Anyone on Medicaid?

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Married2aSwabian
Posts: 265
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: 2824
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: 265
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: 2824
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: 9372
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.

Married2aSwabian
Posts: 265
Joined: Thu Jan 07, 2021 7:45 pm

Re: Anyone on Medicaid?

Post by Married2aSwabian »

Thanks 7Wb5, hope you are able to get health insurance to pony up for the meds you need and that you get well again / your condition becomes more manageable soon.

I’m still kinda surprised at the lack of participation in this thread.

I guess it’s not as exciting as the ERE part about dreaming about what we’ll all do once we’re FI, but healthcare still seems sort of important IMHO. I don’t think it’s realistic to consider push-ups and chin ups as the only health insurance….I do them, nevertheless, but I consider fitness and wellness a good baseline and a means to feel comfortable with bare-bones health insurance.

7Wannabe5
Posts: 9372
Joined: Fri Oct 18, 2013 9:03 am

Re: Anyone on Medicaid?

Post by 7Wannabe5 »

@Married2aSwabian:

I'm having much better luck with getting coverage for my meds and treatments now that I have re-affiliated myself with world-class facility in most-educated-city in U.S., because they have whole departments dedicated to dealing with such problems. However, even though my spending doesn't usually go above 133% poverty level, I still don't like feeling trapped with having to keep my income below that level, even though right now I am too sick to work very much. I start infusions on Friday. Fingers crossed!

chenda
Posts: 3289
Joined: Wed Jun 29, 2011 1:17 pm
Location: Nether Wallop

Re: Anyone on Medicaid?

Post by chenda »

7Wannabe5 wrote:
Tue Jan 25, 2022 4:57 pm
I start infusions on Friday. Fingers crossed!
Really hope it goes well 7wannabe5, glad you're getting good care.

Scott 2
Posts: 2824
Joined: Sun Feb 12, 2012 10:34 pm

Re: Anyone on Medicaid?

Post by Scott 2 »

I agree this is a topic worthy of more attention. Medical care is the single largest financial risk any US based individual faces.


Some further thoughts:

1. For the income ceiling - is it possible to establish a joint LLC or some other corporate entity, take an income from that, using corporate reserves/expenses to smooth cash flow? This is something I've wondered about with ACA as well, but haven't taken time to investigate.

2. For anyone affording expensive medications - assistance programs via the pharmaceutical companies are a must to explore. They may pay your deductible or provide free medicine. It's also possible you may need to switch between largely equivalent medicines, for the sole purpose of better financial support. It all depends on the formulary and prior auth rules for your specific coverage.

3. A non-profit hospital may eat the cost of treatments not covered by your insurance. I don't fully understand why or when this happens. But, it happened for us - in one case several thousands of life changing treatment.

4. With determination of Medicaid benefits being month to month, someone taking retirement mid-year may be well served pursing Medicaid through year end. In hindsight - I would have done this during my first year of retirement. The unsubsidized ACA plan was a terrible value.

cmonkey
Posts: 1814
Joined: Mon Apr 21, 2014 11:56 am

Re: Anyone on Medicaid?

Post by cmonkey »

theanimal wrote:
Thu Jan 13, 2022 12:29 pm
Some states also have asset limits that disqualify you from Medicaid. For example, in Alaska the asset limit is $2,000 for non-seniors. This includes stocks, bonds, checking accounts etc etc.
Didn't know that. Minnesota doesn't have an asset limit (for now). What options do low income Alaskans have besides Medicaid?

cmonkey
Posts: 1814
Joined: Mon Apr 21, 2014 11:56 am

Re: Anyone on Medicaid?

Post by cmonkey »

Married2aSwabian wrote:
Sat Jan 15, 2022 9:08 am

@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?
It was uneventful, just a transfer of $$$. I could have transferred shares actually but since I need to prove income for healthcare, I wanted a single line item. It is 100% taxable but I only converted $19,000 so there won't be any tax to pay because my remaining income for the year is just under 5,000.

My single most important consideration with all financial decisions is to zero out tax wherever and whenever possible. So no income above the standard deduction. No buying retail if second hand exists. Etc..

theanimal
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Location: AK
Contact:

Re: Anyone on Medicaid?

Post by theanimal »

cmonkey wrote:
Fri Jan 28, 2022 2:40 pm
Didn't know that. Minnesota doesn't have an asset limit (for now). What options do low income Alaskans have besides Medicaid?
My understanding is that the only other option is going through ACA marketplace. The limits for subsidies etc are higher here because the adjusted poverty line is higher to account for higher cost of living.

Married2aSwabian
Posts: 265
Joined: Thu Jan 07, 2021 7:45 pm

Re: Anyone on Medicaid?

Post by Married2aSwabian »

7Wannabe5 wrote:
Tue Jan 25, 2022 4:57 pm
I start infusions on Friday. Fingers crossed!
We’re all pulling for you!

So glad you’re able to get care there - some of the best in the country.

Be well.

M
Posts: 423
Joined: Wed Sep 29, 2010 7:34 pm

Re: Anyone on Medicaid?

Post by M »

I am also surprised at the lack of participation in this thread. I would assume if someone is following the ere lifestyle they would have ere level expenses and ere level income and thus almost everyone on this forum would qualify for medicaid...

