• filter:
  • Go to page :
  • 1 2345
  • Text Only
  • Search this Topic »
Voting History
rated:
With the new Affordable Care Act (Obamacare) in place, tax planning is even more Crucial than ever because of the subsidies provided to buy health insurance on an ACA exchange. Through some income shifting, and estimation, on can take advantage of some of the loopholes in the law and gain health insurance at little cost. Conversely, there are many sub-poverty individuals who cannot qualify for Medicaid expansion since their state didn't sign up, but through a back door way can still get affordable insurance simply by making large estimated tax payments to a state or projecting future income above the poverty line. For those near the poverty line in a Medicaid expansion state, paying attention to the deadlines can avoid having to cycle back and forth between private insurance and the Medicaid system, which generally offers far less choice than most exchange plans.

All income referenced to is MAGI (which is AGI plus nontaxable Social Security, tax exempt interest, and foreign earned income). Regulations on premium tax credit (with examples)  

Making too much money

If you think the phaseout for the tuition and fees credit or earned income tax credit is abrupt, the ACA phaseout is even more so  . At 400% Federal Poverty Limit (FPL) the subsidy is completely eliminated and there is no cap on repayment amount  . 

So if you are trying to get income below 400% FPL in order to qualify you need to make sure that you'll hit that. The only way to adjust MAGI after December 31 is through deductible IRA/HSA contributions but traditional IRA deductions phase out for single/HOH AGI over ~$60k or MFJ over ~$100k. Since 400% FPL is $62k for a 2 person household and $110k for a 5 person household this quickly becomes nonviable.  To qualify for HSA you have to use an HDHP - I have heard of some exchanges with HSA compatible Bronze plans in Obamacare, but you have to be eligible for HSA prior to December 1 of the tax year. So you have to reduce income below 12/31 which means the usual - contribute max to 401ks, 457s, and 403bs, tax loss harvest to get the $3000 capital loss deduction, and advance business expenses. This also makes income spiking a better deal - if you know you aren't going to qualify for the subsidy, then you could opt to spike income by taking bonuses/income or deferring expenses one year to stay far above 400% FPL, while managing expenses and deductions to remain below 400% FPL other years. Also since recoveries like state income tax refund is treated above the line it is important to manage those so that they don't send someone intentionally above 400% FPL.

The same considerations are at the break point at 133% FPL, where there is a 2% MAGI to 3% MAGI jump.

One interesting loophole in the regulations is the maximum recapture limit on the credit, which can have interesting impacts depending on how you estimate your income. Lower income means more subsidies AND access to special Silver plans that have reduced cost sharing. So for instance a single 60 year old declaring $20,000 in annual income (175% FPL) in LA County gets a $470 monthly subsidy for a "Silver 87" plan with a $2250 out of pocket cap. At the end of the year, they really had a $45,000 MAGI (390% FPL). Normally a $45,000 MAGI qualifies for a "Silver 70" plan with a $6350 OOP cap and a $199 monthly subsidy. Now let's say they got the subsidy for 12 months. The maximum recapture limitation (regulations 1.36B-4-a-3) is $1,250 for the year. But the actual "unearned" subsidy for the year is $3,252, and this for a better plan with a $4100 lower out of pocket cap. Thus, $2,002 (the unearned subsidy above $1,250) is now written off, and up to $4,100 in OOP are never incurred. Just make sure you stay below 400% FPL or else you will have to pay the whole subsidy back (although presumably not the out of pocket cost). 

Generally, due to time value of money, if you can afford to repay the credit should you estimate wrong, you should do so, since those credits only need to be repaid April 15 after the year that you receive the advance credits. I can't tell if you have to pay estimated tax penalty on advance credit repayments, but most people should avoid them anyway due to the 100% of prior year tax safe harbor rule. 

There are better articles that go into the farce of the "estimation" process   for ACA subsidies.   Still, even without fraud, one could have honest reasons not to report changes in income - perhaps the job is temporary or unstable and you want to wait until it is stable before reporting the change in income. Regardless, you take advantage of the recapture cap.

