Medicaid in FIRE due to "low income"?

[Bearded Man]

So I shop for health insurance on the private market as I draw closer to pulling the plug, etc.

It seems one of the biggest advantages to low expense living and only having to draw down PART of your investment income is that you are eligible for medicaid. That is what I get every site I visit after I plug in my expected FIRE income.

But can one rely on medicaid? How are the benefits? I have had pulmonary embolisms twice. Blood thinners are pretty cheap, so as long as I stay on them and don't have any other sudden health issues, my health needs would be few, mostly concerned about catastrophic. But it would be a nice bonus if I didn't have to shell out hundreds of dollars a month in health care expenses should it ever come to that, which would really cramp FIRE.

[Drifterrider]

So I shop for health insurance on the private market as I draw closer to pulling the plug, etc.

It seems one of the biggest advantages to low expense living and only having to draw down PART of your investment income is that you are eligible for medicaid. That is what I get every site I visit after I plug in my expected FIRE income.

But can one rely on medicaid? How are the benefits? I have had pulmonary embolisms twice. Blood thinners are pretty cheap, so as long as I stay on them and don't have any other sudden health issues, my health needs would be few, mostly concerned about catastrophic. But it would be a nice bonus if I didn't have to shell out hundreds of dollars a month in health care expenses should it ever come to that, which would really cramp FIRE.

Medicaid is for those with no money or assets (poor).  I believe the most recent number is that you may have no more than about $3,000 worth of anything to qualify AND it is income based as well. 

Medicare starts when you are age 65 unless you are deemed disabled and are receiving social security disability in which case, Medicare starts two years AFTER you are deemed disabled. 

Check into catastrophic medical coverage or a policy with higher out of pocket expenses. 

[forummm]

So I shop for health insurance on the private market as I draw closer to pulling the plug, etc.

It seems one of the biggest advantages to low expense living and only having to draw down PART of your investment income is that you are eligible for medicaid. That is what I get every site I visit after I plug in my expected FIRE income.

But can one rely on medicaid? How are the benefits? I have had pulmonary embolisms twice. Blood thinners are pretty cheap, so as long as I stay on them and don't have any other sudden health issues, my health needs would be few, mostly concerned about catastrophic. But it would be a nice bonus if I didn't have to shell out hundreds of dollars a month in health care expenses should it ever come to that, which would really cramp FIRE.

Medicaid is for those with no money or assets (poor).  I believe the most recent number is that you may have no more than about $3,000 worth of anything to qualify AND it is income based as well. 

Medicare starts when you are age 65 unless you are deemed disabled and are receiving social security disability in which case, Medicare starts two years AFTER you are deemed disabled. 

Check into catastrophic medical coverage or a policy with higher out of pocket expenses. 

If you live in a Medicaid expansion state and qualify based on income there is no asset test. Medicaid is generally very good coverage and usually equivalent to private coverage in terms of outcomes for beneficiaries. It's actually administered through a private plan for 75% of beneficiaries (AKA "managed care"). Medicaid is a state program and does vary somewhat from state-to-state, so YMMV. You will hear an occasional story about how someone couldn't find doctors to go to. You will find many more stories about how it was great and really helpful.

[Axecleaver]

Assets tests for Medicaid were eliminated as part of the Affordable Care Act. States that did not accept the Medicaid expansion may still use the assets test (some do not). So, it depends on what state you're in.

Approximately 40% of the population is eligible for Medicaid. As of May, 2015 there were 71.6m people enrolled. (Total population in the US is about 310m.) http://kff.org/health-reform/state-indicator/total-monthly-medicaid-and-chip-enrollment/

The benefits for Medicaid are excellent. In most cases, they are better than the benefits of a Platinum health plan through the private insurance market. Medicaid provides benefits that other plans do not: transportation to doctor appointments, certain drug and alcohol treatment programs, and mental health benefits. All services are provided completely free of charge.

A few caveats. Not all providers accept Medicaid, because it tends to pay lower rates. It's not as flexible as being able to see whomever you like through a wide provider network. Most states are shifting away from Fee For Service claims to the managed care model. In this model there can be wide variations in availability of healthcare and the quality of care.

You can see if you qualify through healthcare.gov (or through your state's Exchange website). One factor to consider, if you do decide to forego Medicaid because you do not want to accept government subsidies, you are ineligible for subsidies of any kind on the Exchange.

[Bob W]

If you can get Medicaid you have a major score.   In our states it pays for virtually everything including medications.   Most all Docs and hospitals around here accept it.

The downside is you have basically gamed the system and are having the workers pay for your medical care. 

[Gone Fishing]

Do you have a lot of tax deferred savings?  Are you expecting to be in a low (0-10%) tax bracket n FIRE?  If the answer to both questions is yes, be sure to consider a subsidized health plan and using all of your available tax "space" for conversions from deferred to ROTH. Might be better, might not, but be sure to run the numbers before deciding what to do. 

[forummm]

Assets tests for Medicaid were eliminated as part of the Affordable Care Act. States that did not accept the Medicaid expansion may still use the assets test (some do not). So, it depends on what state you're in.

Sorry, that's not correct. Asset tests still exist for certain aspects of Medicaid. There are many different ways to qualify for Medicaid (being a child, being pregnant, being indigent, being disabled, etc). Some existed before the ACA and still continue to exist in every state, regardless of whether they expanded under the ACA. It's a complicated topic. But for people qualifying only on income through the Medicaid expansion, there is no asset test.

