the USA for medical tourism. They do not pay anything for this cancer center treatments, but the law mandates that they are treated. So their costs are lumped in with all the rest of us paying patients. We pay more so the cancer center can afford to treat the tourists coming here from Canada.

But everyone in the US seems to just love the Canadian healthcare system with it's long waiting lines [which is the reason behind all of these tourists coming down into the US].

 

[Offgrid Organic Farmer]

... Retired people don't pay FICA but all but the lowest income pay taxes on their SS..so that doesn't make you special.

Most retired Americans are being paid SS. they paid into it when they were working, and as retirees, they get their money paid back to them.

All workers who have SS policies pay into SS regardless of being 'low' income or not.

 

[Offgrid Organic Farmer]

Aren't there people who have paid zero income/FICA taxes, don't work and still get free health care from the Fed. Govt?

If you have a SS policy, then you pay into your SS policy whenever you work.

If you never held a job, then you never paid into SS.

SS is only supposed to pay out to those retired workers who paid into SS for 40-quarters.



Each state has it's own programs to assist the poor or elderly. Like in my state [Maine], we have Mainecare, which the state funds and administrates. MaineCare is 40% funding by Federal money. The other 60% is paid from our property taxes.

 

[Offgrid Organic Farmer]

There are millions of people in rural America that make less than $40K and work full time. They need ACA.

True.

I live in a rural area. I know a lot of farmers who make $10k to $20k /year, and they support families on that income. The COL is low and it works EXCEPT for healthcare, which they get from the state.

If you have 10 to 100 acres of farmland producing veggies and hay, you can earn enough through a roadside farm stand, to cover your property taxes, utilities, food, and clothing, plenty easily.

But very few of those people have smartphones.

 

[MichaelB]

I am going through radiation treatments for my cancer. My oncologist went on a rant the other day, about how many patients they get who are in the USA for medical tourism. They do not pay anything for this cancer center treatments, but the law mandates that they are treated. So their costs are lumped in with all the rest of us paying patients. We pay more so the cancer center can afford to treat the tourists coming here from Canada.

But everyone in the US seems to just love the Canadian healthcare system with it's long waiting lines [which is the reason behind all of these tourists coming down into the US].

If this is what your oncologist said, he or she is wrong. There is no such law or requirement for US cancer centers to treat non-paying patients.

 

[Crabby Mike]

If this is what your oncologist said, he or she is wrong. There is no such law or requirement for US cancer centers to treat non-paying patients.

Yeah, I have a hard time believing that one too. I think hospitals are required to provide emergency care, but not beyond that, as far as I've ever heard.