Author Topic: Why keep income above Medicaid limits?  (Read 5320 times)

Loren Ver

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Why keep income above Medicaid limits?
« on: July 13, 2018, 09:40:39 AM »
I've been noticing posts were people state they want to stay above the medicaid income limits, but they do not mention why.   Why are people trying to avoid getting put on Medicaid? 

DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow.  I'd like to know if I need to avoid something.  I live in a major city, so if it is doctor availability based, it might not apply to us.

Thank you for sharing your insights.
Loren
   

Mr. Green

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Re: Why keep income above Medicaid limits?
« Reply #1 on: July 13, 2018, 09:45:59 AM »
I've been noticing posts were people state they want to stay above the medicaid income limits, but they do not mention why.   Why are people trying to avoid getting put on Medicaid? 

DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow.  I'd like to know if I need to avoid something.  I live in a major city, so if it is doctor availability based, it might not apply to us.

Thank you for sharing your insights.
Loren
   
While Medicaid is a Federal program, it is administered at the state level. Medicaid benefits only apply to healthcare received within that state. I know there are some areas where ACA plans aren't much better but most folks will have the option of buying health insurance on the exchanges that offers wider coverage. Folks who have FIREd commonly talk about frequent travel so broader coverage within the US may be important to them.

jim555

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Re: Why keep income above Medicaid limits?
« Reply #2 on: July 13, 2018, 09:54:15 AM »
It depends on your locale.  Sometimes the ACA plans may have a network with your doctor.  In my instance both the ACA and Medicaid have the same doctors so it is a no brainer to go to Medicaid.  Some states have a very sparse Medicaid.
Some have a moral objection to being on Medicaid. 
Some have no Medicaid option in their state so they need to get over the gap and into ACA.
Some are concerned with Estate Recovery for 55 and older on Medicaid, as some states will recover what they gave you when you die.

Loren Ver

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Re: Why keep income above Medicaid limits?
« Reply #3 on: July 13, 2018, 10:03:31 AM »
Wow, those are all things I did not know or think about. 

You two are fast repliers!  Thanks!

LV

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Re: Why keep income above Medicaid limits?
« Reply #4 on: July 13, 2018, 12:55:08 PM »
Not all doctors will take Medicaid patients, or will have quotas.
I believe some states do a means test, so including assets.

Perhaps you might want to research Medicaid? Your question indicates that you don't know much about it.

terran

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Re: Why keep income above Medicaid limits?
« Reply #5 on: July 13, 2018, 03:02:06 PM »
DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow. 

This is tangential to your question, but I think it's worth pointing out: keeping your investments invested doesn't mean mean  you can't realize income, and in fact realizing income in down years could result in overall lower taxes. You can convert traditional IRAs to Roth to realize the income, but keep the money invested. You can also harvest capital gains by selling to realize the capital gain and then immediately reinvesting at a higher cost basis. Regardless of where you land on the Medicaid aspect, both of these are smart things to do in order to at least fill the standard deduction (tax free) and as much as you can of the 0% capital gains bracket without endangering your ACA benefits.

jim555

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Re: Why keep income above Medicaid limits?
« Reply #6 on: July 13, 2018, 03:12:30 PM »
Not all doctors will take Medicaid patients, or will have quotas.
I believe some states do a means test, so including assets.

Perhaps you might want to research Medicaid? Your question indicates that you don't know much about it.
Most Medicaid is run by managed care firms with HMO like doctor networks and a set monthly capitation rate.  Fee for service is not how most Medicaid is done now.

ACA Medicaid only has an income test, not an asset test.  If the state didn't expand then you are categorically disqualified unless you are disabled, elderly or blind.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #7 on: July 13, 2018, 03:37:31 PM »
Being single, my dividends and interest in my taxable accounts alone would probably push me over the Medicaid limit - it would be close.  I would probably have to move some of my taxable account investments into non-interest bearing accounts to keep my income that low.  I don't want to go there and plan on using the ACA, where I'm budgeting closer to $24K/yr MAGI income.