[Bob W]

Assets tests for Medicaid were eliminated as part of the Affordable Care Act. States that did not accept the Medicaid expansion may still use the assets test (some do not). So, it depends on what state you're in.

Sorry, that's not correct. Asset tests still exist for certain aspects of Medicaid. There are many different ways to qualify for Medicaid (being a child, being pregnant, being indigent, being disabled, etc). Some existed before the ACA and still continue to exist in every state, regardless of whether they expanded under the ACA. It's a complicated topic. But for people qualifying only on income through the Medicaid expansion, there is no asset test.

Wow,  that just blows my mind.  So my buddy with 3 million and 4 kids can qualify for Medicaid in many states?  Wow.   I knew he was a cheap bastard but that is substantial.   A working stiff like me would pay 2K for that coverage and it wouldn't be nearly as good as Medicaid. 

What a great gift for FIRE Mustachians from Uncle Sam!   

[brooklynguy]

This last sentence is important to remember. You cannot qualify for ACA subsidies if your taxable income (MAGI)falls below a certain level and ONLY have the option for Medicaid (if you are in a state that has expanded Medicaid) or have to pay the full premium amount for a health insurance policy without subsidies.

Yep, and it's important to remember that MAGI is calculated on an annual basis.  If at the end of December you suddenly discover that your MAGI for that year fell below the cutoff even though you had purchased coverage in reliance on assumptions projecting income that would put your MAGI above the cutoff, then you're not eligible for the subsidies for which you thought you were eligible (and you can't go back in time to receive any Medicaid coverage for which you thought you were ineligible but for which you were in fact eligible).  For early retirees with Roth conversion pipelines or other ways of managing their reported income, this is pretty easy to control as long as you're paying attention.

What a great gift for FIRE Mustachians from Uncle Sam!

Uncle Sam has many great and wonderful gifts for frugal early retirees, and this forum and the wider online FIRE community exist in no small part to help them (us) collectively learn how to collect those gifts.  If you didn't know better, you could be forgiven for thinking our entire tax code was explicitly designed for the purpose of encouraging early retirement.

[Axecleaver]

Quote from: forummm on Today at 12:37:02 PM
Quote from: Axecleaver on Today at 11:59:33 AM
Assets tests for Medicaid were eliminated as part of the Affordable Care Act. States that did not accept the Medicaid expansion may still use the assets test (some do not). So, it depends on what state you're in.

Sorry, that's not correct. Asset tests still exist for certain aspects of Medicaid. There are many different ways to qualify for Medicaid (being a child, being pregnant, being indigent, being disabled, etc). Some existed before the ACA and still continue to exist in every state, regardless of whether they expanded under the ACA. It's a complicated topic. But for people qualifying only on income through the Medicaid expansion, there is no asset test.

Forummm, you're referring to carve-outs, and yes, you're right, assets tests still exist for specific Medicaid programs across the country. If an applicant is denied under the general eligibility guidelines, they could still qualify under a different program. I had explained this in the draft of my original post, but opted to cut it out because the explanation was getting complicated pretty quickly. This topic comes up a lot, though, so it's best if we explain the whole thing. Thanks!

[forummm]

This last sentence is important to remember. You cannot qualify for ACA subsidies if your taxable income (MAGI)falls below a certain level and ONLY have the option for Medicaid (if you are in a state that has expanded Medicaid) or have to pay the full premium amount for a health insurance policy without subsidies.

Yep, and it's important to remember that MAGI is calculated on an annual basis.  If at the end of December you suddenly discover that your MAGI for that year fell below the cutoff even though you had purchased coverage in reliance on assumptions projecting income that would put your MAGI above the cutoff, then you're not eligible for the subsidies for which you thought you were eligible (and you can't go back in time to receive any Medicaid coverage for which you thought you were ineligible but for which you were in fact eligible).  For early retirees with Roth conversion pipelines or other ways of managing their reported income, this is pretty easy to control as long as you're paying attention.

For additional info on this scenario:
http://forum.mrmoneymustache.com/welcome-to-the-forum/information-on-the-affordable-care-act-with-a-focus-on-early-retirees/

What happens if you over estimate your income and end up with an income level below the ACA subsidy cut off at the end of the year? Do you have to re-pay all the subsidies you received?

 No. As long as the Marketplace determined the individual to be eligible for tax credits, there's a special provision to not go after people for repayment when their income drops below what was expected. But you should always report changes to your income as soon as you know about them.

[forummm]

This last sentence is important to remember. You cannot qualify for ACA subsidies if your taxable income (MAGI)falls below a certain level and ONLY have the option for Medicaid (if you are in a state that has expanded Medicaid) or have to pay the full premium amount for a health insurance policy without subsidies.

Yep, and it's important to remember that MAGI is calculated on an annual basis.  If at the end of December you suddenly discover that your MAGI for that year fell below the cutoff even though you had purchased coverage in reliance on assumptions projecting income that would put your MAGI above the cutoff, then you're not eligible for the subsidies for which you thought you were eligible (and you can't go back in time to receive any Medicaid coverage for which you thought you were ineligible but for which you were in fact eligible).  For early retirees with Roth conversion pipelines or other ways of managing their reported income, this is pretty easy to control as long as you're paying attention.

