Healthcare discussion from Pointedstick's "I'm Free" thread

[Pointedstick]

So this is a relevant discussion for potential FIRE folks in the USA: I went over the health insurance situation with a neighbor who happens to be a professional health insurance broker and basically discovered that we're going to have to go on Medicaid, but that this is actually a great outcome for us. He says that coverage and quality are excellent here in New Mexico, and that basically everything is covered 100%. So that's nice.

This wouldn't have been my first choice (there's that Protestant work ethic again!) but the way Obamacare is structured, we have no choice unless and until I go back to work and bring in a gross income of about $36,000 a year, given my family size.

So until that point, health care is almost entirely free, which frees up $200-300 a month from the average low-income family budget and gives us a huge amount of breathing room. We're easily FI with this adjustment. So at this point, work is basically optional for life and can be used mostly to finance large one-time purchases, vacations, expensive hobbies, etc.

Anyone shooting for an ERE-style financial independence with less than about $20-30k of retirement income (depending on family size) can probably count on having basically zero health care costs until this crazy mixed-up system is changed again.

[Tyler]

This wouldn't have been my first choice (there's that Protestant work ethic again!) but the way Obamacare is structured, we have no choice unless and until I go back to work and bring in a gross income of about $36,000 a year, given my family size.

FYI - If you have a 401k or IRA, you have the option of converting a portion of it to a Roth each year to generate enough reportable income to hit whatever ACA subsidy sweet spot you like. At that income, the taxes will be minimal. And after 5 years you'll even have access to the transferred principal tax and penalty free.

And don't forget your investment income also counts. So dividends and interest apply, as well as any intentional capital gains. At that low income level, the long term capital gains should be tax free. And the standard deduction will largely offset any short term dividends and interest.

But since your state expanded Medicaid, that sounds like a pretty good deal. Sometimes the simplest solution is the best one.

[Tyler]

Tyler, where would one find the ACA subsidy thresholds? Thanks!

For the minimum income requirements, this is a good guide:

https://www.healthcare.gov/glossary/fed ... level-FPL/

The key here is whether your state expanded Medicaid. If it did (like NM), you need at least 138% of the FPL to qualify. If it did not (like TX), then you only need 100% of the FPL to qualify. If your state expanded Medicaid and you make between 100% and 138% of the FPL, the documentation makes it sound like you have a choice but I've heard stories of the system auto-enrolling people into Medicaid. Personally, I have no experience with that part of it so I have no idea if those reports are true.

For a better estimate based on your particular circumstances, I recommend browsing the exchange website. That said, I've only used the federal one and have no experience with individual state sites. And be sure to browse the silver plans. Only they will also have access to cost sharing to offset deductibles as well.

[MachineGhost]

This wouldn't have been my first choice (there's that Protestant work ethic again!) but the way Obamacare is structured, we have no choice unless and until I go back to work and bring in a gross income of about $36,000 a year, given my family size.

So until that point, health care is almost entirely free, which frees up $200-300 a month from the average low-income family budget and gives us a huge amount of breathing room. We're easily FI with this adjustment. So at this point, work is basically optional for life and can be used mostly to finance large one-time purchases, vacations, expensive hobbies, etc.

You're lucky. I'm not eligible for Medicaid OR ObamaCare because I'm eligible for Medicare. The ObamaCare MAGI expansion (no asset test) doesn't apply if you're eligible for any other forms of health insurance. I've been trying for awhile to find a way around it, but just cannot find a loophole in the Byzantine regulations. So I'm going to be stuck paying the bloody stupid $104.90 monthly premium soon. For a youngster like me into radical health prevention, it's a scam and a waste of resources (a Bronze ObamaCare would cost only $50/month after subsidies last I chcked). I also have to decide if opting out of Medicare and going with no health insurance is the way to go and flipping the bird to OBAMA! and the Supreme Court. If I do that, then the monthly premium that I didn't pay will go up by 10% a month as a "penalty" until formal retirement age in a few decades when it resets back to $0. On top of the yearly IRS penalty if I can't finagle a hardship exemption (seriously doubtful, but it could be possible with something overpriced from the individual market). I really, really do not want to participate in this bloody stupid political game. On this basis alone, it's enough to make me vote for Trump and repeal that bloody stupid ObamaCare.

