Author Topic: Health Insurance Confusion! We qualify for Medicaid!?!?  (Read 3941 times)

James1

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Health Insurance Confusion! We qualify for Medicaid!?!?
« on: April 28, 2017, 03:23:00 PM »
We have been living overseas and will be moving back to the states this summer. We are taking the long way home and will be travelling through the national parks for 2 months and technically (actually/legally) unemployed, even though it is more like a short sebatical.

We need health insurance for these 2 months and I tried to apply for a plan through my state's exchange. Since we will be unemployed for those months, they tell me all 4 of us qualify for Medicaid! Medicaid is apparently based on monthly income and there will be no penalty or fees for our months of unemployment, even though our yearly income would make us ineligible (at least the adults, the kids apparently would qualify anyway which seems crazy!).

Does this sound accurate!? Is there anything about medicaid I should be aware of? Am I going to regret this when tax time comes around?

The other option would be to pay upfront for a non-subsidised plan and get any subsidy at tax time. But since the kids would apparently be eligible for Medicaid anyway, they would not be eligible for a subsidy and I'm not sure how that will work. The worst part is that the kids qualify because we will be maxing out retirement accounts and taking a 2 month sebatical. I'm feeling pretty guilty, but not sure what else to do!

jim555

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #1 on: April 28, 2017, 05:15:57 PM »
Enjoy it while it lasts.  It is monthly based and no worries at tax time.  I dropped into it mid year when my UI ran out.  My yearly income was over the Medicaid limit but it doesn't matter since it is monthly based. 

lhamo

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #2 on: April 28, 2017, 07:49:34 PM »
Yep, that's how it works.   It is pretty crazy.   I tried to switch to an exchange plan a couple of months ago, but was told that one-time infusions of cash (capital gains in our case) don't count.  So I'm waiting until we have the regular income coming in to switch over. 

If you weren't traveling it would be a good time to get full physicals, vision and dental checks for everybody.   Probably more bother than it is worth with travel plans, though.   Still, at least you'll be covered in case anything comes up.

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #3 on: April 28, 2017, 08:35:23 PM »
Wait, doesn't that mean that most people who ER will end up on Medicaid (at least in expanded eligibility states)? We would need income over $2,500 for a family of 4 every month to stay off medicaid since 1 time capital gains or Roth conversions don't count!

lhamo

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #4 on: April 28, 2017, 09:37:10 PM »
Wait, doesn't that mean that most people who ER will end up on Medicaid (at least in expanded eligibility states)? We would need income over $2,500 for a family of 4 every month to stay off medicaid since 1 time capital gains or Roth conversions don't count!

Depends on how much you get in monthly or quarterly dividends.   They do count those.   

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #5 on: April 28, 2017, 09:59:11 PM »
Wait, doesn't that mean that most people who ER will end up on Medicaid (at least in expanded eligibility states)? We would need income over $2,500 for a family of 4 every month to stay off medicaid since 1 time capital gains or Roth conversions don't count!

Depends on how much you get in monthly or quarterly dividends.   They do count those.   

True! But wouldn't they only count the dividends in taxable accounts?

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #6 on: April 29, 2017, 12:41:17 AM »
I assumed that in early retirement we would be able to manipulate our income through Roth conversions and capital gains to apply for subsidized health care. But this is making me think it might not be so easy.

How much vtsax would you have to hold in a taxable account in order to reach the $2,500/mo cutoff in a dividend paying month?

Last dividend distribution was 0.26400. To hit $2,500 you would need 9469.69 shares or at current value, $565,151.52.

I wonder how many people that ER end up on Medicaid... or are actually eligible and don't realize it.

Monkey Uncle

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #7 on: April 29, 2017, 05:23:38 AM »
I had no idea that capital gains didn't count as "income" for figuring Medicaid vs. exchange eligibility.  Are you all sure that is correct?  If so, that really sucks. My impression is that many providers won't accept Medicaid patients, although I haven't checked into it very closely.  I suppose one could self-pay for office visits, outpatient procedures, etc. and use Medicaid as a catastrophic policy.

@James1: I believe conversions from a tIRA to a Roth are taxed as ordinary income, not capital gains.  So would that mean Roth conversions count as "income" for Medicaid eligibility purposes?

misshathaway

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #8 on: April 29, 2017, 06:14:49 AM »
I had no idea that capital gains didn't count as "income" for figuring Medicaid vs. exchange eligibility.  Are you all sure that is correct?  If so, that really sucks. My impression is that many providers won't accept Medicaid patients, although I haven't checked into it very closely.  I suppose one could self-pay for office visits, outpatient procedures, etc. and use Medicaid as a catastrophic policy.

The people "helping" by taking applications over the phone, at least in MA, do not always know what they are talking about. When I first applied for ACA subsidized I ended up erroneously enrolled in Medicaid and had to dig myself out with a lot of phone calls. This may vary by state, but in MA income considered for Medicaid does include capital gains and dividends. Also a sale of real estate counts.

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #9 on: April 29, 2017, 08:33:10 AM »
Sorry for the confusion! Im still trying to understand how everything works and would love to know more. Capital gains, dividends, and Roth conversions do apply if taken monthly. If taken as a 1 time transaction, they only apply for that month. The confusion arises because Medicaid is calculated monthly, not yearly.

From the WA state legislature, "Any income received as a lump sum as described in WAC 182-509-0375 is counted as income only in the month in which it is received."

Exchange eligibility is based on yearly income. It's fairly easy to calculate as its just your MAGI. This means you can apparently be eligible for both, but you are given the option that would benefit you the most. This is also why you are supposed to report income changes greater than $150.