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #8 on: July 13, 2018, 06:38:19 PM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.

jim555

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Re: Why keep income above Medicaid limits?
« Reply #9 on: July 13, 2018, 06:46:57 PM »
The current rate at 138% FPL is $16,753 for one person.

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #10 on: July 13, 2018, 06:50:06 PM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.
It sounds like your Mom was either in a non-expanded state or was applying for tradition Medicaid not ACA Medicaid. 6Medicaid, at least in expanded states, used for ACA purposes is based on "taxable" income (MAGI) not total income. So someone who has income from non taxable sources like a Roth could live on a large amount but only a small portion of that income is taxable. While I'm not on Medicaid or ACA in ER (use the VA) the taxable portion of my income is low enough so that I could go on medicaid even though I have a larger annual passive non taxable income.

Correct.  We are in a deep red non-Medicaid-expanded state.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #11 on: July 13, 2018, 07:04:16 PM »
Once you are on the program, you only get kicked off if your monthly income exceeds the monthly limit two calendar months in a row.  I confirmed this with a Healthcare Navigator yesterday.  If you structure your income so that it is spaced out appropriately, you can have a large one-time infusion of capital gains or dividend income and as long as it does not repeat the next month it should not kick you off.  We had a VERY large capital gain in January 2017, and I was asked to provide proof of no current income again to confirm eligibility yesterday -- that's why I saw the Navigator.  She confirmed my current lack of income, uploaded my bank statements, and I got my confirmation of coverage within a few hours.

If that's the case (in your state as an example), spacing out large income withdrawals sounds like a super huge loophole that would be very easy to exploit.  Did you at least have to show some prolonged low income to get on the program in the first place, or did they take your word for it that you FIREd and wouldn't have much income?  What bank statements did you send?  Do they show your stash?

I don't know about that loophole in my state, but I'm skeptical I could stay on Medicaid with $24K/yr income, even after initially qualifying somehow.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #12 on: July 13, 2018, 07:35:39 PM »
If you can keep income pretty low you can just go on a low cost ACA plan. On Weds I went with my newly laid off sister to meet with a Calif ACA person and with an approx $36k annual income (work plus unemployment benefits) she was offered plans that started for under $2/month premiums with $7k OOP max. She didn't qualify for the Enhanced Silver Level plans but they seemed like the best way to go if you have an income that is over the Medicaid limits. The enhanced silver 90 plans was practically free at a $75 monthly premium plus almost zero OOP. She chose a $62/month Kaiser Bronze plan with a $7K OOP max but once her unemployment runs out she plans to go on Medicaid until old enough for a small pension at 55. She will live the FIREd life on cash until then.

Yep, my planned future FIRE throttled $24K/yr MAGI on $50K/yr spending is based on a silver ACA plan just shy of one of the CSR subsidy cliffs, although the deductible is in the range of $3000 or so if I were to actually need healthcare services.  To this point, I'm a pretty low usage healthcare user.  A higher income, and that deductible jumped up closer to $8,000!  The premium was fairly low with the PCT.
« Last Edit: July 13, 2018, 07:39:29 PM by DreamFIRE »

terran

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Re: Why keep income above Medicaid limits?
« Reply #13 on: July 13, 2018, 08:39:19 PM »
I believe this is how the system works in most states that expanded Medicaid.  Anyone considering this option would of course want to do their own research.  I highly recommend making an appointment with a Healthcare Navigator, as they understand the rules and the system and can sign you right up.  I met mine when I was going in to put my daughter on the ACA plan I had been on with my son -decided to work through a Navigator because I had messed things up royally the year before when moving to ACA --  and she was the one who told me we qualified for Medicaid.  I was very open with her yesterday about how crazy I think it is that someone with my level of assets qualifies, but she confirmed again that we are 100% within the rules and eligible for services.

Are these navigators government employees, or some kind of private health insurance agent?

Do you know what kind of coverage (emergency or otherwise) you would have if you travelled to another state?

