ACA/Medicaid

[RockyMtn]

Question for the collective:

DGF has been on ACA silver plans for 4 years now. Plans have been good so far and given she has no income she has converted IRA to Roth IRA to get her to an income level where she gets maximum subsidies and cost sharing.

Starting in 2019 she only has about $10k left in the IRA to convert to Roth for determining MAGI. She doesn't even want to consider going to Medicare and quite frankly I don't want her to as well.

So...what are her options?

Pay full price for unsubsidized silver plan? Get a job where combined with the IRA to Roth conversion she will be beyond the fpl for 2019? Collect SS early for the income? Tell the gov't that here income in 2019 will be similar to 2018 and show her brokerage statement showing this year's conversion if asked for income verification and deal with it at tax time in 2020?

She has three years to go until medicare and I'm pretty sure we'll have to pay full price on Silver plans for a couple of them. Just want to make sure I am considering all of the options.

 

[Dtail]

Question for the collective:

DGF has been on ACA silver plans for 4 years now. Plans have been good so far and given she has no income she has converted IRA to Roth IRA to get her to an income level where she gets maximum subsidies and cost sharing.

Starting in 2019 she only has about $10k left in the IRA to convert to Roth for determining MAGI. She doesn't even want to consider going to Medicare and quite frankly I don't want her to as well.

So...what are her options?

Pay full price for unsubsidized silver plan? Get a job where combined with the IRA to Roth conversion she will be beyond the fpl for 2019? Tell the gov't that here income in 2019 will be similar to 2018 and show her brokerage statement showing this year's conversion if asked for income verification and deal with it at tax time in 2020?

She has three years to go until medicare and I'm pretty sure we'll have to pay full price on Silver plans for a couple of them. Just want to make sure I am considering all of the options.

Do you have any monies in a Taxable account which can generate MAGI?

 

[RockyMtn]

Do you have any monies in a Taxable account which can generate MAGI?

No, she basically has the IRA and the Roth. No real after tax accounts?

 

[jim584672]

Have you compared what is available between the Silver's and the Medicaid plans?


In my area both are about the same, same doctors, different co-pays and deductibles. They are managed care plans not fee for service. You might luck out and find your doctors in one of the plans.

 

[zinger1457]

I'm sure you could get away with just using her 2018 income for 2019 to stay off medicaid but the follow on years may be an issue. I'm not familiar with how medicaid works in AZ. What are the issues that would make her consider paying >$10K a year for a Silver plan to avoid it? I live in AZ and it's not like the ACA choices are all that great either.

 

[RunningBum]

Why a silver plan and not a cheaper bronze? If you aren't getting cost sharing reductions, than a bronze is often better, unless you really need lower deductibles.

How much is in the Roth? Can she withdraw from it, and generate enough taxable income from it to avoid medicaid? I know it's better off in a Roth, but if her taxes are non-existent, she should be paying little or none if the money is in taxable. She could directly withdraw rather than convert what little she has left.

Can she start taking SS to get income? This would be a great reason to start taking at 62.

The other obvious answers are to get a job...or get married...

 

[MBSC]

Tell the gov't that her income in 2019 will be similar to 2018 and show her brokerage statement showing this year's conversion if asked for income verification and deal with it at tax time in 2020?

She has three years to go until medicare and I'm pretty sure we'll have to pay full price on Silver plans for a couple of them.

The federal marketplace uses the tax return from two years ago if you do not input an income estimate. You usually do not have to provide additional documentation when the system automatically renews the plan using the historical tax return data.

The 2019 plan will use the 2017 tax return filed in early 2018. The 2020 plan will use the 2018 tax return filed in early 2019. She can reconcile these two years at tax filing. Keep in mind the dollar amount of the FPL increases slightly each year so hopefully she left a buffer to account for these future year increases.

It's the 2021 ACA plan that defaults to the low income on the 2019 tax return that will need to be addressed. If this is the year she starts Medicare (3 years until Medicare) it may be an issue for only a portion of the year.

25.21.3.2.2 (01-05-2017)
Conditions and Assumptions

1. The following conditions and/or assumptions apply to the IFSV process.

e. As part of the initial application for financial assistance, the Marketplace must give individuals the option to obtain tax return information as part of the annual redetermination and renewal processes, for a period not to exceed 5 years based on a single authorization.