And staying under 138% FPL on Medicaid and off ObamaCare is freaking HARD! Maybe you can pull it off in NM being monkisly frugal with a spouse and two children compared to being single. It can mean no capital gains, no interest and no dividend income at all. Nothing else but the core of 16K (or whatever) a year. It's inherently regressive and promotes having multiple children to stay on welfare benefits.

[Tyler]

Also, it appears that one can enter an estimated income, rather than the past year's AGI. I was wondering how that would be handled, for the first year of ER.

When applying for pre-paid subsidies, they compare what you enter as your projected income to the last tax return they have on file. So if you're applying at the end of 2016 for 2017 coverage, they compare your projected 2017 income to your known income from 2015.

If the projected income is more than the previous income, there are no issues. If it is less (very likely for a retiree) then you have a few months to provide documentation explaining the discrepancy. The worst case is that you pay the full premiums now and they refund what you are owed once you file your 2017 taxes. You can also choose to do that if your future income is uncertain.

[Xan]

Ok, that all makes sense. And yeah, I've encountered the Obama health insurance fines on tax returns (I do tax prep as a side biz).

Desert, can you tell us more about that? (Probably in a new thread rather than this one.) How did you get into that? How much time does it take? What training/credentials are required, and what risk is involved? How's the money?

It sounds like the sort of thing that could appeal to a lot of folks around here.

[MachineGhost]

Also, it appears that one can enter an estimated income, rather than the past year's AGI. I was wondering how that would be handled, for the first year of ER.

Medicaid enforcement is sorely lacking, I can tell you that much. But they will pull from IRS if you give them permission. And you will have to pay for any overs or unders once they catch up (if ever).

[MachineGhost]

PS please be aware that any in any month where you do not possess health care coverage you will be assessed a fine by the IRS under Obamacare.

Fortunately, its just a fine for the entire calendar year, not per month. So it's way less severe than the Medicare penalty. And if it lasts less than three months, there's no fine. The IRS is not allowed to levy, lien or judgement against you for the unpaid fines but can hold it back against future refunds, so there's still a way to game the system.

I really love the Newspeak in calling that fine an "individual shared responsibility payment". Who the fuck are they kidding?

[MachineGhost]

[curlew]

You're lucky. I'm not eligible for Medicaid OR ObamaCare because I'm eligible for Medicare. The ObamaCare MAGI expansion (no asset test) doesn't apply if you're eligible for any other forms of health insurance. I've been trying for awhile to find a way around it, but just cannot find a loophole in the Byzantine regulations. So I'm going to be stuck paying the bloody stupid $104.90 monthly premium soon. For a youngster like me into radical health prevention, it's a scam and a waste of resources (a Bronze ObamaCare would cost only $50/month after subsidies last I chcked). I also have to decide if opting out of Medicare and going with no health insurance is the way to go and flipping the bird to OBAMA! and the Supreme Court. If I do that, then the monthly premium that I didn't pay will go up by 10% a month as a "penalty" until formal retirement age in a few decades when it resets back to $0. On top of the yearly IRS penalty if I can't finagle a hardship exemption (seriously doubtful, but it could be possible with something overpriced from the individual market). I really, really do not want to participate in this bloody stupid political game. On this basis alone, it's enough to make me vote for Trump and repeal that bloody stupid ObamaCare.

That was a lot to process. You say you are eligible for Medicare but "formal retirement age" is in a few decades? So that must mean you are on SS Disability, best I can figure.

And I thought the $104.90 was for part B Medicare which is optional. At least it is for me on old age SS (don't pay it yet because I'm on my wife's insurance).

[MachineGhost]

Anyway, it looks like the ObamaCare Bronze plans have doubled in price since last I checked so I don't think there's a winning argument to be had with the IRS around not participating in your "individual shared responsibility" because the price is just a few dollars more than Medicare. The hardship exemption only applies (in terms of income) if health insurance costs more than 8% of tax household income. Well, golly gee willickers, 8% at the 138% FPL is exactly what a Bronze plan costs! I believe this is completely and utterly intentional. <-- angry face

So much for that idea.

[MachineGhost]

So this is a relevant discussion for potential FIRE folks in the USA: I went over the health insurance situation with a neighbor who happens to be a professional health insurance broker and basically discovered that we're going to have to go on Medicaid, but that this is actually a great outcome for us. He says that coverage and quality are excellent here in New Mexico, and that basically everything is covered 100%. So that's nice.

