Should I Stay With Marketplace Health Insurance or try to enroll in Medicaid?

[nico08]

Forgive me if these questions sound basic. I am fairly new to FIRED status and I have only had a marketplace health insurance plan for one year.

I have a serious medical condition, so I would prefer to keep the doctors that I currently have and who are in my current marketplace health insurance plan. I live in New Jersey.

So I understand that New Jersey has expanded income eligibility for Medicaid to 138% of the federal poverty guideline, and 138% is approximately $16,404 for a single person.

I checked my dividends and capital gain distributions thus far for 2016, I only have $6049 in dividends thus far and no capital gains.

Questions-
1. Is it better for me to be in a marketplace health insurance plan as opposed to Medicaid? I don’t know much about Medicaid, but what little I have heard about it is that it is hard to find doctors who accept Medicaid and the doctors that do accept it are not usually top in their field.

2. The only other income I think I will have are capital gains from non-retirement mutual funds. I have some with T Rowe Price and Vanguard. So, assuming it is better to stay with a marketplace health insurance plan and not Medicaid, can I transfer money from either a 401 account or a 403b account, and put that money into a roth ira, and then that transferred amount could also be considered income for 2016?

3. If transferring money like this would get me over the $16,404 income that I need to be eligible for a marketplace health insurance plan, will I have time to make this transfer after capital gains have been declared by my nonretirement mutual funds but before the end of 2016?

4. If transferring money like this makes sense, how do I initiate the transfer? If I want the roth ira to be with vanguard, will they handle the transfer? Or do I have to deal with an administrator from the 401k or the 403b plan?

Thank you for your insight.

 

[Bamaman]

My doctors absolutely refuse to see any Medicaid patients. The only local doctors that will see anyone on Medicaid barely speak English. Needless to say, you're not going to be referred to the best specialists either.

My doctors will see new Medicare patients, but only if the have a good Medicare Supplement package. The hospital chain to the north of us refuses to accept Medicare Advantage (HMO like) under any circumstances, and they have purchased dozens of practices with 1700 doctors which are following their rules.

 

[swakyaby]

Although a small percentage of doctors in my area have medicaid patients in their practice, it's very hard to find ones that do accept new medicaid patients. Reimbursements from the state are so low that even the hospital I work in refuse to allow any medicaid patients to be admitted for elective in-patient surgery, only outpatient surgery is allowed. It's pretty tough-going for those on medicaid, from what I observe.

 

[pb4uski]

What would be the advantage of enrolling in Medicaid? Other than no health insurance premium or deductibles, all I see are pitfalls.

If premiums are unaffordable (your premiums exceed 8.13% of your income) then you can buy a catastrophic plan even if you are over 30... in some (but not all) states the premiums are substantially lower than a bronze plan (40% where I live).

 

[CRLLS]

.....My doctors will see new Medicare patients, but only if the have a good Medicare Supplement package.

It is my understanding that they cannot deny you based solely on the supplement provider you have, or plan letter, or even if you don't have a supplement package at all. If you have Medicare Part A and Part B, and they are a "participating provider" (accept Medicare assignment) they are required by Medicare to accept you. There is no in-network network unless you have a "select" plan or advantage plan. I am new to this and am doing my homework getting ready for next month (DW) If I am wrong, somebody correct me please.

 

[Alan]

It is my understanding that they cannot deny you based solely on the supplement provider you have, or plan letter, or even if you don't have a supplement package at all. If you have Medicare Part A and Part B, and they are a "participating provider" (accept Medicare assignment) they are required by Medicare to accept you. There is no in-network network unless you have a "select" plan or advantage plan. I am new to this and am doing my homework getting ready for next month (DW) If I am wrong, somebody correct me please.

The OP is talking about Medicaid, not Medicare, quite different. (Bamamam slipped in Medicare to show the contrast between the 2 programs).

 

[MBSC]

If you have Medicare Part A and Part B, and they are a "participating provider" (accept Medicare assignment) they are required by Medicare to accept you. There is no in-network network unless you have a "select" plan or advantage plan. I am new to this and am doing my homework getting ready for next month (DW) If I am wrong, somebody correct me please.

A Medicare participating provider is not required to accept new Medicare patients or continue seeing existing patients. If the participating provider elects to see a Medicare enrollee, the provider is agreeing to accept assignment.

Also, if the provider practices at several locations, they can have a participation agreement on file for one location and be non-participating at another.

 

[nico08]

Ok well let's assume a marketplace health insurance plan is better than medicaid. Can I transfer money from a 401k or 403b to a roth ira, and have the amount transferred considered income, in order to get me to an income level where i would be eligible for a marketplace health insurance plan?