For those who want to take advantage of the subsidy this makes the usual advice to do Traditional to Roth conversions in low income periods questionable as Roth conversions are in MAGI. While this may not be an issue for higher income or younger people (a 30 or 40 year old making 390% FPL gets no subsidy anyway in CA since the Silver plan is deemed affordable as a share of MAGI), that 40 year old making $20,000 in odd jobs and unemployment gained $2,112 in subsidy. Is it worth it to convert $25,000 in the 401k to Roth to fill the 15% tax bracket (the normal advice), and lose that $2,112, which is in effect another 8% tax on the conversion?

Making too little money

First, for states without Medicaid expansion, for those below 100% FPL who can control their income, the obvious answer is to get more income. Sell and immediately rebuy winning investments to reset basis and create capital gains (which may also qualify for 0% LTCG), move tax inefficient investments to taxable, do 401k/Traditional IRA conversions, get a job, gamble and report your winnings honestly, sell things and report the income with zero basis on the items sold (since you have no documentation proving the acquisition cost), etc.

But what if you didn't have to do that?

From a Bogleheads thread   (where I was admonished not to "game the system"): 

My reading of the regulations states that, as long as you estimate at the time of enrollment that your MAGI is between 100% and 400% of FPL, that you are still eligible for subsidies, even though your actual income falls below 100% of FPL. This could happen, for instance, if one lost their job in the middle of the year, which takes them below 100% of FPL. Even if they had to pay back subsidies, an additional provision in regulations limits that to $300 for singles, and $600 for other taxpayers.

§ 1.36B–2 Eligibility for premium tax credit.

[...]
(b) Applicable taxpayer—(1) In general. Except as otherwise provided in this paragraph (b), an applicable taxpayer is a taxpayer whose household income is at least 100 percent but not more than 400 percent of the Federal poverty line for the taxpayer’s family size for the taxable year. 
[...]
(6) Special rule for taxpayers with household income below 100 percent of the Federal poverty line for the taxable year. A taxpayer (other than a taxpayer described in paragraph (b)(5) of this section) whose household income for a taxable year is less than 100 percent of the Federal poverty line for the taxpayer’s family size is treated as an applicable taxpayer if— 
(i) The taxpayer or a family member enrolls in a qualified health plan through an Exchange; 
(ii) An Exchange estimates at the time of enrollment that the taxpayer’s household income will be between 100 and 400 percent of the Federal poverty line for the taxable year; 
(iii) Advance credit payments are authorized and paid for one or more months during the taxable year; and 
(iv) The taxpayer would be an applicable taxpayer if the taxpayer’s household income for the taxable year was between 100 and 400 percent of the Federal poverty line for the taxpayer’s family size. 

(7) Computation of premium assistance amounts for taxpayers with household income below 100 percent of the Federal poverty line. If a taxpayer is treated as an applicable taxpayer under paragraph (b)(5) or (b)(6) of this section, the taxpayer’s actual household income for the taxable year is used to compute the premium assistance amounts under § 1.36B–3(d). 

1.36B–3 Computing the premium assistance credit amount.

[...]
(d) Premium assistance amount. The premium assistance amount for a coverage month is the lesser of— 
(1) The premiums for the month for one or more qualified health plans in which a taxpayer or a member of the taxpayer’s family enrolls; or 
(2) The excess of the adjusted monthly premium for the applicable benchmark plan over 1/12 of the product of a taxpayer’s household income and the applicable percentage 
for the taxable year.

That "applicable percentage" is defined in 1.36B-3(g) and is 2.0% of household income (MAGI) for those under 200% of FPL.

Also, for those making under 400%, a "repayment" clause applies further limiting the actual tax subsidy repayment for those under 200% FPL to $300 for singles, $600 for all other taxpayers.

§ 1.36B–4 Reconciling the premium tax credit with advance credit payments. 
(a) Reconciliation—
(1) Coordination of premium tax credit with advance 
credit payments—
(i) In general. A taxpayer must reconcile the amount of credit allowed under section 36B with advance credit payments on the taxpayer’s income tax return for a taxable year. A taxpayer whose premium tax credit for the taxable year exceeds the taxpayer’s advance credit payments may receive the excess as an income tax refund. A taxpayer whose advance credit payments for the taxable year exceed the taxpayer’s premium tax credit owes the excess as an additional income tax liability.