For additional info on this scenario:
http://forum.mrmoneymustache.com/welcome-to-the-forum/information-on-the-affordable-care-act-with-a-focus-on-early-retirees/

What happens if you over estimate your income and end up with an income level below the ACA subsidy cut off at the end of the year? Do you have to re-pay all the subsidies you received?

 No. As long as the Marketplace determined the individual to be eligible for tax credits, there's a special provision to not go after people for repayment when their income drops below what was expected. But you should always report changes to your income as soon as you know about them.

Also I read somewhere that those who have low incomes (below the ACA minimum cut off) are exempt from having to purchase medical insurance (or get on Medicaid if qualified) and don't have to pay any penalty. Of course the whole point is for people to get medical insurance so I can't imagine anyone who is low income going without health insurance even if it's Medicaid or accepting high subsidies.

Technically you are only exempt because of your low income if 1) your income is below 138% FPL and you live in a non-expansion state (even though in the 100-138% range you can still get tax credits, they are being very lenient), 2) your income is below the tax filing threshold (~$10k for individual, ~$20k for couple), or 3) you did not have access to coverage that was considered affordable (premiums from work plan or bronze plan less than 8% of your income).

http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

[rtrnow]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

[sabertooth3]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

Except the mortgage interest deduction was put in place (rightly or wrongly) to promote homeownership, as that was considered the step from poor to middle-class. Medicaid was created to provide healthcare for those who are too poor to afford a traditional health plan through their employer. So by being asset-rich but income-poor by choice, you're gaming the system by being able to draw on a large nest egg if necessary but choosing not to.

TLDR- You aren't poor, therefore you're not who Medicaid was intended for. Not judging you or anyone else here who takes a lower income to get Medicaid or Marketplace subsidies. You made a point, I simply provided a counterpoint.

[meadow lark]

I think Medicaid is a good plan - I am not an expert at any rate, but I hear a lot more from the social workers where I work saying, "She has Cigna/Blue Cross/United Healthcare so they won't pay".  I have never heard, "Darn, she has Medicaid."

[rtrnow]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

If that is who this was intended for, then it would/should be means tested. It used to be but now is not. (It still is for me in a non-expansion state that would never give it to an able bodied male anyway but that's another story) So my point is it by design is now for anyone making less than X not just the poor. I guess I'm saying whether intended or not, congress changed who this program serves with the ACA.

Except the mortgage interest deduction was put in place (rightly or wrongly) to promote homeownership, as that was considered the step from poor to middle-class. Medicaid was created to provide healthcare for those who are too poor to afford a traditional health plan through their employer. So by being asset-rich but income-poor by choice, you're gaming the system by being able to draw on a large nest egg if necessary but choosing not to.

TLDR- You aren't poor, therefore you're not who Medicaid was intended for. Not judging you or anyone else here who takes a lower income to get Medicaid or Marketplace subsidies. You made a point, I simply provided a counterpoint.

[sabertooth3]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

Except the mortgage interest deduction was put in place (rightly or wrongly) to promote homeownership, as that was considered the step from poor to middle-class. Medicaid was created to provide healthcare for those who are too poor to afford a traditional health plan through their employer. So by being asset-rich but income-poor by choice, you're gaming the system by being able to draw on a large nest egg if necessary but choosing not to.

TLDR- You aren't poor, therefore you're not who Medicaid was intended for. Not judging you or anyone else here who takes a lower income to get Medicaid or Marketplace subsidies. You made a point, I simply provided a counterpoint.

If that is who this was intended for, then it would/should be means tested. It used to be but now is not. (It still is for me in a non-expansion state that would never give it to an able bodied male anyway but that's another story) So my point is it by design is now for anyone making less than X not just the poor. I guess I'm saying whether intended or not, congress changed who this program serves with the ACA.

Pulling out what I believe your quote was; to Congress (and the general public), wealth is primarily measured by income. That's why we have a primarily income-based tax system and not an asset-based tax system. Because of this, making Medicaid eligibility based on income is means-testing in the eyes of Congress. Someone with a $100k/year W2 salary can't go on Medicaid.*

But I completely agree with your point about changing who Medicaid serves, particularly in expansion states. It does open the door for low-income frugalites to utilize the program.

*I'm sure there is some convoluted way for it to happen (9 kids and 5 rental homes or something), but for all intents and purposes there's no realistic way this can happen.

Edit- typo

[BTDretire]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

The difference is; the government says pay us $5,000 (fed taxes) , but then says,  ahh, you have mortgage interest, so you only need to pay us $4,500, vs here I'm giving you $5,000 worth of insurance coverage paid for by your hardworking, taxpaying neighbors.
IMHO.
However I have a price, and the the ACA plus a subsidy vs. my private policy is getting close to it.

[Bearded Man]

To those who think it's "gaming the system". As I noted I paid more than my fair share into the system with my six figure salary. To say that it is wrong of me to use the benefit I've paid for more so than the VAST majority of people in this country is pretty ignorant.

Apparently it's OK for poor people to stay poor due to their own choices of having kids they can't afford, lack of education, work ethic, etc. while a very small percentage of the population foot the bill for their housing, food, cell phones, health care, etc. after paying little if anything into the system, but if I do it in retirement after paying so much money into it, I'm gaming the system. OK then...

