Health Insurance, Age 60-65 Advice

[Dtail]

From my Vanguard (and prior to that, Edward Jones and Merrill Lynch), I withdraw approximately $14K per year. As I understand, this comes not from my Roth (which I still contribute small amounts), nor my tax-deferred accounts (401Ks from prior employers). The funds are managed that were after-tax funds that weren't Roth. I hope that clarifies.

That being the case, would it be accurate to add the $14K to my pension and part-time incomes when I peruse the ACA site for estimates? I'll eagerly look at the November 1 ACA rates and IF there's a plan that would save me a bundle, then it would behoove me to pursue it, especially if there's a significant savings. If savings is negligible, I agree with above posters to let the sleeping dogs lie.

Thank you yet again everyone!

A 14k withdrawal from an after tax fund unto itself would not be included as income for ACA income purposes.
The monies you earn from these after tax investments would typically be included.
So for example let's say you have 100k in CD's in the after tax account and it generates 2k in interest. The 2k would be added to your income for ACA purposes.

 

[jim584672]

Is this only true for states that implemented Medicaid expansion ... via ACA? It is not so for regular Medicaid. Max $2k assets here in Florida.

Even if you had $0 in assets and $0 in income, if you are not disabled, blind, or elderly you still can't get it in a non expansion state.

 

[aja8888]

Even if you had $0 in assets and $0 in income, if you are not disabled, blind, or elderly you still can't get it in a non expansion state.

Correct, this is true in Texas where Medicaid was not expanded.

 

[EastWest Gal]

OP's profile indicates he is in Michigan. It is an expansion state.

 

[ShokWaveRider]

Even if you had $0 in assets and $0 in income, if you are not disabled, blind, or elderly you still can't get it in a non expansion state.

But then your assets ARE taken into account.

 

[pb4uski]

No, I don't think assets are taken into account because if you have $0 assets or $1b in assets you can't get it according to jim584672's post.... so assets are not a factor.... essentially unless you are disabled, blind or elderly you don't get it according to him.

 

[Dtail]

No, I don't think assets are taken into account because if you have $0 assets or $1b in assets you can't get it according to jim584672's post.... so assets are not a factor.... essentially unless you are disabled, blind or elderly you don't get it according to him.

+1

 

[RetiredHappy]

Here's a good article and graphical chart that describes the coverage gap with non-expansion states.

https://www.kff.org/medicaid/issue-...adults-in-states-that-do-not-expand-medicaid/

 

[jim584672]

Able bodied childless adults 18-64 are categorically disqualified in non expansion states. Parents of children can qualify if income is like $200 a month in Texas. Children can qualify through CHIP.

 

[sengsational]

CK, It's important to understand that you can control your income level, given you have pre-tax funds (traditional 401k and/or traditional IRA). If you pull funds out of those, instead of, or in addition to pulling from the Roth, your reported income will go up, and you will be out of Medicaid territory.

In plain talk, just add any amount you wish to your income on the healthcare dot gov or state exchange. Then, during the year, make a withdrawal of that amount from a pre-tax account, and you're fine.

When you buy on the exchange, they calculate the premium tax credit (the money from the treasury to help you pay for health insurance). This amount is based on your income, and that income includes any withdrawals from pre-tax accounts.

You pay the difference between the PTC and the actual price, monthly. Then, when you do your taxes for 2022 (in the beginning of 2023), if your income was higher than you typed into the exchange, you'd pay a little back. If your income was lower than the estimate you type in in November, you get a little back.

 

[SecondCor521]

OP:

If you live in Michigan like your profile says, then you live in what's termed a "Medicaid expansion" state. This means that if your income is at or below 138% of FPL, you can go on Medicaid.

Since you don't want to go on Medicaid, you need an income of 139% of FPL. The best subsidies for Silver plans are below 150% of FPL.

FPL varies by family size, location, and year. For a household of 1 in Michigan for 2022 plans, the FPL is $12,880 (https://www.healthcare.gov/glossary/federal-poverty-level-fpl/)

139% of that FPL is $17,903. 150% of that FPL is $19,320.

There's been a lot of discussion as to what income counts and what doesn't. The number that matters is your ACA modified AGI. Since you're not on SS yet, your ACA modified AGI is probably equal to your AGI. (1) You can find your 2020 AGI on your 2020 Form 1040 line 11; your 2021 AGI will be the analogous number. You can see what goes into your AGI by looking at the numbers that are added together to get the total on line 11. (2)

Open enrollment for 2022 starts November 1st. Michigan uses healthcare.gov. You can probably preview plans there now, sign up in November, and have coverage start 1/1/2022.

Just for kicks, I put in data for a 60 year old male living in Lansing Michigan making $18K a year, and looked at Silver plans. There were two that had a $0 monthly premium (after an $803 subsidy). Both were HMOs with a $350 deductible. One had an $800 OOP maximum and the other had a $1000 OOP maximum. The reason for the low deductible and OOP maximums is CSRs, which are a kind of subsidy which depends only on estimated income, not on actual income.

The key things I think OP would be interested in is whether their regular doctors are in-network, and also if they're OK with the HMO model of maybe needing to go to a PCP first to get referrals to specialists.

(1) There are some things that can be added back to your AGI to get your modified AGI. See the instructions for Form 8962 if you're interested. I'm guessing they don't apply to you, but they could.

