2018 Capital Gain Dist will affect my ACA costs

[gauss]

To the morality folks:

Would taking ACA subsidies with qualifying income and enough resources to ER be any more immoral than moving to another country with some type of national health care?

If so, then why?

The point of ACA was to make premiums "affordable" ie less than 10% of income.

If we let the (regulated) free market determine actual premiums, then by definition the government would need to make up the difference.

Again, if we didn't have a 400% FPL cliff, nor employer sponsored health care, I suspect we would see much less criticism of the ACA.

-gauss

 

[RunningBum]

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.

Yet in your very next post you write:

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.

And you've also compared it to Medicaid, and probably other things if I wanted to go back and reread the many, many posts where you've complained about this. So you won't let others compare this to other so-called immoral things you might take advantage of, but you can do it to others?

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.

Who is bragging? This is a forum where we exchange ideas about, among other things, how to stretch wealth. Where can you find the best CD rates, lowest MF fees, using an HSA to decrease taxes, partial Roth conversions to avoid a big tax bump when SS & RMDs kick in, etc. How and whether to get an ACA is just one of those discussions. I'm not proud to be taking the ACA subsidy, but I'm not embarrassed either.

You've made your point, again and again. You aren't saying anything new. I'm not telling you that you have to stop posting, but I am telling you that you are just being irritating. And self-righteous, even if you don't think you are.

 

[Dtail]

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.

First of all, no one is "bragging" about being able to manage their MAGI. There have been posters who have over 5mm investment assets/Net Worth who wonder or are nervous about retiring. Is it humble bragging in telling us their high net worth - it is not - they are truly nervous about the whole FIRE concept, etc.
How one covers their medical before 65 yo is probably one of the top 5 topics discussed here and many folks are asking for advice on how to manage their MAGI.
Who would pay the full coverage for the ACA premium when they can get a subsidy? Would anyone pay more taxes, just because they are in a tax advantaged situation?
You mentioned you are not "wealthy" like some others here, well I am also below the most likely ~3mm average NW. It doesn't bother me one bit. Perhaps there is an envious factor in play here too for you, besides your morality factor.

 

[pb4uski]

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

Actually, you are 100% wrong... only because there is no such thing as Medicare LTC as you wrote... it is Medicaid LTC.

Yes, I do draw the line at Medicaid planning.... mostly because of the magnitude of the ill-gotton gains... probably over $70k+ a year of benefit vs ~$4k on average for ACA subsidies based on HHS data.

The other difference is at the end of the day the beneficiaries of the Medicaid planning ploy is the person's heirs and it is done directly to benefit the person's heirs... whereas for tax planning, ACA planning, etc the beneficiary is the person... and perhaps only indirectly the person's heirs.

Another notable difference is that Medicaid LTC is targeted to the truly poor... the income and asset limits are extremely low... whereas ACA subsidies are really not targeted towards the poor since the poor... belothe poverty line... are covered by Medicaid... ACA subsidies are targeted to low and low-middle income people of between 100-400% of FPL.

If bewolf objects wealthy people getting ACA subsidies then the Medicaid planning ploy must really drive him crazy.

 

[Mulligan]

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.

The only subsidy I like is the one I can get, lol. After years of high rack rate ACA, I got one more year of it....Then I am on to my GFs employer health plan, and I will cheerfully let them subsidize 80% plus of my healthcare/dental/vision until I hit medicare.

 

[flintnational]

ACA subsidies not exclusively for the "Poor"

An inaccurate straw man has been created in this thread. ACA subsidies (premium tax credits*) are not exclusively intended for the "poor". Per the KFF calculator, a family of 4 with a MAGI of $97k is eligible for subsidies and a family of two with a MAGI of $62K is eligible. Clearly congress intended for folks at these higher income levels to be eligible. Additionally, congress could have added an asset test. They did not. While you might want it to be exclusively for the "poor" that is not the law congress passed^. As others have said, if you disagree with the law, call congress. But it is not fair to call forum members immoral, unethical or cheap for complying with established law.

