ACA vs Medicaid, eligibility and quality

[moustachebar]

Hello,

Looking at health insurance options for post-FIRE. Have read lots of forum posts but still have some uncertainty. I wonder if anyone has experience they could share - thanks!

At some point we'll be on ACA plans. Children would get kicked over to CHIP. I've read the posts and blog of the experience of @seattlecyclone (thanks for writing that up so clearly!) where their state medicaid folks determined they didn't qualify for ACA and moved the whole family on to Medicaid when all they were trying to do was sign up for CHIP.

1) Does anyone know if PA has any such coordination between the two offices that would lead to the same happening in PA?

2) Any experience with PA CHIP good or bad?

3) The ACA silver plans in our area (W PA) seem as good as/ better than any employer health coverage I've ever had - the networks are the same as for employer plans as far as I can see. I prefer ACA to Medicaid because of fear of the unknown. Does anyone have experience with Medicaid in W PA as far as quality, wait, finding providers?

4) Complicated part... if trying to have an 'income' in the ACA range vs. Medicaid, the key problem appears to be consistency. My potential source of income is 72t from tIRA. Breaking a 72t into monthly draws seems very risky due to potential penalties. I would like to do the 72t once a year, put proceeds in the brokerage account, and then draw from that monthly for consistency (using statements from it to show monthly income to the CHIP folks). I gather that withdrawals from a cash/ money market position in a brokerage account is NOT income so I'd sell some stock or bond fund each month.

Hope this makes sense and thanks for reading.

[yachi]

Posting to follow, but I'll add what I can.

I prefer the flexibility of a Roth ladder to a 72t.  I'd be afraid of messing up something with the 72t a decade from now what would make all withdrawals taxable.  I take if you've found yourself with enough in your IRA but without 5 years of expenses to live on while setting up the Roth conversion ladder.

I've heard good things of CHIP in PA, but some of that is compared to not having health insurance years ago before ACA.

You're right that brokerage withdrawals are NOT income.  Also keep in mind, only the capital gain portion of the stock or bond fund is income.

[boarder42]

this is like the 4th one of these but i'm all ears to learn here. 

Currently viewing ACA/CHIP etc as a tax thats controllable at a cost in my later years of higher RMDs.  I've determined I don't care about how RMDs.   So now i'm weighing the cost savings of just spending margin and converting my roth ladder at lower levels

i really need to see what the actual savings are in both tax and aca costs and anything else that gets lumped in with a super low agi.  Its something probably not talked about enough here but could lowering spending early super protect against SORR

[reeshau]

I gather that withdrawals from a cash/ money market position in a brokerage account is NOT income so I'd sell some stock or bond fund each month.

Just to say--correct.  Now in retirement, I could have a $0 income on any given year, because I have the cash I could live on.  That's good for SORR management, but as you are thinking through, bad for ACA and many tax issues.

I was fortunate enough to have enough taxable savings to manage this up to 59 1/2.  If you haven't looked at Roth conversion, that's a flexible way to approach this problem.  I am doing it, not for this purpose, but to make sure I am managing my RMD's at 72.  It's a great way to disassociate your income from your spending / cash flow.

[boarder42]

so by my calcs i can have a margin borrow ranging from 56k all the way down to 40k depending on what we do -  there is neglible difference once the kids hit CHIP for us to stay on an ACA plan and convert more money trad to roth.  16k of extra borrowing a year is quite significant and may pay to stay on a lower plan and just pay less taxes today.

[secondcor521]

Hello,

Looking at health insurance options for post-FIRE. Have read lots of forum posts but still have some uncertainty. I wonder if anyone has experience they could share - thanks!

At some point we'll be on ACA plans. Children would get kicked over to CHIP. I've read the posts and blog of the experience of @seattlecyclone (thanks for writing that up so clearly!) where their state medicaid folks determined they didn't qualify for ACA and moved the whole family on to Medicaid when all they were trying to do was sign up for CHIP.

1) Does anyone know if PA has any such coordination between the two offices that would lead to the same happening in PA?

2) Any experience with PA CHIP good or bad?

3) The ACA silver plans in our area (W PA) seem as good as/ better than any employer health coverage I've ever had - the networks are the same as for employer plans as far as I can see. I prefer ACA to Medicaid because of fear of the unknown. Does anyone have experience with Medicaid in W PA as far as quality, wait, finding providers?

4) Complicated part... if trying to have an 'income' in the ACA range vs. Medicaid, the key problem appears to be consistency. My potential source of income is 72t from tIRA. Breaking a 72t into monthly draws seems very risky due to potential penalties. I would like to do the 72t once a year, put proceeds in the brokerage account, and then draw from that monthly for consistency (using statements from it to show monthly income to the CHIP folks). I gather that withdrawals from a cash/ money market position in a brokerage account is NOT income so I'd sell some stock or bond fund each month.

Hope this makes sense and thanks for reading.

1) Not sure but I think in most states ACA, CHIP, and Medicaid are handled by the same group of people in the state department of health and welfare (H&W).  It makes sense because all are health insurance programs, all have eligibility rules, and the state generally needs to figure out which program to shunt an applicant to based on their application information.  I'd expect the same is true in PA, so it's quite possible.  FWIW, I've only had one administrative error in my ACA experience, and as far as I can tell it was someone at H&W screwing something up.  So a similar story to @seattlecyclone but in a different state (WA vs ID I believe).

