qualifying for Medicaid under post-ACA eligibility standards

[papito23]

I'm originally a Boglehead and this is my first post at MMM. Didn't get any response over there, and wondering if it were because Medicaid is not as often discussed. Thanks all.

Based on a Bogleheads thread in regards to ACA income tax planning strategies, it appears that MAGI (Modified Adjusted Gross Income) for Affordable Care Act-purposes can actually be reduced by Traditional IRA, 401(k), and HSA contributions, among others. This is more commonly used (esp. in this forum) to maximize the premium credit one receives.

My reading of this Sep. 2013 HHS document says that this is the same case for Medicaid (thinking in regards to coverage of pregnant mothers, whose limit extends up into middle class territory). Anyone had experience with this yet?

That is to say, has anyone purposefully increased their Traditional IRA (or HSA, 401(k)...) contributions to lower their MAGI... and were they able to document this to the satisfaction of their local FSSA office? I think an additional challenge would be showing this in the middle of the year, instead of simply showing last year's 1040. Thanks!

[Money Stoic]

I signed up for the ACA for 2014 after doing the math and moving from employee to contact worker at the same job.

Based on my projected income, they automatically tried to put my 2 year old in GA Peachcare, Medicaid for kids. 

I then raised my projected income to make sure he was not sucked into Medicare for kids.  The reason?  Our family Dr office does not take medicaid.  I did not want to have to take my child to a county / state health department vs private physicians office.

Something to think about. 

Update:
   It seems the ACA site got called out on this B.S. and now just suggests you put your kids on Medicaid instead of automatically doing it. 

[papito23]

I think you mean Medicaid, which is assistance for low-income folks and pregnant mothers. Vs. Medicare, assistance for those >65 yrs old.

No problems with doctors here in rural Indiana accepting Medicaid.

A little funky that all you have to do is report a different projected income to get shifted to a new plan... not sure how this will all be verified. Bleck. Was hoping that someone might be able to chime in with some real life experience.

Thanks MoneyWom

[Jamesqf]

I seem to be having the opposite problem: Nevada's web site (they're not under the federal one) keeps trying to sign me up for Medicaid, I guess because I answered honestly when it asked "How much do you expect to make this month?"  I guess they've never heard of self-employed people with irregular incomes.  Mine depends a lot on meeting particular project milestones, so I made about $15K in January, $5K in February, nothing in March, and expect about $1500 this month.  So they extrapolate that one (after subtracting a few deductions and adding dividends & capital gains) and come up with an annual income of something around $15K (when it's more like $50-60K)...  And it won't let me go back to change things.

Sorry for the rant, but those people are driving me up an effing WALL.

[Money Stoic]

I seem to be having the opposite problem: Nevada's web site (they're not under the federal one) keeps trying to sign me up for Medicaid, I guess because I answered honestly when it asked "How much do you expect to make this month?"  I guess they've never heard of self-employed people with irregular incomes.  Mine depends a lot on meeting particular project milestones, so I made about $15K in January, $5K in February, nothing in March, and expect about $1500 this month.  So they extrapolate that one (after subtracting a few deductions and adding dividends & capital gains) and come up with an annual income of something around $15K (when it's more like $50-60K)...  And it won't let me go back to change things.

Sorry for the rant, but those people are driving me up an effing WALL.

Yep, the government bodies that set this up cannot wrap their mind around not having a set / steady income per month. I honestly think it is that way on purpose as the drive to push everyone into a more Socialist system continues (where you work x amount of hours and move up the pay scale based on years into the system rather than production or talent).

However, I have a plan:  To hit my adjust gross income target for 2014, I will simply put a lump sum into a solo 401k next Jan after my final 2014 numbers are in. 

[Exflyboy]

Its common practice among the FIREd folks here to adjust (downwards) the taxes they pay by reducing their MAGI by making IRA contributions. I.e you have after tax savings.. well you simply make an IRA contribution. This will mean for couple the first $36,000 roughly will be tax free (federal).

So doing the same to increase the subsidy you get for ACA premiums seems perfectly logical.