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #14 on: July 14, 2018, 12:08:04 AM »
So again, if you have the luxury of setting up your finances so that you only take limited capital infusions from your investments, then it is pretty easy to get on Medicaid in an expanded Medicaid state.

My dividends are paid quarterly, so I could setup my finances that way.  However, my tax return would show greater income than the limit, unless I cut my spending close to $40K/yr on $16K/yr MAGI.  I'm in a state that has Medicaid Estate Recovery which applies to Medicaid expansion as well, so I would have to move to a different state after age 55 to stay on it until Medicare age without having to worry about the state putting a lien on my property/assets.  Some states I'm considering relocating to don't even have expanded Medicaid.  So all said, I'll probably have to stick to an ACA marketplace plan, which has been my plan for some time.
« Last Edit: July 14, 2018, 12:12:39 AM by DreamFIRE »

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #15 on: July 14, 2018, 09:33:28 AM »
The current rate at 138% FPL is $16,753 for one person.

Is this in the Medicaid expanded states only? If not, I'll get my mother to check in again.

ETA: Never mind, I just hunted around.  That is the cut-off in expanded states only. 
« Last Edit: July 14, 2018, 09:36:51 AM by wenchsenior »

jpdx

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Re: Why keep income above Medicaid limits?
« Reply #16 on: July 14, 2018, 03:09:01 PM »
How would the medicaid agency have knowledge of when you receive your capital gain income? If you show them a tax return, it does not break this down by month.

teen persuasion

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Re: Why keep income above Medicaid limits?
« Reply #17 on: July 14, 2018, 03:31:19 PM »
Medicaid is based on monthly income.  You are expected to report changes in monthly income.

ACA is based on annual AGI.  Even if you would be eligible for ACA subsidies per annual income, if you are eligible for Medicaid per monthly income you are NOT eligible for ACA subsidies.

We learned this when DH was between jobs.  With no immediate income, we landed in Medicaid, even though our annual income (based on 6 months previous earnings) should have made us eligible for ACA subsidies.

Loren Ver

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Re: Why keep income above Medicaid limits?
« Reply #18 on: July 14, 2018, 04:43:29 PM »
Wow.  There has been some great information here.  Thank you for contributing and expanding.

DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow. 

This is tangential to your question, but I think it's worth pointing out: keeping your investments invested doesn't mean mean  you can't realize income, and in fact realizing income in down years could result in overall lower taxes. You can convert traditional IRAs to Roth to realize the income, but keep the money invested. You can also harvest capital gains by selling to realize the capital gain and then immediately reinvesting at a higher cost basis. Regardless of where you land on the Medicaid aspect, both of these are smart things to do in order to at least fill the standard deduction (tax free) and as much as you can of the 0% capital gains bracket without endangering your ACA benefits.

This is a very good point.  We are considering a Roth conversion only if our taxable accounts can't hold us over.  But if Medicaid turn out to be a flop in my state, this is a great way to generate "income."

Not all doctors will take Medicaid patients, or will have quotas.
I believe some states do a means test, so including assets.

Perhaps you might want to research Medicaid? Your question indicates that you don't know much about it.

It is true.  I never even thought about it until I saw some posts were people didn't want to lose their ACA and get stuck with Medicaid.  We wont qualify must of the time, but some years we might be close.  I'll have to take a look at my state to see what is actually offered.   

How would the medicaid agency have knowledge of when you receive your capital gain income? If you show them a tax return, it does not break this down by month.

Form 8949, which I believe is attached to Schedule D(that is what it appears after in the tax return I got via Turbotax), does ask for date of acquisition/disposition of the capital asset that resulted in the capital gain.

You have provided a wealth of information lhamo, thank you for sharing your experience.  I've never really had to deal with monthly income, but if we there are some really down market years this could be a good way to add flexibility.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #19 on: July 14, 2018, 05:03:52 PM »
I've been noticing posts were people state they want to stay above the medicaid income limits, but they do not mention why.   Why are people trying to avoid getting put on Medicaid? 

DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow.  I'd like to know if I need to avoid something.  I live in a major city, so if it is doctor availability based, it might not apply to us.

Thank you for sharing your insights.
Loren
   
While Medicaid is a Federal program, it is administered at the state level. Medicaid benefits only apply to healthcare received within that state. I know there are some areas where ACA plans aren't much better but most folks will have the option of buying health insurance on the exchanges that offers wider coverage. Folks who have FIREd commonly talk about frequent travel so broader coverage within the US may be important to them.

This doesn't make any sense.  I know of no ACA plan that would have broad interstate coverage (interstate metro areas like Kansas City excepted).  The only solution to get coverage when moving around is to get another plan when in another area, which means resetting the earned deduction & out-of-pocket back down to 0.  As Medicaid has no costs (other than a small costs in states that have a jackass governor), this is not an issue.

The only viable argument is that more providers take ACA plans, although the low-cost ACA plan typically doesn't have a whole lot more providers than Medicaid.

Yet another reason for Medicare-For-All.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #20 on: July 14, 2018, 05:07:48 PM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.

So would you consider someone taking out $40K/yr in Roth (basis or regular) distributions as being "low income"?  Uncle Sam thinks such a person has an income of $0.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #21 on: July 14, 2018, 05:16:04 PM »
So again, if you have the luxury of setting up your finances so that you only take limited capital infusions from your investments, then it is pretty easy to get on Medicaid in an expanded Medicaid state.

My dividends are paid quarterly, so I could setup my finances that way.  However, my tax return would show greater income than the limit, unless I cut my spending close to $40K/yr on $16K/yr MAGI.  I'm in a state that has Medicaid Estate Recovery which applies to Medicaid expansion as well, so I would have to move to a different state after age 55 to stay on it until Medicare age without having to worry about the state putting a lien on my property/assets.  Some states I'm considering relocating to don't even have expanded Medicaid.  So all said, I'll probably have to stick to an ACA marketplace plan, which has been my plan for some time.

My understanding is the Medicaid Estate Recovery does not apply to the health insurance aspect of Medicaid, only to the nursing home or long-term aspect.

And a good way to get this settle once and for all is to get federal, unitary Democratic Party control, who can pass laws to take care of all the little stuff that has cropped up.  The Republicans are the Party of Death.

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #22 on: July 14, 2018, 05:24:11 PM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.

So would you consider someone taking out $40K/yr in Roth (basis or regular) distributions as being "low income"?  Uncle Sam thinks such a person has an income of $0.

I'm not sure what you thought I was implying.  I wouldn't consider them low-income.  But if they could qualify for Medicaid under those rules, I have no problem with them doing so.  My mother could not (no assets of any kind).  Nor will we be able to during FI b/c our income will be too high.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #23 on: July 14, 2018, 05:28:21 PM »
How would the medicaid agency have knowledge of when you receive your capital gain income? If you show them a tax return, it does not break this down by month.

Form 8949, which I believe is attached to Schedule D(that is what it appears after in the tax return I got via Turbotax), does ask for date of acquisition/disposition of the capital asset that resulted in the capital gain.

Form 8949 is done on an annual basis, and until the tax year is up, no one can properly prognosticate what his total income will be.  (This is the black hole of income-level benefit determination.)  The rules claim that when the individual has a "change in income", he must notify the Exchange (or the Medicaid office), and there have been some court cases concerning pre-ACA Medicaid and non-steady income.

I would take the attitude that until the year is up - and then until the tax form is due, which folks have the right to delay until Oct 15, not Apr 15 - the income is "undetermined", with the last determined income being the previous year's tax form.  Something else to think about is that the tax filer can file his return as early as Jan 2 (or the first workday of the year), and the Medicaid application is only required once a year, so a good income year can be tucked away as being applicable only between Oct 15 & Jan 2, which means only 3 months of officially having to get ACA Exchange coverage instead of Medicaid - and could probably be explained as an "innocent oversight" if Medicaid enrollment continued through that time.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #24 on: July 14, 2018, 05:30:27 PM »
Wow.  There has been some great information here.  Thank you for contributing and expanding.

