2018 Capital Gain Dist will affect my ACA costs

[flintnational]

Your post was supposed to be Option 3?

Humor is hard. I tried.

 

[DeborahB]

Be glad the ACA poses problems but is available. I retired before it, and before I was eligible for Medicare.

 

[ivinsfan]

Okay up to date with all the posts.
As some others have posted, we are just using the tax code as it is written. I do agree with you on the original intention and your right to state it as such.
As previously mentioned, some use Roth conversions instead of ACA management of income.
My point about complaining about the usage, is IMHO that many posters against the use of ACA income management is because they can't do it themselves, so are against those that do.
If you had 25k of TIRA withdrawals and supplemented it with 50k of cash for example, would you not take the subsidy, or would you state to yourself that it is immoral and you are going to stand on principle and pay 7x more?

Not necessarily, some people might just feel that the government took the easy way out with taxable income and should have factored in some type of asset test. Some people who pay full freight might feel people who work get it as a tax free benny and people under the cliff get subsidy how come the government is ok with just leaving me twisting in the wind and having to pay 20K a year for HI..that's not sour grapes that's a legit question. A better question would be if those of you using the system by lowering your AGI would still be in favor of it if they change the rules to consider assets. It's kind of disingenuous to say people don't like it because they can't use when you are getting personal gain from using it. Would you still be in favor of some people getting free health insurance if you suddenly had to start paying 20K a year for yours.

 

[Dtail]

Not necessarily, some people might just feel that the government took the easy way out with taxable income and should have factored in some type of asset test. Some people who pay full freight might feel people who work get it as a tax free benny and people under the cliff get subsidy how come the government is ok with just leaving me twisting in the wind and having to pay 20K a year for HI..that's not sour grapes that's a legit question. A better question would be if those of you using the system by lowering your AGI would still be in favor of it if they change the rules to consider assets. It's kind of disingenuous to say people don't like it because they can't use when you are getting personal gain from using it. Would you still be in favor of some people getting free health insurance if you suddenly had to start paying 20K a year for yours.

Actually I would be okay with that. If ACA goes away before I hit 65yo, then I will pony up the costs and adjust some discretionary expenses and WR%.
As it has been pointed out, most ACAers pay some costs even if the premiums are zero, which it is not for Silver based plans.
There are so many structured programs from the gov't which aren't totally fair.
For many years I made the maximum for SS withholding, but always felt it should have been unlimited ceiling, but was not going to pony up extra dough unless they changed the law.

 

[RunningBum]

Thank you for the helpful replies. I have a few more ideas to think about now. All my investing knowledge has been from participating in 401k pretax situations. This is the first year learning about taxable investments (proceeds from sale of second home) and how it affects ACA subsidies. The learning curve is steep, but fun!

2019 and on, we will have retire healthcare provided by megacorp, so rest assured to all those who are offended I'm "gaming' the system, I won't be taking anymore money out of your pocket in the future.

Certainly an easier situation if you are only worried about MAGI and the subsidy for 2018. I would definitely sell before distribution and try to lower your income as much as possible to get as much subsidy as I could.

In my case, I'm trying for the subsidy for another 8 years so I don't try to maximize a subsidy one year if it endangers it the next, but rather smooth out income so I come under every year. There may be a point I can't get under if rates take off and brackets don't rise as fast.

 

[ivinsfan]

Actually I would be okay with that. If ACA goes away before I hit 65yo, then I will pony up the costs and adjust some discretionary expenses and WR%.
As it has been pointed out, most ACAers pay some costs even if the premiums are zero, which it is not for Silver based plans.
There are so many structured programs from the gov't which aren't totally fair.
For many years I made the maximum for SS withholding, but always felt it should have been unlimited ceiling, but was not going to pony up extra dough unless they changed the law.

Good for you, and when I say free I mean HI people who pay sticker price for HI can have OOP costs too.

 

[pb4uski]

Just an educated guess that somewhere along the line while ACA was being developed that a congressional staffer pointed out that the design of the subsidy being based on income created a loophole where people of means could manage their income and end up with subsidies.... and that those developing the legislation decided that those instances would be negligible and that it would be much more complicated to create a test based on assets or net worth so they decided to live with the possibility that subsidies might be paid for those for whom they were not intended. IOW, the greater good was to get something in place and help out those who could not afford health insurance and if as a byproduct some wealthly folk ended up benefiting, then so be it.

I realize that others disagree but I see managing your affairs to optimize ACA subsidies as no different than managing your finances to minimize income taxes. Judge Learned Hand wrote:

Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

BTW, I have never received subdsidies.

