Thoughts about the ACA

[TickTock]

I've been rolling this around in my brain. Counter-question to those who think multi-millionaires shouldn't be eligible for ACA subsidies:

Why do you think that someone who w*rked long and hard hours, sacrificed lifestyle to LBYM, and invested over decades to arrive at their current life situation is *less* deserving of subsidies than someone with the same income who spent it all and has negative/zero/small net worth?

 

[Cayman]

I won't get a health ins. subsidy but darn if I waste my time or anyone else's whining about folks lawfully using subsidies to buy health insurance.

Criticizing folks who lawfully navigate a crippled health system? You're misinformed and your judgement is misplaced. The system is the problem.

 

[Lorenzo]

I've been rolling this around in my brain. Counter-question to those who think multi-millionaires shouldn't be eligible for ACA subsidies:

Why do you think that someone who w*rked long and hard hours, sacrificed lifestyle to LBYM, and invested over decades to arrive at their current life situation is *less* deserving of subsidies than someone with the same income who spent it all and has negative/zero/small net worth?

As I see it, the ACA has nothing to do with who is deserving or not deserving based on whether they are hardworking and responsible. It's not a reward for good behavior. It's to promote the health of all Americans. If someone would go without treatment because they couldn't afford insurance, it makes sense to me to subsidize their premium. This is not a new concept. Taxes on wealthier Americans have long funded programs for poorer Americans, sometimes without strings tied to the cause of their circumstances.

 

[Lorenzo]

I won't get a health ins. subsidy but darn if I waste my time or anyone else's whining about folks lawfully using subsidies to buy health insurance.

Criticizing folks who lawfully navigate a crippled health system? You're misinformed and your judgement is misplaced. The system is the problem.

What you call whining may be an enjoyable intellectual debate to others. We have kept it polite and respectful.

And I'm not "criticizing" anyone for using all lawful means to reduce taxes or to qualify for subsidies or otherwise avail themselves of government programs. If I needed the ACA, I'd do just what others here do to help themselves qualify for a subsidy. I'm simply saying that IF one is bothered by the thought they may be "gaming the system"--albeit quite legally--there are arguments in favor of that interpretation. That was the original question in this thread if I recall. Personally, I can live with feeling a little conflicted about whether I'm the kind of subsidy recipient Congress had in mind while still availing myself of it.

 

[TickTock]

As I see it, the ACA has nothing to do with who is deserving or not deserving based on whether they are hardworking and responsible. It's not a reward for good behavior. It's to promote the health of all Americans. If someone would go without treatment because they couldn't afford insurance, it makes sense to me to subsidize their premium. This is not a new concept. Taxes on wealthier Americans have long funded programs for poorer Americans, sometimes without strings tied to the cause of their circumstances.

Sure. Promoting health is a good thing, IMHO.

But here's the thing. Taxes on wealthier Americans are based on income, not assets. Why create a new category?

 

[Cayman]

What you call whining may be an enjoyable intellectual debate to others. We have kept it polite and respectful.

And I'm not "criticizing" anyone for using all lawful means to reduce taxes or to qualify for subsidies or otherwise avail themselves of government programs. If I needed the ACA, I'd do just what others here do to help themselves qualify for a subsidy. I'm simply saying that IF one is bothered by the thought they may be "gaming the system"--albeit quite legally--there are arguments in favor of that interpretation. That was the original question in this thread if I recall. Personally, I can live with feeling a little conflicted about whether I'm the kind of subsidy recipient Congress had in mind while still availing myself of it.

I wasn't referring to you Lorenzo.
The initial post to this thread starts off with a narrow mischaracterization of ACA by a new member. While you may view that member's posts to this thread as "polite", "respectful" and "intellectual" I don't. They're inaccurate and lack supporting data. Fortunately Aerides, MichaelB and others corrected much of the misinformation. Inaccurate posts don't usually fly here.

 

[Aerides]

Taxes on wealthier Americans have long funded programs for poorer Americans, sometimes without strings tied to the cause of their circumstances.

However, I can't think of any taxes in the US purely based on wealth. They are based on income, which is the structure of the ACA tax credits.

 

[wearefinishedworking]

I retired earlier than planned due to the medical practice where I worked for 30 years being bought by a huge private equity firm that promptly began laying employees off in an already understaffed office.

Yes the medical system is a mess. I was able to RE thanks to years of LBYM and having the ACA available.
Yes I controlled income. Yes I got subsidies. Yes I was able to Roth convert for a few years so I would not qualify for only Medicaid.
For me, the costs of Medicare this coming year will exceed what I have paid for healthcare after subsidies.

 

[Flieger]

I wasn't referring to you Lorenzo.
The initial post to this thread starts off with a narrow mischaracterization of ACA by a new member. While you may view that member's posts to this thread as "polite", "respectful" and "intellectual" I don't. They're inaccurate and lack supporting data. Fortunately Aerides, MichaelB and others corrected much of the misinformation. Inaccurate posts don't usually fly here.