Frank

[kite]

My state is one that uses estate recovery to recoup medicaid expenses,  so I wouldn't try to qualify for a "free" plan that limits doctors and coverage but comes with some unknown price later on for my heirs to pay.    The capitation charges can easily exceed the cost of a top tier plan. 

[rubor]

I'm originally a Boglehead and this is my first post at MMM. Didn't get any response over there, and wondering if it were because Medicaid is not as often discussed. Thanks all.

Based on a Bogleheads thread in regards to ACA income tax planning strategies, it appears that MAGI (Modified Adjusted Gross Income) for Affordable Care Act-purposes can actually be reduced by Traditional IRA, 401(k), and HSA contributions, among others. This is more commonly used (esp. in this forum) to maximize the premium credit one receives.

My reading of this Sep. 2013 HHS document says that this is the same case for Medicaid (thinking in regards to coverage of pregnant mothers, whose limit extends up into middle class territory). Anyone had experience with this yet?

That is to say, has anyone purposefully increased their Traditional IRA (or HSA, 401(k)...) contributions to lower their MAGI... and were they able to document this to the satisfaction of their local FSSA office? I think an additional challenge would be showing this in the middle of the year, instead of simply showing last year's 1040. Thanks!

OK, I'll bite. I found myself in this situation this year, although not intentionally. I'm still waiting for the other shoe to drop. I went FI in Dec 2013, but still had residual income from my job that I got checks for in 2014. We have an infant under 1 and my wife is pregnant, due in Dec of this year. Wife is a veteran with a service-connected disability who was enrolled in VA coverage. To make it even more complicated, we moved to a new state (with expanded Medicaid coverage) to be closer to grandparents. I contributed money to a 401K, and traditional IRA for me and my spouse. This drove us into a zone of expanded Medicaid eligibility because we have an infant and my wife is pregnant.

My original intent was to get an exchange plan and pay for it, but I could never get a straight answer from the website or the phone agents about whether my wife would be ineligible for coverage because she was enrolled in the VA system. I was expecting a lot of blowback and documentation requirements because my income in 2013 was very high, and I assumed that's what they were using to verify the self-reported income.

On the first run, the website said that I should get an exchange plan, that my wife was ineligible because of her VA enrollment, and that my infant would be enrolled in Medicaid. Then they asked for proof of the reduced income, which was pretty much me writing a letter saying that I had left my job and that my income was much lower as I was starting my own business. Once I sent that in, they listed a new determination saying that both me and my son should be on Medicaid and they asked for  me to estimate my new business income for 2014 (essentially zero). After getting that, they listed a new determination saying we were all going on Medicaid. I called the help line after that, and spent a half hour saying, "Are you sure that we are eligible for this?" and "Are you sure I can't just enroll in the regular plans?"

The whole process was very confusing, and I keep waiting for a phone call saying that we are going to have to pay back the money spent so far, but nothing yet. I have been pleasantly surprised being on Medicaid, as there is a stigma of bad care associated with it. Most of our doctors take it, the care is the same, and the coverage has been essentially co-pay and deductible free. I feel a little guilty using a service that is designed for poor people, but I was not really given another option. I barely use health care, but my wife's pregnancy will be quite expensive (medically necessary C-section), and if she were deemed not eligible for Medicaid, she would be ineligible for exchange plans, and...wait for it...the VA does not really provide maternity care!

So anyway, that's my story. Feel free to ask follow-up questions, and I will answer best I can. If anyone has any insight into my situation (looming danger, pitfalls, or suggestions) I would welcome it as well.

[garrettld]

I feel a little guilty using a service that is designed for poor people, but I was not really given another option.

I had this thought at first, too, but the reason they force you into using Medicaid is because it costs your fellow taxpayers to put you on Medicaid than it does to pay 100% of your premiums for an exchange-purchased plan, so you shouldn't feel guilty.

I'm glad that you're happy with your healthcare though, I'm a little worried about what being on Medicaid would be like since I anticipate that I might be in your situation once I reach FIRE.

[Spartana]

I'm originally a Boglehead and this is my first post at MMM. Didn't get any response over there, and wondering if it were because Medicaid is not as often discussed. Thanks all.

