Author Topic: Decreasing income to increase benefits  (Read 20727 times)

joonifloofeefloo

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Re: Decreasing income to increase benefits
« Reply #300 on: December 14, 2018, 10:51:22 PM »
We both have the same heart goal.

Absolutely!

Part of this discussion ties in to much of the stuff in the book. In my experience, too many people feel they're "not poor enough" to receive support, that they "should leave it for someone who needs it more", are ashamed to accept it, fear people's judgement if they did. These are common messages, and they leach in through our skin. We're subsequently confused and unsure when people insist to us that we're the exception, we're allowed, they won't judge us, that we're the ones it was meant for... We can't take that in, because we've heard the other message over and over and over from so many sources. We don't know where that arbitrary or imaginary line in other people's minds is, so we go without, and suffer terribly. I'd rather one rich person receive a medical subsidy than nine lower-income people go without because of these common words.

Cassie

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Re: Decreasing income to increase benefits
« Reply #301 on: December 14, 2018, 11:00:36 PM »
You are so right! I rarely change my mind from discussions but you are correct. 

joonifloofeefloo

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Re: Decreasing income to increase benefits
« Reply #302 on: December 14, 2018, 11:12:17 PM »
Oh!!

Cranky

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Re: Decreasing income to increase benefits
« Reply #303 on: December 15, 2018, 06:05:22 AM »
When I was working as part of my benefits package I paid 500/ month for HI.  I do have a problem with both subsidies and Medicaid when you make 95k/year. Yes it is legal. Legal is not necessarily ethical and moral.   Many wealthy people cheat and manipulate the system all the time for their benefit. Thatís how the rich get richer. I think itís wrong.

Fair enough. No use beating a dead horse. I used to be in the same camp as you, but my opinions have changed after a health crisis of my own as well as the continued escalating costs of health insurance. I will never be convinced that it is ok for a self-employed family to pay $1,800/month while 80+% of the population take advantage of large subsidized employee and govt plans often paying a tiny fraction of my unsubsidized costs for the same or better coverage (and I'm talking about employer and employee costs combined, not just the portion that the employee pays).

I am happy that you were able to retire and am sorry that HI takes up over a quarter of your budget. Hope you are enjoying your retirement!

Edited to Add (sorry, just can't help myself :) - Would you feel the same way if I was receiving pension contributions on my behalf but had no access to those funds until retirement and also didn't have access to HI through my employer? Say my gross salary was $45K and my employer was contributing $50K to a pension plan. My AGI would still be $45K, but I would technically be "making" $95K just like my own personal example. I'm just betting/guessing you would feel differently in that scenario, although the future outcome is very similar.

Are employer sponsored plans cheaper overall?  When you add up what we pay and what dh's employer pays - which really is part of his compensation, not a gift, after all - it's more than $1800/month. It's pretty good insurance, though.

SnackDog

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Re: Decreasing income to increase benefits
« Reply #304 on: December 15, 2018, 07:39:21 AM »
I was poor in graduate school and had a pretty low income.  I believe the first year it was $6500 ($541/mo). It never occurred to me to apply for government handouts. I just lived within my means.

I had older friends during that time who had been rich before the S&L scandal wiped them out, helped along by years of profligate spending on the finest things. But, because they were from powerful Texas families going back several generations, they were able to keep up appearances. By this, I mean living in large homes in the most exclusive neighborhoods (think Rolls-Royces) and maintaining exclusive private club memberships.  One friend really had almost no income (and no family help), but literally had champagne, caviar, and a glamorous house (lent to him by a friend) full of rare and exotic furnishings.    A couple times a week he would take me to the country club for a boozy dinner.  I later found out he couldn't pay his dues and his name would get posted in the men's locker room every few months. His solvent friends would get embarrassed and eventually pay the bill.  He was on food stamps! 

I'm in favor of asset-testing for government assistance.  If you hae the ability to turn assets into income but choose not to, no handouts for you.  Several people have said it is difficult but it is actually quite easy and many countries do it. I have done it for years.  Each year when you file your income taxes you declare all assets worldwide (property, bank accounts, business ownership, etc).  If you are caught under-reporting the fines are steep and can include prison time.  This also helps screening for mismatches of assets vs income which can flag corruption or illegal income.