[Gretamom]

To those who think it's "gaming the system". As I noted I paid more than my fair share into the system with my six figure salary. To say that it is wrong of me to use the benefit I've paid for more so than the VAST majority of people in this country is pretty ignorant.

Apparently it's OK for poor people to stay poor due to their own choices of having kids they can't afford, lack of education, work ethic, etc. while a very small percentage of the population foot the bill for their housing, food, cell phones, health care, etc. after paying little if anything into the system, but if I do it in retirement after paying so much money into it, I'm gaming the system. OK then...

I don't think you're gaming the system at all! Of course I believe in Universal Healthcare, but I also believe that if you can get it, do it! It most states and especially in my state, Medicaid is the best healthcare you could possibly receive. It's not your fault if it's available to you in your circumstance! In my state, being self employed, our children are eligible for state insurance regardless of our income (for a very reasonable fee). We pay that fee & our kids get great coverage. I don't feel I'm gaming the system, if the system doesn't like it, then change the rules! 

[forummm]

Breaded Man - I'm not sure if this is true in all states for Medicaid recipients, but in Calif if you are on Medicaid and reach a certain age (I think it's 50) the state can force your estate to repay them for any care you received after that age once you die - even before your heirs get anything. It's called something (i'll try to look it up and update) but that can potentially be one of the downfalls of relying on Medicaid.

ETA link:  http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Estate-Recovery.html

First paragraph: Estate Recovery and Liens

 
State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

Yes, there are certain kinds of care where Medicaid is supposed to get reimbursement from the beneficiary's estate. California is one of the handful of states that actually does this.

[rtrnow]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

It's still the same thing. It's govt money that your getting/not paying. The only difference in your example is $500 vs $5000. It's still the tax payers who are out the money.

The difference is; the government says pay us $5,000 (fed taxes) , but then says,  ahh, you have mortgage interest, so you only need to pay us $4,500, vs here I'm giving you $5,000 worth of insurance coverage paid for by your hardworking, taxpaying neighbors.
IMHO.
However I have a price, and the the ACA plus a subsidy vs. my private policy is getting close to it.

[Davids]

I think there should be an asset test but since there is not then hell if you qualify because your income is now low in FIRE then go for it until it is no longer legal.

[A mom]

Apparently it's OK for poor people to stay poor due to their own choices of having kids they can't afford, lack of education, work ethic, etc. while a very small percentage of the population foot the bill for their housing, food, cell phones, health care, etc. after paying little if anything into the system, but if I do it in retirement after paying so much money into it, I'm gaming the system. OK then...

All the people on Medicaid that I know are mentally disabled. And by the way those people can't have more than $2,000 in assets or they lose their benefits.

[hybrid]

Medicaid is intended for poor people, not for people with means. It really is just that simple. This is yet another classic example of what one can do and what one should do.

[forummm]

Apparently it's OK for poor people to stay poor due to their own choices of having kids they can't afford, lack of education, work ethic, etc. while a very small percentage of the population foot the bill for their housing, food, cell phones, health care, etc. after paying little if anything into the system, but if I do it in retirement after paying so much money into it, I'm gaming the system. OK then...

All the people on Medicaid that I know are mentally disabled. And by the way those people can't have more than $2,000 in assets or they lose their benefits.

It depends on which state you live in. In a state that expanded Medicaid under the ACA rules, then there is no minimum (or maximum) asset level a person can have - only taxable income is counted. So if someone has a taxable annual income just below $16K, they could have millions in assets - both financial and physical like boats, cars, houses, etc... - and still qualify for Medicaid. And there is no need to have a disability either to get it. As long as your taxable income falls below a certain amount you can not get subsidies, only Medicaid. Even if you want to buy your own policy you'll have to pay the full amount of the monthly premiums with no subsidies at all.

For some ways of qualifying for Medicaid there is no asset test. For others, there is--even in states that expanded Medicaid. It's complicated.

[forummm]

Apparently it's OK for poor people to stay poor due to their own choices of having kids they can't afford, lack of education, work ethic, etc. while a very small percentage of the population foot the bill for their housing, food, cell phones, health care, etc. after paying little if anything into the system, but if I do it in retirement after paying so much money into it, I'm gaming the system. OK then...

All the people on Medicaid that I know are mentally disabled. And by the way those people can't have more than $2,000 in assets or they lose their benefits.

It depends on which state you live in. In a state that expanded Medicaid under the ACA rules, then there is no minimum (or maximum) asset level a person can have - only taxable income is counted. So if someone has a taxable annual income just below $16K, they could have millions in assets - both financial and physical like boats, cars, houses, etc... - and still qualify for Medicaid. And there is no need to have a disability either to get it. As long as your taxable income falls below a certain amount you can not get subsidies, only Medicaid. Even if you want to buy your own policy you'll have to pay the full amount of the monthly premiums with no subsidies at all.

For some ways of qualifying for Medicaid there is no asset test. For others, there is--even in states that expanded Medicaid. It's complicated.

