Obamacare numbers

[dude]

Interesting, especially for the early retiree types contemplating health insurance:

http://finance.yahoo.com/news/average-obamacare-subsidy-3-312-102000738.html

[Schaefer Light]

"So far this year the federal government has paid out $4.7 billion in subsidies. The Congressional Budget Office and the Joint Committee on Taxation currently estimate that the ACA’s insurance provisions will cost just under 41.1 trillion over 10 years."

I don't seem remember Nancy Pelosi bringing up these numbers back when the ACA was being debated.

[rtrnow]

"So far this year the federal government has paid out $4.7 billion in subsidies. The Congressional Budget Office and the Joint Committee on Taxation currently estimate that the ACA’s insurance provisions will cost just under 41.1 trillion over 10 years."

I don't seem remember Nancy Pelosi bringing up these numbers back when the ACA was being debated.

It only took one post for an aca thread to turn political. Is that a record?

[hybrid]

I doubt it. Schaefer Light, you are new, so a bit of friendly advice. Bring your best reasoned argument to the table pro or against something and don't lead with worthless snark. We are all adults here and know the ACA has very real costs and benefits. The pluses and minuses are well worth discussing, especially in how it relates to an MMM philosophy.

[TheDude]

I am currently very unexcited about Obamacare. I do support the law and think overall its an improvement although I would really like see something more radical. We just got our medical info at work and imho it really kind of sucks. We pay the firs 10k and I get to pay 212 a month.  In addition my employer will pay about 500 a month. It doesn't seem like a lot of improvement to pay 9000 a year in premiums and pay the first 10000 or medical care. Obamacare really dropped the ball on family plans.

[Emilyngh]

I am currently very unexcited about Obamacare. I do support the law and think overall its an improvement although I would really like see something more radical. We just got our medical info at work and imho it really kind of sucks. We pay the firs 10k and I get to pay 212 a month.  In addition my employer will pay about 500 a month. It doesn't seem like a lot of improvement to pay 9000 a year in premiums and pay the first 10000 or medical care. Obamacare really dropped the ball on family plans.

This is assuming that one does not qualify for a significant subsidy.   You may not, but many early retirees probably would.

[hybrid]

I am currently very unexcited about Obamacare. I do support the law and think overall its an improvement although I would really like see something more radical. We just got our medical info at work and imho it really kind of sucks. We pay the firs 10k and I get to pay 212 a month.  In addition my employer will pay about 500 a month. It doesn't seem like a lot of improvement to pay 9000 a year in premiums and pay the first 10000 or medical care. Obamacare really dropped the ball on family plans.

I'm also unexcited about the ACA because I think it's the wrong prescription for a chronic ailment. Getting employers out of the business of having to provide health insurance for their employees is where I think we need to be, whether one thinks an individual should purchase independently (like American car insurance) or via a national health system. If the former, I think we have to accept the fact that without subsidies health insurance will be out of reach of too many people. As the world's wealthiest nation and near the top in terms of income per capita, certainly we can do better than this. 

[TreeTired]

We just got a request to verify our income so we can continue with the ACA subsidies.  My wife and I are paying $309/month for a plan that retails for over $1500/month.  They asked for documentation, but what to send?  I am not going to send them a "brokerage statement" which will show every stock I own but will tell them little about my income.  I generated a YTD dividend and interest report (let them extrapolate), and sent them a ytd gain/loss report, but I plan to take some losses later in the year which will cancel out the gains.  Also sent them a paystub showing the income I made so far this year from working 4 days total at minimum wage.  Also sent them a statement from an interest bearing account showing the interest I have earned ytd.   We will see what they say.   

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

[iris lily]

"So far this year the federal government has paid out $4.7 billion in subsidies. The Congressional Budget Office and the Joint Committee on Taxation currently estimate that the ACA’s insurance provisions will cost just under 41.1 trillion over 10 years."

I don't seem remember Nancy Pelosi bringing up these numbers back when the ACA was being debated.

Shush! Just PLEEEEEEEEESE be quiet! I am counting on the (stupidly expensive, unaffordable for our country) ACA as I jump ship into early retirement. Do NOT let those morons in Congress know the full extent of their stupidity.

Oh wait, it won't matter to them anyway, they can just print more money.

[Cromacster]

I am currently very unexcited about Obamacare. I do support the law and think overall its an improvement although I would really like see something more radical. We just got our medical info at work and imho it really kind of sucks. We pay the firs 10k and I get to pay 212 a month.  In addition my employer will pay about 500 a month. It doesn't seem like a lot of improvement to pay 9000 a year in premiums and pay the first 10000 or medical care. Obamacare really dropped the ball on family plans.