 

[John Galt III]

nico08, I was contemplating the same thing a few years ago. Medicaid vs ACA. Heard good things and bad things about Medicaid. Decided to go with ACA. I have to do a Roth conversion every year to get my income over the $16,xxx threshold to qualify for ACA. I get a Silver plan, and have ended up with low premiums ($20 to $40 per month) low max out of pocket and deductibles. I've been forced to change insurance companies every year because they either leave completely or change in negative ways. But I always have a decent cheap plan. For the Roth conversion I contacted my credit union by phone, and after a lot of mistakes on their part, I finally got things set up so it is fairly painless each year. I have traditional IRA's there that I am converting. I also have a 401K but have not taken any distributions. I suppose you could extract money from your 401k in small amounts either as regular taxable income, or as Roth conversion into Roth IRA. But 401k's each have their own rules on amounts and frequency of withdrawals. I think you will have enough time between now and 12/31/2016 to get your withdrawals done. Just takes a phone call to start, then some faxes of paperwork, or online forms filled out. No big deal, just the usual problem of getting someone on the other end who knows what's going on. And you can estimate income when you are applying for ACA and provide proof later, if they request it. That's what I had to do. It all worked out.

 

[MoreTimetoRide]

My experiences are from Massachusetts. YMMV.

1. If you are eligible for Medicaid (in MA), you are not given the opportunity to purchase health care off the exchange.

2. We were on Medicaid for a while when ACA websites first went on-line (it's a long story why and how this happened). I found NO downside to being on Medicaid (in MA). We saw the same doctors, paid no co-pays, and saw no bills.

3. Yes, you can transfer money from a retirement account to a Roth IRA to capture income and, therefore, adjust your income to whatever level you need for ACA eligibility purposes.

4. You will need to figure out how to make the transfer, figure out what capital gains you will see at year end, and actually make the transfer prior to December 31st (note that this works differently than IRA contributions that you can make prior to filing your taxes in April). Contact your current retirement account company to get started figuring out how to do all this.

Perhaps you can save yourself some sleepless nights and rollover whatever is necessary to get you above the "Medicaid Line" now (say $11k if your figures are right). Obviously, you won't hit your MAGI exactly at the 138% level, but you will know that you have successfully avoided "The Dreaded Medicaid Curse."

Best of luck!
--
Wayne.

 

[nico08]

John Galt III and moretimetoride thank you for sharing your experience this is just the type of information I was looking for.

 

[AllDone]

I used to work for a very large Southern California medical group and we accepted MediCal (California's version of Medicaid) patients. I don't know about my colleagues, but I sure never went to the trouble of looking up the name of a patient's insurance provider. The referral networks were not exactly the same, but did substantially overlap.

You can also overestimate your yearly income when you apply. Estimate it at 139% of the FPL and you'll get maximum subsidy as well as payment support. There's no penalty for overestimation. I'm not sure that you'll be able to get away with that for more than a year, though, and it will cost you more than Medicaid.

 

[pb4uski]

....Obviously, you won't hit your MAGI exactly at the 138% level, but you will know that you have successfully avoided "The Dreaded Medicaid Curse."

Best of luck!
--
Wayne.

Actually you can hit your MAGI exactly at 138% if you wish to... just Roth convert more than you need to and then recharacterize any excess when you do your tax return... I've done this the last 2 years to make my taxable income exactly equal to the top of the 15% tax bracket... I just recharacterize any excess and the recharacterization amount reduces my income and I reflect it in the return.

 

[nico08]

Actually you can hit your MAGI exactly at 138% if you wish to... just Roth convert more than you need to and then recharacterize any excess when you do your tax return... I've done this the last 2 years to make my taxable income exactly equal to the top of the 15% tax bracket... I just recharacterize any excess and the recharacterization amount reduces my income and I reflect it in the return.

hi pb4uski. this information is helpful. if i roth convert more than i need to and then recharacterize any excess, does that excess amount end up becoming a traditional ira account with the financial institution that i set up the roth ira with, or does that excess amount go back to the 401k account where it came from?

 

[pb4uski]

I'm not sure as i do not have a 401k anymore... I rolled it into mtIRA many years ago and convert from there to a Roth and then the recharacterization goes back into the tIRA. Hopefully someone will come along who knows.

 

[jim584672]

For the OP. New Jersey has Medicaid Managed Care plans with internal doctor networks. You should research these networks and compare them with what is available on the Marketplace. Fee-for-service Medicaid is very different from managed care plans, so don't dismiss it out of hand.

Medicaid is far superior when it comes to out of pocket costs compared to even Platinum plans.

 

[walkinwood]

If your income is close to the cut-off, then you may be in medicaid next year and not eligible the year after. That may cause you to have to change doctors each year. Can you live with that?

IRA to ROTH transfers will count as income.

Mutual funds will announce the dates and estimated amounts for dividends in early December. Dates vary from around the middle of the month to just before Christmas. So you should have enough time. Vanguard allows you do do the transfers online - it is quite easy to do. Or you can call them. I don't know about other mutual fund companies.

Good luck.

 

[GTFan]

Medicaid varies greatly from state to state depending on how it's funded. It is a poor choice (literally) here in GA, for example, because of the limited number of docs that will take it - the state doesn't want to pay crap to providers so it's widely shunned by them. Of course we haven't expanded Medicaid under the ACA.

Much better to stay below 150% of the FPL and get the max benefit, cost-shared Silver plan on the exchange. For expanded Medicaid states, you'd have to stay between 138% and 150% IIRC. But even at 150-200% of FPL they're still darn good plans for the money (with subsidies).

All of this is up in the air as the ACA devolves into 2017 and more states expand Medicaid with the enhanced federal funding that goes with it.