DreamFIRE

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Re: Decreasing income to increase benefits
« Reply #305 on: December 15, 2018, 08:14:16 AM »
Having an asset test for government benefits would discourage saving and would allow the guy who never saved while foolishly spending like a drunken sailor over his career with nothing to show for it access to benefits while the responsible individual who earned the same income while living frugally and saving all he could would be ineligible and have to use his savings/assets to pay for his healthcare while the fool gets a free ride.   With savings rates already being very low, we don't need anything to further discourage people from doing it.

I would rather one guy with massive savings just slip through the cracks occasionally to exploit the system than take those steps to change eligibility requirements for all of the people that truly need and deserve it.

DreamFIRE

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Re: Decreasing income to increase benefits
« Reply #306 on: December 15, 2018, 08:21:40 AM »
Are employer sponsored plans cheaper overall?  When you add up what we pay and what dh's employer pays - which really is part of his compensation, not a gift, after all - it's more than $1800/month. It's pretty good insurance, though.

Kronsey actually mentioned the employer part of it as well.  For just me, it's $600/mo including my employer's contribution to the premium, and I have good insurance with a $100 deductible and low out of pocket (at least in network).  I can't find anything like that on my own.  Also, everyone at my employer gets that same rate for themselves, regardless of age ("plus one" and "family" are extra).

Kronsey

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Re: Decreasing income to increase benefits
« Reply #307 on: December 15, 2018, 08:49:29 AM »
Are employer sponsored plans cheaper overall?  When you add up what we pay and what dh's employer pays - which really is part of his compensation, not a gift, after all - it's more than $1800/month. It's pretty good insurance, though.

Kronsey actually mentioned the employer part of it as well.  For just me, it's $600/mo including my employer's contribution to the premium, and I have good insurance with a $100 deductible and low out of pocket (at least in network).  I can't find anything like that on my own.  Also, everyone at my employer gets that same rate for themselves, regardless of age ("plus one" and "family" are extra).

DreamFIRE's explanation agrees with my expereince. It is not true 100% of the time, but generally the more corporate (and larger) the working environment, the better AND cheaper the health insurance options. It is the worst (or best?) for govt employees. Kinda like our elected officials having access to the TSP with great low cost index funds and mandatory contributions on their behalf while being completely out of touch compared to a good majority of Americans who work at small businesses where the owner was sold an absolute shit 401k plan from his insurance salesman buddy from high school.

Unfortunately Cranky, people in your position are usually worse off than people in mine. You work a job and don't have the same flexibility for benefits compared to a SE person and there isn't a whole lot you can do about it without a complete change in employment.

My argument isn't that my insurances and benefits should be better and cheaper than everyone else's simply because I'm self employed. I'm just asking for a level playing field that actually encourages self employment and entrepreneurship.

Our society is quickly becoming dependent on the mega Corp or govt job. I would argue that isn't good for anyone and takes is farther away from real healthcare reform/solutions as those people stuck in that environment get caught up in the mindset (and propaganda) that says people in my scenario have some moral obligation to get absolutely taken advantage of when trying to complete a simple transaction of purchasing insurance to reduce risks.

I think my example of three people going to buy a Toyota Prius and getting quoted 3 different prices based on their employment status is the best analogy I could give, and unfortunately, is completely accurate in explaining the joke of a health insurance marketplace/system we have today.

Cassie

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Re: Decreasing income to increase benefits
« Reply #308 on: December 15, 2018, 09:04:15 AM »
If many countries can make universal health care work so can we. The politicians donít care because they have great coverage. When I was young if you had a job you had good reasonable insurance attached to it.   I believe access to health care is a right not a privilege.  We do want to encourage people to be self employed if thatís what they want. 

Cranky

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Re: Decreasing income to increase benefits
« Reply #309 on: December 15, 2018, 09:34:19 AM »
Are employer sponsored plans cheaper overall?  When you add up what we pay and what dh's employer pays - which really is part of his compensation, not a gift, after all - it's more than $1800/month. It's pretty good insurance, though.

Kronsey actually mentioned the employer part of it as well.  For just me, it's $600/mo including my employer's contribution to the premium, and I have good insurance with a $100 deductible and low out of pocket (at least in network).  I can't find anything like that on my own.  Also, everyone at my employer gets that same rate for themselves, regardless of age ("plus one" and "family" are extra).