Is that due to obamacare or you employer sponsored health insurance?  And you say family, how many are in your family?  212 with a 10k deductible seems pretty par (though I thought obamacare did not allow for that high of a deductible anymore).  Max out your HSA and your deductible will be more than covered after two years.

[iris lily]

This is assuming that one does not qualify for a significant subsidy.   You may not, but many early retirees probably would.

Will be setting up my income specifically for this new perk, thank you very much taxpayers. Being flexible in what income streams I choose to take, I've got ultimate control. What I'm finding is that we've got a LOT of options which makes it harder. I also fear that DH will not stop working and we'll have too damned much money.   :)

[iris lily]

We just got a request to verify our income so we can continue with the ACA subsidies.  My wife and I are paying $309/month for a plan that retails for over $1500/month.  They asked for documentation, but what to send?  I am not going to send them a "brokerage statement" which will show every stock I own but will tell them little about my income.  I generated a YTD dividend and interest report (let them extrapolate), and sent them a ytd gain/loss report, but I plan to take some losses later in the year which will cancel out the gains.  Also sent them a paystub showing the income I made so far this year from working 4 days total at minimum wage.  Also sent them a statement from an interest bearing account showing the interest I have earned ytd.   We will see what they say.   

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

[Jamesqf]

We just got a request to verify our income so we can continue with the ACA subsidies.

I'm in the opposite boat, currently starting on an appeals process to convince the idiots that I am NOT eligible for Medicaid.  This after maybe three months of trying to get their web site (state one, not the national) to actually effing work, part of their signup questionaire asks how much I made in April.  So I answer, perfectly accurately, $0, because I work for myself, and my income tends to come in big chunks at several month intervals. (Like $15K in January, $7K in March, etc.)  So based on that, their algorithm  figures I'm poor, and eligible for Medicaid?  And the site won't let me go back to put in realistic faked info...

I don't want another argument about whether Obamacare is a good idea or a bad one, but I will say that even the best idea in the world can turn into a disaster if the implementation is turned over to a bunch of FUCKING INCOMPETENTS.

[Gin1984]

We just got a request to verify our income so we can continue with the ACA subsidies.  My wife and I are paying $309/month for a plan that retails for over $1500/month.  They asked for documentation, but what to send?  I am not going to send them a "brokerage statement" which will show every stock I own but will tell them little about my income.  I generated a YTD dividend and interest report (let them extrapolate), and sent them a ytd gain/loss report, but I plan to take some losses later in the year which will cancel out the gains.  Also sent them a paystub showing the income I made so far this year from working 4 days total at minimum wage.  Also sent them a statement from an interest bearing account showing the interest I have earned ytd.   We will see what they say.   

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

Check your state laws, Ca allows for 36 months of COBRA.

[Gin1984]

We just got a request to verify our income so we can continue with the ACA subsidies.  My wife and I are paying $309/month for a plan that retails for over $1500/month.  They asked for documentation, but what to send?  I am not going to send them a "brokerage statement" which will show every stock I own but will tell them little about my income.  I generated a YTD dividend and interest report (let them extrapolate), and sent them a ytd gain/loss report, but I plan to take some losses later in the year which will cancel out the gains.  Also sent them a paystub showing the income I made so far this year from working 4 days total at minimum wage.  Also sent them a statement from an interest bearing account showing the interest I have earned ytd.   We will see what they say.   

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

Was this a request from the federal government or someone else? 

[iris lily]

We just got a request to verify our income so we can continue with the ACA subsidies.

I'm in the opposite boat, currently starting on an appeals process to convince the idiots that I am NOT eligible for Medicaid. ...

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

And I hear ya buddy about F8cktards running gooberment programs.

[iris lily]

Check your state laws, Ca allows for 36 months of COBRA.

Thanks for that, I did just check it and my state follows the federal mandate and no more. But it was worth checking.

[Emilyngh]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

Yes, this is something early retirees should keep in mind.   I too am in a no-expansion state (although hopefully that will be changed soon).   If I don't make enough in a year to be above poverty for family size, I would wind up not qualifying for any subsidies and have to pay full price for ACA coverage.   It's still an improvement, IMO, to know that I can't be denied coverage, have premiums jacked up or dropped if I get very sick, etc, but I'd prefer to qualify for a subsidy and will keep this in mind when I'm closer to planning ER.

[brooklynguy]

With respect to income verification, presumably the subsidies will all get straightened out at tax time (i.e., you will get a refund or owe taxes if your subsidies received during the year were too low or too high, respectively).