(3) Limitation on additional tax—(i) In general. The additional tax imposed under paragraph (a)(1) of this section on a taxpayer whose household income is less than 400 percent of the Federal poverty line is limited to the amounts provided in the table in paragraph (a)(3)(ii) of this section (or successor tables). For taxable years beginning after December 31, 2014, the limitation amounts may be adjusted in published guidance, see § 601.601(d)(2) of this chapter, to reflect changes in the consumer price index. 

This refers to a table which shows the maximum subsidy repayment for single taxpayers ("determined under section 1(c)") with MAGI under 200% FPL at $300, or $600 for other taxpayers.  


So for sub poverty level in non-Medicaid expansion states the answer is clear - be more optimistic in declaring income. Note that the exchanges do check reduction in income (to qualify for more subsidy) but don't check increase in income (and, even if this were the case, one paycheck from a seasonal job can be extrapolated for the year). For the super honest, Bogleheads had an interesting tactic   of prepaying state estimated tax in the previous year and itemizing (taking care to pay more than the standard deduction normally received), and then receiving the entire state tax refund as income, thus generating enough MAGI to go above 100% FPL. An alternative way is to declare cash income from self employment, as described in this great Forbes article   (which includes other loopholes and outright frauds).

Unfortunately, this will help dull some of the movement complaining about the "donut hole" in coverage   since some advocacy groups are already publicly encouraging people to be optimistic  .

In Medicaid expansion states, there will be those at the low end that want to avoid Medicaid, since the exchanges may offer more choice. Unfortunately premium credits are not available to those who are eligible for Medicaid (called "government sponsored minimum essential coverage"). Therefore, people will cycle in and out of Medicaid and the exchange depending on income. But, there is a minimum three months grace period to application date, never mind actual receipt of Medicaid. Even if you were ultimately ineligible you are still subject to the subsidy recapture cap.

Under the final regulations, an individual who fails to complete the requirements necessary to receive benefits available under a government sponsored program by the last day of the third full calendar month following the event that establishes eligibility is treated as eligible for the coverage on the first day of the fourth calendar month. Because an individual who timely completes the necessary requirements is treated as eligible for government-sponsored minimum essential coverage no earlier than the first month that the individual may receive benefits, this 3-month time period does not include the time needed for a government agency to process an application.

See also Example 6 under 1.36B-4. Although it uses employer coverage as an example, it calculates how much needs to be repaid and states that it is subject to the cap. So if you are below 133% of FPL in a Medicaid eligible state, then file the paperwork on the last day of the third month after you become eligible for Medicaid. (But how do you know you are eligible if you can control your income at will? That would be based on the Medicaid regulations for eligibility.) This also works great for people who originally qualify for the exchange but then work for an employer with unaffordable or undesirable coverage, but coverage that still meets Obamacare's minimum requirements. An example would be an unemployed person who has exchange insurance but then gets a job which only offers a Obamacare-qualified captive HMO as its coverage option. They don't want to switch doctors, but they never notify the exchange of their employment. They are subject to the annual recapture cap, at least until the exchange recertifies (at which point the person would then perjuring themselves by signing the certification that they have no qualified coverage).

The married filing separately vs. jointly calculations are even more interesting but that is an exercise left to the reader.




 

Member Summary
Most Recent Posts
Thank you both for the quick replies. My income is variable and about half is business (sub-s) income. So I really won... (more)

chedv (Nov. 16, 2014 @ 10:35p) |

Incidentally, they are checking income. My mom got a notice in the mail to send over bank statements because the estimat... (more)

calwatch (Nov. 30, 2014 @ 12:33a) |

I honestly reported my income for 2014 and my wife got a job half way through the year, so I called to report this and o... (more)

dhewbiz (Dec. 01, 2014 @ 10:28a) |

Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
calwatch  said:
From a Bogle heads thread        (where I was admonished not to "game the system"): 

 

 Thats some mind boggling harsh moderation

rated:
pietromoon said:   
calwatch  said: From a Bogle heads thread         (where I was admonished not to "game the system"): 
 

 Thats some mind boggling harsh moderation

Bogleheads - come for the kool-aid, stay to watch the overzealous moderation and stifled dissent. :/

rated:
I'm pretty confused on what to do to get coverage for my father-in-law in CA; I have a grandfathered plan that is unaffected (but he can't be added to it) but since we claim him on our taxes he can't get a subsidy. We are thinking of dropping him as a dependent and having him file on his own in January with no income so he can get Medicaid. Even the 'bronze' plan is out of reach.