Based on a Bogleheads thread in regards to ACA income tax planning strategies, it appears that MAGI (Modified Adjusted Gross Income) for Affordable Care Act-purposes can actually be reduced by Traditional IRA, 401(k), and HSA contributions, among others. This is more commonly used (esp. in this forum) to maximize the premium credit one receives.

My reading of this Sep. 2013 HHS document says that this is the same case for Medicaid (thinking in regards to coverage of pregnant mothers, whose limit extends up into middle class territory). Anyone had experience with this yet?

That is to say, has anyone purposefully increased their Traditional IRA (or HSA, 401(k)...) contributions to lower their MAGI... and were they able to document this to the satisfaction of their local FSSA office? I think an additional challenge would be showing this in the middle of the year, instead of simply showing last year's 1040. Thanks!

OK, I'll bite. I found myself in this situation this year, although not intentionally. I'm still waiting for the other shoe to drop. I went FI in Dec 2013, but still had residual income from my job that I got checks for in 2014. We have an infant under 1 and my wife is pregnant, due in Dec of this year. Wife is a veteran with a service-connected disability who was enrolled in VA coverage. To make it even more complicated, we moved to a new state (with expanded Medicaid coverage) to be closer to grandparents. I contributed money to a 401K, and traditional IRA for me and my spouse. This drove us into a zone of expanded Medicaid eligibility because we have an infant and my wife is pregnant.

My original intent was to get an exchange plan and pay for it, but I could never get a straight answer from the website or the phone agents about whether my wife would be ineligible for coverage because she was enrolled in the VA system. I was expecting a lot of blowback and documentation requirements because my income in 2013 was very high, and I assumed that's what they were using to verify the self-reported income.

On the first run, the website said that I should get an exchange plan, that my wife was ineligible because of her VA enrollment, and that my infant would be enrolled in Medicaid. Then they asked for proof of the reduced income, which was pretty much me writing a letter saying that I had left my job and that my income was much lower as I was starting my own business. Once I sent that in, they listed a new determination saying that both me and my son should be on Medicaid and they asked for  me to estimate my new business income for 2014 (essentially zero). After getting that, they listed a new determination saying we were all going on Medicaid. I called the help line after that, and spent a half hour saying, "Are you sure that we are eligible for this?" and "Are you sure I can't just enroll in the regular plans?"

The whole process was very confusing, and I keep waiting for a phone call saying that we are going to have to pay back the money spent so far, but nothing yet. I have been pleasantly surprised being on Medicaid, as there is a stigma of bad care associated with it. Most of our doctors take it, the care is the same, and the coverage has been essentially co-pay and deductible free. I feel a little guilty using a service that is designed for poor people, but I was not really given another option. I barely use health care, but my wife's pregnancy will be quite expensive (medically necessary C-section), and if she were deemed not eligible for Medicaid, she would be ineligible for exchange plans, and...wait for it...the VA does not really provide maternity care!

So anyway, that's my story. Feel free to ask follow-up questions, and I will answer best I can. If anyone has any insight into my situation (looming danger, pitfalls, or suggestions) I would welcome it as well.

This was my experience as well. I have a military service-connected disability and am signed up with the VA healthcare system. In addition, pre-ACA, I bought a low cost catastrophic plan. When that plan was cancelled in Jan. I tried to buy a new plan on the exchange (Calif) and was turned down because 1): I used the VA and you can't get both subsidies and use the VA, and  2): because my "taxable - i.e. MAGI" income was low enough to qualify for Medicaid - which can be used along with the VA coverage. So that was my only option other then to buy my own private plan at full cost with no subsidies. So since Jan that is what I did, buy my own private insurance plan at 3 times the cost of my former private plan and a much greater out of pocket max. before coverage kicks in. However I just bit the bullet and went ahead and signed up for Medicaid. Like rubor, I felt like a bit of a bum for signing up when I had both the income and assets and am FIRE'ed to buy my own plan but decided if everyone else was taking subsidies and/or Medicaid, then I might as well too. I have not used it yet, and don't really plan to unless there is an emergency and I can't get an appointment at the VA (my first provider of choice if needed), but will treat it like my former catastrophic plan and only use if needed. My understanding is that you can take all the tax write offs before you reach your MAGI number to qualify for Medicaid  the same as for subsidies if you are in a Medicaid expanded state and they don't count assets. In Calif there is no gender or children requirement to go on Medicaid - it's is solely based on MAGI and open to everyone under 65 who has a taxable income a bit under $16K annually. Since a fair amount of my income is non-taxable (like my military disability benefit) it is not counted towards my income for Medicaid or subsidy income. I just filled out a simple on-line form and didn't need to document anything (I have a gov. pension) either.