I now think he is full of shit. Correct me if I'm wrong (happy, Reub?), but the ObamaCare MAGI expansion only covers single adults without children up to 138% FPL. I don't see how you can fall into that category. I'm sure you have more than $2K in assets so there's no possible way you can qualify for Medicaid under either the original eligibility criteria or the ObamaCare expansion.

[MachineGhost]

And I thought the $104.90 was for part B Medicare which is optional. At least it is for me on old age SS (don't pay it yet because I'm on my wife's insurance).

Medicare Part A, B, C and D are all optional. Just like having a SSN is optional. But you will pay the price, if not via fines & fees, then difficulty in dealing with a society that can't deal with non-conformists.

This isn't Switzerland or I'd have dramatically less of an issue about my so-called "individual shared responsibility".

[Pointedstick]

So this is a relevant discussion for potential FIRE folks in the USA: I went over the health insurance situation with a neighbor who happens to be a professional health insurance broker and basically discovered that we're going to have to go on Medicaid, but that this is actually a great outcome for us. He says that coverage and quality are excellent here in New Mexico, and that basically everything is covered 100%. So that's nice.

I now think he is full of shit. Correct me if I'm wrong (happy, Reub?), but the ObamaCare MAGI expansion only covers single adults without children up to 138% FPL. I don't see how you can fall into that category. I'm sure you have more than $2K in assets so there's no possible way you can qualify for Medicaid under either the original eligibility criteria or the ObamaCare expansion.

MG, I would appreciate fewer insults and more adult behavior, especially when you're the one who's in error:

http://theincidentaleconomist.com/wordp ... sset-test/
https://www.medicaid.gov/state-resource ... slides.pdf

[Mountaineer]

So this is a relevant discussion for potential FIRE folks in the USA: I went over the health insurance situation with a neighbor who happens to be a professional health insurance broker and basically discovered that we're going to have to go on Medicaid, but that this is actually a great outcome for us. He says that coverage and quality are excellent here in New Mexico, and that basically everything is covered 100%. So that's nice.

I now think he is full of shit. Correct me if I'm wrong (happy, Reub?), but the ObamaCare MAGI expansion only covers single adults without children up to 138% FPL. I don't see how you can fall into that category. I'm sure you have more than $2K in assets so there's no possible way you can qualify for Medicaid under either the original eligibility criteria or the ObamaCare expansion.

MG, I would appreciate fewer insults and more adult behavior, especially when you're the one who's in error:

http://theincidentaleconomist.com/wordp ... sset-test/
https://www.medicaid.gov/state-resource ... slides.pdf

That is not really MG talking, it is a ventriloquist spirochete.

[MachineGhost]

MG, I would appreciate fewer insults and more adult behavior, especially when you're the one who's in error:

http://theincidentaleconomist.com/wordp ... sset-test/
https://www.medicaid.gov/state-resource ... slides.pdf

Okay, just checking. I don't know how it snuck through but the Medicaid expansion was never for families, only single adults 18-65 with no children. Very curious!

EDIT: It seems that calling it a "Medicaid expansion" is an understatement. ObamaCare fundamentally reformed Medicaid in many different areas. But the way MAGI Medicaid is predicated on a "tax household" falls upon a individual, non-elderly tax filer and thus has to take family size into consideration for determining income vs FPL. No wonder half the states opted out -- this wasn't about just a simple "expansion" in the FPL eligibility range. There also seems to be some leeway in what the participating states get to cover in terms of an "expansion" (beyond the Federal minimum), though.

[MachineGhost]

That is not really MG talking, it is a ventriloquist spirochete.

Correct you are, sir, when its late at night and I'm tired. It is not me, Casper the friendly MachineGhost, speaking at all!

P.S. I find it rather amusing that PS now has a bee in his bonnet about cursing and banal commentary all of a sudden.

[MachineGhost]

I wanted to update this thread because of how pissed off I am.