2)  Nope.  I will mention that in my state, CHIP vs non-CHIP was at a breakpoint of 185% of FPL.  So if I wanted/didn't want my kids on CHIP, I'd need to have or estimate having an income above/below that number on my application.

3)  No idea.

4)  Your understanding seems to differ a great deal from mine.  In my state, CHIP is offered to kids in families under 185% (although the website seems to be set to 190%) of FPL for *estimated annual* income.  ACA is offered to families above 138% of FPL for *estimated annual* income.  Medicaid is offered to families below 138% of FPL but for *monthly actual* income.

If you want ACA or CHIP, it's easy enough to just estimate the appropriate percentage of FPL on the application and then have a reasonable plan and explanation for achieving that FPL.

So in your case, if your state has the same style of eligibility guidelines (which I thought it should but I could be wrong), then whether you do 72(t) or not will not affect CHIP or ACA eligibility.  If you want to be on Medicaid, then you'd simply need to prove a few months of low income, which could easily be done by having a 72(t) program with a single annual withdrawal - just live off savings for January through March, apply for and get on Medicaid in April, then do your 72(t) withdrawals annually in June for example.  I think @lhamo does something in this ballpark in order to stay on Medicaid in Washington state with intermittent income.

The H&W people probably won't fall for a transfer from brokerage to cash being interpreted or represented as income.  And representing it as such is fraud anyway, so don't do that.  As someone mentioned above, selling stock or whatever in a taxable account only generates income to the extent that it is capital gains.

And of course, once you start a 72(t), you're stuck with it (and whatever impact it has on your ACA/Medicaid/CHIP situation for you and your family) for the duration.  I was going to use 72(t) myself until I learned about Roth conversion ladders while I was still working.  I generally disliked the tax inflexibility of the 72(t), so arranged things to do the Roth conversion ladder instead.  I'm glad I did, as it has allowed me tax maneuverability as my kids have been in their college years and the tax laws around financial aid and my kids' situations have been changing.

[moustachebar]

I prefer the flexibility of a Roth ladder to a 72t.  I'd be afraid of messing up something with the 72t a decade from now what would make all withdrawals taxable.  I take if you've found yourself with enough in your IRA but without 5 years of expenses to live on while setting up the Roth conversion ladder.

Kind of, yes. Also would prefer not to deplete Roth basis; and thinking of doing a 72t up to the standard deduction and a Roth conversion for any amount desired above that. I share your fear but also don't think the calculations look that hard. Perhaps I am naive about that.

You're right that brokerage withdrawals are NOT income.  Also keep in mind, only the capital gain portion of the stock or bond fund is income.

The H&W people probably won't fall for a transfer from brokerage to cash being interpreted or represented as income.  And representing it as such is fraud anyway, so don't do that.  As someone mentioned above, selling stock or whatever in a taxable account only generates income to the extent that it is capital gains.

Thanks for pointing this out. Since I am thinking of Roth conversions and 72t's as income, I fell into thinking of the brokerage exchanges/ withdrawals the same way. I get it. One was taxed and has basis, totally different. No fraud intended. Thanks again.

In my state, CHIP is offered to kids in families under 185% (although the website seems to be set to 190%) of FPL for *estimated annual* income.  ACA is offered to families above 138% of FPL for *estimated annual* income.  Medicaid is offered to families below 138% of FPL but for *monthly actual* income.

If you want ACA or CHIP, it's easy enough to just estimate the appropriate percentage of FPL on the application and then have a reasonable plan and explanation for achieving that FPL.

So in your case, if your state has the same style of eligibility guidelines (which I thought it should but I could be wrong), then whether you do 72(t) or not will not affect CHIP or ACA eligibility.  If you want to be on Medicaid, then you'd simply need to prove a few months of low income, which could easily be done by having a 72(t) program with a single annual withdrawal - just live off savings for January through March, apply for and get on Medicaid in April, then do your 72(t) withdrawals annually in June for example.

I may just be confused! I would like to stay OFF Medicaid, at least I think so (or, at least until I know if it's functional in this locale). But I cannot do ACA for child because CHIP here is up to 315% FPL. If I provide an estimated annual income around 200% for CHIP and ACA, so far so good. I can attest to an income and make good on it with that annual 72t or with a Roth conversion (thanks all for that suggestion!). My concern is that then someone at H&W asks for an income verification like what happened to @seattlecyclone IF I am understanding that story correctly; then I have nothing to show and get thrown off ACA. If that kind of thing were to come with complications like being ill at the time or having to repay subsidies or something... yikes.

[seattlecyclone]

4)  Your understanding seems to differ a great deal from mine.  In my state, CHIP is offered to kids in families under 185% (although the website seems to be set to 190%) of FPL for *estimated annual* income.  ACA is offered to families above 138% of FPL for *estimated annual* income.  Medicaid is offered to families below 138% of FPL but for *monthly actual* income.

If you want ACA or CHIP, it's easy enough to just estimate the appropriate percentage of FPL on the application and then have a reasonable plan and explanation for achieving that FPL.

I think this will depend a lot on your state's workflow behind the scenes. Our family ended up on Medicaid even though we estimated an annual income well above 138% of the poverty line, because they looked at our income proof documentation and noticed we were actually Medicaid-eligible because we had very little income in recent months. So if their process is "first check if they're eligible for Medicaid, see what else they qualify for if not" then you might end up in Medicaid if all your annual income happens in just one month. If their process is "check what their income estimate makes them eligible for, verify Medicaid eligibility only if their annual estimate is near/below the Medicaid line," then it might make no difference whether your income comes all at once or is spread out.