I'm not sure how it works in other states but I think you can get Medicaid (for medical care) based on income alone, or any of the other reasons you can get it like being disabled, etc... But I think other programs like food stamps are asset tested as well as income tested but not sure. Here's a link to Cal's Medicaid program (called Medi-Cal) info but is pretty simplistic so may be much more involved in reality: http://www.dhcs.ca.gov/services/medi-cal/Pages/DoYouQualifyForMedi-Cal.aspx  Now what I don't know is if Medicaid counts ALL your income or just taxable MAGI income to qualify. Seems that in expanded states it was just your taxable income.

ETA: Actually I do know that Calif's Medicaid plan only counts taxable income because when the ACA first came out and my private insurance policy with Blue Cross was cancelled I tried to sign up for a new policy on Calif's exchange and was put automatically put into Medicaid (which I didn't want and so cancelled it asap). They used the same info that the ACA exchanges did for determining subsides - with did not include any non-taxable income sources (i.e. they didn't want info on my non-taxable VA disability benefit for example) or any assets at all, and my military disability wasn't a factor either - just taxable MAGI income. Maybe way different in the OP's state though.

Yes, in CA you can get Medi-Cal based solely on income in many situations. But for certain people, an asset test is involved. I'm not sure what CA's eligibility standards are, but sometimes at least in some states people in a nursing home have an asset test to get coverage. So it's correct to think that you can get Medicaid in an expansion state without an asset test in some cases. For people who were ineligible under the traditional Medicaid criteria, there will be no asset test. For people eligible under the traditional Medicaid criteria, there may be an asset test in some cases in some states. The "traditional Medicaid" criteria that CA has are these:

You can also get Medi-Cal if you are:

65 or older
Blind
Disabled
Under 21
Pregnant
In a skilled nursing or intermediate care home
On refugee status for a limited time, depending how long you have been in the United States
A parent or caretaker relative or a child under 21 if:
The child's parent is deceased or doesn't live with the child, or
The child's parent is incapacitated, or
The child's parent is under employed or unemployed

Have been screened for breast and/or cervical cancer (Breast and Cervical Cancer Treatment Program)
 

I feel like I'm just confusing you more. But I was trying to be accurate. And the policy is complicated. In summary, you probably shouldn't worry about an asset test if you are otherwise healthy and just looking for normal insurance.

[lostamonkey]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

This is such an odd way to look at it. Even if you think Medicaid or the ACA should be means tested, it's not. Why would you leave money on the table? I think the mortgage deduction is a bad idea and should probably be phased out. I sure as hell still deduct my mortgage interest. I guess I'm gaming the system.

The difference is; the government says pay us $5,000 (fed taxes) , but then says,  ahh, you have mortgage interest, so you only need to pay us $4,500, vs here I'm giving you $5,000 worth of insurance coverage paid for by your hardworking, taxpaying neighbors.
IMHO.
However I have a price, and the the ACA plus a subsidy vs. my private policy is getting close to it.

In my opinion there is no difference morally between minimizing taxing and maximizing benefits assuming you don't break the law. It's similar to buying a $100 item and getting $5 off vs getting a rebate in the mail for $5.

Let's assume Bill Millionaire pays 100K in taxes over 10 years if there was no mortgage interest deduction or subsized health care. Let's assume he is able to claim the mortgage deduction which saves him $20K in taxes. This is morally equivalent to claiming a health care subsidy which saves him $20K in health care premiums.

[Neustache]

But it's...not. 

The money someone earns is theirs, yet they have to give it to the government through taxation.  If they take a deduction, they get to keep more of their money, that they earned, from their job.

If they choose subsidies for ACA or MediCaid (when they can work but just want to ER) they are taking someone else's money who was forced to give it over to the government for a program that was really designed for people who can't earn much income in a way to help the poor out.  It wasn't money they earned.  It wasn't there, it's been taken from someone else.

Legally..sure....you qualify.  Personally, I'm not sure I'd take the subsidy.  And ethically I see a difference in the two. 

[lostamonkey]

But it's...not. 

The money someone earns is theirs, yet they have to give it to the government through taxation.  If they take a deduction, they get to keep more of their money, that they earned, from their job.

If they choose subsidies for ACA or MediCaid (when they can work but just want to ER) they are taking someone else's money who was forced to give it over to the government for a program that was really designed for people who can't earn much income in a way to help the poor out.  It wasn't money they earned.  It wasn't there, it's been taken from someone else.

Legally..sure....you qualify.  Personally, I'm not sure I'd take the subsidy.  And ethically I see a difference in the two.

Let's assume 100K was withheld from that taxpayers pay checks. He can file his returns with the mortgage deduction and get a $20K refund. Or he can file for a medical subsidy and have the government pay the $20K to a insurance company. I don't see an actual difference ethically.

I am using the mortgage interest deduction and medical subsidies because they were both not designed to help millionaires.

[Potterquilter]

Here is an idea.
You RE and live on a low income. You qualify for Medicaid and take it. Then you use the money you would have spent on health insurance or the equivalent in volunteer time to better society. 

For instance you help the local fire department with fundraisers. You tutor struggling kids in reading and math. You volunteer at a soup kitchen or food bank. You work with your local garden club to keep your parks full of beautiful flowers and free of trash. You give to your library. And so on.

There is so much good you can do in this world. It is too bad we do not have one plan, like Medicaid that we all could be in with the same rules.  Even if we had to pay into it I would. I really hate our private insurer, we aren't even sick and it seems like we have to jump through hoops all the time. 