[goatmom]

The VAs I have been to have maternity coverage. There are so many lady vets these days.

[Spartana]

The VAs I have been to have maternity coverage. There are so many lady vets these days.

I think all VA hospitals have a Women's health care dept to deal with female-specific health issues - and maternity care is one of them. Check out this website Rubor and see if your VA has that: http://www.womenshealth.va.gov/WOMENSHEALTH/OutreachMaterials/GeneralHealthandWellness/maternity.asp

[Spartana]

I feel a little guilty using a service that is designed for poor people, but I was not really given another option.

I had this thought at first, too, but the reason they force you into using Medicaid is because it costs your fellow taxpayers to put you on Medicaid than it does to pay 100% of your premiums for an exchange-purchased plan, so you shouldn't feel guilty.

I'm glad that you're happy with your healthcare though, I'm a little worried about what being on Medicaid would be like since I anticipate that I might be in your situation once I reach FIRE.

That's what I thought too but I'm not so sure as I guess itr depends on how much healthcare each person needs who is on Medicaid. . While there are no monthly premium subsidies being paid out every month to a private insurance provider (whether you use that health care or not) with taxpayer dollars, it does seem like it would cost the tax payers less for Medicaid coverage. Basicly only paying when a person uses healthcare. But with 100% of healthcare being covered, it might cost MORE to pay for that compared to paying premium subsidies and then letting the insurance company pick up the tab for the actual health care (after deductible that is). So not really sure which route is best - probably equalizes at some point since some people will use it a lot, and other's never will.

[Spartana]

My state is one that uses estate recovery to recoup medicaid expenses,  so I wouldn't try to qualify for a "free" plan that limits doctors and coverage but comes with some unknown price later on for my heirs to pay.    The capitation charges can easily exceed the cost of a top tier plan.

This is the case in my state too (Calif) but doesn't apply until a person is 55. However, any care you receive on Medicaid after age 55 can be reimbursed from your estate when you die, or from your spouses estate when they die if you died before them.

[rubor]

The VAs I have been to have maternity coverage. There are so many lady vets these days.

The VAs I have been to have maternity coverage. There are so many lady vets these days.

I think all VA hospitals have a Women's health care dept to deal with female-specific health issues - and maternity care is one of them. Check out this website Rubor and see if your VA has that: http://www.womenshealth.va.gov/WOMENSHEALTH/OutreachMaterials/GeneralHealthandWellness/maternity.asp

Thanks for the link. Yeah, the VISN she is enrolled in has women's health, but does not include maternity care. They had a non-VA OB/Gyn that they said my wife could use, but that doc is more than an hour away, and it would mean delivering at a faraway hospital with a not-great reputation.

[rubor]

I feel a little guilty using a service that is designed for poor people, but I was not really given another option.

I had this thought at first, too, but the reason they force you into using Medicaid is because it costs your fellow taxpayers to put you on Medicaid than it does to pay 100% of your premiums for an exchange-purchased plan, so you shouldn't feel guilty.

I'm glad that you're happy with your healthcare though, I'm a little worried about what being on Medicaid would be like since I anticipate that I might be in your situation once I reach FIRE.

I guess that is true, and I am balancing out my wife's visits by being extremely healthy myself!

Medicaid has been much better than expected so far, but it may be a little bit of an artificial situation. I believe that the ACA increased reimbursement rates dramatically for the next 2 years for docs who take Medicaid. After that 2 year period, you might start to see doctors dropping Medicaid patients again, making the care more frustrating to deal with.