rated:
"Honey, don't work extra hours or take that weekend job at the veterinarian's office... we need to keep our income down so we qualify for Obamacare subsidies."

rated:
Ananrefugee said:   I'm pretty confused on what to do to get coverage for my father-in-law in CA; I have a grandfathered plan that is unaffected (but he can't be added to it) but since we claim him on our taxes he can't get a subsidy. We are thinking of dropping him as a dependent and having him file on his own in January with no income so he can get Medicaid. Even the 'bronze' plan is out of reach.
  I think that's a good idea. The subsidy is worth more than the tax deduction. Although reporting no income could be suspicious.

rated:
Blame corporations for cutting their employees to Part Time so they don't have to pay healthcare. Trader Joe's comes to mind. I might not shop there anymore just to protest.

rated:
most of their employees do better with subsidy

 

rated:
calwatch said:   
Ananrefugee said:   I'm pretty confused on what to do to get coverage for my father-in-law in CA; I have a grandfathered plan that is unaffected (but he can't be added to it) but since we claim him on our taxes he can't get a subsidy. We are thinking of dropping him as a dependent and having him file on his own in January with no income so he can get Medicaid. Even the 'bronze' plan is out of reach.
  I think that's a good idea. The subsidy is worth more than the tax deduction. Although reporting no income could be suspicious.

  That is what I'm doing with my Mom. I only save $3000  in taxes with HOH status and dependent deduction.  Silver plan will cost around $5000/yr with no subsidy plus deductibles/copays.  Dropping her as a dependent and getting Medicaid will net me $2000 plus no copays/deductibles(slightly more limited network but we don't mind). 

I have a couple ideas on how I can prove to the IRS that she is no longer my dependent.  I have doubts they will ever go that far but just in case. 

I'm gifting her money this year so she can pay me next year for at least half her "support" cost.  She also has some cash on hand and a lot of jewlery to sell  in future years to pay me back for support. 

Another option is that since I split my Mom's support cost with my brother if she just provides 10% and we each provide 45% no one provided more than half to claim her.  We both "refuse" to  sign a multiple support agreement so no one can technically claim her.

The last option I thought of is to make the dependent fail the $3800 gross income test.  You can pay them for something like household services.  They will have to pay almost $600 in self employment taxes though.  To avoid that you can give them money and have them loan it back to you as an interest only loan at the highest rate without violating usury laws.  For Nevada the limit is 40% so I can just have her loan me $10000.  You would want an official note drawn up (notarized to make it more official) and make actual interest payments into their bank account.  Interest income isn't subject to self-employment tax and the Standard Deduction/Exemption will wipe out the interest income so no income taxes.  The only con here is that if they will need Long-term care from Medicaid in the future that $10000 is now an asset that needs to be spent down before they qualify for medicaid. 

One thing I'm struggling with is if I can assign a value for Medicaid coverage for support test purposes.  The IRS pub states something like welfare(which is a specific dollar amount) is support provided by the state.  The support I provide my Mom is maybe $5-6k/yr.  If I can say Medicaid is a better version of the $5000/yr Silver Plan (since Medicaid has no deductible/copay) and give it a value of $5k+  than the state is providing almost half her support and she's not my dependent anymore.  Realistically I think I can only assign a value based on what Medicaid pays for her doctor visits/labs/prescription.  Assuming she doesn't get really sick and Medicaid's low reimbursement rates it might be $1k at best.

rated:
cr3s said:   Blame corporations for cutting their employees to Part Time so they don't have to pay healthcare. Trader Joe's comes to mind. I might not shop there anymore just to protest.
  There are many companies trying to push their employees below the ACA's new (lower) part time threshold but I haven't heard of trader joe's doing it. I assume you're thinking of them canceling healthcare coverage for part time employees? If so, here's their side of it which agrees with the point of this thread.

rated:
cr3s said:   Blame corporations for cutting their employees to Part Time so they don't have to pay healthcare.
  I'm not sure why anyone is surprised that this prediction is coming true.

rated:
Snezz said:   
calwatch said:   
Ananrefugee said:   I'm pretty confused on what to do to get coverage for my father-in-law in CA; I have a grandfathered plan that is unaffected (but he can't be added to it) but since we claim him on our taxes he can't get a subsidy. We are thinking of dropping him as a dependent and having him file on his own in January with no income so he can get Medicaid. Even the 'bronze' plan is out of reach.
  I think that's a good idea. The subsidy is worth more than the tax deduction. Although reporting no income could be suspicious.