DH and I plan on retiring soon with pretty low income, especially if we decide to use a cash buffer for bad years and let investments grow. 

This is tangential to your question, but I think it's worth pointing out: keeping your investments invested doesn't mean mean  you can't realize income, and in fact realizing income in down years could result in overall lower taxes. You can convert traditional IRAs to Roth to realize the income, but keep the money invested. You can also harvest capital gains by selling to realize the capital gain and then immediately reinvesting at a higher cost basis. Regardless of where you land on the Medicaid aspect, both of these are smart things to do in order to at least fill the standard deduction (tax free) and as much as you can of the 0% capital gains bracket without endangering your ACA benefits.

This is a very good point.  We are considering a Roth conversion only if our taxable accounts can't hold us over.  But if Medicaid turn out to be a flop in my state, this is a great way to generate "income."

Not all doctors will take Medicaid patients, or will have quotas.
I believe some states do a means test, so including assets.

Perhaps you might want to research Medicaid? Your question indicates that you don't know much about it.

It is true.  I never even thought about it until I saw some posts were people didn't want to lose their ACA and get stuck with Medicaid.  We wont qualify must of the time, but some years we might be close.  I'll have to take a look at my state to see what is actually offered.   

How would the medicaid agency have knowledge of when you receive your capital gain income? If you show them a tax return, it does not break this down by month.

Form 8949, which I believe is attached to Schedule D(that is what it appears after in the tax return I got via Turbotax), does ask for date of acquisition/disposition of the capital asset that resulted in the capital gain.

You have provided a wealth of information lhamo, thank you for sharing your experience.  I've never really had to deal with monthly income, but if we there are some really down market years this could be a good way to add flexibility.

There is a rule that once someone in enrolled in an ACA plan, even if his income drops during the year, he gets to stay (his choice) in that ACA plan for the rest of the year.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #25 on: July 14, 2018, 05:42:07 PM »
Re: Estate recovery, at least in expanded Medicaid states it does seem to apply only to money paid through Medicaid for long-term care/nursing home stays as of 2013.  Here are the rules for WA:
 
https://www.hca.wa.gov/health-care-services-supports/program-administration/estate-recovery

I don't live in Washington state.  I live in one of the various other expanded Medicaid states that will go after estates/properties/assets of Medicaid recipients to recover costs for ANY Medicaid provided services, and that includes the monthly fee of managed care even if you never use Medicaid services, to the tune of $75K!  I would avoid registering for Medicaid at all costs as long as I live here.

And a good way to get this settle once and for all is to get federal, unitary Democratic Party control, who can pass laws to take care of all the little stuff that has cropped up.  The Republicans are the Party of Death.

I live in solid blue state.  They did expand Medicaid, but the Asset Recovery is still in place for Medicaid services - I was just reading an article yesterday and found no evidence that's there's been anything introduced by lawmakers to change this in these years since ACA became law.  It's apparently not an issue in these Medicaid expanded states based on a published paper a while back (I didn't personally verify each).

Arizona
Arkansas
Hawaii
Kentucky
Michigan
Minnesota
New Mexico
Oregon,
Vermont
West Virginia
Washington
« Last Edit: July 14, 2018, 05:48:40 PM by DreamFIRE »

RedmondStash

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Re: Why keep income above Medicaid limits?
« Reply #26 on: July 14, 2018, 05:47:43 PM »
For me, it's twofold:

1. The Roth conversions, as previously mentioned.
2. The belief that Medicaid was founded to help people who could not afford healthcare. I don't want to take a slot from one of them, or use assets earmarked for them. So yeah, it's partly a moral thing for me. Just because I could finagle the numbers to work doesn't mean it's fair to when I'm sitting on a decent stash.