 

[beowulf]

The only thing I disagree with in the last several posts is the continuing comment that premiums for the ACA are a tax. They are not a tax - they are premiums for health insurance which most of us pay one way or another. Even with Medicare. Yes - I strongly resent people with substantial assets who are receiving ACA coverage at no cost. You can call it what you want, but it demonstrates a level of cheapness that should embarrass anyone doing it. I don't really understand the interaction between the ACA and Medicaid, but I googled it and apparently the asset test is determined by the individual state. Assuming you live in a state that doesn't have such an asset test, why wouldn't someone with a very low MAGI with a high asset level simply apply for Medicaid? Is there some stigma attached to that which doesn't carry over to the ACA. What I'm trying to figure out is why guaranteed free medical care if you keep your MAGI very low wouldn't trump the uncertainty of having to pay a premium? The MAGI would probably be lower than needed for the ACA, but why not bite the bullet and just lower income so you qualify for Medicaid? Would you consider doing that immoral? That's for poor people also. What's wrong with a millionaire taking advantage of that also?

 

[RunningBum]

I'm under the impression that Medicaid is substandard--many doctors won't accept it, so it's to be avoided if possible.

Most people can't control their income down to medicaid level anyway. For me, what I chose to live on is keeps my income under the ACA limit (but well over the Medicaid limit). I could keep it to that, or I could convert some of my tIRA to Roth, which I choose to do up to the ACA limit. I don't see why I should convert more, just so you won't resent me. I simply don't care about that.

 

[ivinsfan]

beowolf why don't you resent the government game playing and gamesmanship that made this income standard federal law. In a rush to appease the electorate and buy some votes that make a rule that doesn't make sense. No one thinks it makes sense but resenting the people who take advantage of this loophole is being mad at the wrong people.

 

[MichaelB]

I'm under the impression that Medicaid is substandard--many doctors won't accept it, so it's to be avoided if possible.

Medicaid is a federal program with a series of requirements states must implement. Specifics and management of the program is left to each state, and in many cases, counties. Eligibility and benefits differ. Some are more narrow and austere, others broader and more generous. You really need to evaluate individual locations. In some locations it is comparable to HMO plans, and in other locations the state or country farms out the coverage to insurer HMOs.

One thing always to keep in mind, though, is clawback. States can lawfully recover premiums paid for Medicaid. Some states have indicated they have no plans to do so, but the potential is always present.

 

[RunningBum]

OK, it appears that my impression is at least not correct globally. I did a quick google, and articles in Consumer Reports and NY Times say that it's generally ok especially for the price and one should probably take it if they can. In some areas, maybe not. My primary doctor does accept medicaid patients, while he is out of network through my current ACA insurer.

Moot point for me as I'd never qualify for Medicaid.

If I was on the cusp, sure, I'd look closer at the pros and cons and consider juggling income if it looked better. If I was on the cusp, I'd also be a lot poorer.

 

[DAYDREAMER]

Wow, just logged back on to get more helpful comments from my favorite website. Ouch, Didn't realize I was so immoral! Lol, I guess I shouldn't let Beowulf know that my 2018 income came from Unemployment compensation due to being layed off into retirement, of which I deferred for 6 months to avoid paying huge taxes in 2017. Dear lord, please forgive me for being such a heathen.

Just stirring an already silly pot of people's view of morals. Yes I can sleep at night.
Beowulf--Don't be so self righteous.

 

[Rustward]

Well, do whatever you want to. Some states require the applicant to be available and willing to work and actively seeking employment to be eligible for unemployment benefits. I don't see this as a morality item. It is the law. Your chances of getting caught are very small, so have at it if you wish.

On the other side, one can manipulate their income to reduce taxes or obtain other benefits if they do it within the law.

 

[DAYDREAMER]

Well, do whatever you want to. Some states require the applicant to be available and willing to work and actively seeking employment to be eligible for unemployment benefits. I don't see this as a morality item. It is the law. Your chances of getting caught are very small, so have at it if you wish.

On the other side, one can manipulate their income to reduce taxes or obtain other benefits if they do it within the law.

Submitted 3 resumes per week for 26 weeks looking for a utopia job while recieving UI. Nope, nobody would pay me past level salary, to do equivelant level work. Would I accept a lesser job--DIDNT NEED TO, I was financially independent! So be it, Done!

 

[Rustward]

If you were sincerely applying for work and honoring the spirit of unemployment benefits then OK. But it is pretty easy to construct a set of requirements to which almost no employer will conform. I don't think it is written anywhere that your previous salary must be matched. If that is what you were doing, then you were then you got your three resumes per week in. Enjoy.

 

[DAYDREAMER]

If you were sincerely applying for work and honoring the spirit of unemployment benefits then OK. But it is pretty easy to construct a set of requirements to which almost no employer will conform. I don't think it is written anywhere that your previous salary must be matched. If that is what you were doing, then you were then you got your three resumes per week in. Enjoy.

Have a nice weekend!

 

[ERD50]

+1
I would like to see one negative comment about ACA income management from folks using the technique.
I am renting - not asking anyone to give up their mortgage deduction.

I won't disagree with your other comments, but renters do benefit from the mortgage deduction.

Your landlord deducts interest as a business expense, and that factors into how much they charge for rent in a free market.

-ERD50

 

[Dtail]

I won't disagree with your other comments, but renters do benefit from the mortgage deduction.

Your landlord deducts interest as a business expense, and that factors into how much they charge for rent in a free market.