  That is what I'm doing with my Mom. I only save $3000  in taxes with HOH status and dependent deduction.  Silver plan will cost around $5000/yr with no subsidy plus deductibles/copays.  Dropping her as a dependent and getting Medicaid will net me $2000 plus no copays/deductibles(slightly more limited network but we don't mind). 

I have a couple ideas on how I can prove to the IRS that she is no longer my dependent.  I have doubts they will ever go that far but just in case. 

I'm gifting her money this year so she can pay me next year for at least half her "support" cost.  She also has some cash on hand and a lot of jewlery to sell  in future years to pay me back for support. 

Another option is that since I split my Mom's support cost with my brother if she just provides 10% and we each provide 45% no one provided more than half to claim her.  We both "refuse" to  sign a multiple support agreement so no one can technically claim her.

The last option I thought of is to make the dependent fail the $3800 gross income test.  You can pay them for something like household services.  They will have to pay almost $600 in self employment taxes though.  To avoid that you can give them money and have them loan it back to you as an interest only loan at the highest rate without violating usury laws.  For Nevada the limit is 40% so I can just have her loan me $10000.  You would want an official note drawn up (notarized to make it more official) and make actual interest payments into their bank account.  Interest income isn't subject to self-employment tax and the Standard Deduction/Exemption will wipe out the interest income so no income taxes.  The only con here is that if they will need Long-term care from Medicaid in the future that $10000 is now an asset that needs to be spent down before they qualify for medicaid. 

One thing I'm struggling with is if I can assign a value for Medicaid coverage for support test purposes.  The IRS pub states something like welfare(which is a specific dollar amount) is support provided by the state.  The support I provide my Mom is maybe $5-6k/yr.  If I can say Medicaid is a better version of the $5000/yr Silver Plan (since Medicaid has no deductible/copay) and give it a value of $5k+  than the state is providing almost half her support and she's not my dependent anymore.  Realistically I think I can only assign a value based on what Medicaid pays for her doctor visits/labs/prescription.  Assuming she doesn't get really sick and Medicaid's low reimbursement rates it might be $1k at best.

  The head of household status is worth quite a bit when it comes to calculating your taxes.  Sometimes, it's worth thousands!  I would run it on a spreadsheet just to make sure that $5,000 in silver costs is more than $3,000 deduction and tax savings from HOH versus Single filing status.

rated:
TheMeliorist said:   
cr3s said:   Blame corporations for cutting their employees to Part Time so they don't have to pay healthcare. Trader Joe's comes to mind. I might not shop there anymore just to protest.
  There are many companies trying to push their employees below the ACA's new (lower) part time threshold but I haven't heard of trader joe's doing it. I assume you're thinking of them canceling healthcare coverage for part time employees? If so, here's their side of it  which agrees with the point of this thread.

under the new law, any company with over 50 employees must provide health bennies to employees working over 30 hrs.  Trader Joe's cut their staff's hours to 28 hrs to avoid mandatory spending.  They said:

"Depending on income earned outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the ACA, many crew members should be able to obtain health care coverage at very little, if any, net cost."
Wal-Mart did the same thing--unloading their healthcare cost to medicaid--and they got major flak for it.  Don't know why Trader Joe's should get any different treatment. 

rated:
brettdoyle said:   "Honey, don't work extra hours or take that weekend job at the veterinarian's office... we need to keep our income down so we qualify for Obamacare subsidies."
  
