Author Topic: Saving my mom over $10,000 in 2018 - a forum thank you!  (Read 3708 times)

Mr. Green

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Saving my mom over $10,000 in 2018 - a forum thank you!
« on: December 08, 2017, 08:57:10 AM »
My mom is 61 years old. The small employer she's been with for 20 years doesn't provide heath insurance so she gets it through the ACA. In 2017, her insurance premium went up to $590 a month and it was about all she could do to afford it. She makes a few thousand dollars more than the ACA subsidy cliff threshold so she doesn't get any help, even though her insurance premiums are unaffordable, by definition in the ACA. At her age she is very hesitant to go without insurance since she's had a couple major problems from a car accident a few years back. CareFirst is raising her premium by 40% for 2018, up to almost $900 a month, and there's no chance that she can afford to pay it.

Thanks to all the knowledge I've learned from this forum and other early retirement bloggers, I investigated how easy it would be for her small employer (about 8 people) to set up a Vanguard SIMPLE IRA for her, which the IRS considers a retirement plan and would allow her to contribute pre-tax dollars to, thereby reducing her modified adjusted gross income. I asked her if the owner would be willing to offer a SIMPLE IRA to employees of the business. She thought he might go for it so I created a short PowerPoint presentation highlighting the benefits of the plan and what it would cost the business and she gave it to him to review. She explained to him how it would make a tremendous difference to the cost of her health insurance so he went for it, and has created a plan through Vanguard.

Now that she can reduce her modified adjusted gross income via pre-tax retirement contributions, I sat down with her and we reviewed her income to show how she can shift IRA contributions she had been making on her own, how she can open an HSA to reduce her MAGI even further, and how everything will work and still leave her with the money she needs to cover her living expenses. She called the state insurance exchange to report a change of income and she will now receive over $600 a month in premium subsidies, bringing the cost of insurance down to about $230 a month. The end result between the small employer contribution she'll get on her SIMPLE IRA, the tax savings she'll receive on the HSA she's opening, additional tax savings on any retirement contributions she'll make above the $6,500 she was limited to with a self-directed IRA, and the premium subsidy is that she'll save over $10,000 in 2018 and she'll get to keep her insurance. Even better is the fact that she doesn't expect her income to rise in the next few years so she now has a viable path to keeping health insurance affordable until she's 65 and can start Medicare.

So I just wanted to say THANK YOU to all the folks here that I've learned from over the past couple years because without the knowledge I've learned here this wouldn't have been possible. My mom is over-the-moon happy.

secondcor521

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #1 on: December 08, 2017, 09:56:49 AM »
Glad to hear it.  Good on you for helping your Mom and her employer navigate through the complexity that was getting in the way.

Chrissy

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #2 on: December 08, 2017, 10:18:03 AM »
That's a great outcome!  Thank you for sharing.

Exflyboy

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #3 on: December 08, 2017, 10:24:48 PM »
That is outstanding!

Well done!

FrugalZony

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #4 on: December 08, 2017, 11:51:26 PM »
That is AMAZING!!!
Not only did you help your Mum, you probably helped a few of her colleagues as well!!

It's a wonderful thing, you were able to do that!

okits

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #5 on: December 09, 2017, 12:10:36 AM »
Super fantastic, Mr. Green

stashgrower

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #6 on: December 09, 2017, 12:47:32 AM »
Great success story :)

2Birds1Stone

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #7 on: December 09, 2017, 05:11:22 AM »
*Que Borat Voice*

"Great success"

JohnGalt79

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #8 on: December 10, 2017, 08:38:03 AM »
Awesome work, well done!

I don't know if it's possible, but any chance you can post the Powerpoint presentation here, or a link to it?  I might be putting together a similar proposal for someone and would love to see a model that was effective.

Mr. Green

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #9 on: December 10, 2017, 09:07:14 AM »
Awesome work, well done!

I don't know if it's possible, but any chance you can post the Powerpoint presentation here, or a link to it?  I might be putting together a similar proposal for someone and would love to see a model that was effective.
Absolutely!

MaybeBabyMustache

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #10 on: December 10, 2017, 09:21:43 AM »
That is AMAZING!!!
Not only did you help your Mum, you probably helped a few of her colleagues as well!!

It's a wonderful thing, you were able to do that!

This! You are awesome. I have a mentally disabled aunt, & my sister & I have both spent quite a bit of time researching options for her with the ACA. It's no short amount of time, but is so worth it to have someone get access to reasonably priced health care.

JohnGalt79

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #11 on: December 10, 2017, 07:13:01 PM »
Awesome work, well done!

I don't know if it's possible, but any chance you can post the Powerpoint presentation here, or a link to it?  I might be putting together a similar proposal for someone and would love to see a model that was effective.
Absolutely!

Thank you very much!

Liberty Stache

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #12 on: December 11, 2017, 11:22:05 AM »
Extremely impressive!

soccerluvof4

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #13 on: December 13, 2017, 03:41:27 AM »
Super impressed! bet not only did you make your Mom happy but shes proud as can be you were not only able to do this but sold it to her employer. So cool!

Rosy

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #14 on: December 13, 2017, 04:06:40 PM »
Wow - I am impressed - kudos for helping out your mom and open up opportunities for others at her workplace. Kudos to the employer too for listening and making his employees health and life planning soo much more effective.
I'd be over the moon too - health insurance is a must as we get older.

Livingthedream55

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #15 on: December 15, 2017, 12:12:25 PM »
Truly badass! Well done sir!!

Bicycle_B

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #16 on: December 16, 2017, 04:57:39 PM »
Mr. Green, this truly is the best post of the day, hands down.  I went to "The best post I saw on the Money Mustache forums today..." thread in General Discussion, Welcome and General Discussion to tag it there only to find that simonsez had already mentioned it! 

You make us proud.

Wings5

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #17 on: January 03, 2018, 09:01:31 AM »
This is awesome! Nice work!

As Pete has said, it's like this forum is one big library and all the people are books you can check out to learn from. The world needs more of this stuff!

mm1970

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #18 on: January 03, 2018, 09:27:14 AM »
This is awesome!

honeybbq

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #19 on: January 03, 2018, 12:40:05 PM »
**applause**

Mr. Boh

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #20 on: January 11, 2018, 09:48:17 AM »
Well done and a great story.

As I am still learning, I have a question. Was she able to lower her AGI more by using the SIMPLE IRA from her employer than if she had just used a tIRA?

MousyMo

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #21 on: January 11, 2018, 10:59:51 AM »
Well Done!

Thank you for sharing the power point presentation.


Mr. Green

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #22 on: January 11, 2018, 04:51:47 PM »
Well done and a great story.

As I am still learning, I have a question. Was she able to lower her AGI more by using the SIMPLE IRA from her employer than if she had just used a tIRA?
Well, for one, self directed traditional IRA contributions do not lower your MAGI. It does lower AGI but the ACA uses Modified Adjusted Gross Income, which is AGI with some deductions added back in, one of them being self-directed  IRA contributions.

The cap for a tIRA is $5,500 and a SIMPLE IRA through an employer has a cap of $12,500 so she can contribute much more. It may sound a little confusing since the plan through her employer is still an IRA but the key is employer-directed vs. self-directed.

So if she were to max out her SIMPLE IRA she is able to put a very healthy dent in her MAGI.

Mr. Boh

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Re: Saving my mom over $10,000 in 2018 - a forum thank you!
« Reply #23 on: January 12, 2018, 08:38:48 AM »
Thank you Mr. Green.