Reference: https://www.irs.gov/irm/part25/irm_25-021-003

 

[VanWinkle]

You can also claim SS for up to a year to increase the income, and then suspend it and pay it all back to reset it to a later date. I am not sure if a year will help, but it is like a no interest loan for a year. By the way, don't spend it cause they want it all back. If you claim in the middle of a year, you could cover 2 years this way.

 

[RockyMtn]

Have you compared what is available between the Silver's and the Medicaid plans?


In my area both are about the same, same doctors, different co-pays and deductibles. They are managed care plans not fee for service. You might luck out and find your doctors in one of the plans.

Many Dr's here don't accept Medicaid patients. Several of hers are among that group.

 

[RockyMtn]

I'm sure you could get away with just using her 2018 income for 2019 to stay off medicaid but the follow on years may be an issue. I'm not familiar with how medicaid works in AZ. What are the issues that would make her consider paying >$10K a year for a Silver plan to avoid it? I live in AZ and it's not like the ACA choices are all that great either.

Really about choice of Dr's. You are right that there aren't a lot of ACA choices in Az. In fact we have just one choice in our county! The only redeeming thing about that is that any Dr that wants any ACA business has to sign up with the provider.

 

[RockyMtn]

Why a silver plan and not a cheaper bronze? If you aren't getting cost sharing reductions, than a bronze is often better, unless you really need lower deductibles.

How much is in the Roth? Can she withdraw from it, and generate enough taxable income from it to avoid medicaid? I know it's better off in a Roth, but if her taxes are non-existent, she should be paying little or none if the money is in taxable. She could directly withdraw rather than convert what little she has left.

Can she start taking SS to get income? This would be a great reason to start taking at 62.

The other obvious answers are to get a job...or get married...

Will definitely look at Bronze plan as well. Not enough in Roth to generate enough income to really make a difference. I have considered the SS option and will have to explore more carefully. Same with job. Marriage will not matter as she would no longer be eligible for cost sharing and subsidies because of my income.

 

[kevink]

We dealt with this issue when we lived in Tucson and have been monitoring goings-on in AZ carefully from our current perch in New Mexico as we'd like to return someday.

It is very much a county-by-county and city-by-city thing there as in the two other states (NM and CO) we've lived since ACA has been in effect. in Pima County there are a bunch of really good clinics and the docs you'll see and availability of care are the same whether on Medicaid or an ACA plan.

I suspect if you do enough research you can find "good enough" doctors for your DGF who take Medicaid and with only 3 years until Medicare you/she almost certainly don't have to worry about what seems almost certain to happen in AZ fairly soon, which is to say the state of AZ getting its wishes to implement work requirements, monthly income verification and (the kicker) a 5 year lifetime limit on Medicaid.

Here's the most recent update from the KFF on the waivers:

https://www.kff.org/medicaid/issue-brief/section-1115-medicaid-demonstration-waivers-the-current-landscape-of-approved-and-pending-waivers/

No perfect options but at least you've got a good handle on what's possible to generate enough income for her to stay on an ACA plan. There is also a smartphone app called Taxcaster that I've found helpful in staying on top of MAGI each year to make sure I'm on target for ACA and/or Medicaid purposes.

Much better BTW here in New Mexico with 3-4 insurers in most counties and no stigma regarding Medicaid since so much of the state population is on it (and it's a deep blue state that is eager to hang on to every benefit vs. AZ which is the opposite). Still the Medicaid expansion to childless adults has been hugely successful in AZ and I don't that or access to subsidized ACA plans going away there without a huge fight. Ditto+ for any cuts to Medicare - AZ is full of old people who vote!

 

[RockyMtn]

The federal marketplace uses the tax return from two years ago if you do not input an income estimate. You usually do not have to provide additional documentation when the system automatically renews the plan using the historical tax return data.

The 2019 plan will use the 2017 tax return filed in early 2018. The 2020 plan will use the 2018 tax return filed in early 2019. She can reconcile these two years at tax filing. Keep in mind the dollar amount of the FPL increases slightly each year so hopefully she left a buffer to account for these future year increases.

It's the 2021 ACA plan that defaults to the low income on the 2019 tax return that will need to be addressed. If this is the year she starts Medicare (3 years until Medicare) it may be an issue for only a portion of the year.

If the plan for a given year uses income from the two years prior tax return it will be the 2021 ACA plan that becomes an issue as 2019 is the year she will have below FPL income. 65th Birthday is early April 2021. Maybe I buy her a catastrophic plan for those four months before she goes on Medicare.