While his post "may" have been inaccurate, it was/is his opinion and was done respectfully, new member or not. All other posts should follow the same tenor and not be seen as a personal attack on anyone, no matter how polar opposite the opinion. Opinions can change with additional information, as I have often found on this Forum, but they can also be "hardened" by attacks. Much better to provide information to sway or "correct".

Flieger

 

[COcheesehead]

While his post "may" have been inaccurate, it was/is his opinion and was done respectfully, new member or not. All other posts should follow the same tenor and not be seen as a personal attack on anyone, no matter how polar opposite the opinion. Opinions can change with additional information, as I have often found on this Forum, but they can also be "hardened" by attacks. Much better to provide information to sway or "correct".

Flieger

I saw the “new member” comment too.

 

[Lorenzo]

But here's the thing. Taxes on wealthier Americans are based on income, not assets. Why create a new category?

However, I can't think of any taxes in the US purely based on wealth. They are based on income, which is the structure of the ACA tax credits.

I think we're going around in circles here, but a point we discussed earlier was whether the ACA subsidy is different from other tax credits in that the other tax credits are going to the type of recipient Congress was targeting, whereas with the ACA subsidy we early retirees are just sort of slipping in along with the targeted crowd. Your response to this in post #51 was spot-on:

Because the whole program is in Tax law, means testing cannot apply. They knew that, and designed it this way anyway. If 1-5% or so of recipients are getting more than they "intended" that's pretty damn good. Literally every program tax has folks it misses and folks it over-compensates.

 

[Flieger]

I think we're going around in circles here, but a point we discussed earlier was whether the ACA subsidy is different from other tax credits in that the other tax credits are going to the type of recipient Congress was targeting, whereas with the ACA subsidy we early retirees are just sort of slipping in along with the targeted crowd. Your response to this in post #51 was spot-on:

I agree here, and this and another post (or two) made me re-evaluate my thinking such that I am looking at how to make the best use of the "ACA system" over the next couple of years or so, within the bounds of the las as it currently stands. If they figure it out and correct it to apply more for the "targeted" group, I won't be mad, but until then....

Flieger

 

[anethum]

However, I can't think of any taxes in the US purely based on wealth. They are based on income, which is the structure of the ACA tax credits.

Property taxes are essentially a wealth tax. My property tax is more than my federal income tax.

Regarding the ACA, in the last couple of years before I started Medicare I was getting about a 50% premium tax credit. But my rack rate premiums were so high that Medicare + Medigap Plan G + Plan D total much less than what I was paying for my ACA policy after age 60 for a policy with a huge deductible.

I was very glad that the ACA existed, however. And there are some very good things which are part of the ACA such as no lifetime cap, a policy can't be cancelled if you get sick or injured, and you can't be denied a policy due to pre-existing conditions. Those cheap policies which existed prior to the ACA typically had none of these features, which is why they were cheap.

 

[imjustawarrior]

You state that you are all for legally managing income and such to minimize taxes, right? How about managing income to maximize tax credits? Are you ok with that? The same thing, right?

I will generally say I am ok with one working within the laws for the benefit of the one. This includes tax credits. I'm no tax expert, but I would assume tax credits falls under minimizing taxes. Of course there are non-refundable tax credits that don't minimize taxes if there is no tax burden. I assume you are not trying to trick me by asking if they are the same thing. Theoretically, I could increase my tax credits and not reduce my taxes. In that case, they are not the same thing.

My opinion: I'm not ok with the entitled nature of people. Somehow that got morphed into thinking that I'm not ok with following laws. I believe the entitled nature of some lead to bad laws. That is the problem. Following laws is not a problem.

 

[PaunchyPirate]

Like 99% of the rich people out there, I'm going to take advantage of every tax break that I legally can if it works in my favor. And I don't feel bad about doing that in the slightest. Just like the rich people do not feel bad about doing it.

 

[imjustawarrior]

I've been rolling this around in my brain. Counter-question to those who think multi-millionaires shouldn't be eligible for ACA subsidies:

Why do you think that someone who w*rked long and hard hours, sacrificed lifestyle to LBYM, and invested over decades to arrive at their current life situation is *less* deserving of subsidies than someone with the same income who spent it all and has negative/zero/small net worth?

I'm not a fan of taking from the responsible and giving to the irresponsible. I don't think this forum is the place to go very far down this road.

 

[Aerides]

I think we're going around in circles here, but a point we discussed earlier was whether the ACA subsidy is different from other tax credits in that the other tax credits are going to the type of recipient Congress was targeting, whereas with the ACA subsidy we early retirees are just sort of slipping in along with the targeted crowd. Your response to this in post #51 was spot-on:

And I can guarantee you with great certainty, that if the math showed that "rich early retirees" are getting subsidies in any substantial way impacting the overall cost of the ACA, every congress since inception would have been screaming that from the rooftops as part of the argument to overturn it, and it would be a very popular motivator.

But they haven't, not once in the 13 or so years since the ACA became law, despite all the arguments made against it, and we all know there have been many. So it's probably one of those "oh huh look at those few people, oh well" kind of things. Just like every other tax credit program. If you meet your goal 90% of the time, that's a win.