(Of course, that is not much comfort if you don't have the cash flow to pay non-subsidized rates over the course of the year, and also means you could end up giving an interest free loan to Uncle Sam.)

[brooklynguy]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

Yes, this is something early retirees should keep in mind.   I too am in a no-expansion state (although hopefully that will be changed soon).   If I don't make enough in a year to be above poverty for family size, I would wind up not qualifying for any subsidies and have to pay full price for ACA coverage.   It's still an improvement, IMO, to know that I can't be denied coverage, have premiums jacked up or dropped if I get very sick, etc, but I'd prefer to qualify for a subsidy and will keep this in mind when I'm closer to planning ER.

Yes, and to further elaborate on this, it's important to carefully manage your income to the extent possible.  If you expect to qualify for subsidies and therefore sign up for an ACA exchange plan but then fall short of the required minimum income level, you will (perversely, in my opinion) owe a lot of money (potentially over $10 grand) that you would not have owed had you just earned a little bit MORE income.  Obviously your annual income amount is not always within your control, but for many early retirees it is (through Roth conversions, etc.).

[soccerluvof4]

all this above is what frustrates me. How is the "common person" suppose to figure all this stuff out.? Hopefully a lot will get resolved on the ongoing issues and there is a lot more clarity on things but Im not going to hold my breath. At the end its like anything else you gotta play games to get it or not get it but the rules of the game are not clear enough. arghh!

[Jamesqf]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

The exceptionally stupid part is that I don't really* have a low income, if you add it all up and average it over a year.  I just don't get regular $X per week or month paychecks.

*OK, last year was lower than usual, due to spending a lot of time working on a dissertation project, so I might possibly have qualified for subsidies, but still, Medicaid, when last year's income still paid all my expenses (including about $5K for a broken wrist), and let me add a few thousand to the stash.

[Spartana]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

Yes, this is something early retirees should keep in mind.   I too am in a no-expansion state (although hopefully that will be changed soon).   If I don't make enough in a year to be above poverty for family size, I would wind up not qualifying for any subsidies and have to pay full price for ACA coverage.   It's still an improvement, IMO, to know that I can't be denied coverage, have premiums jacked up or dropped if I get very sick, etc, but I'd prefer to qualify for a subsidy and will keep this in mind when I'm closer to planning ER.

And even if you are in a Medicaid expanded state as I am, you may not want to go on Medicaid. But, if your taxable income is too low, it's your only choice short of paying 100% of your premiums without subsidies and buying directly from an insurer. This is what I am doing right now until I do something to increase my taxable income, or I'd have to go on Medicaid (don't wanna) or use the VA Hospital (don't wanna either). And with no more inexpensive catastrophic plans allowed, that can be quite costly. So for the very low taxable income people, you may want to plan on adding a little bit more  taxable income to your income stream just to get the subsidies. Rightly or wrongly (from an ethical POV) you can probably balance it so you get almost 100% subsidized health insurance premiums without having to go on Medicaid.

[Spartana]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

The exceptionally stupid part is that I don't really* have a low income, if you add it all up and average it over a year.  I just don't get regular $X per week or month paychecks.

*OK, last year was lower than usual, due to spending a lot of time working on a dissertation project, so I might possibly have qualified for subsidies, but still, Medicaid, when last year's income still paid all my expenses (including about $5K for a broken wrist), and let me add a few thousand to the stash.

In my state (Calif) their exchange site allowed you to put in either a monthly income or an annual income. I believe the Fed site does too. However, for those who have a variable annual taxable income stream, you'll probably have to really keep track of it for end of the year tax and ACA purposes or may end up owing a lot more then you planned towards subsidies. Definitely a balancing act.

[Dr. Doom]

We just got a request to verify our income so we can continue with the ACA subsidies.  My wife and I are paying $309/month for a plan that retails for over $1500/month.  They asked for documentation, but what to send?  I am not going to send them a "brokerage statement" which will show every stock I own but will tell them little about my income.  I generated a YTD dividend and interest report (let them extrapolate), and sent them a ytd gain/loss report, but I plan to take some losses later in the year which will cancel out the gains.  Also sent them a paystub showing the income I made so far this year from working 4 days total at minimum wage.  Also sent them a statement from an interest bearing account showing the interest I have earned ytd.   We will see what they say.   

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

Same -- I'm incredibly interested in this.  Would you be willing to post the outcome in a new thread when you have the results?  It would do the community a lot of good to have a working process to follow regarding income verification here.

