Author Topic: Case study: healthcare from riches to rags  (Read 4970 times)

Calimerostache

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Case study: healthcare from riches to rags
« on: October 31, 2019, 02:28:20 PM »
Hello Mustachios,
 
Different case study than the usual RE case study.
 
I am soon to be unemployed as I gave my resignation from my 6 figures paying job, without backup job (I know it’s stupid, facepunching myself for that)
I’m 38M with a 38DW (part time assistant teacher) and 2 kids (9, 5) leaving in WA.
 
I’m hoping to find a new job quickly, but in case it takes me longer to find a job, I have a stash than should support us for 2 years or so if needed.
 
My case study is really around healthcare coverage.
 
For the rest of this year, for the sake of simplicity and to avoid a period with no coverage, I’m planning to use COBRA.
It will be expensive but is only 1 or 2 months.
 
My question is for next year.
Until I find a new job I anticipate my income to be as follow:
Me: $0 (will withdraw from EF)
DW: she earns $16,000/year but we put everything in 403b so her AGI will be close to zero (not intending to change that, since I have cash)
 
I see at least 2 options (maybe more?):
 
Option 1:
We can use her company medical insurance, the cost would be around $1,000 per month to cover the family.
Its roughly $80 for her and $920 for the spouse and the 2 kids.
 
Option 2:
She could cover herself only by her company next year ($80/month)
For myself and my child, I was thinking on enrolling in ACA? Since with a $0 income we would fall below the 9.86% threshold, I should be eligible ?
Would the cost be less than $920/month with subsidies ?
With an AGI of $0 or close would I even be eligible to ACA?
What type of verification will I need to provide to show that I plan to have an income of $0, knowing that this year I was in the 6 figures?
 
Any other option?
 
I’m sure people in the RE population must have faced something somewhat similar.
I would love to benefit from their experience.
 
Thanks for reading

ZMonet

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Re: Case study: healthcare from riches to rags
« Reply #1 on: October 31, 2019, 04:47:05 PM »
The website is currently down so I can't check myselfbut, at least in my state, you can enter income and the website will show you the plan options and your estimated cost.  You'll need to compare plans, including your wife's, versus the price to make a good decision.  I would think you'll be in good shape.

Wishing you the best of luck in your job search.  WHy did you leave your 6 figure job without a backup?  I'm sure you have a reason as just from this email it seems like you are pretty well planned out.

https://www.wahealthplanfinder.org/

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #2 on: October 31, 2019, 06:49:04 PM »
Yeah the reasons are not that important.
Definitely being frugal and having saved quite a bit has helped me make that decision... definitely the power of being (somewhat) financially independent.

When I went on the healthcare website and I put zero income It tells me that my income is too low to qualify for ACA and send me somewhere else.

Do I have to provide some type of backup to substantiate my projected income ?

BECABECA

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Re: Case study: healthcare from riches to rags
« Reply #3 on: October 31, 2019, 06:59:03 PM »
I think with an AGI of zero, you’ll be put on Medicaid. And just above zero, depending on if the state you’re in passed a bill to fix the gap between Medicaid eligibility and the lowest income bracket for ACA subsidy, you might get stuck in the no benefit gap:
https://en.wikipedia.org/wiki/Medicaid_coverage_gap
« Last Edit: October 31, 2019, 07:05:53 PM by BECABECA »

MDM

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Re: Case study: healthcare from riches to rags
« Reply #4 on: October 31, 2019, 07:08:17 PM »
Any other option?
Do you have enough in traditional accounts that you could generate income by converting to Roth and thus
a) take advantage of a low marginal rate for the conversion, and
b) be above the poverty line and thus eligible for an ACA policy?

Of course, if you do get a good paying job then the ACA premium tax credits may disappear - but at that point you are back to a "first world problem"....

SimpleCycle

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Re: Case study: healthcare from riches to rags
« Reply #5 on: October 31, 2019, 07:27:59 PM »
WA is a Medicaid expansion state.  You cannot get a subsidized ACA plan when your income is less than the FPL.  Instead you are eligible for Medicaid.

mistymoney

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Re: Case study: healthcare from riches to rags
« Reply #6 on: November 01, 2019, 07:36:17 AM »
You say myself and my child for ACA - is the other child not included here? And where would they get insurance from?

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #7 on: November 01, 2019, 08:08:08 AM »
Sorry I meant children

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #8 on: November 01, 2019, 07:48:46 PM »
Thanks lhamo will look into that . I live in the Seattle area.

blingwrx

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Re: Case study: healthcare from riches to rags
« Reply #9 on: November 01, 2019, 11:44:27 PM »
As others have stated you qualify for Medicaid. You can apply now you don’t need to wait until the end of the year for open enrollment. You losing your job/health coverage is a qualifying event. I was in a similar situation when I was laid off. Cobra wanted 2k a month to cover my family, crazy. I applied for Medicaid right away and got it by the following month. Cobra has a grace period of 45 days so you don’t need to sign up or pay the premium just yet, you could wait for the Medicaid to kick in. And if anything does happen between the gap you can just kick in the cobra it backdated to when you lost coverage. As long as your in a big city Medicaid should be ok, I can still see most of the same doctors. The only pitfall is the need to get referrals for when you need to see a specialist but that’s just an issue with HMO plans. Drugs, hospital stays, office visits are all free.

