Author Topic: expanded Medicaid coverage, good for early retirees?  (Read 4620 times)

sol

  • Walrus Stache
  • *******
  • Posts: 8492
  • Age: 42
  • Location: Pacific Northwest
expanded Medicaid coverage, good for early retirees?
« on: August 14, 2013, 11:58:08 AM »
As of January 1 2014, Medicaid (national insurance for low income individuals) will no longer have an asset test for most people.  If you qualify for it because you are low income, and not because you're disabled for elderly, then eligibility will be determined solely by your income.  Anyone who makes less than 138% of the federal poverty level will qualify.

138% FPL for a family of four is almost $32k per year, or very in line with ordinary retirement budgets proposed here.  Many of us could conceivably qualify for Medicaid under these expanded provisions if we retire on something like $800k and draw 4% or less per year.  Or even more, if you're invested in taxable accounts from which withdrawals would be "return of principal" instead of earnings.

I've never used Medicaid so I'm not very familiar with how it works.  Aside from a perceived social stigma that is totally a matter of personal opinion, are there any other drawbacks to using Medicaid as your primary insurance in retirement?
« Last Edit: August 14, 2013, 12:04:32 PM by sol »

Lans Holman

  • Bristles
  • ***
  • Posts: 276
  • Location: North by Northwest
Re: expanded Medicaid coverage, good for early retirees?
« Reply #1 on: August 14, 2013, 12:00:39 PM »
The big obvious drawback that comes to mind right away is that lots of doctors won't take medicaid because the reimbursement rates are pretty low. 

BigRed

  • Stubble
  • **
  • Posts: 200
  • Age: 43
  • Location: NJ
Re: expanded Medicaid coverage, good for early retirees?
« Reply #2 on: August 14, 2013, 12:33:36 PM »
That's an income test, not an expense test, and mustachianism isn't predicated on limiting your income.  The ideal, passive income generating stache is supposed to be able to generate more income than your expenses, so it's hard to imagine you'd be sure that you were eligible.  I think you'd much prefer a subsidized plan from a PPACA marketplace.  Of course, if you fall below 125% of the poverty line you will be eligible only for Medicaid, not for the marketplace subsidies.  Also, your state may not have expanded Medicaid, many states did not. 

At any rate, I'm not sure how it will work for those who have incomes near the 125% who may fall into Medicaid eligibility or subsidy eligibility based on factors beyond their control (like how much your portflio earns or income changes during the year).  So, you'd want to figure that out.  Private insurance will almost certainly be better than Medicaid, though Medicaid is better than no insurance for sure.


sol

  • Walrus Stache
  • *******
  • Posts: 8492
  • Age: 42
  • Location: Pacific Northwest
Re: expanded Medicaid coverage, good for early retirees?
« Reply #3 on: August 14, 2013, 12:53:26 PM »
That's an income test, not an expense test, and mustachianism isn't predicated on limiting your income.

It looks to me like Medicaid eligibility is determined once per year, and good for 12 months.  I think they're just going to pull your most recent tax forms and look at your MAGI.

Which is easy to game.  There are lots of ways to get your MAGI down pretty low, depending on how you structure your investments.  Between retiring and reaching Medicare eligibility age, I expect most of my expenses to come out of "income" that would never show up on my tax forms, such as Roth IRA withdrawals, drawdowns on taxable investment accounts, or annuities.

If the market goes crazy one year and I wasn't eligible, I can always get insurance on my state exchange.  Looking at the projections for Washington State is very encouraging, I expect to pay less per month as an unemployed early retiree than I do now as a worker with an employer who covers most of my health insurance costs.  The ACA seems to guarantee that I can float back and forth between types of coverage at will, without being denied eligibility for a gap in coverage.

Quote
Of course, if you fall below 125% of the poverty line you will be eligible only for Medicaid, not for the marketplace subsidies.

Right, but even if I'm above the 138% FPL cutoff for Medicare, I still expect to be comfortably below the 400% FPL cutoff for marketplace subsidies.  That's over $94k/year in MAGI for a family of four.  If you can't stay under that, you probably don't belong on this website.

Quote
Private insurance will almost certainly be better than Medicaid, though Medicaid is better than no insurance for sure.

This is really what I was asking about.  Why is Medicaid not as good as private insurance?  What are the drawbacks?  It seems to cover all the same stuff (preventative visits, hospitalizations, prescription drugs, ER) and some stuff that some regular insurance doesn't (vision, long term care).
« Last Edit: August 14, 2013, 12:57:29 PM by sol »

Gin

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: expanded Medicaid coverage, good for early retirees?
« Reply #4 on: August 14, 2013, 01:57:16 PM »
Just because it says it is covered doesn't mean you can find someone to provide the services for you.  Medicaid varies state to state.  I am an occupational therapist.  I know every time I have an referral for OT eval for an adult I will never get the approval for visits.  They will approve the eval and deny all treatment recommendations.  In my 15 years I have had 2 where they ok treatment and it was for 4 visits or something.  Since I know this when I do the eval I try and teach them as much as I can because I won't see them again.  I wouldn't recommend it.  If you are truly thinking about it I would call around and see what doctors are taking new medicaid patients. 

Rural

  • Magnum Stache
  • ******
  • Posts: 4834
Re: expanded Medicaid coverage, good for early retirees?
« Reply #5 on: August 15, 2013, 07:36:53 PM »
The Medicaid expansion is not nationwide, anyway. Plus very few doctors or hospitals will take it. The exchanges look like a much better option to me.

Hamster

  • Pencil Stache
  • ****
  • Posts: 623
Re: expanded Medicaid coverage, good for early retirees?
« Reply #6 on: August 15, 2013, 10:47:11 PM »

Quote
Private insurance will almost certainly be better than Medicaid, though Medicaid is better than no insurance for sure.

This is really what I was asking about.  Why is Medicaid not as good as private insurance?  What are the drawbacks?  It seems to cover all the same stuff (preventative visits, hospitalizations, prescription drugs, ER) and some stuff that some regular insurance doesn't (vision, long term care).

In WA State, Medicaid is both better and worse than private insurance. I'm not sure if this will change with the ACA, but at least with current Medicaid (with the caveat that I only see kids, but assume it is the same for adults) there are no co-pays for anything - medications, surgeries, specialists, anything. But, fewer things are covered, and it is harder to get prior authorization - essentially exceptions to their coverage rules when the Dr feels an exception needs to be made. Also, a lot of providers won't take Medicaid patients as has been said previously. Most pediatricians do since something like 40% of WA kids are Medicaid eligible.