(2) IRA distributions and/or Roth conversions would be added in via line 4b.

 

[qwerty3656]

If you say you'll be above 139%, but then come in below, what happens? Also, if you start the year with 3 people on plan, but end the year with 2 people on plan is the 139% based on 3 people or 2 people?

 

[Aerides]

If you say you'll be above 139%, but then come in below, what happens?

Nothing. There's no penalty to earning less than expected, only to earning more and going over the amount that calculated your subsidy.

 

[jim584672]

If you say you'll be above 139%, but then come in below, what happens? Also, if you start the year with 3 people on plan, but end the year with 2 people on plan is the 139% based on 3 people or 2 people?

You are supposed to re-estimate through the year if income changes. Assuming you want to stay out of Medicaid, do not re-estimate mid year as it will drop you into Medicaid, which is based on monthly income, whereas ACA plans are calendar year income. As previously stated, nothing happens if you come in under at the end of the year.

 

[SecondCor521]

If you say you'll be above 139%, but then come in below, what happens? Also, if you start the year with 3 people on plan, but end the year with 2 people on plan is the 139% based on 3 people or 2 people?

The above answers of "nothing happens" are correct as long as your estimate is considered reasonable. There is a single sentence in the instructions for Form 8962 (the form where your ACA subsidies are reconciled between your estimated income and your actual income) about if you estimate inaccurately with a gross disregard for the facts or something like that. If so, I believe you're disqualified for the subsidies entirely. But I doubt anyone has been prosecuted for that (yet).

The 139% of X people is based on your tax household family size, where X is basically the number of adults plus the number of dependents (usually children up through about college age). This is generally equal to the number of people on the plan, but might not be. If you have, say, three people on the plan - two parents and a college student - and the student ends up being a tax independent that year, then you would have a family size of two, and I think you would have to go through the allocation stuff in Part IV of Form 8962 because then you'd have two tax families (the two parents are one tax family of size 2 and the college student is their own tax family of size 1) on one ACA plan.

 

[GoodLife59]

An annual premium of $5000 is very reasonable compared to a decent plan via ACA. I was paying $1550/month. Then my state started its own exchange and the cost dropped to $1480. Covers annual check-ups at no cost and recommended testing at reasonable co-pays. Due to the pandemic we were asked to re-apply. Because my wife was laid off due to the pandemic we qualified for premium subsidies that brought us down to $0/month for 2021. This is how our state chose to use funding from the American Rescue Plan. It looks like we will qualify again in 2022. I’d suggest checking what your state offers if anything. If you’re happy with your current coverage and you don’t qualify for any income based premium subsidies I’d stay the course.

 

[LakeRat1]

I am 59, been retired since I was 52....Joined Christian Healthcare Ministries...... This is a great alternative to the normal insurance and has saved me THOUSANDS ..... DW was using this as well until she turned 65 2 years ago .... https://www.chministries.org/ If you decide to join, please use me as a reference ---> Membership #286749

 

[frances]

Husband and I have a VERY small company (IS incorporated) and have two employees (me and him). We were paying corporate health insurance rates until a year ago and laws changed to allow us to go to the healthcare exchanges, find coverage, and have our company reimburse our premiums as a benefit. Cost went from nearly $4k/month to about $1650/month with an $8k/deductible per person.
HOWEVER,
we looked online and THOUGHT we had a pretty decent company.
SHOULD have done more thorough research - i.e. BBB, state insurance commissioner's website, any other place we could find for complaints.
BECAUSE
we ended up going with Ambetter.
Oh, they have great ads on the radio, TV, and in print.
but I call them "Ain'tBetter" because they are HORRIBLE.
They pay for NOTHING.
They approve NOTHING.
I had to go to the insurance commissioner in my state (Georgia) to get our PCPs defined in their system as PCPs and not "specialists" so that our doctor appointments would count toward our deductible.

Long story short - IMO if you have some good insurance that is paying for what you need through your retirement plan until you can get to Medicare IMO KEEP IT!!!

 

[meleana]

I dropped $500 per month COBRA and went on an Ambetter ACA silver plan for $33 per month.

Our only income was a small RMD from an inherited IRA, interest, dividends etc. Our taxable brokerage account is pretty tax efficient. We are living off cash until age 70 when we will collect SS.

We used a broker who used to be a health care navigator for the state before NH eliminated those positions. He assisted with the application and I simply told him my best guess at what our income would be making sure it was above the Medicaid line.

Turns out our income fell below my estimate which would have meant I should have been on Medicaid, but the following year I still remained in the plan for 6 more months until I turned 65 this past June. The premiums fir 2021 were $55 per month.

I was very happy with the plan and thankful to have been able to have the option. I had just moved to NH from NY and all my new providers took the plan.

Even better I recently received a check for almost $1000 from the insurance company because of some law in NH that says insurance companies have to reimburse money if they don’t spend a certain percentage of premiums on healthcare!

I couldn’t believe it! I thought it was a mistake and initially was afraid to cash it! I mean- I didn’t even spend anywhere near that on premiums! And my copays were non existent or very low- like $5.00- since I have been lucky to be healthy. I wasn’t even on a single medication at the time!

Leave it to the government accounting!