[jim555]

CHIP is supposed to be good from what I have heard.  Maybe do some research on what Providers take it and what plans are in your area?

[secondcor521]

My concern is that then someone at H&W asks for an income verification like what happened to @seattlecyclone IF I am understanding that story correctly; then I have nothing to show and get thrown off ACA. If that kind of thing were to come with complications like being ill at the time or having to repay subsidies or something... yikes.

It apparently varies by state how these things are handled.  In my state, I'd just say, "Hey, I'm going to do a 72(t) and a Roth conversion and that's going to make my AGI what I told you it was."  FIREfolk are relatively uncommon ACA customers but not completely rare, so they just wave me past after I say that.

Repaying or not the subsidies is between you and the IRS, not between you and H&W.  So I wouldn't worry about it for that reason.  In fact, that's why I don't really fully try to get my H&W people to understand what I'm doing - as long as they get things close enough I'll just true it up at tax time.

Once you get approved to get an ACA plan, they don't kick you off AFAIK.  So your only heartburn will be getting the H&W folks to accept your estimated income.  This is only mildly hard if it's your first year on ACA or if you change your estimate by a lot.  And again, once they accept your income estimate and you sign up, it's generally smooth sailing.

I think this will depend a lot on your state's workflow behind the scenes. Our family ended up on Medicaid even though we estimated an annual income well above 138% of the poverty line, because they looked at our income proof documentation and noticed we were actually Medicaid-eligible because we had very little income in recent months. So if their process is "first check if they're eligible for Medicaid, see what else they qualify for if not" then you might end up in Medicaid if all your annual income happens in just one month. If their process is "check what their income estimate makes them eligible for, verify Medicaid eligibility only if their annual estimate is near/below the Medicaid line," then it might make no difference whether your income comes all at once or is spread out.

Understood, and good points.  My state has two (or maybe three) different application streams for each of ACA, Medicaid, and CHIP.  The ACA process will point out if you're eligible for Medicaid or CHIP, but doesn't shift your application over - that is up to the applicant to decide.  Just a little bit different approach which may avoid the kind of problem you encountered but also creates other pitfalls.

Which is better may depend on how much knowledge and understanding the applicant has of the programs and what they want.  You and I and most here probably know what we're aiming for, so we want to drive the process (well, I do, anyway).  People who are flummoxed with all the various programs and criteria and options may just want to put all their particulars on a single application and have a government person decide what is the best choice.

[moustachebar]

It apparently varies by state how these things are handled.  In my state, I'd just say, "Hey, I'm going to do a 72(t) and a Roth conversion and that's going to make my AGI what I told you it was."  FIREfolk are relatively uncommon ACA customers but not completely rare, so they just wave me past after I say that.

That will be my plan I guess!

Once you get approved to get an ACA plan, they don't kick you off AFAIK.  So your only heartburn will be getting the H&W folks to accept your estimated income.  This is only mildly hard if it's your first year on ACA or if you change your estimate by a lot.  And again, once they accept your income estimate and you sign up, it's generally smooth sailing.

Thanks, it's good to hear it went smoothly.

I think this will depend a lot on your state's workflow behind the scenes. Our family ended up on Medicaid even though we estimated an annual income well above 138% of the poverty line, because they looked at our income proof documentation and noticed we were actually Medicaid-eligible because we had very little income in recent months. So if their process is "first check if they're eligible for Medicaid, see what else they qualify for if not" then you might end up in Medicaid if all your annual income happens in just one month. If their process is "check what their income estimate makes them eligible for, verify Medicaid eligibility only if their annual estimate is near/below the Medicaid line," then it might make no difference whether your income comes all at once or is spread out.

Got it, thank you. So it may not happen and without having a similar story to yours in PA available, there's really no way to know.

Do you think that when you were told to send in your two months' proof of income, if you had called to offer some alternative proof of income (not sure what that would be - another attestation?) that they might have taken it instead? In other words, any way to be ready in case their internal process does trip us up?

CHIP is supposed to be good from what I have heard.  Maybe do some research on what Providers take it and what plans are in your area?

Thank you. CHIP we hear good things about; maybe because in PA it's available up to 315% FPL it seems to be widely used and accepted... it's probably at least as good as employer plans have been.

Medicaid I have no insight into, except for posts by others, in which in some regions it sounds very difficult to use. In others it sounds easy and common. I am aiming for ACA not Medicaid, and just trying to find out more about Medicaid IN CASE what happened to @seattlecyclone happens to us.

Perhaps it might be fine to end up there, but just can't tell.

It's just so interesting that the ACA and CHIP application is based upon annual, and verification can unintentionally rely upon monthly, and you can't tell when. And that I'll attest to income in good faith in accordance with the law, but that the H&W folks can decide/ err that my good faith effort is wrong, and potentially shift me to another program... which could be better/ worse/ less costly/ who knows.

[moustachebar]

Currently viewing ACA/CHIP etc as a tax thats controllable at a cost in my later years of higher RMDs.  I've determined I don't care about how RMDs.   So now i'm weighing the cost savings of just spending margin and converting my roth ladder at lower levels

i really need to see what the actual savings are in both tax and aca costs and anything else that gets lumped in with a super low agi.  Its something probably not talked about enough here but could lowering spending early super protect against SORR

so by my calcs i can have a margin borrow ranging from 56k all the way down to 40k depending on what we do -  there is neglible difference once the kids hit CHIP for us to stay on an ACA plan and convert more money trad to roth.  16k of extra borrowing a year is quite significant and may pay to stay on a lower plan and just pay less taxes today.

