Anyone on Medicaid?

Health, Fitness, Insurance, ...
Married2aSwabian
Posts: 203
Joined: Thu Jan 07, 2021 7:45 pm

Re: Anyone on Medicaid?

Post by Married2aSwabian »

I just double checked https://www.healthcare.gov/glossary/fed ... level-fpl/
We are a family for 3, so $21,960 x 1.38 = $30,305.
I would rather go on an ACA plan, but it’s not possible here in MI for us at our planned income for next couple of years.


I’ve talked with folks at Medicaid and Soc Security as well as Medicare (planning for a few years down the road) this week.
My “friendly” attorney who did our wills just had his secretary call back to inform me that he doesn’t handle “cases like this”. :D I told her it’s a five minute question about asset clawback calculation for Medicaid, but not interested. Asshole.

I know many here have leanings toward stoicism and libertarianism, much of which I agree with. I went back and reread areas of Jacob’s book pertaining to healthcare. We’re already doing everything possible to have good health: quit smoking, exercise a lot, drink very little, vegetarian diet, you name it. I don’t want to be over-insured either, but I am also responsible for a family, not just myself. As far as I know, none of us can do dIY brain surgery or similar if needed.

Having lived and worked in Germany for for four years, I just don’t get all the hang ups, stigmas and politicization of healthcare in America. Humans need it, just like food, water and shelter.

We will be applying for and using Medicaid in the near future for the next couple of years anyway, so I’ll check back and let y’all know how it’s going. As a point of reference, my current employer (small division of German company in US) pays around $34k per year for our BCBS health insurance annually - insane. They pay 100% of premiums, too. The costs are astronomical - the system is broken.

For anyone interested, I also checked DW’s Medicare status, as she’s a German citizen still with green card of course. She worked in Germany for ten years and 8 here. She qualifies for Medicare, BUT would have to pay $274 / month for Part A (hospital stays) unless she works 2 more years to get the balance of 40 credits needed.

Scott 2
Posts: 2007
Joined: Sun Feb 12, 2012 10:34 pm

Re: Anyone on Medicaid?

Post by Scott 2 »

If Medicaid is the win, cool. I agree - the system is broken, all we can do is play not to lose.

The possible optimization of taxes and benefits is my primary consideration for digging in. Apologies if you've already gone through this exercise.


A Medicare credit requires earning something minimal in a quarter - like $1510. Great return on the effort there, if she's up for a little disruption. It could change the ACA conversation. Maybe that impacts her possible social security benefits as well? Hah, seeing that, I feel a need to plan for optimizing mine.

Looking at assets and age in your journal, I'm a little surprised manufacturing the income for ACA isn't an option. Are you accounting for roth conversions, dividends, and any unrealized capital gains? Could you shift to holding high dividend assets in post-tax accounts, to help manufacture income?

Now is the time to mine that stuff, setting yourself up for a better tax position before social security kicks (70 at the latest) and required minimum distributions (IRA) kick in at 72. In my ideal world, by 72, I'll have nothing in the traditional IRA and zero unrealized capital gains.

When calculating MAGI for ACA, are you accounting for the unique calculation rules? From what I could figure out, the only deduction impacting that number is an HSA contribution.

Married2aSwabian
Posts: 203
Joined: Thu Jan 07, 2021 7:45 pm

Re: Anyone on Medicaid?

Post by Married2aSwabian »

Scott 2 wrote:
Fri Jan 14, 2022 10:52 am
Are you accounting for roth conversions, dividends, and any unrealized capital gains? Could you shift to holding high dividend assets in post-tax accounts, to help manufacture income?
We have the vast majority of our investments in pre-tax IRAs over 90%. I have thought about doing Roth conversions over next few years as a way to both qualify for ACA and minimize taxes in retirement. 50% of SS income for example is taxed for MFJ couples with income between $32 - $44k / yr and up to 85% of its taxed over that. Some years, we’ll be in the $32 - $44 range, but if we do more traveling or have unanticipated expenses come up, we’d go over. Then we could tap Roth money for that, to keep taxes lower.