As others have pointed out, generally if you have amassed enough to RE chances are you spent many years being forced to pay federal, state, Medicare, social security's and unemployment taxes. They were not voluntary.  I would not dream of forgoing my social security because I have enough.

Cheating is another thing entirely. But if you can legally take advantage of benefits you were forced to contribute to it seems foolish not to.

[rtrnow]

But it's...not. 

The money someone earns is theirs, yet they have to give it to the government through taxation.  If they take a deduction, they get to keep more of their money, that they earned, from their job.

If they choose subsidies for ACA or MediCaid (when they can work but just want to ER) they are taking someone else's money who was forced to give it over to the government for a program that was really designed for people who can't earn much income in a way to help the poor out.  It wasn't money they earned.  It wasn't there, it's been taken from someone else.

Legally..sure....you qualify.  Personally, I'm not sure I'd take the subsidy.  And ethically I see a difference in the two.

Both programs were not means tested while others (nursing care, food stamps) are means tested. The program by design is for low incomes not just the poor. Generally the two go together but not always. There are some good articles on why this is a good idea but I don't feel like finding them.

It seems by your definition, if I take a subsidy as a tax credit it's different than paying and getting a refund. Tax money you don't pay or get back as a refund is the same money from the tax payers. However, by all means don't take any tax deductions if you want.

[Neustache]

Yeah, I'm sure my libertarian leanings influence this, but I see a  huge difference between legally keeping as much of your earned income as possible (through deductions/credits/etc.) because in that scenario you are keeping what's yours....money you spent time and effort to make.  It was never the tax payers money.  It was yours, and the government requires you to fork it over under penalty of law.

But to not work, 'cause you don't wanna, and then use money that others were forced (by threat of force) to give?  I don't know.  I see a difference.  I doubt I'll convince you, or you I, so I'll leave it at that.

I paid social security and Medicare taxes, I have no problems using those.  But Medicaid, politically, has always been assumed to be used by the poor.  If we can cut Medicaid to only be used by people who actually need it, I'd do it.  But most people have zero clue that wealthy early retirees are using it to retire even earlier.  I can see why they'd be furious to find that out, based on how Medicaid is used politically. 

I'm not saying I for sure won't use it.  Just that I'm torn. 

[hwstar]

Breaded Man - I'm not sure if this is true in all states for Medicaid recipients, but in Calif if you are on Medicaid and reach a certain age (I think it's 50) the state can force your estate to repay them for any care you received after that age once you die - even before your heirs get anything. It's called something (i'll try to look it up and update) but that can potentially be one of the downfalls of relying on Medicaid.

ETA link:  http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Estate-Recovery.html

First paragraph: Estate Recovery and Liens

 
State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

Yes, there are certain kinds of care where Medicaid is supposed to get reimbursement from the beneficiary's estate. California is one of the handful of states that actually does this.

And this is why I'll servo my MAGI to avoid Medicaid/Medi-Cal. With the ACA, its better to over-estimate and pay additional taxes.

[forummm]

Yeah, I'm sure my libertarian leanings influence this, but I see a  huge difference between legally keeping as much of your earned income as possible (through deductions/credits/etc.) because in that scenario you are keeping what's yours....money you spent time and effort to make.  It was never the tax payers money.  It was yours, and the government requires you to fork it over under penalty of law.

But to not work, 'cause you don't wanna, and then use money that others were forced (by threat of force) to give?  I don't know.  I see a difference.  I doubt I'll convince you, or you I, so I'll leave it at that.

I paid social security and Medicare taxes, I have no problems using those.  But Medicaid, politically, has always been assumed to be used by the poor.  If we can cut Medicaid to only be used by people who actually need it, I'd do it.  But most people have zero clue that wealthy early retirees are using it to retire even earlier.  I can see why they'd be furious to find that out, based on how Medicaid is used politically. 

I'm not saying I for sure won't use it.  Just that I'm torn.

While I agree with you on this ethically, I personally feel there should be asset testing for both Medicaid and subsidies because many lower income people who receive fairly large subsidies/tax credits may actually have high asset levels and incomes but have the ability to take many high tax deductions to lower their income and get large premium subsidies - and almost 100% premium subsidies in some cases.  The taxpayers are paying out money to private insurance companies every month in the form of subsidies for higher income people, whether those people use that medical coverage or not each month or year,  just as they pay for the cost of medical care for those on Medicaid (although it doesn't cost the taxpayers unless it's used for care as there are no monthly premiums).

For myself I'd like to see medical care/insurance in this country treated like we do are public education system. Everyone, regardless of income or asset levels, is entitled to a free education at a public school or they can opt to pay the big bucks for a private school. If we had a fixed premium amount everyone paid monthly (regardless of income or assets) to cover basic medical insurance, then those with higher incomes could pay for greater care if they wish and those with lower incomes and assets can get financial help.

Otherwise, for those of us who retired on small incomes but have higher assets, I would like to see a return of the low cost catastrophic plan (like the one I had for 10 years before the ACA was enacted) and allow us to self-insure for everything else. My personal asset levels aren't very high, yet I am banned from getting subsidies and if I want a regular health insurance plan have to pay for the full amount myself - which was more than triple the cost I paid previously. Yet another person who can get maybe 50% or more of their premiums paid by the tax payers may have millions of dollars and 10 homes, and 15 cars, etc...