Is your idea to margin borrow against your taxable account for current spending to keep income lower and do a bigger Roth conversion, and then pay it back with gains and converted money/ basis?

In looking at Vanguard's margin accounts the interest rate is high and it's not clear to me if I can only borrow to trade or for cash. I gather that folks like IB but they freak me out a little.

[boarder42]

Currently viewing ACA/CHIP etc as a tax thats controllable at a cost in my later years of higher RMDs.  I've determined I don't care about how RMDs.   So now i'm weighing the cost savings of just spending margin and converting my roth ladder at lower levels

i really need to see what the actual savings are in both tax and aca costs and anything else that gets lumped in with a super low agi.  Its something probably not talked about enough here but could lowering spending early super protect against SORR

so by my calcs i can have a margin borrow ranging from 56k all the way down to 40k depending on what we do -  there is neglible difference once the kids hit CHIP for us to stay on an ACA plan and convert more money trad to roth.  16k of extra borrowing a year is quite significant and may pay to stay on a lower plan and just pay less taxes today.

Is your idea to margin borrow against your taxable account for current spending to keep income lower and do a bigger Roth conversion, and then pay it back with gains and converted money/ basis?

In looking at Vanguard's margin accounts the interest rate is high and it's not clear to me if I can only borrow to trade or for cash. I gather that folks like IB but they freak me out a little.

current plans are to take out a LOC against my taxable accounts at Etrade at 1% over SOFR.  and let all investments continue to grow.  If i get a margin call i'll use my Roth contributions to buy more shares in my taxable account.  and i'll convert whatever makes the most sense from trad to roth.  I dont actually have any formal plans to ever pay down the debt i'm accumulating.

[seattlecyclone]

I think this will depend a lot on your state's workflow behind the scenes. Our family ended up on Medicaid even though we estimated an annual income well above 138% of the poverty line, because they looked at our income proof documentation and noticed we were actually Medicaid-eligible because we had very little income in recent months. So if their process is "first check if they're eligible for Medicaid, see what else they qualify for if not" then you might end up in Medicaid if all your annual income happens in just one month. If their process is "check what their income estimate makes them eligible for, verify Medicaid eligibility only if their annual estimate is near/below the Medicaid line," then it might make no difference whether your income comes all at once or is spread out.

Got it, thank you. So it may not happen and without having a similar story to yours in PA available, there's really no way to know.

Do you think that when you were told to send in your two months' proof of income, if you had called to offer some alternative proof of income (not sure what that would be - another attestation?) that they might have taken it instead? In other words, any way to be ready in case their internal process does trip us up?

They were pretty explicit about asking me to send in proof of any income we had received in the past few months. That income was below the 138% line for every requested month. Not sure how I could have retrospectively manufactured a higher number without lying somehow. They received that information and summarily cancelled the Marketplace plan we had signed up for, putting us on Medicaid instead. When I called in to confirm that was actually the right thing to do, I explained that we had a pretty big deferred compensation payout coming in a few months that would put us over the Medicaid line for the year. The representative stated that a) they can't consider future expected income in making Medicaid determinations, and b) one-month income swings basically don't count. It's all about what your baseline income actually was in the period immediately prior to making their determination.

Again, my advice to anyone who wishes not to be placed on Medicaid is to establish a recurring pattern of monthly income of at least 139% of the poverty line. You can be significantly higher some months, but if you go under for any month considered for a health care income check you could experience undesired results.

As to why they asked for our income in the first place, I think it was mostly about the kids on the CHIP coverage. They seemed happy enough to accept our initial estimate and sell a Marketplace plan to my wife and me. The follow-up request for more documentation was addressed specifically for the kids' coverage.

[jim555]

Again, my advice to anyone who wishes not to be placed on Medicaid is to establish a recurring pattern of monthly income of at least 139% of the poverty line. You can be significantly higher some months, but if you go under for any month considered for a health care income check you could experience undesired results.

Doing a monthly Roth conversion to $1 over the line would work.  In NY you get on it for a full year, even if your income rises.

[boarder42]

I think this will depend a lot on your state's workflow behind the scenes. Our family ended up on Medicaid even though we estimated an annual income well above 138% of the poverty line, because they looked at our income proof documentation and noticed we were actually Medicaid-eligible because we had very little income in recent months. So if their process is "first check if they're eligible for Medicaid, see what else they qualify for if not" then you might end up in Medicaid if all your annual income happens in just one month. If their process is "check what their income estimate makes them eligible for, verify Medicaid eligibility only if their annual estimate is near/below the Medicaid line," then it might make no difference whether your income comes all at once or is spread out.

Got it, thank you. So it may not happen and without having a similar story to yours in PA available, there's really no way to know.

Do you think that when you were told to send in your two months' proof of income, if you had called to offer some alternative proof of income (not sure what that would be - another attestation?) that they might have taken it instead? In other words, any way to be ready in case their internal process does trip us up?

They were pretty explicit about asking me to send in proof of any income we had received in the past few months. That income was below the 138% line for every requested month. Not sure how I could have retrospectively manufactured a higher number without lying somehow. They received that information and summarily cancelled the Marketplace plan we had signed up for, putting us on Medicaid instead. When I called in to confirm that was actually the right thing to do, I explained that we had a pretty big deferred compensation payout coming in a few months that would put us over the Medicaid line for the year. The representative stated that a) they can't consider future expected income in making Medicaid determinations, and b) one-month income swings basically don't count. It's all about what your baseline income actually was in the period immediately prior to making their determination.