Man... imagine living in a country where people have to choose between working weekends or affording health coverage.  Sounds horrible.

rated:
cr3s said:   
 
under the new law, any company with over 50 employees must provide health bennies to employees working over 30 hrs.  Trader Joe's cut their staff's hours to 28 hrs to avoid mandatory spending.  They said:

 

By the way, this 50 employee limit also creates an incentive for small companies to not hire.  France has some limits on companies larger than X employees too and it created a similar incentive.  People try to work around it (I once worked for a French company).

rated:
ahmadcpa said:     The head of household status is worth quite a bit when it comes to calculating your taxes.  Sometimes, it's worth thousands!  I would run it on a spreadsheet just to make sure that $5,000 in silver costs is more than $3,000 deduction and tax savings from HOH versus Single filing status.
 

  I have done that and those numbers are correct.  Difference between HOH w/dependent and Single is an extra $6750 in deduction and a larger tax brackets. The $3000 is difference in taxes owed not deduction. 

rated:
Quitting working has got me under 400%, and now with lower CD rates I might even get under the 300% I need to be to also get State Subsidies from MA. So 2013 health care cost me about $20k, 2014 will be about $6k. Go Obamacare!!!

rated:
Out of curiosity, what are these programs selling mostly? Are they providing lower deductible plans that cover many office visits, etc. or is it more focused on a higher deductible plan of some sort? As I understand it, there is a lot of overhead involved with smaller claims (involving claims handling, etc. for a $100 claim requires too much to make it worthwhile) and so my assumption was that they would probably push more for an HSA type of account to cover the more routine expenses and keep the insurance for more significant issues.

rated:
cr3s said:   
TheMeliorist said:   
cr3s said:   Blame corporations for cutting their employees to Part Time so they don't have to pay healthcare. Trader Joe's comes to mind. I might not shop there anymore just to protest.
  There are many companies trying to push their employees below the ACA's new (lower) part time threshold but I haven't heard of trader joe's doing it. I assume you're thinking of them canceling healthcare coverage for part time employees? If so, here's their side of it    which agrees with the point of this thread.

under the new law, any company with over 50 employees must provide health bennies to employees working over 30 hrs.  Trader Joe's cut their staff's hours to 28 hrs to avoid mandatory spending.  They said:

"Depending on income earned outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the ACA, many crew members should be able to obtain health care coverage at very little, if any, net cost."
Wal-Mart did the same thing--unloading their healthcare cost to medicaid--and they got major flak for it.  Don't know why Trader Joe's should get any different treatment. 

  That is just rational behavior in an irrational world.

rated:
I've started a new company. I care enough about each employee to ensure that all of them receive 100% free healthcare.

I do this by not paying any employee more than 1 times the federal poverty level.

rated:
Have kids. Then the FPL will be higher for you and your income will be a lower percentage of it. Also will enable you to claim dependent exemptions, the Child Tax Credit, and vastly increase the maximum income to qualify for the EITC and the amount you will receive from it.

rated:
ankitgu said:   Out of curiosity, what are these programs selling mostly? Are they providing lower deductible plans that cover many office visits, etc. or is it more focused on a higher deductible plan of some sort? As I understand it, there is a lot of overhead involved with smaller claims (involving claims handling, etc. for a $100 claim requires too much to make it worthwhile) and so my assumption was that they would probably push more for an HSA type of account to cover the more routine expenses and keep the insurance for more significant issues.
  Nope - not being able to turn in your $100 doctor visit is anti-American and the root of all the evils in the healthcare system...

rated:
Thanks for the ideas Snezz, I'll run 'em by my accountant.

rated:
ankitgu said:   Out of curiosity, what are these programs selling mostly? Are they providing lower deductible plans that cover many office visits, etc. or is it more focused on a higher deductible plan of some sort? As I understand it, there is a lot of overhead involved with smaller claims (involving claims handling, etc. for a $100 claim requires too much to make it worthwhile) and so my assumption was that they would probably push more for an HSA type of account to cover the more routine expenses and keep the insurance for more significant issues.
  I mention some sample plans above. The Bronze plans tend to be more like HDHPs (although they offer primary care coverage for $60 per visit, limit three visits) and have a $5,000 deductible. California does not have any HSA compatible Bronze plans yet but Blue Shield has one under regulatory approval. But they are pushing more people, and most who require subsidies, to Silver which has a $2,000 deductible but with most lab tests and office visits exempt from it. However, with lower income, the deductible also gets smaller (the person with 170% FPL I mention above only has to meet a $500 deductible). https://www.coveredca.com/PDFs/English/CoveredCA-HealthPlanBenefitsComparisonChart.pdf 

