A few days later I learned what a huge mistake this honesty was. By simply submitting the updated income info, I was in effect relinquishing all control over my health insurance decisions. My 2 kids were immediately removed from the Silver ACA HMO plan and placed into Masshealth Family Assistance, one of the expanded Medicaid plans in MA. My wife and I were left in the Silver plan for 2016, but for 2017 enrollment options, the Health Connector only allowed us to select from 5 limited-network ConnectorCare plans (in MA the ACA "cost-sharing subsidies" are provided by creating separate plans for those with less than 300+5% FPL) vs. the dozens of plans normally available.
Regarding the kids, Washington does a similar thing, putting kids in Apple Health (Medicaid) up to what looks like 317% of the FPL based on
their eligibility chart, with nominal monthly premiums for families on the higher end of that range. The Medicaid threshold is still at 138% for adults.
We do the cost sharing plans differently though; they seem to all be marketed under the same carriers, plan names, and networks as the full-price plans, just with lower deductibles and out-of-pocket maximums.
But every state marketplace is different. I've been working with my mother to try and get her on a subsidized plan in Minnesota until she's old enough for Medicare. There they send everyone under 200% of the FPL but above the Medicaid cutoff onto a special "Minnesota Care" plan with very nominal premiums and co-pays for services. Seems like a pretty good deal, especially compared to the at least $10k she'd probably end up spending if their income was above that line.
All this was done without giving us the option to remain in the Silver Plan. Perhaps I was naive in expecting that before my kids were moved to Medicaid I would first receive something saying "Based on your expected income you now qualify for Plan X. Please let us know if you would like to take advantage of Plan X or stay in your current Plan Y." My wife and I fully support the existence of Medicaid to provide health care for those who can't otherwise afford it, and we are happy to live in an expanded Medicaid state. And being mustachians, we certainly don't like to spend extra money when it is not necessary. But health care premiums are something we carefully budgeted for in our post-FIRE life, and we can afford to pay for our health care. We don't ethically feel that it is right for our kids to be in this program just because our MAGI income is deemed to be poverty-level. We now qualify for food stamps and free school lunch programs and subsidized government housing programs, but we will happily pay full price at the grocery store and pack our kids with bag lunches and pay the full cost necessary to live in our current house.
I understand your frustration about being unexpectedly shunted into a plan you didn't want without consultation, a plan that might not let you see doctors you know well. However I find it hard to follow your ethics argument. You were perfectly happy to accept an income-based government subsidy covering 90+% of your health care costs, but when they offer you a 100% subsidy that's somehow crossing an ethical line?
My feeling on most of these programs is that you should absolutely not feel bad availing yourselves of the ones to which you are legally entitled. If Congress thought it was important to make sure low-income millionaires couldn't get benefits, they would put a wealth or investment income test into it (such as has been done for food stamps and the earned income tax credit, among other things). You didn't get to opt out of the taxation that paid for the welfare state when you were working; you shouldn't let anyone shame you into opting out of using those programs when the stated qualifications apply to you.
Skipping the painful and gory details, after 6+ weeks wrangling with the Health Connector and its fine customer service staff, I was able to get us all back on the original Silver Plan with access to all available plans for 2017. The clear lesson learned was that if you want access to all ACA plan options (in MA at least) and want to avoid being on Medicaid, you need to forecast income above 400% FPL, forego access to monthly premium subsidies and all cost-sharing subsidies, and then claim the premium tax credit on your taxes based on your actual income. Is this the same in other states, I wonder, or is this just a MA approach?
My understanding is that you should be able to get the premium subsidy, but not any cost-sharing subsidy, back when you file your taxes if you end up with a qualifying income. Whether the state marketplace sees fit to front you that money on a monthly basis depends on their own bureaucratic processes.
It took quite a bit of effort to get us un-enrolled from Medicaid, and we found out only after the fact that in Washington State denial by the consumer of Medicaid benefits means forfeiting rights to the ACA subsidies.
More correctly,
being eligible for Medicaid makes you ineligible for ACA subsidies. This is true anywhere in the country. Seems reasonable for the state, having determined you were eligible for Medicaid, would cancel your ACA subsidies whether you enroll in Medicaid or not. What you should have done instead of simply turning down Medicaid is to instead make sure they agreed you had too high of an income for Medicaid. Of course, it's hardly your fault for not knowing that. This stuff is complicated!
Thanks everyone for your anecdotes. I think I may need to edit my blog post a bit.