Again, my advice to anyone who wishes not to be placed on Medicaid is to establish a recurring pattern of monthly income of at least 139% of the poverty line. You can be significantly higher some months, but if you go under for any month considered for a health care income check you could experience undesired results.

As to why they asked for our income in the first place, I think it was mostly about the kids on the CHIP coverage. They seemed happy enough to accept our initial estimate and sell a Marketplace plan to my wife and me. The follow-up request for more documentation was addressed specifically for the kids' coverage.

so is this again a major loophole in the healthcare system. 

1. why would you not want to be on medicaid with the kids on CHIP
2. If my plan is to convert money every december from trad to roth or every january or whatever and i realistically have no regular monthly income other than my conversions why wouldnt i do this intentionally to be on medicaid.

[secondcor521]

so is this again a major loophole in the healthcare system. 

No, it's a bug in the government health insurance systems.

1. why would you not want to be on medicaid with the kids on CHIP
2. If my plan is to convert money every december from trad to roth or every january or whatever and i realistically have no regular monthly income other than my conversions why wouldnt i do this intentionally to be on medicaid.

1.  Some people think that private health insurance is better than Medicaid/CHIP and is worth paying the additional cost.
2.  No reason, other than #1.

I'm considering a similar thing myself in about two years.  The one glitch I don't know how to address is if I typically do my Roth conversions in December and wanted to start on Medicaid the immediately following January, I might have to wait about two months or so to establish January/February with income below the Medicaid line.  Anyone know how to avoid the approximately two month waiting period there?  @seattlecyclone?  @lhamo?

[boarder42]

so is this again a major loophole in the healthcare system. 

No, it's a bug in the government health insurance systems.

1. why would you not want to be on medicaid with the kids on CHIP
2. If my plan is to convert money every december from trad to roth or every january or whatever and i realistically have no regular monthly income other than my conversions why wouldnt i do this intentionally to be on medicaid.

1.  Some people think that private health insurance is better than Medicaid/CHIP and is worth paying the additional cost.
2.  No reason, other than #1.

I'm considering a similar thing myself in about two years.  The one glitch I don't know how to address is if I typically do my Roth conversions in December and wanted to start on Medicaid the immediately following January, I might have to wait about two months or so to establish January/February with income below the Medicaid line.  Anyone know how to avoid the approximately two month waiting period there?  @seattlecyclone?  @lhamo?

2 months on the ACA then back to medicaid?

[jim555]

I've been on Medicaid for 7 years.  It is the best coverage period.  No complaints.

[boarder42]

maybe i'll just call my state and talk to them to understand how this works.

[seattlecyclone]

so is this again a major loophole in the healthcare system. 

No, it's a bug in the government health insurance systems.

1. why would you not want to be on medicaid with the kids on CHIP
2. If my plan is to convert money every december from trad to roth or every january or whatever and i realistically have no regular monthly income other than my conversions why wouldnt i do this intentionally to be on medicaid.

1.  Some people think that private health insurance is better than Medicaid/CHIP and is worth paying the additional cost.
2.  No reason, other than #1.

I'm considering a similar thing myself in about two years.  The one glitch I don't know how to address is if I typically do my Roth conversions in December and wanted to start on Medicaid the immediately following January, I might have to wait about two months or so to establish January/February with income below the Medicaid line.  Anyone know how to avoid the approximately two month waiting period there?  @seattlecyclone?  @lhamo?

2 months on the ACA then back to medicaid?

Or you could...gasp...do a Roth conversion in October?

[secondcor521]

2 months on the ACA then back to medicaid?

Or you could...gasp...do a Roth conversion in October?

Both good ideas, thanks.  Wasn't sure if I was missing anything.

[SweetTPi]

moustachebar,

I went on ACA in PA earlier this year after quitting my job & moving here.  Can't help w/ CHIP or W. PA questions, but can share what I did to prove income eligibility.  In my situation, I had a relatively well paying job for the first 3 months of the year, and then nothing but interest/dividends to show.  (I plan to do some IRA conversions this month to bring up my income for the year to an eligible level, but definitely would not meet a monthly standard).  I sent documentation of my former job & misc income, but was told it wasn't enough to verify the number I had entered into the system.  Finally, with some back & forth, was told to make a "Self Attestation" letter indicating what I projected my annual income to be, sign, & scan it into the system as proof.  I will have to do the same thing for 2022 b/c I will not yet have filed 2021 taxes that will act as proof.  I didn't have to break this down into anything particularly specific (handwaving at future conversions and potential capital gains sufficed, without numbers), and definitely didn't have to show it on a monthly basis.

Pennie, for all of the annoyances of the website, does have a questions portal that seems to be well-staffed.  When I was working all this proof of eligibility nonsense out, they usually got back to me the next working day.  You will also get physical mail versions of the responses, so be prepared to get lots of paper.

[nalor511]

So your investments' dividends not throw a monkey wrench into the equation?

[moustachebar]

They were pretty explicit about asking me to send in proof of any income we had received in the past few months. That income was below the 138% line for every requested month...