I think it should be like essentially the rest of the industrialized world where there's universal coverage and it's primarily supported by your taxes. So you don't have to monkey around with your income and pick between lots of confusing options and try to game the system. You just earn however much money, pay whatever taxes, and get your high-quality healthcare when you need it without worry. You can work for a small or large business or start your own and the coverage is the same. But since the ACA is trying to keep us in the failed private insurance system that is still largely employer based but still have some way to cover the poor, it's not at all like that.

[Cassie]

When I was reading the paper today it said that the government realized when they put the ACA into action that some people would choose not to work since they could finally get healthcare without a job. It was not a surprise or unintended consequence.

[forummm]

When I was reading the paper today it said that the government realized when they put the ACA into action that some people would choose not to work since they could finally get healthcare without a job. It was not a surprise or unintended consequence.

Correct. It was part of the CBO's analysis on the effects of the bill. The Republicans use that stat (of people voluntarily deciding to retire now that they no longer needed work in order to get insurance, or being able to quit their current job to create their own business) to say that the ACA "kills jobs". But what it's actually doing is opening up those jobs so someone else can take them. So it's actually reducing unemployment and increasing freedom.

[Cassie]

I think it is great that your health insurance no longer needs to be connected to a job. Freedom is wonderful.

[Paul der Krake]

Asset tests are largely not utilized in the tax code because there are many, many ways to hide or shelter assets. It goes from Hillbilly Joe burying gold coins in his backyard to people with numerals in their names setting up series of trusts (see Joshua Kennon's trust articles for an overview). It's much easier to base policy decisions on an incorrect yet good enough measure of wealth: income.

[Miss Prim]

My sister-in-law asked me to help her figure out how much income she would need to have to avoid Medicaid as she was afraid she wasn't going to get as good of care.  I figured she had to show $18,000 in income.  She can live on practically nothing, so she has her own small handy man business and pulls some from her investments which are quite substantial. 

I on the other hand, will be on the ACA next year.  I will be trying to keep my income around $40,000, so I can get a good premium rate for myself.  My husband is on Medicare.  We do a lot more travelling than her, so I am trying to pull out more this year to have a cushion to ride through the next 2 1/2 years. 

                                                                                                Miss Prim

[forummm]

My sister-in-law asked me to help her figure out how much income she would need to have to avoid Medicaid as she was afraid she wasn't going to get as good of care.  I figured she had to show $18,000 in income.  She can live on practically nothing, so she has her own small handy man business and pulls some from her investments which are quite substantial. 

I on the other hand, will be on the ACA next year.  I will be trying to keep my income around $40,000, so I can get a good premium rate for myself.  My husband is on Medicare.  We do a lot more travelling than her, so I am trying to pull out more this year to have a cushion to ride through the next 2 1/2 years. 

                                                                                                Miss Prim

If your SIL is in her own household (not married, files taxes as single, has no dependents, and no one claims her as a dependent) and she lives in a state that expanded Medicaid, then she'd need about $16,250 in MAGI for 2015 to be a few dollars above the threshold for Medicaid. That goes up at about the rate of inflation each year.

[zing12]

I think it should be like essentially the rest of the industrialized world where there's universal coverage and it's primarily supported by your taxes. So you don't have to monkey around with your income and pick between lots of confusing options and try to game the system. You just earn however much money, pay whatever taxes, and get your high-quality healthcare when you need it without worry. You can work for a small or large business or start your own and the coverage is the same. But since the ACA is trying to keep us in the failed private insurance system that is still largely employer based but still have some way to cover the poor, it's not at all like that.

Well the reason for that is because it's what was politically feasible. The president was upfront about this in his recent interview on the WTF with Marc Maron podcast. He basically said he preferred single payer but there was no way you were going to pass that due to the health insurance lobby and other established and entrenched norms in our country. He believes most progress through history has been very incremental and that's the way you get things done.

[forummm]

I think it should be like essentially the rest of the industrialized world where there's universal coverage and it's primarily supported by your taxes. So you don't have to monkey around with your income and pick between lots of confusing options and try to game the system. You just earn however much money, pay whatever taxes, and get your high-quality healthcare when you need it without worry. You can work for a small or large business or start your own and the coverage is the same. But since the ACA is trying to keep us in the failed private insurance system that is still largely employer based but still have some way to cover the poor, it's not at all like that.

Well the reason for that is because it's what was politically feasible. The president was upfront about this in his recent interview on the WTF with Marc Maron podcast. He basically said he preferred single payer but there was no way you were going to pass that due to the health insurance lobby and other established and entrenched norms in our country. He believes most progress through history has been very incremental and that's the way you get things done.

I understand the political calculus that went into the decision. The insurance, drug, hospital, and medical device industries are incredibly powerful and own are very influential with hundreds of members of Congress.

[forummm]

I did some research today and for the Medicaid expansion states, I think all but 2 or 3 (AR and CT were ones I could identify) are using private insurance to fulfill the coverage. So if you get "Medicaid" through the expansion, you are probably just getting private insurance that the state contracts with the private insurer to provide to beneficiaries. And anecdotally, the private insurers pay the providers more than the state FFS Medicaid program does, so providers take this Medicaid more readily. In fact, the state contracts with the insurer requires the insurer to ensure that there are sufficient providers available in each area of the state. So access to doctors and hospitals should typically not be a problem for Medicaid beneficiaries going forward.