ACA subsidies are supposedly not based on net worth (i.e. there's no real means test) but rather just MAGI as I understand it.  But it still seems to me that there's risk involved in showing folks that you're worth X hundreds of thousands of dollars when applying for a subsidy clearly meant for disadvantaged folks.  Never know what's going to happen once those eyebrows get raised.

[Spartana]

Just a side bar: to you military Veteran's who plan to use both the VA and buy your own private health insurance, be aware that you can't get subsidies if you are signed up and using the VA even if you qualify for them financially. You will have to pay 100% of your private insurance costs.  The VA website has info on that http://www.va.gov/health/aca/ This does not apply to military retirees who will get Tricare. From the website:

"I am enrolled in a VA health care program. Would I be eligible for assistance to pay health insurance premiums on the Marketplace if I choose to purchase health care outside of VA?

Since VA care meets the standard for health care coverage, you wouldn’t be eligible for assistance to lower your cost of health insurance premiums if you chose to purchase additional health care coverage outside of VA. However, you may still purchase private health insurance on or off the Marketplace to complement your VA health care coverage."

[WannabeDone]

Last year I generated just enough income to not be eligible for ACA subsidies, but that was due to a Roth IRA conversion.  This year I will not do a conversion, so my estimated income makes me eligible for maximum subsidy.

Do you mind saying what has lead you to not do any Roth conversions this year?  Is it because you think the ACA subsidy will net you more in the long run than converting IRA money to Roth money?  Thanks.

[geekette]

I am currently very unexcited about Obamacare. I do support the law and think overall its an improvement although I would really like see something more radical. We just got our medical info at work and imho it really kind of sucks. We pay the firs 10k and I get to pay 212 a month.  In addition my employer will pay about 500 a month. It doesn't seem like a lot of improvement to pay 9000 a year in premiums and pay the first 10000 or medical care. Obamacare really dropped the ball on family plans.

One thing to consider - if you do go to the doctor and haven't met the deductible, you still get the benefit of the negotiated rates.

I had $1000 worth of labs done, but it dropped down to a mere $73 which was applied to the deductible, and was all I had to pay.

We had Cobra for the first part of this year, but switched to an ACA policy this May.  It's not as good a plan as the Cobra one was, but it's less per month, even without considering a subsidy.  We're paying in full up front and will deal with possible subsidies later, if we even take them.

[Jamesqf]

In my state (Calif) their exchange site allowed you to put in either a monthly income or an annual income. I believe the Fed site does too.

That might have helped, if I had known about the options and their consequences beforehand.  The problem (not the only one, by any means) is that the web site does not let you back up and correct things, or play with alternatives.

Then add in the fact that it's pretty hard to keep track of exactly what you're doing when the site response time was several minutes, even for things as simple as selecting a radio button.  As I said, effing incompetents can turn anything into a disaster.

[bacchi]

ehealthinsurance.com or any similar site.

Same plans but no subsidies and no hassle.

[Spartana]

Does anyone know when the next open enrollment period will be to buy health insurance? I just looked at ehealthinsurance.com and to buy a policy (with or without ACA subsidies) they won't allow you to buy anything but a short term policy unless you've had a "qualifying event" - job loss, divorce, etc... and it has to be documented. The short term policies don't cover pre-existing conditions either. Don't know if voluntarily quitting your job falls under one of the qualifying events or not, but if not you'll probably want to consider waiting to quit until it's open enrollment time. Here's what ehealthinsurance said:

You can only enroll in a major medical plan at this time if you have a qualifying life event. Short-term plans offer coverage for 30 days up to 12 months. Note that they don't cover pre-existing conditions, and you may still be subject to the tax penalty.  

[Spartana]

ehealthinsurance.com or any similar site.

Same plans but no subsidies and no hassle.

I bought my health insurance thru there when my plan was cancelled Jan. 1st. It was an unsubsidized plan and pretty expensive compared to what I had before - about 3 times higher premiums and a greater deductible and OOP max.

[Gin1984]

Does anyone know when the next open enrollment period will be to buy health insurance? I just looked at ehealthinsurance.com and to buy a policy (with or without ACA subsidies) they won't allow you to buy anything but a short term policy unless you've had a "qualifying event" - job loss, divorce, etc... and it has to be documented. The short term policies don't cover pre-existing conditions either. Don't know if voluntarily quitting your job falls under one of the qualifying events or not, but if not you'll probably want to consider waiting to quit until it's open enrollment time. Here's what ehealthinsurance said:

You can only enroll in a major medical plan at this time if you have a qualifying life event. Short-term plans offer coverage for 30 days up to 12 months. Note that they don't cover pre-existing conditions, and you may still be subject to the tax penalty.