Again, my advice to anyone who wishes not to be placed on Medicaid is to establish a recurring pattern of monthly income of at least 139% of the poverty line. You can be significantly higher some months, but if you go under for any month considered for a health care income check you could experience undesired results.

As to why they asked for our income in the first place, I think it was mostly about the kids on the CHIP coverage. They seemed happy enough to accept our initial estimate and sell a Marketplace plan to my wife and me. The follow-up request for more documentation was addressed specifically for the kids' coverage.

This will be exactly our scenario so it could well happen to us. The deferred lump sum too. Hard to integrate.

Somehow I didn't think about doing 139%, just thought about doing equal parts of the total anticipated income. Thank you for pointing this out again.

1. why would you not want to be on medicaid with the kids on CHIP
2. If my plan is to convert money every december from trad to roth or every january or whatever and i realistically have no regular monthly income other than my conversions why wouldnt i do this intentionally to be on medicaid.

1. Nothing against it AFAIK. But not sure it's going to be decent coverage where we are. Also, just wasn't the intention. I figured the ACA would be what we did, and it's a known.
2. That is kind of what I am amazed by, is that if they are going to kick you over to it anyway, this actually probably costs less and lets you do bigger conversions as repeated 'one-offs'. But it is not in good faith and from a casual look appears to violate the same provision of ACA that requires you to estimate annual income in good faith for ACA else be committing fraud. A bug to be sure though.

I've been on Medicaid for 7 years.  It is the best coverage period.  No complaints.

Good to hear. Willing to share any background HCOL/ LCOL, big or middle metro/ small metro/ rural, lots of healthcare competition or not, red/ blue/ purple state? Understand if not. Also thanks for the info re: $1 over working. It's not like employer coverage is great so I am not surprised Medicare is better, but also see people saying it's terrible where they are.

Finally, with some back & forth, was told to make a "Self Attestation" letter indicating what I projected my annual income to be, sign, & scan it into the system as proof.  I will have to do the same thing for 2022 b/c I will not yet have filed 2021 taxes that will act as proof.  I didn't have to break this down into anything particularly specific...

Pennie, for all of the annoyances of the website, does have a questions portal that seems to be well-staffed.  When I was working all this proof of eligibility nonsense out, they usually got back to me the next working day.  You will also get physical mail versions of the responses, so be prepared to get lots of paper.

Thanks for sharing your story and that the portal might be helpful - perhaps this is this form? https://agency.pennie.com/wp-content/uploads/Self-Attestation-Form-1-4.pdf Glad to keep the USPS in business I guess?

So your investments' dividends not throw a monkey wrench into the equation?

Not for me, no.... sadly :) Not much in dividends. I do worry a little about other unexpected lumps but I like @seattlecyclone 's 139% or @jim555 's $1 over ideas for that.

[SweetTPi]

Finally, with some back & forth, was told to make a "Self Attestation" letter indicating what I projected my annual income to be, sign, & scan it into the system as proof.  I will have to do the same thing for 2022 b/c I will not yet have filed 2021 taxes that will act as proof.  I didn't have to break this down into anything particularly specific...

Pennie, for all of the annoyances of the website, does have a questions portal that seems to be well-staffed.  When I was working all this proof of eligibility nonsense out, they usually got back to me the next working day.  You will also get physical mail versions of the responses, so be prepared to get lots of paper.

Thanks for sharing your story and that the portal might be helpful - perhaps this is this form? https://agency.pennie.com/wp-content/uploads/Self-Attestation-Form-1-4.pdf Glad to keep the USPS in business I guess?

Bwahahaha!  No, I never did find that form or have it sent to me.  I just googled what one was then wrote my own!  That would have made my life easier- maybe I should temper my endorsement of the help system...  But thanks for finding it, and making my 2022 attestation simpler!  Now just to decide how much income I want to have next year.

An aside:  It's interesting hearing about how some people have been asked for the monthly income documentation that resulted in being switched from ACA to Medicaid, but I think for now I'm not going to sweat it for my case.  I don't have kids on CHIP for which monthly income is an eligibility factor and possibly a trigger for an income check.  I think that as long as my tax filing matches up I'll be fine, and I'm willing to risk it until proven otherwise.  If it does happen, I'll at least have some strategies from you all to tackle it, so thanks!

[jim555]

I've been on Medicaid for 7 years.  It is the best coverage period.  No complaints.

Good to hear. Willing to share any background HCOL/ LCOL, big or middle metro/ small metro/ rural, lots of healthcare competition or not, red/ blue/ purple state? Understand if not. Also thanks for the info re: $1 over working. It's not like employer coverage is great so I am not surprised Medicare is better, but also see people saying it's terrible where they are.

Lots of doctors in my county, Nassau County, NY, especially the North Shore area.  NY is a good state for health coverage.

These are the plan in my county...

Affinity by Molina Healthcare
www.molinahealthcare.com

Empire BlueCross BlueShield Health Plus
www.empireblue.com/nymedicaid

Fidelis Care
www.fideliscare.org

Health First PHSP
www.healthfirstny.org

Health Insurance Plan of Greater New York (H.I.P)
www.emblemhealth.com

UnitedHealthcare Community plan
www.uhccommunityplan.com

[boarder42]

Yep i looked up our medicaid plans and they are great.  now to figure out if its worth it to game this.

[moustachebar]

Bwahahaha!  No, I never did find that form or have it sent to me.  I just googled what one was then wrote my own!  That would have made my life easier- maybe I should temper my endorsement of the help system...  But thanks for finding it, and making my 2022 attestation simpler! 