*The ACA subsidies are premium tax credits. Taxes were raised and new taxes were added to pay for the premium tax credits (ACA subsidies). The new taxes and tax credits are administered by the IRS and are reported on tax forms. Those that do not believe ACA subsidies are tax policy are mistaken.

^Many think SS and Medicare should only be for the poor. But that is not the law congress passed. Yet, we would not call wealthy participants immoral, unethical or cheap for complying with these laws. Once again, neither require an asset test. Like it or not, these are the laws congress intended.

 

[flintnational]

As someone mentioned earlier, the way many achieve an ACA subsidy is by foregoing additional ROTH conversions at lower tax rates. That means they will likely pay higher taxes in the future. Additionally, to reach the ACA thresholds, many use money they have already paid taxes on. This means their taxable funds will also likely be taxed at higher rates in the future (compared to blending income from both sources now). Accordingly, their strategy may not even reduce their taxes over the long term.

Would we call those that make ROTH conversions to manage taxes immoral, unethical or cheap? No. Nor should we use those terms to describe ACA folks rolling the dice and also attempting to reduce taxes. While pursuing ACA subsidies, they are missing a tax reduction strategy many advocate.

 

[DAYDREAMER]

Thank you for the very well thought out replies defending the virtue of qualifying for the ACA Subsidy.

Now back to the original reason I created this thread.

Here's my plan based after reading the recommendations.
December 1, I will sell all my Wellesley shares (currently at $20K loss), buy back Wellesley January 2 (or 31 days after sale) at the reduced price. I will have avoided the capital gains distribution and dividend income increases and also be able to reduce my Magi an additional 3K from the investment loss.
January 1, wife and I qualify for for retiree health care, and will use the the rest of the capital gains loss to help do Roth conversions over the nex 6 years.

Sounds like a solid well thought out, financially responsible,legal, moral, ethical plan. I have other snarky comments for the self righteous who have insulted my integrity, but, have a snugly cat cuddling on my lap that keeps me calm.

 

[Rianne]

*flintnational. Now that makes sense and summarizes the ACA law. It is law and there are clear specifications and expectations to follow the law. Many laws may seem immoral to me, regardless if they benefit one class of people over another.

Sometimes I get away with breaking the law. Just to add light to a seriously polarized thread...

-I'll let my dog run without a leash a little, as long as no one is around
-I'll J walk
-I'll run a stop sign if no one is coming
-I'll text if I'm stopped at a stoplight
-I'll blow a yellow light if I'm in a hurry


Granted there are many people who would be appalled at those criminal activities. Yet, I'm ok with them.

But in my mind I make up for those crimes if I pick up garbage at a park. Or take the time to talk to an elderly person who looks lonely. It's all a give and take.

 

[Cpadave]

You are not protecting yourself from market move in Wessesley from Dec 1 to the time you plan to buy. If I were you, I would buy another somewhat similar fund or just VTI.

Thank you for the very well thought out replies defending the virtue of qualifying for the ACA Subsidy.

Now back to the original reason I created this thread.

Here's my plan based after reading the recommendations.
December 1, I will sell all my Wellesley shares (currently at $20K loss), buy back Wellesley January 2 (or 31 days after sale) at the reduced price. I will have avoided the capital gains distribution and dividend income increases and also be able to reduce my Magi an additional 3K from the investment loss.
January 1, wife and I qualify for for retiree health care, and will use the the rest of the capital gains loss to help do Roth conversions over the nex 6 years.

Sounds like a solid well thought out, financially responsible,legal, moral, ethical plan. I have other snarky comments for the self righteous who have insulted my integrity, but, have a snugly cat cuddling on my lap that keeps me calm.

 

[DAYDREAMER]

You are not protecting yourself from market move in Wessesley from Dec 1 to the time you plan to buy. If I were you, I would buy another somewhat similar fund or just VTI.