Quite frankly with no or low income I’d definitely do the Medicaid route rather than paying for cobra and ACA premiums.

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #10 on: November 03, 2019, 08:54:53 AM »
blingwrx: besides the wait time do you consider that the quality of the service is the same wether you are on Medicaid or ACA ? Is the network more limited ?
I don’t mind paying a more if the quality of the service is better (especially with young children). If you are saying that in the end the same then no reason to pay more.

Thanks

blingwrx

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Re: Case study: healthcare from riches to rags
« Reply #11 on: November 03, 2019, 10:08:22 PM »
The thing with ACA besides the monthly premiums is that there are high deductibles and out of pocket, so the costs can really add up if you end up using it a lot.

For me family of 4 in a Medicaid expansion state I would need to make 50k and up to be able to get a ACA silver plan otherwise it’s Medicaid if your under 34k and between 34k-50k in my state there is something called a essential plan that’s like Medicaid but you have to pay a small monthly premium and co pays.

I can‘t tell you how the providers are in your area, but for me my pcp, pediatrician, allergist do take my Medicaid plan. I don’t go to any 5 star doctors in the rich neighborhoods or anything. You should def call your pcp, pediatrician and any other doctors you regularly see to check if they take the Medicaid manage care plans or ACA silver plans. If they don’t it should t be hard to shop around for other doctors.

At the end of the year I’m getting kicked off Medicaid and probably will end up paying for an ACA silver plan and I’m dreading it. That’s thousands in premiums each year and thousands more if you end up using it. The quality and care is similar in my opinion, you just need to look around for doctors to see who takes what. It’s not like only a handful of places will take you there’s probably hundreds of doctors and specialist that take it since your in a big city. They also do not discriminate against you for using Medicaid, most importantly almost all hospitals will take you.

I also think you’re over thinking this and thinking of the worst case scenario, but more likely than not you’ll get back on your feet right away, job market is good these days with very low unemployed rate so you might not need this insurance for very long.

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #12 on: November 05, 2019, 09:20:13 PM »
Lhamo and blingwrx
Thanks for your comment . I feel really reassured by them .
I for some reason (maybe because I’m a foreigner) had a negative bias toward Medicaid .
Thanks also for the reassuring word regarding getting back on my feet.
I do tend to plan for the worst (which is also what allows me to have quite a bit of saving lined up.)
Will let you know how the journey goes

Tom Bri

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Re: Case study: healthcare from riches to rags
« Reply #13 on: November 06, 2019, 01:33:15 AM »
I'm a hospital nurse. At least where I work there is no distinction between the care an indigent street bum gets and what an insured person gets during an in-patient stay. I have worked with homeless men who were being prepped for heart surgery. At any time you can take your kids to the ER even without insurance. Your problems will be at lower levels of care. Sick kids who need a quick trip to a doctor, yearly physicals, rehab, mental health care etc are harder to access without good insurance.

A short-term plan might work for you, if you only expect to be out of work a few months. They are limited, in that there is usually no 'wellness' coverage and no or little pre-existing conditions coverage. But they are okay as a stop-gap coverage, and cheap.

ontheway2

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Re: Case study: healthcare from riches to rags
« Reply #14 on: November 06, 2019, 10:24:08 AM »
You have healthcare advice, so touching on the 403(b), is there a roth option? I'm not sure why you would want your AGI/MAGI to be zero when you get a 24k standard deduction. You will also lose out on any earned income credit. I would do a roth IRA for you and your spouse instead and still pay zero taxes while getting a refund and funding a Roth

Edit: you could get almost 6k EITC back when you file your taxes plus the refundable portion of the child credit. Not sure, but I think that puts you around 9k total. You just have to have income to get this, and a zero or near zero AGI will not allow it
« Last Edit: November 06, 2019, 10:56:13 AM by ontheway2 »

RedwoodDreams

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Re: Case study: healthcare from riches to rags
« Reply #15 on: November 06, 2019, 10:26:03 AM »
Lhamo and blingwrx
Thanks for your comment . I feel really reassured by them .
I for some reason (maybe because I’m a foreigner) had a negative bias toward Medicaid .
Thanks also for the reassuring word regarding getting back on my feet.
I do tend to plan for the worst (which is also what allows me to have quite a bit of saving lined up.)
Will let you know how the journey goes

I'm American and had the same uneasy feeling about Medicaid for my son, but I'm happy to report that at least in California, my son sees the same doctors and receives the same level of good care he did while I still had an employer-sponsored gold-plated health insurance plan. Granted, I'm sure this quality varies greatly by state. Best of luck.

Calimerostache

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Re: Case study: healthcare from riches to rags
« Reply #16 on: November 06, 2019, 10:40:20 PM »
You have healthcare advice, so touching on the 403(b), is there a roth option? I'm not sure why you would want your AGI/MAGI to be zero when you get a 24k standard deduction. You will also lose out on any earned income credit. I would do a roth IRA for you and your spouse instead and still pay zero taxes while getting a refund and funding a Roth

Edit: you could get almost 6k EITC back when you file your taxes plus the refundable portion of the child credit. Not sure, but I think that puts you around 9k total. You just have to have income to get this, and a zero or near zero AGI will not allow it

This is why I love this forum... you think you have just received the best advice ... and someone put a cherry on top of it. This makes me realize I still have more progress to become a real savvy mustachio.
I will see if the Roth is an option on my DW 403b.