Health Insurance with no income but savings?

[Alex The Great]

I wonder if someone has an experience buying health insurance at exchange with very low income (let's assume less than 138% FPL) but some after tax savings >$200K not including 401K? It looks like such a person currently qualify under Medicaid expansion (in certain states), but I'd rather be interested to know how people handle this situation in states where Medicaid expansion is not available, and with these savings obviously no hope to qualify for actual Medicaid? I tried to look at exchange web sites, but they do not give any info for very low income.

 

[Alex The Great]

Actually I found some numbers for TX: it appears, there is no tax credit in this situation. It is very interesting, that healthcare.gov show much lower premium for $30K income, compared to $5K income!

 

[GTFan]

Yeah in non-expanded states you have to keep income above 100% of FPL. You get the best subsidies and CSR'd Silver plans below 150% FPL, but it's still good up to 250%.

 

[travelover]

Actually I found some numbers for TX: it appears, there is no tax credit in this situation. It is very interesting, that healthcare.gov show much lower premium for $30K income, compared to $5K income!

This is an incentive for people to make more money.

 

[jim584672]

The easiest solution is to move to a state that has expanded, or stay and make sure you get over 100% FPL and get an exchange plan.

 

[Senator]

This is an incentive for people to make more money.

Probably similar to the EITC. An incentive to work, rather than retire...

Wouldn't straight medicaid cover anyone with $5K in income?

 

[jim584672]

Wouldn't straight medicaid cover anyone with $5K in income?

To get straight (non-expansion) Medicaid a person would need to be blind, disabled, or elderly. Then spend down all assets and have practically no income.

The emergency room would be the only option, which will quickly lead to bankruptcy once all the bills come in.

 

[Alex The Great]

The easiest solution is to move to a state that has expanded, or stay and make sure you get over 100% FPL and get an exchange plan.

Yes, this is my conclusion too. It is amazing, how system is working. Although expansion may actually go away everywhere, as soon as ACA repealed.

 

[MRG]

Yeah in non-expanded states you have to keep income above 100% of FPL. You get the best subsidies and CSR'd Silver plans below 150% FPL, but it's still good up to 250%.

+1.

Can you create income by rolling 401k into a Roth?

 

[Alex The Great]

Can you create income by rolling 401k into a Roth?

I think it is a great idea. But how about tax? In Texas, it would be OK as it does not have any state tax.

 

[homestead]

I took a large IRA distribution in jan a few years ago to bring my income up but it didn't do any good since they only look month to month for income. They put me in Medicaid so I dropped out and purchased insurance directly from BCBS. Your income must high enough each month to stay out of Medicaid. Other states may vary.

 

[MRG]

I think it is a great idea. But how about tax? In Texas, it would be OK as it does not have any state tax.

You have to pay taxes, Federal, state. But you would be in a low bracket.

 

[RunningBum]

I think it is a great idea. But how about tax? In Texas, it would be OK as it does not have any state tax.

Sooner or later you'll pay tax. Eventually you'll have to take MRDs. You are probably better off taking some of the income while you don't have social security. Besides, after deductions and exemptions you'll owe little to none anyway.

 

[shotgunner]

When you buy HI insurance on the Exchange you are predicting taxable income for the coming year. If you predict your income is within tax credit aka subsidy range you will get the credit for the estimated income.

If your income falls below the minimum for a subsidy in that tax year you will get the maximum amount of tax credit. There is no penalty for too little income.

I do not know how many years you can get away with not achieving the minimum needed for a tax credit but know for sure it is at least one and probably more.

 

[ShokWaveRider]

I keeps ours to $30k for both of us and it works VERY WELL...... More than happy with ACA.

 

[Alex The Great]

If your income falls below the minimum for a subsidy in that tax year you will get the maximum amount of tax credit. There is no penalty for too little income.

Thanks, this is an important piece of information. But it raises an interesting question: who is in charge of verifying, if estimated income you provided for health insurance purpose and actual income at the end of year match? Because it may open the door for a great abuse of the system.

 

[GTFan]

HHS manages the program, they have to verify income and eligibility for subsidies. As mentioned you can get away with estimating income just above the line without penalty if you fall below it, whether they catch up with you after a few years of falling below it is another story. But they do verify income.

 

[bingybear]

Thanks, this is an important piece of information. But it raises an interesting question: who is in charge of verifying, if estimated income you provided for health insurance purpose and actual income at the end of year match? Because it may open the door for a great abuse of the system.

When you file your taxes you will file info about your health insurance from the 1095 form and your naturally have your income on your 1040. This is where you would have to pay back any excess APTC or get a little more if your income was less than expected. To qualify for the PTC you would need to buy your HI thru the exchange.

 

[landover]

Is there a month to month income limits requirement or just annual income targets?

 

[bingybear]

Is there a month to month income limits requirement or just annual income targets?

ignoring medicaid and expanded medicaid, I think you will find it as an annual limit. The PTC calculations are based on annual.

That said, if you call the ACA exchanges they will ask "what is your monthly income?" Why would they do this? Simple, this is their training. Many people can not identify what their income will be for a year. So the ACA reps walk your thru the process of figuring your income. If your previous taxes show an accurate approximate income for this year, then these may do as proof for ACA APTC.

When figuring your own income remember to estimate your MAGI. Things like muni-bond interest is added back in. Don't use taxable income either.

 

[garyt]

I keeps ours to $30k for both of us and it works VERY WELL...... More than happy with ACA.

Well of course you are. But you, (and soon me) are examples of why it's a terrible plan. When people who could have millions but can manipulate taxable income can get a bigger subsidy than a couple who are squeaking by on say, $50K total income, you know you have a bad system.
Not a knock on you, cause I'll do the same when I retire in a year. It's the system that is in place and you should use it to your advantage. I'd retire now if I thought ACA would stay in place for the next 5 years when I'll be eligble for Medicare.

 

[jim584672]

Is there a month to month income limits requirement or just annual income targets?

ACA APTC is annual starting Jan 1. Medicaid is monthly based.

 

[travelover]

Well of course you are. But you, (and soon me) are examples of why it's a terrible plan. When people who could have millions but can manipulate taxable income can get a bigger subsidy than a couple who are squeaking by on say, $50K total income, you know you have a bad system..............

The number of people who can actually pull this off is tiny, though I'd agree it is not the intention of the law.

 

[Alex The Great]

When figuring your own income remember to estimate your MAGI.

Is that true that MAGI works for Medicaid and expanded Medicaid only? And for ACA income calculation, it is actually a gross income?

 

[rbmrtn]

MAGI for ACA is outlined here

http://laborcenter.berkeley.edu/pdf/2013/MAGI_summary13.pdf