Funny. I saw something about attestation so I googled "Pennie attestation" and that was it. Glad it can help. Your path seems low risk to me since no CHIP.

Lots of doctors in my county, Nassau County, NY, especially the North Shore area.  NY is a good state for health coverage.

Thank you! Very helpful, since I didn't know the plan info was online or even that Medicaid is handled through insurance plans until you made your list. I thought it was direct involvement with a state agency at every turn.

May I ask, what makes you say that about NY? I saw someone else say that NH was a 'bad' state for healthcare. Wondering what drives these judgments - bad benefits? good benefits but not many doctors? etc. When I go to the Medicaid website NY, PA, NH, WA all appear to have similar 'quality' ratings. I was able to find most doctors in most specialties on most plans in my locality, which I didn't expect. I may be deluding myself, but the plans appear to cover most everything.

All leading me to be somewhat more comfortable with our original plan of CHIP + ACA, even if they shunt us to Medicaid. I do also seem to see that Medicaid has a premium, and don't know how to determine that.

I feel quite uncomfortable with the bug that if we applied for Medicaid instead of ACA, and determined we wanted to do a lump Roth conversion, we'd come out better off. Not going to add to the debate about ethical limits of optimization here. But I didn't expect this.

Thank you everyone for the help getting here.

One last wrinkle: assets. I see references to asset-testing in some states including PA, but in PA: "Resource limits do not apply to persons eligible for - Modified Adjusted Gross Income (MAGI) MA (Medical Assistance)". So I am not sure who it applies to, really.

[jim555]

Lots of doctors in my county, Nassau County, NY, especially the North Shore area.  NY is a good state for health coverage.

Thank you! Very helpful, since I didn't know the plan info was online or even that Medicaid is handled through insurance plans until you made your list. I thought it was direct involvement with a state agency at every turn.

May I ask, what makes you say that about NY? I saw someone else say that NH was a 'bad' state for healthcare. Wondering what drives these judgments - bad benefits? good benefits but not many doctors? etc. When I go to the Medicaid website NY, PA, NH, WA all appear to have similar 'quality' ratings. I was able to find most doctors in most specialties on most plans in my locality, which I didn't expect. I may be deluding myself, but the plans appear to cover most everything.

All leading me to be somewhat more comfortable with our original plan of CHIP + ACA, even if they shunt us to Medicaid. I do also seem to see that Medicaid has a premium, and don't know how to determine that.

I feel quite uncomfortable with the bug that if we applied for Medicaid instead of ACA, and determined we wanted to do a lump Roth conversion, we'd come out better off. Not going to add to the debate about ethical limits of optimization here. But I didn't expect this.

Thank you everyone for the help getting here.

One last wrinkle: assets. I see references to asset-testing in some states including PA, but in PA: "Resource limits do not apply to persons eligible for - Modified Adjusted Gross Income (MAGI) MA (Medical Assistance)". So I am not sure who it applies to, really.

Medicaid is a state run program so the bluer the state means more care is put into it generally.  12 red states refused the Medicaid expansion outright so in those states it isn't an option at all.  MAGI means able bodied childless adults 18-64, this is the expansion group created by the ACA. There is no premium for Medicaid.  Each state uses a different methodology concerning lumpy income.

https://info.nystateofhealth.ny.gov/sites/default/files/Medicaid%20At%20A%20Glance%20Card%20-%20English_1.pdf

[moustachebar]

current plans are to take out a LOC against my taxable accounts at Etrade at 1% over SOFR.  and let all investments continue to grow.  If i get a margin call i'll use my Roth contributions to buy more shares in my taxable account.  and i'll convert whatever makes the most sense from trad to roth.  I dont actually have any formal plans to ever pay down the debt i'm accumulating.

Wow.

Is this part of a Roth ladder? Is there any point in the future you think you'd need or want to put more into that account either to have more to borrow against and spend, or to pay it down?

[boarder42]

current plans are to take out a LOC against my taxable accounts at Etrade at 1% over SOFR.  and let all investments continue to grow.  If i get a margin call i'll use my Roth contributions to buy more shares in my taxable account.  and i'll convert whatever makes the most sense from trad to roth.  I dont actually have any formal plans to ever pay down the debt i'm accumulating.

Wow.

Is this part of a Roth ladder? Is there any point in the future you think you'd need or want to put more into that account either to have more to borrow against and spend, or to pay it down?

most of the time adding to the taxable account isnt actually necessary.  There are larger risks associated with this as your SWR gets to 4% of your total stash or higher using margin or loans against stock to compensate.  But currently i doubt we will need to do much of anything in this space as we also do have other cash flows that were recently created.  Should be a fun experiment either way.

[moustachebar]

Medicaid is a state run program so the bluer the state means more care is put into it generally.

One of the ways PA is bluer than it seems sometimes I guess. It really is like a cross between NY and OH in so many ways.

MAGI means able bodied childless adults 18-64, this is the expansion group created by the ACA.

Thanks for this too! I found a list of non-MAGI Medicaid folks for PA. 'Childless' I gather because the children go on CHIP.
https://www.dhs.pa.gov/Services/Assistance/Pages/ACA.aspx

Off topic slightly, but I find myself wondering whether someone on ACA getting PTCs and CSRs ends up with more paid out to insurers and practitioners than someone on Medicaid.

[moustachebar]

@boarder42 I haven't heard much about this kind of strategy. Really interesting. Hope it works well for you!