DreamFIRE's explanation agrees with my expereince. It is not true 100% of the time, but generally the more corporate (and larger) the working environment, the better AND cheaper the health insurance options. It is the worst (or best?) for govt employees. Kinda like our elected officials having access to the TSP with great low cost index funds and mandatory contributions on their behalf while being completely out of touch compared to a good majority of Americans who work at small businesses where the owner was sold an absolute shit 401k plan from his insurance salesman buddy from high school.

Unfortunately Cranky, people in your position are usually worse off than people in mine. You work a job and don't have the same flexibility for benefits compared to a SE person and there isn't a whole lot you can do about it without a complete change in employment.

My argument isn't that my insurances and benefits should be better and cheaper than everyone else's simply because I'm self employed. I'm just asking for a level playing field that actually encourages self employment and entrepreneurship.

Our society is quickly becoming dependent on the mega Corp or govt job. I would argue that isn't good for anyone and takes is farther away from real healthcare reform/solutions as those people stuck in that environment get caught up in the mindset (and propaganda) that says people in my scenario have some moral obligation to get absolutely taken advantage of when trying to complete a simple transaction of purchasing insurance to reduce risks.

I think my example of three people going to buy a Toyota Prius and getting quoted 3 different prices based on their employment status is the best analogy I could give, and unfortunately, is completely accurate in explaining the joke of a health insurance marketplace/system we have today.

But it seems like youíre saying that it would be *cheaper* for us to buy health insurance outside of whatís available at work.

I agree that single payer is a more reasonable system and that it would be better to detach health insurance from employment. Iím just not sure that itís going to be radically cheaper.

Kronsey

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Re: Decreasing income to increase benefits
« Reply #310 on: December 15, 2018, 10:14:26 AM »

But it seems like youíre saying that it would be *cheaper* for us to buy health insurance outside of whatís available at work.

I agree that single payer is a more reasonable system and that it would be better to detach health insurance from employment. Iím just not sure that itís going to be radically cheaper.

It would only be cheaper if you could sock away significant portions of income in tax sheltered retirement accounts so you could get your income low enough to qualify for subsidies (APTC and CSR).

Without the subsidies for my situation, I was looking at upwards of $18,000 for premiums, deductibles around $4k for the family ($2k per person), and max out of pocket of $16,000 or so per year.

So someone in my scenario who is netting (in tax terms) around $100k per year who also has ongoing health issues would be looking at spend around $35,000 per year for care. That is mostly with after tax dollars, by the way (the premiums would be a deduction on the tax return, but not the co-pays, deductibles, and max out of pocket as it wouldn't be enough to exceed the standard deduction).

So take $100k of income, subtract around 25% for all taxes (FICA, federal, and state) gets me to $75k of spendable dollars. Subtract another $35k and you are down to $40k, which is amazingly about the same amount of cash flow I have available by socking away most of my money in tax sheltered retirement accounts and showing $45k of net income.

Some are saying "that's unethical to arrange your life that way as those beneifts were meant for the less fortunate!" I would partly agree with them and used to be completely in agreement a few years ago when I was completely healhy and thought of myself as bulletproof.

In my situation now, I would say it is completely unethical to ask someone to pay around half of their after tax income just to receive the needed treatment that allows them to live a normal, functioning life while be a contributing member of society.

I might do a tax projection for my exact scenario just to show close to actual numbers so everyone can see just how screwed up the situation is.

Cassie

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Re: Decreasing income to increase benefits
« Reply #311 on: December 15, 2018, 12:46:25 PM »
If we had Medicare for all it would be much cheaper. The country would direct resources at paying for it versus wasting our money on tax breaks for the very wealthy.

Kronsey

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Re: Decreasing income to increase benefits
« Reply #312 on: December 15, 2018, 01:01:08 PM »
If we had Medicare for all it would be much cheaper. The country would direct resources at paying for it versus wasting our money on tax breaks for the very wealthy.

Don't forget all the unnecessary foreign entanglements we've gotten ourselves into by trying to police the world. US military spending compared to what the rest of the world spends is unfathomable. 