However, as ACA exchange plans become sparser, more expensive, and less appealing, I must admit I'm looking at Medicaid as a potential option someday. I wouldn't do so if I weren't worried about skyrocketing healthcare expenses with no clear signs of settling down or even predictability; I don't want to lose my hard-won stash to some freak accident or medical emergency and end up on the street. It's also why I'm considering relocating to a country with universal healthcare.

jim555

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Re: Why keep income above Medicaid limits?
« Reply #27 on: July 14, 2018, 05:57:26 PM »
I had an income drop mid year since my UI ran out and I was able to drop into Medicaid even though the yearly income was way over 16k.

Also if you want to avoid Medicaid with Roth conversions, report the conversions as a monthly item.  If you do it all in one lump, it only counts in that one month, then you would technically drop back into Medicaid after that month.

Estate recovery depends on the state so it needs to be investigated for your situation.

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #28 on: July 14, 2018, 05:58:46 PM »
So here is an interesting hypothetical.

Let's say (which is true) we anticipate having far too high an income to ever begin to qualify for Medicaid once retired.  Let's say Roth distributions are not counted as income for purposes of Medicaid eligibility (as this thread has implied).  Even if we structured all our investment income to come from Roths, we expect to have my husband's pension and his SS at some point shortly after he retires, which alone would boot us far above the qualifying income.

First question is...does pension qualify as income? I assume so.  SS certainly does (as my mother's situation illustrates).

However, pension and SS are in DH's name.  What if I also stopped working (or earned only, e.g., 10K/yr) and we filed taxes as married filing separately?  Could I then qualify for Medicaid, even with a household income of 70-90K (which is what we anticipate it to be during FI?)

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #29 on: July 14, 2018, 06:00:49 PM »
ACA is based on annual AGI.

It's based on MAGI.  This can be a significant difference from AGI, for example, if you are receiving early SS benefits, since MAGI for purposes of ACA includes both taxable and non-taxable SS benefits.

jim555

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Re: Why keep income above Medicaid limits?
« Reply #30 on: July 15, 2018, 01:34:19 AM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.
Your mother must be in Traditional Medicaid.  The way around the problem is a "spend down".  SS is paying 1,250 a month what they do is reduce that income by medical expenses (or nursing home fees), that is how you get under the line.  Income $1,250 - $900 for a drug Rx = $350 countable income. 

Expansion Medicaid is based solely on MAGI and has no spend down.

swampwiz

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Re: Why keep income above Medicaid limits?
« Reply #31 on: July 15, 2018, 04:45:43 AM »
And this is the most major downfall of the ACA, even in Medicaid expanded states. Where people like your mom or  poor people who have incomes too large for Medicaid but not large enough to qualify for ACA coverage or can't use the medical coverage on lower cost ACA plans due to high deductibles are left without insurance or under insured while people who have higher incomes can qualify for Medicaid.

This makes no sense.  Unless someone is over 400% of poverty, if someone has an income too large for Medicaid, he will get the ACA premium tax credit.

wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #32 on: July 15, 2018, 09:16:40 AM »
The main reason is that income (unless you are disabled or have a dependent child(ren) has to be incredibly low to qualify.  My mother did not qualify when she had zero assets (not even a car) and a total income from SS of just under 15K/year.  That was a few hundred dollars too much to qualify for Medicaid.  Once she aged to Medicare eligibility it cost about 350$/month for minimal coverage on Medicare. So she lives on about $900/month. 

Again, she has too much income to qualify for Medicaid

Personally, I want my retirement to be higher income than that, or I wouldn't be putting so much effort into saving.
Your mother must be in Traditional Medicaid.  The way around the problem is a "spend down".  SS is paying 1,250 a month what they do is reduce that income by medical expenses (or nursing home fees), that is how you get under the line.  Income $1,250 - $900 for a drug Rx = $350 countable income. 

Expansion Medicaid is based solely on MAGI and has no spend down.

My mother is on traditional Medicare.  But yes, she would qualify for traditional Medicaid using 'spend down' if she were to eventually need it for nursing home/ltc expenses.  My point was that the spend-down approach doesn't work to qualify her for standard medical care/insurance paid for by Medicaid prior to the need for long term care, etc.   Even with no assets, 15K/year is too much income for her to qualify for that type of Medicaid coverage in about half the states in the country that did not expand Medicaid as part of the ACA. 

