Author Topic: How does ObamaCare work for people who live on equities?  (Read 6731 times)

Rich M

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How does ObamaCare work for people who live on equities?
« on: September 27, 2013, 06:30:31 PM »
Anyone know if one has a bought a lot of stock over the years, retired and were to live by selling $25k of stock a year, do they have claim the total $25k as income toward the subsidy?  Or can they just use the capital gain amount as income, potentially putting them in the full subsidy and covering their health care completely?

I consider income something I have not paid taxes on. So for me only the capital gain would count.

Thus, it seems like an early retiree can game this for the early part of retirement, tapping into the stocks investments that gained the least before the high gaining ones and the 401ks.

seattlecyclone

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Re: How does ObamaCare work for people who live on equities?
« Reply #1 on: September 27, 2013, 06:51:23 PM »
The subsidies are based on your adjusted gross income (with a few minor modifications). So your capital gains and dividends would count as income for the purpose of determining your subsidy, while the amount you paid for the stock would not. There's a big thread in the "general discussion" board about Obamacare and its effect on early retirement. Check it out for more info.

Another Reader

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Re: How does ObamaCare work for people who live on equities?
« Reply #2 on: September 27, 2013, 07:06:33 PM »
Depending on the amount of the sale that is taxable gain and how much other income you have in your MAGI, you might fall below 133 percent of FPL.  For a single person, 133 percent of FPL in 2013 is $15,282.  If your MAGI is below that, not only will you then not qualify for a subsidy, you will qualify for Medicaid.  Want real insurance, the kind that actually lets you see a doctor when you need one?  You will have to pay the full, unsubsidized amount.  It's called the Law of Unintended Consequences.

sol

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Re: How does ObamaCare work for people who live on equities?
« Reply #3 on: September 27, 2013, 08:11:40 PM »
Want real insurance, the kind that actually lets you see a doctor when you need one?

For the record, Medicaid is accepted by more doctors and hospitals than any other insurance plan in the world.

beltim

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Re: How does ObamaCare work for people who live on equities?
« Reply #4 on: September 27, 2013, 09:08:00 PM »
Want real insurance, the kind that actually lets you see a doctor when you need one?

For the record, Medicaid is accepted by more doctors and hospitals than any other insurance plan in the world.

Do you have a source for this?  I tried a quick Google search but failed.

Another Reader

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Re: How does ObamaCare work for people who live on equities?
« Reply #5 on: September 27, 2013, 09:47:38 PM »
I think I referred to an LA Times article in another thread that showed otherwise, at least in California.  It's buried in their archives, so I can't link to it now.  No doctor I know accepts Medi-Cal patients here.   Specialist appointments are impossible to get.  That's why the emergency room are always full - it's the only source for care.

LauraG

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Re: How does ObamaCare work for people who live on equities?
« Reply #6 on: September 28, 2013, 07:06:39 AM »
If you are in a state that is not expanding Medicaid to cover people making up to 133% of federal poverty level, you will be eligible for exchange subsidies if you make over 100% of FPL. People making under 100% of FPL have no subsidies in non-expansion states.

If you are in an expansion state, you can get access to Medicaid if you make under 133% of FPL and will not be eligible for subsidies at that income level, since you qualify for Medicaid.

Nationally, 69% of doctors were accepting new Medicaid patients, as of 2012. But the rate varies by state. Obamacare is raising Mediciad payment rates, so the share accepting Medicaid _should_ increase.

http://www.kaiserhealthnews.org/stories/2012/august/06/third-of-medicaid-doctors-say-no-new-patients.aspx

mcneally

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Re: How does ObamaCare work for people who live on equities?
« Reply #7 on: September 28, 2013, 09:53:55 AM »
Depending on the amount of the sale that is taxable gain and how much other income you have in your MAGI, you might fall below 133 percent of FPL.  For a single person, 133 percent of FPL in 2013 is $15,282.  If your MAGI is below that, not only will you then not qualify for a subsidy, you will qualify for Medicaid.  Want real insurance, the kind that actually lets you see a doctor when you need one?  You will have to pay the full, unsubsidized amount.  It's called the Law of Unintended Consequences.

I'm not sure I'd call failing to give able-bodied early retirees (the best kind of) government subsidized health insurance an unintended consequence.