Fully agree with you Cpadave. I need to think through what to do in that one month time period. What have others done with the money in a situation such as this? Ground rules to this question, I will be buying back Wellesley after 31 days. I really like the fund.

 

[scrabbler1]

At least the ACA subsidies decrease as income increases. The employer's share of one's HI premium in their group plan is tax-free, or an indirect tax subsidy which actually rises as income rises. I don't see anyone writing a check to the IRS for the unpaid taxes on the employer subsidy.

 

[flintnational]

^^^This thread has morphed into the immorality of tax breaks "others" receive. All of the tax breaks "I" receive are moral, ethical, deserved and quite fair!

I think you might be onto something.

 

[Spock]

Why would anyone using the technique for ACA subsidies complain about it? That would be counter-intuitive. Like Warren Buffet asking for his taxes to be higher. Oh, he has done that. No problem with anyone taking any legal steps to reduce their taxes. ACA is a different matter - it's not a tax. It was hyped as a plan to help people who could not afford health insurance and/or those with pre-existing conditions. The concept of subsidies was to aid those with very low incomes to be able to obtain health insurance through ACA plans. Does the word affordable ring a bell. Yes - Congress messed up the criteria. If you believe the intent was to allow people with substantial investable assets who showed very low MAGI on their tax returns to take advantage of the ACA, then you are probably living in CO smoking some weed.

It's not like tax deductions for medical bills or owning a home or other itemized items (many of which have been eliminated or capped). This is a loophole that allows far wealthier people than intended to take advantage of a plan intended to help folks far more disadvantaged than most people on this forum. If you have $3M in assets and decided to retire at 45, why should you be able to take advantage of a program meant to help people with less than $40K or so in income and few assets. Whether you believe it or not, that was the original intent. We pay nearly $10K a year in Medicare and supplemental insurance premiums for two people. And we have far less in assets that most people here. Is that fair? I may not like it, but I don't complain that it's unfair that I have to pay higher Medicare premiums if we break the $170K lowest tier premium.

It's not that you're doing anything illegal. To me, it's simply immoral to some degree. You may not like what I say, but I have the same right to say it as you do to complain that you may lose your ACA subsidy because you retired early without health insurance, have substantial investments and decided to take advantage of a program meant for the poor or normally uninsurable.

Except that
* the supreme court ruled the parts that were challenged as legal under congressional "taxing power"
* and the subsidies go up into incomes of 100K... so it was never about people who could not afford health insurance.

 

[ivinsfan]

Thank you for the very well thought out replies defending the virtue of qualifying for the ACA Subsidy.

Now back to the original reason I created this thread.

Here's my plan based after reading the recommendations.
December 1, I will sell all my Wellesley shares (currently at $20K loss), buy back Wellesley January 2 (or 31 days after sale) at the reduced price. I will have avoided the capital gains distribution and dividend income increases and also be able to reduce my Magi an additional 3K from the investment loss.
January 1, wife and I qualify for for retiree health care, and will use the the rest of the capital gains loss to help do Roth conversions over the nex 6 years.

Sounds like a solid well thought out, financially responsible,legal, moral, ethical plan. I have other snarky comments for the self righteous who have insulted my integrity, but, have a snugly cat cuddling on my lap that keeps me calm.

Somebody is self righteous here but it's not the people you think it is....

 

[DAYDREAMER]

Somebody is self righteous here but it's not the people you think it is....

 

[pb4uski]

Fully agree with you Cpadave. I need to think through what to do in that one month time period. What have others done with the money in a situation such as this? Ground rules to this question, I will be buying back Wellesley after 31 days. I really like the fund.

Go back and read post #2. You can buy the global version of Wellesley or any other balanced fund that is about 40/60 for that interim period or even just park the money in VMMXX at 2.19% for a month. You can also make low year end capital gains distributions a criteria for your choice.

 

[pb4uski]

Except that
* the supreme court ruled the parts that were challenged as legal under congressional "taxing power"
* and the subsidies go up into incomes of 100K... so it was never about people who could not afford health insurance.