 

[pb4uski]

I will generally say I am ok with one working within the laws for the benefit of the one. This includes tax credits. I'm no tax expert, but I would assume tax credits falls under minimizing taxes. Of course there are non-refundable tax credits that don't minimize taxes if there is no tax burden. I assume you are not trying to trick me by asking if they are the same thing. Theoretically, I could increase my tax credits and not reduce my taxes. In that case, they are not the same thing.

My opinion: I'm not ok with the entitled nature of people. Somehow that got morphed into thinking that I'm not ok with following laws. I believe the entitled nature of some lead to bad laws. That is the problem. Following laws is not a problem.

I really don't know what to make the last part. You're all over the place and it is hard to follow and understand what you really think. Can you elaborate on the segment of people that you are referring to as entitled that you so object to?

My earlier point was that if you are ok with people managing their income and financial affairs to minimize their taxes (with which I fully agree) and are also ok with people managing their income and financial affairs to maximize tax credits (again agree) then you would have to be ok with people managing their income for ACA subsidies because ACA subsidies are tax credits that those who receive them either get monthly as a reduction of their ACA health insurance premiums or get once a year when they file their tax return. Whether the tax credits are refundable or non-refundable isn't relevant to the debate.

 

[pb4uski]

And I can guarantee you with great certainty, that if the math showed that "rich early retirees" are getting subsidies in any substantial way impacting the overall cost of the ACA, every congress since inception would have been screaming that from the rooftops as part of the argument to overturn it, and it would be a very popular motivator.

But they haven't, not once in the 13 or so years since the ACA became law, despite all the arguments made against it, and we all know there have been many. So it's probably one of those "oh huh look at those few people, oh well" kind of things. Just like every other tax credit program. If you meet your goal 90% of the time, that's a win.

Totally agree. To begin with, outside this and similiarly themed forums on early retirement very few know that it exists and secondly, in the whole schem of things it is so negligible that there is no real imputus for Congress to do anything about it. In short, a minor loophole/unintended consequence that is so negligible that nobody cares other than a few.

 

[Fermion]

Sure. Promoting health is a good thing, IMHO.

But here's the thing. Taxes on wealthier Americans are based on income, not assets. Why create a new category?

It becomes very difficult to determine the tax rate based on wealth and not income. If a person happens to live in a gentrified neighborhood and their house is a large portion of their wealth, do you tax them on that? (not talking about property taxes but general taxes or ACA subsidy). What if they inherited a family painting worth $500,000. What about the gold coins in their safety deposit box? That classic car they spent the past few years restoring?

If you start trying to exempt things from wealth tax or qualifications, like the house, then a person who sells their house is suddenly wealthy while an identical person who does not sell is "poor".

It is just messy all around.

 

[pb4uski]

+1 To implement some sort of annual means testing for ACA subsidies or SS or anything else is a administrative nightmare since some wealth is easy to measure and other wealth is extremely hard to measure.

The only real means testing that I am aware of is where in some cases the government tries to clawback some of what it has paid for someone's medicaid LTC costs from their assets after they die and that is a one-time thing.

 

[imjustawarrior]

My earlier point was that if you are ok with people managing their income and financial affairs to minimize their taxes (with which I fully agree) and are also ok with people managing their income and financial affairs to maximize tax credits (again agree) then you wold have to be ok with people managing their income for ACA subsidies because ACA subsidies are tax credits that those who receive them either get monthly as a reduction of their ACA health insurance premiums or get once a year when they file their tax return. Whether the tax credits are refundable or non-refundable isn't relevant to the debate.

I have never said that people shouldn't work within the laws to minimize taxes. You may think I am all over the place because you are confused about what I am getting at.

 

[Flieger]

It becomes very difficult to determine the tax rate based on wealth and not income. If a person happens to live in a gentrified neighborhood and their house is a large portion of their wealth, do you tax them on that? (not talking about property taxes but general taxes or ACA subsidy). What if they inherited a family painting worth $500,000. What about the gold coins in their safety deposit box? That classic car they spent the past few years restoring?

If you start trying to exempt things from wealth tax or qualifications, like the house, then a person who sells their house is suddenly wealthy while an identical person who does not sell is "poor".

It is just messy all around.

Yes. Much like the current system that has grown with all kinds of exceptions, loopholes, etc.

A flat tax, with a Std Deduction for the lower income would ease a lot of that, but also has its issues.

Flieger

 

[Fermion]

Yes. Much like the current system that has grown with all kinds of exceptions, loopholes, etc.

A flat tax, with a Std Deduction for the lower income would ease a lot of that, but also has its issues.

Flieger

A flat tax is extremely regressive and now you are modifying it with standard deductions for lower income so suddenly you have an exception. Then more people figure out how to qualify for that exception and you fix some loopholes, but now it unfairly penalizes another class of workers so you make special case exceptions for that. Eventually you end up with a similar system and all you accomplished was profits for tax software companies.

 

[NatureBoy]

However, I can't think of any taxes in the US purely based on wealth. They are based on income, which is the structure of the ACA tax credits.

Estate and inheritance taxes at both the state and federal levels?