Another Reader

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Re: How does ObamaCare work for people who live on equities?
« Reply #8 on: September 28, 2013, 12:54:37 PM »
If your MAGI is $15,283, you get a huge subsidy.  If your MAGI is $15,281, you get nothing and are relegated to Medicaid.  For a $2.00 difference in MAGI. you gain or lose thousands of dollars a year and affordable access to quality care.  The law sets two cliffs, one at 133 percent of FPL, one at 400 percent of FPL.  There is no phase out.  Either you get the subsidy or you don't. 

mpbaker22

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Re: How does ObamaCare work for people who live on equities?
« Reply #9 on: September 29, 2013, 07:16:14 AM »
Depending on the amount of the sale that is taxable gain and how much other income you have in your MAGI, you might fall below 133 percent of FPL.  For a single person, 133 percent of FPL in 2013 is $15,282.  If your MAGI is below that, not only will you then not qualify for a subsidy, you will qualify for Medicaid.  Want real insurance, the kind that actually lets you see a doctor when you need one?  You will have to pay the full, unsubsidized amount.  It's called the Law of Unintended Consequences.

I'm not sure I'd call failing to give able-bodied early retirees (the best kind of) government subsidized health insurance an unintended consequence.

Depending on age, you could expect rates to go up quite a bit.  From what I can tell, a lot of the subsidies are in place to negate the fact that younger people are going to be taking on a lot of older peoples' costs.  So, it may indeed be an unintended consequence.  Not that the government wants to subsidize early retirement but that this persons rates might go up without receiving the subsidy.

dragoncar

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Re: How does ObamaCare work for people who live on equities?
« Reply #10 on: September 30, 2013, 02:28:23 PM »
If your MAGI is $15,283, you get a huge subsidy.  If your MAGI is $15,281, you get nothing and are relegated to Medicaid.  For a $2.00 difference in MAGI. you gain or lose thousands of dollars a year and affordable access to quality care.  The law sets two cliffs, one at 133 percent of FPL, one at 400 percent of FPL.  There is no phase out.  Either you get the subsidy or you don't.

Wait wait wait.  In what world is Medicare not also "a huge subsidy"???

mpbaker22

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Re: How does ObamaCare work for people who live on equities?
« Reply #11 on: September 30, 2013, 03:07:46 PM »
If your MAGI is $15,283, you get a huge subsidy.  If your MAGI is $15,281, you get nothing and are relegated to Medicaid.  For a $2.00 difference in MAGI. you gain or lose thousands of dollars a year and affordable access to quality care.  The law sets two cliffs, one at 133 percent of FPL, one at 400 percent of FPL.  There is no phase out.  Either you get the subsidy or you don't.

Wait wait wait.  In what world is Medicare not also "a huge subsidy"???

Not to mention there is a phase out before 400%

Another Reader

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Re: How does ObamaCare work for people who live on equities?
« Reply #12 on: September 30, 2013, 03:22:51 PM »
Medicaid, not Medicare.  I also said access to quality care.  The availability and quality of care from Medi-Cal, the California version of Medicaid is notoriously abysmal.  For a $2.00 difference in MAGI, you get access to subsidized low cost private insurance which, while not nearly as good as many employer policies, is orders of magnitude better than Medi-Cal.  That's just stupid. 

There are phase-outs, but there is still a steep cliff at the 400 percent of FPL boundary.  Run the California shop and compare calculator for 10 dollars below and 10 dollars above the 400 percent boundary.  For my age and location, the difference is $366 a month or around half the monthly premium because of the subsidy.  That's a cliff.

mpbaker22

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Re: How does ObamaCare work for people who live on equities?
« Reply #13 on: September 30, 2013, 03:31:47 PM »
Using Kaiser calculator for a family of 4 in Missouri at different incomes and California below (94301 Palo Alto Zip Code)

% of Poverty Line             Income              Subsidy
355                                    $83603              $146
360                                     $84780             $34
362                                     $85,251             $0

400                                     $94,200            $1,595
401                                    $94,436              $0

So in certain zip codes, making 236 dollars more results in a $1,595 tax credit loss (I bet a ton of employees get paid $94,200 next year).  I think there's some sort of a tie between the dollar amount and the area median income as well as a tie between dollar amount and federal poverty line.  It must be the ties competing between local and federal data that causes the steep decline in high COL areas.