-ERD50

Didn't think of that - good angle.

 

[beowulf]

Wow, just logged back on to get more helpful comments from my favorite website. Ouch, Didn't realize I was so immoral! Lol, I guess I shouldn't let Beowulf know that my 2018 income came from Unemployment compensation due to being layed off into retirement, of which I deferred for 6 months to avoid paying huge taxes in 2017. Dear lord, please forgive me for being such a heathen.
Just stirring an already silly pot of people's view of morals. Yes I can sleep at night.
Beowulf--Don't be so self righteous.

Not self righteous at all. Expressing my opinion as everyone else on the ER forums do. And receiving unemployment insurance after being laid off is everyone's right and certainly not immoral. I've done it also. It helps pay the bills.

It's interesting that so many people respond to my comments by providing example of things that I may think are immoral. I am only speaking about receiving ACA subsidies by lowering MAGI to qualify when the person has several million dollars in savings. This is a narrow swath of people. I don't agree with the system as set up with a sharp cliff that eliminates subsidies for people with just a few hundred dollars income over the MAGI limit. What I don't like is wealthy people bragging about how they managed to game a system set up for the uninsurable and poor so they avoid the expense of health insurance. They can get ACA coverage by paying the full premium, but they choose not to. Again, it's not a tax - it's an insurance premium. If you don't want to have health insurance, that is also now your right.

 

[beowulf]

beowolf why don't you resent the government game playing and gamesmanship that made this income standard federal law. In a rush to appease the electorate and buy some votes that make a rule that doesn't make sense. No one thinks it makes sense but resenting the people who take advantage of this loophole is being mad at the wrong people.

I'm not mad at anyone. I just don't think programs meant for the poor and uninsurable should be taken advantage of by the wealthy. And, I haven't seen anyone respond that they actually need the subsidy - just that they don't want to pay because there's a loophole. If you need it to survive that's one thing. If you are doing it to preserve your wealth, that's another. That's my moral code - you have to live with yours. Not much different than those doing bodily harm to themselves or taking meds to fail the draft physical during the late 60s and early 70s. FYI, my draft number in the first lottery was 366 - I served despite the free pass.

 

[Just_Steve]

I realize that others disagree but I see managing your affairs to optimize ACA subsidies as no different than managing your finances to minimize income taxes. Judge Learned Hand wrote:


BTW, I have never received subdsidies.

Yet in the past you judge people who manage their money for medicare LTC as not doing the right thing.

 

[Texas Proud]

Not necessarily, some people might just feel that the government took the easy way out with taxable income and should have factored in some type of asset test. Some people who pay full freight might feel people who work get it as a tax free benny and people under the cliff get subsidy how come the government is ok with just leaving me twisting in the wind and having to pay 20K a year for HI..that's not sour grapes that's a legit question. A better question would be if those of you using the system by lowering your AGI would still be in favor of it if they change the rules to consider assets. It's kind of disingenuous to say people don't like it because they can't use when you are getting personal gain from using it. Would you still be in favor of some people getting free health insurance if you suddenly had to start paying 20K a year for yours.

I have not complained much about people on Medicaid, taking food stamps, living in free housing etc. etc.... sometimes when you see it being abuse I can say a few choice words...


OR, when they try and hide their assets to qualify (not the same as adjusting income) as that IS cheating.. it is a crime to do so...



Also I do not say much about the people who are using SSI or whatever else they use... I know two people who get a good amount of money from the gvmt for special needs children... one lives in a much nicer house than I do... heck, I think they got money to help them buy a van...



So yes, if they changed the rules I would also change...

 

[Texas Proud]

Well, do whatever you want to. Some states require the applicant to be available and willing to work and actively seeking employment to be eligible for unemployment benefits. I don't see this as a morality item. It is the law. Your chances of getting caught are very small, so have at it if you wish.

On the other side, one can manipulate their income to reduce taxes or obtain other benefits if they do it within the law.

When I was laid off from work I was getting unemployment and also looking for work... I was offered a temp job and took it... that went away and I started up unemployment again (continuing from before, not starting over)... got another temp job that lasted 9 months and off again... started up new unemployment...


Always looking for a job and never getting an offer... I will admit that a few places where I interviewed they were working over 60 hours a week and I might have slipped that I like 40 hours.... no offer came...

 

[Texas Proud]

I'm not mad at anyone. I just don't think programs meant for the poor and uninsurable should be taken advantage of by the wealthy. And, I haven't seen anyone respond that they actually need the subsidy - just that they don't want to pay because there's a loophole. If you need it to survive that's one thing. If you are doing it to preserve your wealth, that's another. That's my moral code - you have to live with yours. Not much different than those doing bodily harm to themselves or taking meds to fail the draft physical during the late 60s and early 70s. FYI, my draft number in the first lottery was 366 - I served despite the free pass.

Your first stmt is where the problem is... the program is not for the POOR... if that were the case there would be an asset test... it is for the LOW INCOME people... that I qualify for...