[seattlecyclone]

Thank you! Very helpful, since I didn't know the plan info was online or even that Medicaid is handled through insurance plans until you made your list. I thought it was direct involvement with a state agency at every turn.

Here in Washington they have five different insurance companies you can choose from to administer your coverage. They have different provider networks but the underlying parameters of the plan (i.e. everything's free) are the same for them all. From an end user perspective there seems to be no difference between Medicaid and CHIP here. It's all branded as "Apple Health," all managed by the same set of insurance companies, and the only difference I see is the different income limits for kids vs. adults. This is something that could of course vary from state to state.

[jim555]

Thanks for this too! I found a list of non-MAGI Medicaid folks for PA. 'Childless' I gather because the children go on CHIP.
https://www.dhs.pa.gov/Services/Assistance/Pages/ACA.aspx

Childless is because parents can qualify for Medicaid in some instances.  For example in Texas (who refused the expansion) a parent can qualify if income is below $103 a month. 

[boarder42]

Thanks for this too! I found a list of non-MAGI Medicaid folks for PA. 'Childless' I gather because the children go on CHIP.
https://www.dhs.pa.gov/Services/Assistance/Pages/ACA.aspx

Childless is because parents can qualify for Medicaid in some instances.  For example in Texas (who refused the expansion) a parent can qualify if income is below $103 a month.

its absurd states are doing this MO had to put it on our ballot and write it into the constitution.  Then we had to sue our elected representatives to actually fund a part of the constitution. I feel like if there was a national vote for a federal govt option for health insurance the same would happen but we dont operate that way nationally. 

[moustachebar]

Here in Washington they have five different insurance companies you can choose from to administer your coverage. They have different provider networks but the underlying parameters of the plan (i.e. everything's free) are the same for them all. From an end user perspective there seems to be no difference between Medicaid and CHIP here. It's all branded as "Apple Health," all managed by the same set of insurance companies, and the only difference I see is the different income limits for kids vs. adults. This is something that could of course vary from state to state.

Got it. In PA it appears to be called HealthChoices. The insurance companies vary a little from region to region. But the rest appears to be as you are describing.

I was surprised to see the copays. $3 a day for hospital stay!?

Childless is because parents can qualify for Medicaid in some instances.  For example in Texas (who refused the expansion) a parent can qualify if income is below $103 a month. 

I see. Thank you.

[SweetTPi]

One last wrinkle: assets. I see references to asset-testing in some states including PA, but in PA: "Resource limits do not apply to persons eligible for - Modified Adjusted Gross Income (MAGI) MA (Medical Assistance)". So I am not sure who it applies to, really.

From what I could wrangle out for the website late last night (so... no guarantees I got it correct), the asset tests for Medicaid are for those also eligible for other regular health insurance coverage like Medicare.  For example, (I assume) those asset limits are used to determine when someone is eligible for Medicaid to step in and cover nursing home bills.  If you're eligible for regular Medicaid based on MAGI, then it is not asset-tested.

Also, there were so so many times I've had to explain PA as a red patch with blue dots at the ends when I lived in other states.  Outsiders think of it as a blue state, but at the state and local level it can really be... not.

[jim555]

Elderly, disabled and blind have asset and income tests in all states.

[moustachebar]

Another fun piece of info/ musing.

I called our exchange and asked how to consider Coronavirus-Related Distributions. Remember these from 2020?

The income from the CRD landed all in 2020. But the taxes were payable (optionally) equally over 2020, 2021, and 2022. The exchange person believes for ACA purposes the income should be counted in the year the taxes are paid upon it. Thus creating a lump sum payout-ish thing for anyone who took a CRD and spread the taxes out. Thus affecting premiums etc.

But since Medicaid tends to want to know monthly income, and that CRD landed ages ago, might the CRD be considered income in the year it was actually received instead?

[secondcor521]

The income from the CRD landed all in 2020. But the taxes were payable (optionally) equally over 2020, 2021, and 2022.

I don't think this is accurate.  CRD income was permitted to be spread/recognized across three years.  It did not all land in 2020 from an income tax perspective, even if the cash flow actually arrived in 2020.

See Form 8915-E, especially lines 9, 11, 17, and 19.

Since ACA is based (eventually) on AGI, if a person elected to take a CRD and spread it over three years, then the ACA effects should also be spread over those three years since the CRD would be added 1/3 at a time to AGI in 2020, 2021, and 2022.

I've no idea how Medicaid would treat a CRD.  Probably not that many people in that set intersection.

[moustachebar]

I don't think this is accurate.  CRD income was permitted to be spread/recognized across three years.  It did not all land in 2020 from an income tax perspective, even if the cash flow actually arrived in 2020.

See Form 8915-E, especially lines 9, 11, 17, and 19.

Since ACA is based (eventually) on AGI, if a person elected to take a CRD and spread it over three years, then the ACA effects should also be spread over those three years since the CRD would be added 1/3 at a time to AGI in 2020, 2021, and 2022.

Super helpful, thank you, and consistent with how the representative was suggesting it be treated.

I've no idea how Medicaid would treat a CRD.  Probably not that many people in that set intersection.

You must be right, because there seems to be no info on it. I would have guessed that with the effects of the pandemic, some people would have taken distributions having lost employment, and would then have landed on Medicaid. But I guess not.

Perhaps it gets treated as a lump sum that lands, pick a day, and it is like an inheritance or other windfall - might not affect eligibility since it is not recurring.