seattlecyclone

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Re: How does ObamaCare work for people who live on equities?
« Reply #14 on: September 30, 2013, 05:11:34 PM »
The subsidy is set up so that if you're within the 133-400% of poverty level range, the net cost of the second-cheapest "silver" level plan in your area after subsidies will be a certain percentage of your income. People who make 133% of the poverty level are expected to pay 2% of their income for that plan, while people who make 400% of the poverty level are expected to pay 9.5% of their income. There's a sliding income scale for people whose income falls between those extremes. If the second-cheapest silver plan is more expensive than the set percentage of your income, a subsidy pays for the rest. The subsidy's value is set based on the cost of the second-cheapest silver plan in your area, but you can use that subsidy amount for any health plan offered through the exchange.

In Missouri, it looks like the second-cheapest silver level health plan for your hypothetical family must have had an annual premium of about $8,088. Your hypothetical family with an income of $83,603 qualifies for a $146 subsidy because the second-cheapest silver plan for their family costs $146 more than 9.5% of their income. 9.5% of the difference between $84,780 and $83,603 is $112, which is why the higher-earning family's subsidy is $112 lower. $8,088 is 9.5% of $85,136, so a family making more than this would not be eligible for a subsidy.

In California, the premium for the second-cheapest silver plan must be higher ($10,544 per year, by the look of it). A family with an income of $94,200 would be expected to pay 9.5% of their income ($8,949), and the remainder of the premium would be subsidized. But the law authorizes no subsidies for people making more than 400% of the poverty limit, so there is a big cliff in the tax structure that people need to watch out for here. The family in Missouri wasn't affected by it because their insurance premiums are low enough for the subsidy to phase out below 400% of the poverty level. People in more-expensive states (or older people whose premiums are more likely to exceed 9.5% of 400% of the poverty limit) need to take care to avoid this cliff.

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Re: How does ObamaCare work for people who live on equities?
« Reply #15 on: September 30, 2013, 07:03:08 PM »
+1 for seattlecyclone's explanation.  I'm older and I live in one of the most expensive regions in California.  You can be darn sure the pre-Medicare retirees in high COLA locations, many of whom are being dumped into the exchanges through their pension plans, will be watching their MAGI's like hawks.

Diamondpick

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Re: How does ObamaCare work for people who live on equities?
« Reply #16 on: September 30, 2013, 07:08:18 PM »
Sol....to me Medicaid is not insurance. I loose money seeing them let alone doing and injection/X-ray or let alone a surgery on them. I severely limit them into my practice and am considering opting out. Tomorrow will be interesting.

mpbaker22

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Re: How does ObamaCare work for people who live on equities?
« Reply #17 on: October 01, 2013, 06:24:05 AM »
Does anyone think this Gold, Silver, Bronze plan stuff is just bullshit when the best plan of them (and most mustachian) is obviously the catastrophic plan for most people.  Of course I'll still be eligible for it for a few years, but I just don't understand why this was put into the law.

I also heard a Kathleen Sebelius interview while at the gym yesterday (free work gym).  She said something about most US citizens not having enough cash laying around to cover a $5000-$6000 deductible, so she didn't want them to be able to make a decision like that.  I guess it's hard to reconcile which plans are most efficient with those that 'most US citizens' could actually stay disciplined to afford.

Hamster

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Re: How does ObamaCare work for people who live on equities?
« Reply #18 on: October 01, 2013, 09:36:26 AM »
Sol....to me Medicaid is not insurance. I loose money seeing them let alone doing and injection/X-ray or let alone a surgery on them. I severely limit them into my practice and am considering opting out. Tomorrow will be interesting.
I am a physician. I have heard many repeat this claim, but it is usually not true. Unless you have ridiculous overhead, you are not *losing* money on Medicaid patients, simply getting paid much less than you would for private insurance. So, you are losing money in a relative sense, not an absolute sense. What is your *marginal* cost of performing an x-ray? A few minutes of tech time, and a few pennies in electricity?

I was seriously pissed during residency when basically all of the private orthopedists in the Seattle area stopped taking Medicaid. A bunch of docs making well over 400k per year (MGMA median orthopedist salary of $493,000...) complaining about not getting paid enough... But happy to shunt all the Medicaid patients to the university hospitals so the private docs could take more higher-paying privately insured patients. Shameful in my book...