Cache_Stash

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Re: Decreasing income to increase benefits
« Reply #313 on: December 15, 2018, 01:40:41 PM »
Kron, in your example the money is not accessible so yes I would be fine with it because you have no choice. 

Well to give you some more details, if I wasn't self-employed and went to work for an accounting firm in my area that was smaller (think under 20 employees), I probably wouldn't have access to health insurance. I would probably have 401K access, but that would be it. My salary would probably be somewhere around $70K. So if I wanted to save enough for a somewhat early retirement, I would choose to max out the 401K and an IRA as well (probably wouldn't have cash flow for any more savings at this point).

That would get me somewhere around the same taxable income level that I am now and would therefore still qualify me for CSR and APTC under the ACA as well as Medicaid for HI for my kids. Quite frankly, it still feels weird for me to accept those benefits on the Medicaid side, but I literally have 0 other options for my kids. I'm not saving this money to take advantage of the system. I'm saving the money because I don't want to be working til I'm in my sixties. In other words, if healthcare wasn't even in the discussion (single payer for all!) I would still be making the exact same decisions. And I technically don't have access to the money outside of 72T distributions or the ROTH conversion ladder mentioned earlier.

Maybe I'm trying to make sense of it in my own head as well, but it just seems inconsistent that you would pigeon hole my scenario as "immoral" because you view 95K as a lot of money, but wouldn't view others as "immoral" with the same net spendable cash flow that I will have in 2019 simply because they don't have access to their money (which I would argue I don't either).

Actually I have chosen to keep working part time from home at age 64 because our nest egg is not huge and we want to travel, and do other activities that cost money while we can. I bring in another 22k/year. I have lost 3 friends ages 59-67 the last 3 years.   Sorry you are having health issues.

That sounds like a pretty good arrangement assuming the part-time work isn't too taxing. My parents are recently retired and are enjoying in. They are both 66 and are starting to show signs of fatigue/slowing down. Nothing majorly wrong, just making comments like "I can't get up and down the stairs like I used to" and "I just don't have the energy to do as much as in the past". On the other hand, my mom's mother (my grandma) is still going strong at 89. Hard to predict how you are going to age, so I think it is very wise to do some of those bucket list items while you still feel like it. Doing taxes for seniors in the past, people really seemed to grow tired of traveling and on the go stuff somewhere in their early to middle 70's. That isn't a huge sample size, but enough to make me realize I probably won't want to be a world traveler by the time I reach my 70's.

The health issues are actually improving. I had a rough surgery and subsequent diagnosis almost exactly two years ago. Outside of ACA changes, I would have been uninsurable due to pre-existing conditions. Without proper medications for my condition, I probably wouldn't be able to work at all. The current system we have sucks, but I am hopeful we as a nation can come up with some better solutions.

I don't see anyone talking about how the system is set up to encourage people to save for retirement.  That's why you get the benefit , not because you're "gaming" the system, you are doing the right thing for you and everyone else.  The benefits from saving in the form of retirements accounts such as an IRA are setup like that for a reason. 

Cache_Stash

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Re: Decreasing income to increase benefits
« Reply #314 on: December 15, 2018, 01:49:56 PM »
If many countries can make universal health care work so can we. The politicians donít care because they have great coverage. When I was young if you had a job you had good reasonable insurance attached to it.   I believe access to health care is a right not a privilege.  We do want to encourage people to be self employed if thatís what they want.

Is it listed in the Bill of Rights?


Kronsey

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Re: Decreasing income to increase benefits
« Reply #315 on: December 15, 2018, 01:52:19 PM »
I don't see anyone talking about how the system is set up to encourage people to save for retirement.  That's why you get the benefit , not because you're "gaming" the system, you are doing the right thing for you and everyone else.  The benefits from saving in the form of retirements accounts such as an IRA are setup like that for a reason.

Yep, I understand and mostly agree with what you are saying. I don't have much of a mental hang up with the ACA subsidies, but it does weigh on my conscience signing my kids up for Medicaid. I really don't have any other option, though. My state is one that forces you to put your dependents on Medicaid if you make under a certain threshold. So it is either accept the health insurance via Medicaid, or my kids go without insurance.

I do agree it is a net benefit to society for people to be savers as we are way less likely to consume needed resources into the future. Most don't think about that though.