@cmonkey, how did your Roth conversion go? What were your reasons for doing it? Is 100% of conversion taxable in the year it’s done?

Wish I had a crystal ball to know which health insurance would be best. Like all insurance, they’re selling you a promise, which you have no idea how they’ll keep until something happens! I’ve been fortunate to need very little doc care, other than routine exams, etc. Only pills I take are vitamins. You just never know and, unfortunately, there IS a history of cancer in my family. DW and DD are basically healthy, but on a couple of prescriptions.
Scott 2 wrote:
Fri Jan 14, 2022 10:52 am

When calculating MAGI for ACA, are you accounting for the unique calculation rules? From what I could figure out, the only deduction impacting that number is an HSA contribution.
What are the “unique” calc rules? I thought MAGI was pretty straightforward.

Scott 2
Posts: 2007
Joined: Sun Feb 12, 2012 10:34 pm

Re: Anyone on Medicaid?

Post by Scott 2 »

MAGI for ACA is straightforward. It is unique in the simplicity. The games to optimize AGI for taxes don't change MAGI. This makes reaching the income band thresholds easier.

I have no idea how to tell whether the ACA plan (which one???) or Medicaid provides a better experience. My intuition says the plan you pay for. My experience says I don't know. And it's going to change unpredictably every year.


Ignoring plan quality - as a starting point - the argument for filling out your income up to the Medicaid ceiling is very strong. When will you ever get cheaper access to that money? Whether the income comes from Roth conversions, dividends, capital gains, work, etc.


Lifetime optimization of cash flow is a reason I think many FIRE folks end up on ACA. A young retiree with 90% of assets in their IRA/401k has no choice. The 10% penalty for pulling early from an IRA forces their hand. This picks off a lot of people who might otherwise want Medicaid. Fear over penalties (asset recovery or social stigma) picks off others.


Ignore those pools, I think optimizing lifetime taxes against the ACA income bands becomes more squishy. What's the value of filling out the 12% federal tax bracket, as declining ACA support provides an opposing tax bite? Well - how much social security do you expect? How big will your IRA be when required minimum distributions kick in? How conservative is your SWR? Will you have any other income between now and then?

In my projections, we're likely to have high marginal taxes as seniors. The biggest culprits are social security and a conservative SWR. Using the ACA tax window up to 2x poverty level makes sense, but is not a dramatic win. Especially since I chose an insurance plan significantly more expensive than the ACA subsidy.

Much clearer - since we expect to use medical care, there is a strong financial cliff after income surpasses 2x poverty level. Assuming medical costs incur to our annual out of pocket max, we keep only 38% of the next $16k in earnings. It's a strong incentive to cap income when actively using the healthcare system.

7Wannabe5
Posts: 7701
Joined: Fri Oct 18, 2013 9:03 am

Re: Anyone on Medicaid?

Post by 7Wannabe5 »

I am currently on Medicaid plan offered by major insurer. Huge problem for me has been that my highly irregular Semi-ERE income has typically tottered somewhere right around the cut-off line between ACA and Medicaid over the last several years. The system is designed to calculate or estimate yearly income based on monthly income at time of qualification or yearly re-qualification. So, it's a PITA if your net income flow is something like $200 in August but $2000 in November. However, I think this may be more of an issue for those who have multiple small unpredictable sources or income in semi-retirement rather than those who are able to better control the flow of income which is for the most part only coming out of investments in full retirement.

Since I now have a chronic fairly debilitating health condition which will likely require long-term expensive treatment and pharmaceuticals, and also somewhat limits my ability to work, it is currently in my financial best interest to be on Medicaid. The gamble on potential asset clawback is well worth it to me, because my current medical expenses, if only partially covered, would likely amount to at least 1 Jacob per year. In previous years, when I had very low medical expenses, I preferred to generate just enough income to qualify for ACA.

I am also experiencing a good deal of difficulty in getting the insurance company to cover some of my prescriptions and expenses, but it is my understanding that this is common experience with many insurance plans for others who suffer from Crohn's disease, because many treatments are quite new and expensive., because immunology is field still in its infancy.

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