Tools to balance the fight between health care costs and bankruptcy?

[MarieIG]

While you have a fair point, I see a big difference between someone that manages their income for ACA purposes to receive a $800/monthly or $9,600 annual benefit for a few years between ER and Medicare at 65 vs someone who gains a $120k benefit annually for 3-10 years.

The other difference is that to manage income all one needs to do is to withdraw from taxable rather than tax-deferred whereas for Medicaid planning you need to set up irrevocable trusts, retitle assets into the trust, etc. Big difference IMO.

FWIW, I haven't done either... I chose not to take ACA subsidies so I could do more low tax cost Roth conversions and I will not do Medicaid LTC planning either even though our heirs might benefit significantly.

We've always paid our own bills and will continue to do so as long as we have money to pay them.

I reserve the right to respectfully disagree with this line of reasoning. IMHO taking subsidies from either program should be based upon genuine need. (No, we've done neither.) Obviously, YM does V.

 

[pb4uski]

I reserve the right to respectfully disagree with this line of reasoning. IMHO taking subsidies from either program should be based upon genuine need. (No, we've done neither.) Obviously, YM does V.

Ok, we can agree to disagree. While I agree with you that subsidies from either program should be based on genuine need, the problem is with the way that both of those programs have been designed. While I think we agree that the ACA tax credits should have been designed so someone with wealth doesn't receive them, I think that Congress decided that it would add too much complexity to find a way to exclude those relative few situations of wealthy people getting premium tax credits.

Another nuance of a difference is that legally ACA subsidies are a premium tax credits according to SCOTUS and it is well established in the law that a taxpayer is free to arrange their financial affairs in a manner to reduce taxes (or increase tax credits whch reduces their taxes).

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

~ Judge Learned Hand
(1872-1961), Judge, U. S. Court of Appeals
in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

Medicare LTC planning is not related to taxes in any way so it is a whole different kettle of rotten fish.

 

[ncbill]

I'll be blunt. Don't be greedy. You have the money, suck it up and pay for your own care instead of looking for ways to hide assets hoping that someone else will pick up the tab.

They should buy LTCi now, then while young...cheaper & easier to qualify.

Those who have the money but don't buy LTCi often see the healthy spouse ruin their health trying to "save money" rather than spend it on LTC.

 

[MarieIG]

Yes, PB4uski, I understand your point of view. And I do remember learning about Learned Hand.

 

[MarieIG]

They should buy LTCi now, then while young...cheaper & easier to qualify.

Those who have the money but don't buy LTCi often see the healthy spouse ruin their health trying to "save money" rather than spend it on LTC.

Not everyone can qualify. Buying and maintaining good LTCi, especially today, can be dicey.

 

[athena53]

Those who have the money but don't buy LTCi often see the healthy spouse ruin their health trying to "save money" rather than spend it on LTC.

This happened to my Aunt. The assets mostly came from an inheritance from her side of the family and it was the 1960s so you commingled everything. (Not sure how Medicaid treats separately-inherited assets never commingled, anyway.) Uncle (my Dad's brother) developed Alzheimer's and she kept him home probably longer than she should have. She's calm him down when he tried to get violent (very unlike him), slept in a recliner by the door so he couldn't slip out at night, etc. She battled colon cancer at one point and is slowly going blind from macular degeneration. She did get him into a decent place as self-pay but had spent down close to the highest level of assets Medicaid allowed before Uncle died.

Fortunately her two sons are both highly successful entrepreneurs and they'll take care of her. A cautionary tale nonetheless.

 

[Bamaman]

The CCRC (continuing care retirement community) where my mother lives does not take Medicaid but they have a trust fund to pay the costs for those who eventually run out of money so they do not have to leave the facility. The trust fund is not used very often because to get in the facility you have to have a pretty high net worth.

CCRC's often have very expensive entry fees which are essentially a "security deposit". You never own the apartment.

Most CCRC residents will have substantial net worth to last them a few years' expenses. My mother's "security deposit" was $177K and her "rent" was $2,050 including 20 meals a month.

That's equal to 88 months rent. And since she was 89 years old, obviously she was not going to outlive the "security deposit" had she not been able to pay monthly rent.