I think a lot of savvier people, those with no chronic conditions, and those who want a HSA will go with Bronze. In particular Bronze seems great for the early retiree who is living off 401k/IRA withdrawals, and who can't minimize their income to such a level that they qualify for Silver limited cost sharing plans (i.e. they get rental income). If you can get your income to 150% of FPL then get a Silver 93 plan. You'll have to live on $17,000 income which could be challenging. https://www.coveredca.com/PDFs/English/CoveredCA_HealthPlanBenefitsSummary.pdf 

rated:
calwatch said:   I think a lot of savvier people, those with no chronic conditions, and those who want a HSA will go with Bronze. In particular Bronze seems great for the early retiree who is living off 401k/IRA withdrawals, and who can't minimize their income to such a level that they qualify for Silver limited cost sharing plans (i.e. they get rental income). If you can get your income to 150% of FPL then get a Silver 93 plan. You'll have to live on $17,000 income which could be challenging. https://www.coveredca.com/PDFs/English/CoveredCA_HealthPlanBenefitsSummary.pdf  
  They don't seem to count Roth IRA withdrawals in MAGI, so an early retiree can live off as much as they can afford to withdraw from their Roth IRA + $17,000/year from their regular IRA and still qualify for the Silver 93 plan for under $500/year.

rated:
Trader Joes also has a ton of crew that only works 20 hours a week on average, just so they can qualify for benefits that they don't qualify for at their real job. Several other biggies cutting to 28 hrs too and no $500 to help you pay for your Obamacare.
 

rated:
FYI, if you are in a state with a federally run exchange and keep getting the message to wait in line then click this link: https://www.healthcare.gov/marketplace/global/en_US/registration...

rated:
cr3s said:   Trader Joe's cut their staff's hours to 28 hrs to avoid mandatory spending.
 

  I wouldn't be surprised if that were true because lots of companies (from WalMart to darden restaurants) have been doing that but I still haven't found any source, despite searching, that says trader joes has done that (despite many articles covering them dropping healthcare for PT workers). What is your source?

rated:
What an odd world we are living now, typically when you make more money, things start costing less - encouraging people to prosper.

Now you just get penalized for it.

Edit* - spelling

rated:
Something not mentioned was that Obamacare requires that all employees premiums must not be more than 9.5% of the lowest paid worker's salary (with full-time hours qualifying them for group insurance under the employer). If even one employee has an insurance cost (single plan) that exceeds 9.5%, thus qualifying them for a subsidy, then the company pays a penalty based on total number of employees.

Assume the company wants to do the right thing - it also has to find a group plan now that has a single rate that doesn't exceed 9.5% of that employee's income AND provides at least 60% or Bronze level coverage. So that employee makes $8/hr*30hrs/wk, not to exceed 9.5%, and the plan must not cost over $98/month - and it has to cover all other employees. So even if it's possible for Trader Joe's and WalMart to find such a plan, they would essentially be dooming all other employee's to a crap bronze level insurance.

I'm no fan of big business but shoving employee's into Obamacare gives all employees better insurance because of those rules.

rated:
blok said:   What an old world we are living now, typically when you make more money, things start costing less - encouraging people to prosper.

Now you just get penalized for it.

On what planet ?

Top 1% Take Biggest Income Slice On Record
The gulf between the richest 1% of the USA and the rest of the country got to its widest level in history last year. The top 1% of earners in the U.S. pulled in 19.3% of total household income in 2012, which is their biggest slice of total income in more than 100 years.

USA TODAY

rated:
JoeFriday said:   
blok said:   What an old world we are living now, typically when you make more money, things start costing less - encouraging people to prosper.

Now you just get penalized for it.

On what planet ?

Top 1% Take Biggest Income Slice On Record
The gulf between the richest 1% of the USA and the rest of the country got to its widest level in history last year. The top 1% of earners in the U.S. pulled in 19.3% of total household income in 2012, which is their biggest slice of total income in more than 100 years.

USA TODAY


  
This is what happens with excessive money creation and artificially low interest rates. 

 

rated:
blok said:   This is what happens with excessive money creation and artificially low interest rates.
Unsubstantiated theories aside, so where's the "penalized" part ?

