Retire early and save money on health care

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

Retire early and save money on health care

Postby michpocz » Sat Aug 31, 2013 5:57 pm

Anyone considering moving to a state that offers Medicaid expansion under the Affordable Health Car Act, to save on healthcare costs and retire before Medicare kicks in at 65?
michpocz
 
Posts: 11
Joined: 27 May 2013

Re: Retire early and save money on health care

Postby Texas hold em71 » Sat Aug 31, 2013 10:37 pm

Medicaid eligibility under ACA kicks in at 133 percent of Federal Poverty Guidelines which for a single person is like 15,000 a year. No way.

I don't see the simplified eligibility rules of an income only test surviving long after the first round of news stories of millionaires on Medicaid. Medicaid is intended for the poor and the exchanges for those who are not and don't have access to employer based coverage.
Texas hold em71
 
Posts: 522
Joined: 18 May 2013

Re: Retire early and save money on health care

Postby SteveB3005 » Sun Sep 01, 2013 7:32 am

That's too much work, you got to move all your stuff, I hate moving. The tax credits are so rich on ACA that if, as a couple you stay below 62k or single below 46k income , the coverage becomes amazingly affordable for the 50-64 year olds. My calculations say maybe $400-$600 a month per person on a Silver Plan, those prices put early retirement on the table for a lot of people.


Boomers may benefit most from Obamacare, MarketWatch 30Aug2013
http://blogs.marketwatch.com/encore/2013/08/30/boomers-could-benefit-most-from-obamacare/
User avatar
SteveB3005
 
Posts: 1406
Joined: 19 Feb 2007

Re: Retire early and save money on health care

Postby michpocz » Sun Sep 01, 2013 7:38 am

If you have an MAGI of less than $11,500 you do not get the subsidy if you live in a state which is not expanding Medicaid.

If you retire and have no income accept for withdrawals from retirement accounts, it would be well worth it to move to a state expanding Medicaid
michpocz
 
Posts: 11
Joined: 27 May 2013

Re: Retire early and save money on health care

Postby Texas hold em71 » Sun Sep 01, 2013 9:56 am

viewtopic.php?f=2&t=110274

Looks like it is based on MAGI so withdrawal from 401(k)s and IRAs count. Have you seen something indicating otherwise?
Texas hold em71
 
Posts: 522
Joined: 18 May 2013

Re: Retire early and save money on health care

Postby michpocz » Sun Sep 01, 2013 12:17 pm

So if I retire at 60 and withdraw around $11,600 from my IRA, and that is my only income for the year, I would get the biggest subsidy from the Federal Goverment under the Affordable Car Act? I have not been able to find a good definition for MAGI concerning the Affordable Heath Care Act.

If the above is true it would seem that using money in a taxable account and living off that money plus a withdrawal of $11,500 from your IRA would be the way to go to get the lowest possible health insurance expense until age 65.
michpocz
 
Posts: 11
Joined: 27 May 2013

Re: Retire early and save money on health care

Postby patriciamgr2 » Sun Sep 01, 2013 12:30 pm

You may want to search for "PPACA" and "ACA" on this Forum for earlier discussions of this topic. http://www.ncsl.org/documents/health/defincacamedicdprov.pdf addresses the definition of income.

You should check on the national site for the health insurance marketplace & then link to the site for your own state. There should be a link to a calculator (I believe sponsored by the Kaiser Family Foundation) that calculates your subsidy level based on Modified Adjusted Gross Income.

Because not all providers support Medicaid, some have decided that they want income to be high enough to not qualify for Medicaid, but low enough to qualify for a subsidy.
User avatar
patriciamgr2
 
Posts: 310
Joined: 19 Nov 2007

Re: Retire early and save money on health care

Postby michpocz » Sun Sep 01, 2013 12:44 pm

My state is not expanding Medicaid under the Affordable Care Act. So I have to withdraw at least $11,500 from my IRA to get a subsidy. If my income is below the poverty level I do not get any subsidy help. This gap was caused when the Supreme Court made Medicaid expansion an option to the states. The more money I draw from my IRA, the lower the subsidy. The best plan of action is to take the minimum amount from my IRA to receive the largest subsidy, and then if I need more money, take it from my taxable savings.
michpocz
 
Posts: 11
Joined: 27 May 2013

Re: Retire early and save money on health care

Postby Saving$ » Sun Sep 01, 2013 9:14 pm

michpocz wrote:My state is not expanding Medicaid under the Affordable Care Act. So I have to withdraw at least $11,500 from my IRA to get a subsidy. If my income is below the poverty level I do not get any subsidy help. This gap was caused when the Supreme Court made Medicaid expansion an option to the states. The more money I draw from my IRA, the lower the subsidy. The best plan of action is to take the minimum amount from my IRA to receive the largest subsidy, and then if I need more money, take it from my taxable savings.


Perhaps the workings of the ACA are another factor in the calculation of Roth vs TIRA? The TIRA allows you to create taxable income, which is sounds like something that is needed before you are 65 in order to get reasonable health insurance rates.
Saving$
 
Posts: 753
Joined: 5 Nov 2011

Re: Retire early and save money on health care

Postby rnitz » Sun Sep 01, 2013 9:22 pm

I'm thoroughly confused. Are you planning on retiring on $ 11,500 a year and moving to another state because you can't get a subsidy on your health insurance? The moving costs (and social costs, and lifestyle issues) seem large compared to the benefits of a subsidy to insurance. Am I missing something? Are there other issues (you want to move nearer family, you want to move for the weather, etc.) that I'm not factoring in?
rnitz
 
Posts: 142
Joined: 10 May 2007
Location: San Diego

Re: Retire early and save money on health care

Postby furwut » Sun Sep 01, 2013 11:30 pm

I've seen comments that some are thinking of limiting their taxable income so as to qualify for a subsidy under ACA. I've also seen comments by some of purposefully increasing their taxable income so as to avoid qualifying for Medicaid. There could be a believe that under Medicaid medical care is more limited and of poorer quality.

It also seems there is a provision in Medicaid for "Estate Recovery". It looks like after you die the state has a right/obligation to recover some or all of the costs for your care. So unless you absolutely don't care about leaving a legacy a policy through the exchange may preserve more assets to pass on.
furwut
 
Posts: 259
Joined: 5 Jun 2012


Return to Personal Finance (Not Investing)

Who is online

Users browsing this forum: Igglesman, jared, Workinghard and 33 guests