ObamaCare Marketplaces cannot legally sell you any health insurance if you have Part A or Part B Medicare. No problem, you can just drop out of both, right? Hold your horses!!! The Clintons decided to link together SS and Medicare back in 1993 so you cannot drop Part A (which is premium free and was paid for by your covered earnings) without paying back all received SS benefits to date, including any Part A hospital costs. There's nothing in the law for either SS or Medicare about a linkage between both, but is just a guideline in the SSA Handbook. It went to court, the petitioners lost on OBAMA! adminsitration influence (a liberal judge reversed herself) and the Supreme Court later denied to hear the appeal. The Clintons and their single payer, universal health care vision won. I'm not sure why there was even a lawsuit about this Part A linkage long before ObamaCare unless private health insurance used Medicare as an excuse to deny and fob you off onto the Federal government.

So while we can't drop Part A for practical reasons and can't buy on the ObamaCare exchange or qualify for the ObamaCare Expansion, that leaves only the individual market (does that even still exist?) and employer-provided insurance after dropping Part B. Maybe.

Also, the "late enrollment" penalty for not having Part B is an accumulative 10% a year not month; however the penalty for not having Part D is an accumulative 1% a month. I actually do not know for sure if those penalties accumulate if you do join both when you are required to do so, but drop them later.

[Pointedstick]

If you're eligible for Medicare, why would you want to buy into the Obamacare marketplace?

[MachineGhost]

If you're eligible for Medicare, why would you want to buy into the Obamacare marketplace?

Why do I want to pay $104.90/month for a shitty 20%/80% plan with useless-to-limited preventive and coverage benefits aimed at unaware old people and dictated by a cabal of unelected bureaucrats compared to $1/month for a high deductible (hopefully HSA eligible also) plan subsized by the taxpayers? You don't know how lucky you are.

This whole HSA thing was not an intended consequence of ObamaCare... it was on the chopping block to ban because liberals hate any individual self-responsibility, so its amazing it's managed to flourish because of what an expensive boondoggle ObamaCare has been for the insurance companies.

[Xan]

Have you thought about getting a job?

[MachineGhost]

Have you thought about getting a job?

Isn't that what we're all trying to get away from, having to get a job just to get low-cost health insurance? That isn't productive.

Besides, a job isn't going to solve the problem. I'm stuck with Part A forever. Can't buy on the ObamaCare exchange if an employer is using it and I'm not seeking a high paying job in a urban blue zone just to have a Cadillac group co-op plan. The point is I don't want Medicare, but can't effectively get rid of it!!! I'm subsidizing all your damn Baby Boomers for no good reason.

[Xan]

Have you thought about getting a job?

Isn't that what we're all trying to get away from, having to get a job just to get low-cost health insurance? That isn't productive.

Oh, no, I meant to give you something else to do. :-)

[MachineGhost]

Have you thought about getting a job?

Isn't that what we're all trying to get away from, having to get a job just to get low-cost health insurance? That isn't productive.

Oh, no, I meant to give you something else to do. :-)

Don't worry, I'll have something else to do after the PP is fully invested!

[MachineGhost]

Here's some more bad news.

ObamaCare affected the individual health insurance market, not just Medicaid and the Marketplace Exchanges. Contracts have to conform to the same stupid Minumum Essential Coverage requirements as on the Exchanges, i.e. be unecessarily expensive to cover things you may not be interested in such as maternity, illicit drug treatment, etc.. I'm pretty sure they can't underwrite individual policies either and have to do community rating and treat every sick tobacco smoking idiot injecting heroin the same as a healthy non-drug addict genius. All such pre-ObamaCare plans will be gone for good by the end of 2017.

I priced a sample contract on the individual market and it was $233 a month at the lowest for a high deductable plan. For just one person! The only difference that I can see is you just don't get the tax credits or cost-sharing subsidies (currently in legal dispute) for buying off of the Exchange.

So okay, maybe $104.90 a month for a Part C Medicare Advantage plan (to fix the Part D gap without extra cost and maybe get rid of the 20% coinsurance) isn't all that bad given the clear lack of freedom of choice anymore. But, that premium goes up over time too and SS just paid another fucking measly .3% increase in SS benefits while medical inflation is skyrocketing.

Slick Hilly's solution is to put more lipstick on this dirty, rotten, stinkin', filthy ObamaCare pig by giving away even more taxpayer money for subsidies to fix some punitive subsidy gaps. Nothing she has planned will do a damn thing to keep ObamaCare economically-feasible nor reign in sick care costs.