Losing your job counts as a qualifying event.

[randymarsh]

Does anyone know when the next open enrollment period will be to buy health insurance? I just looked at ehealthinsurance.com and to buy a policy (with or without ACA subsidies) they won't allow you to buy anything but a short term policy unless you've had a "qualifying event" - job loss, divorce, etc... and it has to be documented. The short term policies don't cover pre-existing conditions either. Don't know if voluntarily quitting your job falls under one of the qualifying events or not, but if not you'll probably want to consider waiting to quit until it's open enrollment time. Here's what ehealthinsurance said:

You can only enroll in a major medical plan at this time if you have a qualifying life event. Short-term plans offer coverage for 30 days up to 12 months. Note that they don't cover pre-existing conditions, and you may still be subject to the tax penalty.

Losing your job counts as a qualifying event.

Only losing counts though right? I don't think quitting counts.

[randymarsh]

Anyone else think the article is terrible?

They are determined by an individual’s annual income as listed on their applications—otherwise known as an honor system.

Doesn't it check with the IRS to verify your last tax return?

The Congressional Budget Office and the Joint Committee on Taxation currently estimate that the ACA’s insurance provisions will cost just under 41.1 trillion over 10 years.

Trillion? That seems...extremely high. Don't they mean billion? The entire annual US budget is around 3 trillion.

[Malaysia41]

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

me too - I just assumed they based premiums on previous year's tax filings so planned on COBRA 18 months and then ACA.  Really honor system?  I may scrap the COBRA plan come January 1. (AGI in 2014 will be too high so may as well continue the plan I know with COBRA).

[Gin1984]

Does anyone know when the next open enrollment period will be to buy health insurance? I just looked at ehealthinsurance.com and to buy a policy (with or without ACA subsidies) they won't allow you to buy anything but a short term policy unless you've had a "qualifying event" - job loss, divorce, etc... and it has to be documented. The short term policies don't cover pre-existing conditions either. Don't know if voluntarily quitting your job falls under one of the qualifying events or not, but if not you'll probably want to consider waiting to quit until it's open enrollment time. Here's what ehealthinsurance said:

You can only enroll in a major medical plan at this time if you have a qualifying life event. Short-term plans offer coverage for 30 days up to 12 months. Note that they don't cover pre-existing conditions, and you may still be subject to the tax penalty.

Losing your job counts as a qualifying event.

Only losing counts though right? I don't think quitting counts.

It does not matter why you not long have it, just that you no longer do.  For example, my getting a job counting as a qualifying event for my husband to change his health insurance because we were on a family plan.  So, we removed me and I joined my work's plan.  All it is a change in work status, not why that happened.

[bonjourliz]

Does anyone know when the next open enrollment period will be to buy health insurance? I just looked at ehealthinsurance.com and to buy a policy (with or without ACA subsidies) they won't allow you to buy anything but a short term policy unless you've had a "qualifying event" - job loss, divorce, etc... and it has to be documented. The short term policies don't cover pre-existing conditions either. Don't know if voluntarily quitting your job falls under one of the qualifying events or not, but if not you'll probably want to consider waiting to quit until it's open enrollment time. Here's what ehealthinsurance said:

You can only enroll in a major medical plan at this time if you have a qualifying life event. Short-term plans offer coverage for 30 days up to 12 months. Note that they don't cover pre-existing conditions, and you may still be subject to the tax penalty.

Losing your job counts as a qualifying event.

Only losing counts though right? I don't think quitting counts.

yes, it does.  quitting is fine.

Sent from my HTC first using Tapatalk

[brewer12345]

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

me too - I just assumed they based premiums on previous year's tax filings so planned on COBRA 18 months and then ACA.  Really honor system?  I may scrap the COBRA plan come January 1. (AGI in 2014 will be too high so may as well continue the plan I know with COBRA).

Not exactly the honor system.  I applied through the exchange when I quit my job for coverage starting 2/1.  I indicated that my job was a thing of the past and this year's income would be a lot less than last year.  I picked a number and they asked for substantiation.  It turned out that a 1099 (interest & dividends), my sole paystub for the year, and a ledger for DW's business (not tax return since it was not done yet) were sufficient to substantiate the income number.  If you are wrong and way underestimate your income, there is a mechanism to true up come tax filing time and nobody has said this but I strongly suspect that you will be given extra scrutiny when you apply for the next year.

[brooklynguy]

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

me too - I just assumed they based premiums on previous year's tax filings so planned on COBRA 18 months and then ACA.  Really honor system?  I may scrap the COBRA plan come January 1. (AGI in 2014 will be too high so may as well continue the plan I know with COBRA).