[Purple Economist]

I did some research today and for the Medicaid expansion states, I think all but 2 or 3 (AR and CT were ones I could identify) are using private insurance to fulfill the coverage. So if you get "Medicaid" through the expansion, you are probably just getting private insurance that the state contracts with the private insurer to provide to beneficiaries. And anecdotally, the private insurers pay the providers more than the state FFS Medicaid program does, so providers take this Medicaid more readily. In fact, the state contracts with the insurer requires the insurer to ensure that there are sufficient providers available in each area of the state. So access to doctors and hospitals should typically not be a problem for Medicaid beneficiaries going forward.

Arkansas gives premium assistance to purchase private coverage, so it is definitely a private option.  Can you provide a link that says most states are using private insurance to expand Medicaid?  My understanding and research shows that most states are just expanding eligibility criteria for Medicaid coverage.  The states that are using alternative methods (private insurance supports) include Arkansas, Indiana, Iowa, Michigan, New Hampshire and Pennsylvania.

[FIRE me]

Medicaid is for those with no money or assets (poor).  I believe the most recent number is that you may have no more than about $3,000 worth of anything to qualify AND it is income based as well. 

Please don't spread bad information on such an important topic. That statement simply is not true, at least not in all states.

There is no means test in my state, and many other states. It's all about income.

[forummm]

I did some research today and for the Medicaid expansion states, I think all but 2 or 3 (AR and CT were ones I could identify) are using private insurance to fulfill the coverage. So if you get "Medicaid" through the expansion, you are probably just getting private insurance that the state contracts with the private insurer to provide to beneficiaries. And anecdotally, the private insurers pay the providers more than the state FFS Medicaid program does, so providers take this Medicaid more readily. In fact, the state contracts with the insurer requires the insurer to ensure that there are sufficient providers available in each area of the state. So access to doctors and hospitals should typically not be a problem for Medicaid beneficiaries going forward.

Arkansas gives premium assistance to purchase private coverage, so it is definitely a private option.  Can you provide a link that says most states are using private insurance to expand Medicaid?  My understanding and research shows that most states are just expanding eligibility criteria for Medicaid coverage.  The states that are using alternative methods (private insurance supports) include Arkansas, Indiana, Iowa, Michigan, New Hampshire and Pennsylvania.

My research wasn't from looking up things online. You are right about AR being premium support--so still private. What I should have said was it was Medicaid managed care (i.e. private insurance) in the expansion states. About 75% of all Medicaid beneficiaries (including traditional and expansion beneficiaries) are in managed care (i.e. covered by a private insurer). And the trend is moving closer to 100% every year.

[FIRE me]

The downside is you have basically gamed the system and are having the workers pay for your medical care.

Yeah. Just like not paying taxes by maxing out taxed advantaged savings accounts is gaming the system. Just like living on half of what you make is gaming the system. Just like becoming FI and RE is gaming the system.

It is bullshit that anyone here calls making use of government subsidies for government required health insurance gaming the system.

[FIRE me]

Medicaid is intended for poor people, not for people with means. It really is just that simple. This is yet another classic example of what one can do and what one should do.

Life is a game. Play it better.

Maybe you should have changed your sig before you posted.

[Purple Economist]

I did some research today and for the Medicaid expansion states, I think all but 2 or 3 (AR and CT were ones I could identify) are using private insurance to fulfill the coverage. So if you get "Medicaid" through the expansion, you are probably just getting private insurance that the state contracts with the private insurer to provide to beneficiaries. And anecdotally, the private insurers pay the providers more than the state FFS Medicaid program does, so providers take this Medicaid more readily. In fact, the state contracts with the insurer requires the insurer to ensure that there are sufficient providers available in each area of the state. So access to doctors and hospitals should typically not be a problem for Medicaid beneficiaries going forward.

Arkansas gives premium assistance to purchase private coverage, so it is definitely a private option.  Can you provide a link that says most states are using private insurance to expand Medicaid?  My understanding and research shows that most states are just expanding eligibility criteria for Medicaid coverage.  The states that are using alternative methods (private insurance supports) include Arkansas, Indiana, Iowa, Michigan, New Hampshire and Pennsylvania.

My research wasn't from looking up things online. You are right about AR being premium support--so still private. What I should have said was it was Medicaid managed care (i.e. private insurance) in the expansion states. About 75% of all Medicaid beneficiaries (including traditional and expansion beneficiaries) are in managed care (i.e. covered by a private insurer). And the trend is moving closer to 100% every year.

Ok.  I understand what you are saying and agree.  I live in Kansas (a non-expansion state) and there are three managed care organizations that provide Medicaid services.  My understanding, based on discussions with hospital executives, is that the reimbursement rates are still quite low (lower than Medicare).

The low reimbursement rate of Medicaid is generally hypothesized to be the reason that patients with Medicaid have the worst outcomes of any group based on type of insurance (including uninsured).  The fact that Medicaid has the worst health outcomes of any group is why I will always do what I can to avoid having Medicaid as my health insurance.  My goal will always be to have enough income to qualify for the maximum subsidy on an exchange.