I am trying to understand these differences so I know how to answer the questions to avoid medicare, but still get a subsidy. Although in my state, you could make close to $100,000 per month and the kids could still be on Medicaid with a $30/child/mo (max of $60/family) premium (Family of 4 maxing out 401k and tiras).

I could not figure out how to document our income this year since we have foreign income, WA state income, a 2 month "sebatical", and then a "normal" work schedule for 4 or 5 months of the year. I finally gave up and called them. The minute I said unemployed when we move back, the deal was done. Our income for those months might approach $1,000, but that is still significantly under the cut-off.

I spoke to a friend whose children have been on Medicaid for 6 yrs and she loves it, so I am feeling better about it after asking a lot of questions. Which is good because the kids at least will be on it  until the end of the year.
« Last Edit: April 29, 2017, 09:10:48 AM by James1 »

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #10 on: April 29, 2017, 08:39:08 AM »
@James1: I believe conversions from a tIRA to a Roth are taxed as ordinary income, not capital gains.  So would that mean Roth conversions count as "income" for Medicaid eligibility purposes?

From my understanding, which is limited, conversions are considered a redistribution of wealth in some state's Medicaid plans. But they would be counted as part of MAGI for exchange eligibility. I'm still trying to understand how this part works!

lhamo

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #11 on: April 29, 2017, 10:17:03 AM »
Roth conversions would count, at least in the month you made them.

If you are already on Medicaid, a one-time, large capital gain seems to be excludable.      This was the information I was given by my Navigator (the people who are paid to learn the rules and help people get signed up for exchange plans and/or Medicaid) here in WA.  She even called someone in the main office to verify that, and told me I was good to go until monthly or quarterly dividends started.  If we had NOT already been on the plan, then we would have had to wait until the next month when we had no significant income to sign up.

I strongly recommend anyone who has questions about this go talk with a Navigator.   Ours has been very helpful.   I think it helped that I was TRYING to make sure we paid our share, so she didn't think we were trying to scam the system.   


jim555

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #12 on: April 29, 2017, 10:46:25 AM »
I looked into this.  If the income is recurring and periodic then an annual "budget" can be constructed.  So say you have a quarterly income of $4,000.  Normally you would be ineligible for 4 months and eligible for 8 months.  However they can take the quarterly payments and annualize them to divide the annual amount by 12.  Doing it this way a person can be eligible for all 12 months since 16,000 is under the limit.

One time income events, as long as they are not recurring only effect the month they are rec'd in.

Sibley

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #13 on: April 29, 2017, 06:15:36 PM »
One more thing: Medicaid is state by state. Each state has the ability to determine various aspects of Medicaid, so don't assume something based on another state. Do your research.

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #14 on: April 29, 2017, 06:59:39 PM »
Roth conversions would count, at least in the month you made them.

If you are already on Medicaid, a one-time, large capital gain seems to be excludable.      This was the information I was given by my Navigator (the people who are paid to learn the rules and help people get signed up for exchange plans and/or Medicaid) here in WA.  She even called someone in the main office to verify that, and told me I was good to go until monthly or quarterly dividends started.  If we had NOT already been on the plan, then we would have had to wait until the next month when we had no significant income to sign up.

I strongly recommend anyone who has questions about this go talk with a Navigator.   Ours has been very helpful.   I think it helped that I was TRYING to make sure we paid our share, so she didn't think we were trying to scam the system.

Ihamo, thanks for the information! I will definitely contact a navigator when we move back. I've been trying to figure it out to make sure my husband and I don't go without coverage (the kids will get Medicaid no matter what). Our insurance here ends may 31st and we need a new plan to start June 1st. If I buy a plan to cover June, I have to do it in the beginning of may. If we get Medicaid, I can sign up anytime in the beginning of June and it will cover the whole month. As soon as the woman I spoke with understood my confusion and that I had been trying to buy a plan (and not trying to scam the system), she was incredibly helpful. But I have to use Skype to call and ask my questions, which can be frustrating at times - like when it dropped the call after being on hold for 30 min!

James1

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #15 on: April 29, 2017, 07:07:35 PM »
I looked into this.  If the income is recurring and periodic then an annual "budget" can be constructed.  So say you have a quarterly income of $4,000.  Normally you would be ineligible for 4 months and eligible for 8 months.  However they can take the quarterly payments and annualize them to divide the annual amount by 12.  Doing it this way a person can be eligible for all 12 months since 16,000 is under the limit.

One time income events, as long as they are not recurring only effect the month they are rec'd in.

So that means you could earn considerably more in dividends and still qualify. That makes me think even more ER folks would qualify for Medicaid, at least in expanded Medicaid states.

Sibley, the unique state Medicaid programs are what has made this so confusing. You can't just read about someone's experience and assume it applies to you. Even a few years ago, Medicaid in my state look very different.

jim555

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #16 on: April 30, 2017, 12:04:14 AM »
The Medicaid expansion has certain rules common to all states that expanded.  For example FPL under 138% with no asset test is written in the law.  This is not up to a state to decide.  If a state did not expand then an able bodied adult from 18 to 64 would never be eligible for it.  They would have to be deemed disabled and come under strict asset and income tests, basically making them destitute before they would become eligible for it.

seattlecyclone

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Re: Health Insurance Confusion! We qualify for Medicaid!?!?
« Reply #17 on: April 30, 2017, 10:19:56 AM »
I have no inside knowledge on this, but my guess is that they don't count lhamo's one-time large capital gain mostly for administrative reasons. If it's really a one-time thing, it doesn't make sense to shuffle someone off to an exchange plan for a month if they'll be right back on Medicaid the next month. But if you were habitually selling stocks every month and getting some small capital gains, I'd bet they count that.