Not exactly the honor system.  I applied through the exchange when I quit my job for coverage starting 2/1.  I indicated that my job was a thing of the past and this year's income would be a lot less than last year.  I picked a number and they asked for substantiation.  It turned out that a 1099 (interest & dividends), my sole paystub for the year, and a ledger for DW's business (not tax return since it was not done yet) were sufficient to substantiate the income number.  If you are wrong and way underestimate your income, there is a mechanism to true up come tax filing time and nobody has said this but I strongly suspect that you will be given extra scrutiny when you apply for the next year.

As I mentioned above, all of this is only relevant for purposes of getting the subsidies "advanced" to you during the year.  If you are eligible for the subsidies but didn't get them during the year, you will get them in your tax refund (and if you are not eligible but did get them during the year, you will have to pay them back when you file your taxes).  This matters as far as cash flow management and avoiding giving the government an interest free loan, but you will end up getting the correct subsidy amount at tax time.  It's analogous to setting withholding amounts on your paycheck.

[geekette]

Are there any 2014 1040 forms out there yet?  I'm trying to plan.

[brewer12345]

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

me too - I just assumed they based premiums on previous year's tax filings so planned on COBRA 18 months and then ACA.  Really honor system?  I may scrap the COBRA plan come January 1. (AGI in 2014 will be too high so may as well continue the plan I know with COBRA).

Not exactly the honor system.  I applied through the exchange when I quit my job for coverage starting 2/1.  I indicated that my job was a thing of the past and this year's income would be a lot less than last year.  I picked a number and they asked for substantiation.  It turned out that a 1099 (interest & dividends), my sole paystub for the year, and a ledger for DW's business (not tax return since it was not done yet) were sufficient to substantiate the income number.  If you are wrong and way underestimate your income, there is a mechanism to true up come tax filing time and nobody has said this but I strongly suspect that you will be given extra scrutiny when you apply for the next year.

As I mentioned above, all of this is only relevant for purposes of getting the subsidies "advanced" to you during the year.  If you are eligible for the subsidies but didn't get them during the year, you will get them in your tax refund (and if you are not eligible but did get them during the year, you will have to pay them back when you file your taxes).  This matters as far as cash flow management and avoiding giving the government an interest free loan, but you will end up getting the correct subsidy amount at tax time.  It's analogous to setting withholding amounts on your paycheck.

That is true if we are only talking about premium subsidies.  If you are eligible for cost sharing subsidies (<250% FPL IIRC) then you have to qualify for the advanced premium subsidies as I understand it.

[Daleth]

Whoah, I had not thought about that aspect of it. I'm in a No-Medicaid expansion state. While it would be unlikely that I would choose a retirement scenario that has us having  no income for a year, I hadn't thought about the effect of that choice on ACA qualifications. One CAN go too low to play the game, Check.

The exceptionally stupid part is that I don't really* have a low income, if you add it all up and average it over a year.  I just don't get regular $X per week or month paychecks.

*OK, last year was lower than usual, due to spending a lot of time working on a dissertation project, so I might possibly have qualified for subsidies, but still, Medicaid, when last year's income still paid all my expenses (including about $5K for a broken wrist), and let me add a few thousand to the stash.

So just average it out. Let's say you get big chunks of money quarterly--divide each chunk by 3 and attribute 1/3 to each month in the quarter. It will all shake out correctly at tax time, which is when it matters for subsidy purposes.

[Jamesqf]

So just average it out. Let's say you get big chunks of money quarterly--divide each chunk by 3 and attribute 1/3 to each month in the quarter. It will all shake out correctly at tax time, which is when it matters for subsidy purposes.

That could have worked if I had known in advance just how their system was going to figure income and so on, but AFAIK they do not tell you this, and the information is in no obvious place.  However, I think you've missed the sheer effing stupidity of the state's system: it simply does not allow you to go back and fix mistakes.

Then there's a second problem with this, which is that I really do not know what my income is going to be a year in advance.  I could, for instance, possibly make over $10K every month for the rest of the year, if my clients have work they want done, and I wanted to put in 40+ hours/week.  OTOH, if business is slow, or if I feel like spending a lot of time hiking &c, I could make next to nothing for some or all months.

[Daleth]

So just average it out. Let's say you get big chunks of money quarterly--divide each chunk by 3 and attribute 1/3 to each month in the quarter. It will all shake out correctly at tax time, which is when it matters for subsidy purposes.

That could have worked if I had known in advance just how their system was going to figure income and so on, but AFAIK they do not tell you this, and the information is in no obvious place.  However, I think you've missed the sheer effing stupidity of the state's system: it simply does not allow you to go back and fix mistakes.