Spartana made a similar point to the one I was making: although there are apparently hypothetical loop holes (roth income, etc) that some relatively well-off individuals (as on this board) could exploit to qualify for Medicaid, there is a big population of people who are very poor but not quite miserably poor enough to qualify for it.


wenchsenior

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Re: Why keep income above Medicaid limits?
« Reply #33 on: July 15, 2018, 09:20:23 AM »
And this is the most major downfall of the ACA, even in Medicaid expanded states. Where people like your mom or  poor people who have incomes too large for Medicaid but not large enough to qualify for ACA coverage or can't use the medical coverage on lower cost ACA plans due to high deductibles are left without insurance or under insured while people who have higher incomes can qualify for Medicaid.

This makes no sense.  Unless someone is over 400% of poverty, if someone has an income too large for Medicaid, he will get the ACA premium tax credit.

This might be true now...at least until the ACA gets gutted or overturned; I have not looked into this since my mother's situation was so dire prior to 2009.   It would be interesting to run hypotheticals on my mother's former situation under current legislation.

Raenia

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Re: Why keep income above Medicaid limits?
« Reply #34 on: July 15, 2018, 09:46:30 AM »
And this is the most major downfall of the ACA, even in Medicaid expanded states. Where people like your mom or  poor people who have incomes too large for Medicaid but not large enough to qualify for ACA coverage or can't use the medical coverage on lower cost ACA plans due to high deductibles are left without insurance or under insured while people who have higher incomes can qualify for Medicaid.

This makes no sense.  Unless someone is over 400% of poverty, if someone has an income too large for Medicaid, he will get the ACA premium tax credit.

In the expanded Medicaid states, it should be true, but in states that refused the expansion, it is a big problem.  (https://en.wikipedia.org/wiki/Medicaid_coverage_gap)

My mom was in this situation in FL - she had only ~2k of income for the year so far, lost her ACA plan due to a temp job that offered health insurance, which ACA required her to go on, and once the temp job ended, Marketplace said "so sorry, you don't qualify anymore."  FL doesn't offer Medicaid to any childless adults no matter how low your income.  This situation was a big factor in convincing my mom to move up to PA where my sister and I are - PA has expanded Medicaid, so she would qualify.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #35 on: July 15, 2018, 10:46:53 AM »
Person B who earns $20K a year might get ACA subsidies but have to pay $8K or more each year to actually use medical care.

* from Brookings Institute: "In 2015, Jeremy Barofsky, a Brookings nonresident senior fellow, found that among the states that had not expanded Medicaid, there was a substantial gap in coverage for those with incomes too high to qualify for Medicaid, but too low to obtain federal premium subsidies on insurance exchanges. This created a counterintuitive situation in which the poorest were denied coverage while those with slightly higher incomes could receive premium subsidies to buy health insurance."

Person B should get decent CSR and a low premium by getting a silver plan.  At $20K, if they got their MAGI down closer to the low end ~$17K, they would get the best CSR to minimize what they might have to pay out of pocket.  I'm thinking of compromising around $24K (maximum) myself to allow for more spending while staying under one of the subsidy cliffs.  I would have to cut my spending from $50K/yr to $30K/yr to qualify for Medicaid, which would be especially bad to do in my estate recovery state.

DreamFIRE

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Re: Why keep income above Medicaid limits?
« Reply #36 on: July 15, 2018, 11:41:27 AM »
When I went with my sister to see the ACA navigator on Weds I know she didn't qualify for the enhanced silver plan with a $35k income and would have to get a bronze plan with an $7k OOP max plus subsidies premiums. Cheapest Silver she could get even.with subsidies was around $300/month plus high deductible.

Yep, that doesn't surprise me at all.  A small bump up from $24K/yr for me was going to take me over a subsidy cliff and bump my deductible way up.  So $35K/yr is definitely too high for that.   At least a PCT is still available.