The top 10% are next, right behind the top 1%.

If that’s being penalized, then penalize me baby, penalize me hard.

rated:
JoeFriday said:   
blok said:   This is what happens with excessive money creation and artificially low interest rates.
Unsubstantiated theories aside, so where's the "penalized" part ?

The top 10% are next, right behind the top 1%.

If that’s being penalized, then penalize me baby, penalize me hard.

  
Did you read the OP? What does millionaires and billionaires have to do with this conversation? 

rated:
blok said:   
JoeFriday said:   
blok said:   This is what happens with excessive money creation and artificially low interest rates.
Unsubstantiated theories aside, so where's the "penalized" part ?

The top 10% are next, right behind the top 1%.

If that’s being penalized, then penalize me baby, penalize me hard.

  
Did you read the OP? What does millionaires and billionaires have to do with this conversation? 

  They earned money that JoeFriday wants to steal and give to someone else.

rated:
blok said:   What does millionaires and billionaires have to do with this conversation?
What does "millionaires and billionaires" have to do with the top 10% (that are not the top 1%) ?

And, still waiting for the "penalized" part, which has everything to do "with this conversation", that YOU posted.

Try posting about reality instead of your mere unsubstantiated beliefs.

rated:
brettdoyle said:   They earned money that JoeFriday wants to steal and give to someone else.
Ah, the unsubstantiated ad hominems from the uninformed.

Right on cue.

rated:
JoeFriday said:   
blok said:   What does millionaires and billionaires have to do with this conversation?
What does "millionaires and billionaires" have to do with the top 10% (that are not the top 1%) ?

And, still waiting for the "penalized" part, which has everything to do "with this conversation", that YOU posted.

Try posting about reality instead of your mere unsubstantiated beliefs.

  
Well since you dont want to read the OP, this link  is a great example:

"Here's the situation. It's 2013, after October 1st, and Joe D, 59 yrs old, has a wife and two children living with him (the kids never moved out). None of them have insurance. Their total income is estimated to be about $85,000 dollars in 2013 and is not expected to change in 2014, so they're eligible for insurance subsidies under Obamacare since their income is at 363% of the FPL, below the 400% cutoff point.

I'll use another insurance calculator for this example, the Kaiser calculator , which uses premium estimates in 2014 dollars. According to this calculator, a family of four health policy costs $23,047 in 2014 dollars. The good news is that Joe is eligible for a tax credit of $14,972, payable right to the insurance company on a monthly basis, so the insurance costs Joe $8,075, or $673/month. Not cheap, but they're glad to have the insurance, and they'll avoid the ACA tax penalty. 

OK, it's now March, 2015 and Joe is collecting his tax receipts. He did well this year, he got a raise, and his wife found a decent part-time job. So after all the W2's, etc., came in, his income added up to be $95,000. But this is not good as far as Joe's health insurance goes, because his income turns out to be at 406% of the poverty level, and he's not eligible for government tax credits! Joe now owes the government an additional tax of $14,972 for the subsidy payments made to the insurance company on his behalf! "

So, based on that example, you are penalized ~$15k for making $1 more. So where is the incentive for making more money?

rated:
This is another tax on low information and non-savvy people, which goes back to the poverty thread. Most FWFers would monitor their income closely during the year and defer 100% of their final month's income into a 401k if they had to. They would write that check for a traditional IRA, or they would switch to a Bronze HSA Compatible plan and fully fund the HSA just to drop below the line. I might even sign up for a master's program before the end of the year and qualify for the tuition and fees deduction, which reduces MAGI. I could drop it in the next year and declare the recapture of the credit as income, but I already qualified for the subsidy. Unfortunately, the average person doesn't, which is what the government is counting on. Yet another tax paid for by the uninformed. 

Skipping 141 Messages...
rated:
I honestly reported my income for 2014 and my wife got a job half way through the year, so I called to report this and our subsidy went down, then I got an unexpected commission payment last month so now I will owe $2,500 for the recapture credit based on my 2014 tax return prep.

The recapture credit maxes out at $1,250 per person but if you make more than 400% of the poverty level for your household size, there is no limit on the Obamacare subsidy you will have to pay back.

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014