Yes, that is completely stupid. I have no idea how your state chose to figure things but AFAIK with Obamacare there is no special way--they figure it annually, period. If you make more than X in a given year but less than Y you qualify for subsidies (off the top of my head, X is 100% of poverty level and Y is 400% of poverty level--so the numbers depend on your family size and where you live; poverty levels are set higher in Hawaii, for instance). If you make less than X you were supposed to qualify for Medicaid under the original law, but then the Supreme Court shot down that part of it and a bunch of red states decided not to do the Medicaid part. And of course, if you make more than Y then you don't get any subsidy.

So in that respect it's relatively simple and I don't know why your state asked questions like "how much did you make in April," since that doesn't seem like it would tell them what they need to know--namely, how much you'll earn in 2014 (which no one will know until 12/31/14).

Then there's a second problem with this, which is that I really do not know what my income is going to be a year in advance.  I could, for instance, possibly make over $10K every month for the rest of the year, if my clients have work they want done, and I wanted to put in 40+ hours/week.  OTOH, if business is slow, or if I feel like spending a lot of time hiking &c, I could make next to nothing for some or all months.

There are a couple of ways to handle that:
- If you want to qualify for Obamacare as opposed to going on Medicaid, figure out what the bare minimum you need to earn for that is and make sure you earn it (I doubt this would be a challenge for you personally).

- Assuming you qualify for Obamacare and want to ensure you qualify for a subsidy, take note of what 400% of poverty level is in your state for your family size, and don't exceed that. You can pace yourself (i.e. try and earn just under 1/12th of that number each month or just under 1/4 of that number each quarter--or if your business is more seasonal, try and pace yourself with respect to its seasonal pattern), or alternatively, just work until you're almost at 400% and quit working before you exceed it. If that means you hang a "gone fishing" sign on your door in September and spend the rest of the year hiking, so be it, if your line of business will support such a long period of not working (i.e. if you can do that and still have work to come back to in January).

- Regardless of which approach you take (pacing yourself or just working until you hit your ceiling and taking the rest of the year off), you have three options w/r/t your subsidy:

(1) take it all up front, so if your insurance is $500/mo and your max subsidy would be $200/mo (based on earning just under 400% of poverty level--or whatever number you chose in your estimate of this year's income; might be 300%, whatever), then you just pay $300/mo all year and deal with the consequences, if any, at tax time (i.e. if you ended up earning more than you had estimated on your Obamacare application, then you will have to pay back part or even all of your subsidy on tax day). Or...

(2) take $0 of it up front. Just pay your full $500/mo insurance cost, then do the math when you're figuring your taxes and if you qualified for a subsidy, you will get it all in one big chunk as a tax refund. Or...

(3) take part of it up front. Say your max subsidy, based on what you estimate your income will be, is $200/mo. You could just take $100/mo to be conservative. Then when you file your taxes next year, perhaps your earnings turn out to be such that you only really qualified for a $150/mo subsidy--since you only took $100/mo, you will get back $50x12=$600 as a tax refund. And if you really only should have qualified for, say, a $90/mo subsidy, then you will have to pay an extra $10x12=$120 with your taxes.

So it's not complicated, especially compared to the other financial calculations we make here on this board...

[Malaysia41]

I am keying into posts like this with keen interest. This is where the rubber meets the road: how is income verified? and what really counts as "income?"  Keep us posted, and thanks for blazing the trail.

After I retire I'm taking COBRA for 18 months to

1) let more ACA rules and regs shake out
2) get a low income to show for ACA subsidies

Of course that Cobra coverage will cost us $16,000 annually, but that's fine, we've got the money socked away.

me too - I just assumed they based premiums on previous year's tax filings so planned on COBRA 18 months and then ACA.  Really honor system?  I may scrap the COBRA plan come January 1. (AGI in 2014 will be too high so may as well continue the plan I know with COBRA).

Not exactly the honor system.  I applied through the exchange when I quit my job for coverage starting 2/1.  I indicated that my job was a thing of the past and this year's income would be a lot less than last year.  I picked a number and they asked for substantiation.  It turned out that a 1099 (interest & dividends), my sole paystub for the year, and a ledger for DW's business (not tax return since it was not done yet) were sufficient to substantiate the income number.  If you are wrong and way underestimate your income, there is a mechanism to true up come tax filing time and nobody has said this but I strongly suspect that you will be given extra scrutiny when you apply for the next year.

