I will presume that a lot of folks here are in the same situation as me: early retired, with a decent level of liquid assets, but not generating a high income - I am such that I live off of 5-year seasoned conversion basis Roth IRA distributions, and therefore don't generate any income towards AGI (I do generate some income with Roth IRA conversion going forward, but only at the 0% federal tax bracket). I am also on the ObamaRomneyHeritageCare Medicaid expansion - something that technically I am forced to take in lieu of an Exchange plan since my AGI is less than poverty, and I am ineligible for the premium tax credit. But the rage across the nation is for those EVIL "able-bodied" folks - even those that have worked, and have built up a retirement nest egg, and now enjoying that - to not get Medicaid, so as to "restore dignity". What, being able to retire early is not dignified? Who says?
Now, if the law were changed so that American citizens could get the premium tax credit for an income below poverty - something that non-citizens are allowed (WHERE IS THE OUTRAGE FROM THE MAGA CROWD?) - this would not be an issue as I would simply pay the $500 or so in net costs for my coverage (i.e., including out-of-pocket), but with a broken government until 2021 (when the Democrats finally come to the rescue), this is the situation. (Of course, one could always simply be "optimistic" in his income projection and hit the poverty level and essentially work around this ridiculous part of ORHC, but I digress.)
I am wondering how my fellow moustachers (I prefer the classic French spelling) feel about this, and what they plan to do about it.
You are really upset that you are not able to collect on a means tested benefit without trying to work?
I get taking government benefits you qualify for even if you arguably are not intended to benefit by the spirit of the law/regulation; our tax and spending policies are detached enough from morality that I don't think it's unreasonable for people to argue that they should pay as little as possible and take as much as possible and address any inequity through personal giving to actual needy people/worthy causes.
I can get people complaining about SS and Medicare becoming less generous than they expected. Even though they are straight welfare programs, they have been "pitched" to americans as some combination of retirement and insurance program that they "pay into" (as if they don't "pay into" TANF, Section 8, Medicaid, the Military, DOT, etc).
But why would it bother you that a means tested program is actually doing something to be more effective at being means tested?
I think I understand swamps frustration. Last year, we were "too poor" for ACA subsidies for our children while my wife and I qualified. The result was no fee care for our children, and a subsidy that covered about 85% of the premium for my wife and I. I wanted all of us to be in the ACA plan, but we did not make enough. The only choices were :
1. Have children go on medicaid.
2. Self insure children at full cost.
3. Earn more to get into an ACA plan.
Last year I took option 1, but it was a bit of a sticky wicket. If our annual income came in too low, then we would have had to pay back the ACA subsidies for the wife and I. If too high, then the children were then uninsured. It creates a financial ledge that places healthcare costs at risk, and you need to know a year ahead of time what your income will be. If you are wrong in 1 direction or the other, you owe. It seems almost purposefully confusing.
This led to some very silly financial decisions, like keep cash in checking so we don't make "too much".
This year I went with option 3, in part due to the foolishness I just mentioned regarding cash.
At this point, the sweet spot for our family of 4 (1 in college)seems to be about $45,000 of annual income to earn enough to get off medicaid and still get an ACA subsidy while they still last. We will use the ROTH conversion to hit that threshold. I plan to do it in December instead of January because you can no longer re-characterize it in a market downturn.
While I do feel a little dirty about it, I will still play by the rules and take the subsidy. I also take my standard deduction, deduct my property taxes (for 1 more year), pay 0% taxes on long term capital gains for the first $75,000 or so, and defer all of my taxes owed on my unrealized gains forever (since there will be no gains due to step-up once I am dead).
One thing that may change is that once I am out of IRA money to convert to a Roth, I may force myself to realize gains I do not need right now for the sole purpose of generating income to get us to the sweet spot.
At least taxes are simpler :)