On the last part... I think perhaps you misspoke... it was never about the poor since they are covered by Medicaid... it was all about people for whom health insurance was unaffordable.

 

[bingybear]

Fully agree with you Cpadave. I need to think through what to do in that one month time period. What have others done with the money in a situation such as this? Ground rules to this question, I will be buying back Wellesley after 31 days. I really like the fund.

If you are going to buy another investment after you sell Wellesley, make sure that replacement does not kick out distributions that mess up what you are trying to do.

Also make sure you don't have Wellesley in an IRA with distributions being reinvested. This could also affect your plan by creating a wash sale.

 

[beowulf]

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...

Yes, I agree, it's not for the very poor. But it's really not for the lower fringes of the middle class either. Do you consider a single working person earning $49K a year middle class and able to afford health insurance? They are just over the ACA cliff. The median income in my part of the state is $112K. How about a couple earning $62K? They are also over the cliff. And both are too "wealthy" for subsidized housing. I'm taking about an area where the average rental for a 1 BR apartment is now in excess of $2K a month. These are working people who obviously do not have high paying jobs and most likely few assets other than a car.

From your posts, it appears that you possess substantial already taxed savings or IRAs that can be used for expenses. Do you really think the people I'm speaking about that are NOT eligible for an ACA subsidy are in the same boat as you are? They have no options except to pay or go without HI. You do have that choice.

 

[beowulf]

To the morality folks:

Would taking ACA subsidies with qualifying income and enough resources to ER be any more immoral than moving to another country with some type of national health care?

If so, then why?-gauss

Anyone can do anything they want - legal or illegal. If illegal, they have to face the consequences. There is nothing immoral about moving to another city, state or country. People do it all the time. If you move to NH, you pay neither sales tax or income tax. The have high RE taxes and lots of cold weather and snow. Your choice.

 

[Fedup]

My kid was earning $47k in LA, HCOL area, this was 2 years ago when she aged out of our health care plan at 26. She got nothing subsidized. But what I’ve found is the plan under CoveredCa was more pricey than the plan on the healthcare exchange with more coverage. So that’s maybe why there’s subsidy. It was about $10 cheaper on ehealthinsurance.

 

[beowulf]

Yet in your very next post you write:
And you've also compared it to Medicaid, and probably other things if I wanted to go back and reread the many, many posts where you've complained about this. So you won't let others compare this to other so-called immoral things you might take advantage of, but you can do it to others?

Who is bragging? This is a forum where we exchange ideas about, among other things, how to stretch wealth. Where can you find the best CD rates, lowest MF fees, using an HSA to decrease taxes, partial Roth conversions to avoid a big tax bump when SS & RMDs kick in, etc. How and whether to get an ACA is just one of those discussions. I'm not proud to be taking the ACA subsidy, but I'm not embarrassed either.

If you know of something that's immoral that I've taken advantage of, I'd be happy to know about it. As to the bragging, it looks like that to me - as in, look how much I've saving with the ACA subsidy and I need advice on how I can avoid the cliff and might have to pay for HI.

 

[DAYDREAMER]

Go back and read post #2. You can buy the global version of Wellesley or any other balanced fund that is about 40/60 for that interim period or even just park the money in VMMXX at 2.19% for a month. You can also make low year end capital gains distributions a criteria for your choice.

Thank you PB4uski! Your #2 post info went on the "To Research" list I'm making. All the recommedations from the members that have replied to the actual intent of the thread have been written down for further research.

The rest of the opinion editorials has been entertaining, and my comments back to the editorials were just to poke the bear.

 

[beowulf]

If bewolf objects wealthy people getting ACA subsidies then the Medicaid planning ploy must really drive him crazy.

YUP - and I know people who are quite wealthy who have done that with their parents. Mostly before the asset dumping and clawback rules were introduced. You really have to plan ahead to do that now. OTOH, I know far too many people whose parents went through all their assets in nursing homes or assisted living and then the kids chipped in to cover the cost. If there are no kids or the kids have no assets, then they are on Medicaid.