Personally this is a subject I have thought about a LOT...We are a family of six and last year our expenses were 23,700, under $4,000 per person. This even includes 4 grand worth of eating out, travelling, and entertainment we could cut if needed. We live in a Medicaid expansion state so can have $51,000 in income and still qualify for Medicaid which is...insane. Our withdrawal rate would be around 1.9% if we went on medicaid. This is something I have really pondered about a lot. I keep thinking, certainly this will go away eventually, right? ..Right? Certainly they will add an asset test eventually, or a work requirement...Right? This uncertainty really makes planning for medical expenses challenging.

I do know several people on medicaid in a couple different states and the experience is always very positive. All of their normal doctors accepted it, they got paid to go to checkups, free gym memberships etc.

zbigi
Posts: 978
Joined: Fri Oct 30, 2020 2:04 pm

Re: Anyone on Medicaid?

Post by zbigi »

M wrote:
Wed Feb 23, 2022 7:02 pm
they got paid to go to checkups
Wait, what? People get paid for doing medical checkups?

classical_Liberal
Posts: 2283
Joined: Sun Mar 20, 2016 6:05 am

Re: Anyone on Medicaid?

Post by classical_Liberal »

@cmonkey

Personally I could qualify for either Medicaid or ACA (if I played the conversion game to ensure I qualify) and get free insurance either way.
I have a huge ethical issue with US healthcare as a result of firsthand experience and have instead chosen to opt out of the system by purchasing a health-share. In my personal moral inventory, giving to a semi-religious private organization is a better options than free gov’t subsidized care. This choice costs me about $1200 annual or about 8-10% of spending. It does have some advantages in care (ie you get to choose everything, no networks, etc), but also many disadvantages in out of pocket costs for minor maintenance-type events. Another advantage is that I do not have to play the tax game for insurance purposes; I can do what I want with my taxes each year, and can even earn additional income without fear of losing coverage.

Some longer term considerations…

Making the assumption that US healthcare remains relatively unchanged… Medicare does limit options, particularly if anyone in your family becomes seriously or chronically ill. One may think that doesn’t matter, but if one oncologist advises palliative care, and another gives you a 70% five-year survival rate if you fight (this is a real life example), it may REALLY matter to you if the second doctor is not an option.
As we age, the odds of serious or chronic health conditions rise, so I think it’s very good planning to ensure that you will have enough tax differed assets remaining you can bring yourself above the Medicaid threshold for a few years if you ever feel it’s needed. IOW, don't exhaust all the deferred $$ by 50 or 55 when your risks for disease before medicare peak.

One last note. Medicaid is often retroactive for about one month (in most states, yes in MN). So at any point, if someone becomes ill, and qualifies, the hospital will obtain Medicaid for a patient otherwise unable to pay. The retroactive period will still cover those emergency costs.

Laura Ingalls
Posts: 668
Joined: Mon Jun 25, 2012 3:13 am

Re: Anyone on Medicaid?

Post by Laura Ingalls »

Howdy CL :)
As a person who has used both both ACA and Medicaid at various times in my semi-retired, quasi ERE life I have been happy with the care I have received. But I haven’t had any diagnosis where one provider was saying I could be cured and another said just do palliative care.

I have learned that cheaping out on your medigap plan can be a bad idea. My aunt had a crappy network if you need skilled rehab. My aunt could not find a rehab slot and spent a week longer in the hospital as a result. Then she went home and my mom had to caregive.

My atheist partner would never participate in a health share for his own moral reasons.

Tyler9000
Posts: 1758
Joined: Fri Jun 01, 2012 11:45 pm

Re: Anyone on Medicaid?

Post by Tyler9000 »

We have been on ACA coverage for a while now, and decided early on to get good at manipulating our taxable income to choose our own ACA coverage rather than rely on Medicaid. Even when our work income was zero, between dividends, interest, and deliberate capital gains management it wasn't too hard to stay right at the sweet spot for subsidies. I just think of it as smart tax management.

But obviously every situation is different, especially when it comes to ERE. IMO, the most important thing is to just fit healthcare into your overall web of goals in whatever way makes the most sense.

M
Posts: 423
Joined: Wed Sep 29, 2010 7:34 pm

Re: Anyone on Medicaid?

Post by M »

zbigi wrote:
Fri Feb 25, 2022 9:16 am
Wait, what? People get paid for doing medical checkups?
Yes - my understanding is certain medicaid providers provide a small incentive to encourage annual checkups for preventative care. Think 50 dollars or so. I am not sure how common this is - it may be limited to my state or even the specific Medicaid provider I plan on using.

Then again, my company also pays me a small incentive to get an annual checkup, and I still can't be bothered.

Scott 2
Posts: 2824
Joined: Sun Feb 12, 2012 10:34 pm

Re: Anyone on Medicaid?

Post by Scott 2 »

M wrote:
Sat Feb 26, 2022 9:26 pm
Then again, my company also pays me a small incentive to get an annual checkup, and I still can't be bothered.
Do this. Seriously. Baseline blood work while you are healthy. It's an invaluable reference when things start going wrong. Watching the annual trend can alert you before problems are serious. The return on catching issues early is unbeatable.

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