As I mentioned above, all of this is only relevant for purposes of getting the subsidies "advanced" to you during the year.  If you are eligible for the subsidies but didn't get them during the year, you will get them in your tax refund (and if you are not eligible but did get them during the year, you will have to pay them back when you file your taxes).  This matters as far as cash flow management and avoiding giving the government an interest free loan, but you will end up getting the correct subsidy amount at tax time.  It's analogous to setting withholding amounts on your paycheck.

That makes sense - it all comes out in the wash at tax time.  I very rarely give the government free loans but if on our transition year that turns out to be the case, meh, no biggie. 

[projekt]

The Congressional Budget Office and the Joint Committee on Taxation currently estimate that the ACA’s insurance provisions will cost just under 41.1 trillion over 10 years.

Trillion? That seems...extremely high. Don't they mean billion? The entire annual US budget is around 3 trillion.

I think the trillions refer to health care spending as a whole. We are around 3 trillion this year, growth rate 5 to 6 percent. Obviously not all of the spending can be blamed on the ACA alone. The goal is for the total number to be lower in 10 years than it would have been without the law, with an allowance for all of the uninsured that are now insured.

[rusty]

As a broker in NC, I wrote a bunch of coverage thru ACA.  I would strongly suggest you talk to a local broker in your state that represents all the carriers that are in the Marketplace.  There are some rules that vary state to state and carrier to carrier (certain special enrollment periods [sep] come to mind).  Some carriers may recognize an "extra" SEP - like voluntarily dropping individual coverage.  Talking with a broker is worth the time.

Ehealthinsurance.com generally does not have all the carriers in your state listed.  I know they don't in NC.  Many of the Blue's are not listed on ehealth.  You really need to talk with someone who can guide you through this.  Working with a broker doesn't cost you any money.  They are compensated by the carrier.  Just make sure they represent all the carriers and they take you directly through healthcare.gov.  By representing the different carriers, brokers can help you compare carriers beyond the details listed on healthcare.gov.  Here in NC, there are several big "holes" in the coverage that are not easily recognizable on healthcare.gov for the untrained.  Out of network coverage and network size are two that come to mind here in NC.  Some plans have unlimited exposure out of network.  If your bill was $250,000; the plan pays 50% and you pay 50% with no limit as to the max you pay....sounds like fun.

The question of how ACA will impact us will play out in the next few years as changes are made and costs are determined. 

[Daisy]

Great...just when you think you are needlessly suffering through OMY syndrome, topics like these make you want to keep working until the kinks in the ACA are all worked out.

The last thing I want to do in retirement (or at any time, actually), is try to figure out how to play the income tax and health subsidy shell game. You want to limit your income (from Roth conversions) to keep yourself in a low tax bracket, but not limit it too much so that you avoid ACA subsidies and have to pay full-rate.

While I was unemployed a few years ago, I was able to purchase catastrophic care. Is this really not available any more? That sounds nasty.

That's the kind of coverage I would want. For reasons unrelated to this thread, I usually shun "conventional" medical care and go the holistic route (have had much success with a couple of issues) and that stuff hardly ever gets covered by insurance anyways. I don't want to pay for care I don't want. I want it for cases of accidents, etc.

[brewer12345]

Great...just when you think you are needlessly suffering through OMY syndrome, topics like these make you want to keep working until the kinks in the ACA are all worked out.

The last thing I want to do in retirement (or at any time, actually), is try to figure out how to play the income tax and health subsidy shell game. You want to limit your income (from Roth conversions) to keep yourself in a low tax bracket, but not limit it too much so that you avoid ACA subsidies and have to pay full-rate.

While I was unemployed a few years ago, I was able to purchase catastrophic care. Is this really not available any more? That sounds nasty.

That's the kind of coverage I would want. For reasons unrelated to this thread, I usually shun "conventional" medical care and go the holistic route (have had much success with a couple of issues) and that stuff hardly ever gets covered by insurance anyways. I don't want to pay for care I don't want. I want it for cases of accidents, etc.

Playing the game with taxes and the ACA amounts to a hobby for me.  Having paid through the nose as a W-2 slob for so many years, I delight in playing the game as well as I can.  YMMV.

Catastrophic coverage is no longer available, but you also no longer have to worry about medical underwriting, policy exclusions, waiting periods, and (most importantly) rescission.  Those are all huge.  So it is what it is.  If healthcare is the only thing holding you back, I would not let it do so.  If you want to figure out how to maximize your benefits/play the game, post and no doubt forum participants here and at early-retirement.org  can help you figure it out.  You can buy a bronze policy, use an HSA, and pay a relatively skinny amount of premiums and taxes.