Monthly income 16K with a max Obamacare subsidy???

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This guy has a blog and he shares his wealth and income. One thing striked me. As far as I can tell his monthly income is around 15-16K and yet he is able to report a low AGI. I am not sure what his AGI is but the bottom line he is qualified for extreme subsidy for Obamacare

Here is the how much he is getting subsidy

http://i.hizliresim.com/DBG951.jpg

How is it possible to get such a huge subsidy in healthcare and report a low AGI when your income is so high?

Here is the blog

http://rootofgood.com/december-2016-financial-update/

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lots of deductions

He deducts EVERYTHING as a business expense.

It looks like he just lied on his application (http://rootofgood.com/affordable-care-act-coverage-subsidies-pit...
Blog Guy† said: ...in my application, I listed as income for the year:

$20,000 self employment income
$12,000 retirement income (this would be Roth IRA conversions)
$10,000 investment income (dividends and interest)

...
I have no clue if thatís what my income will actually look like in 2016 but I expect to craft the income stream to be around $42,000.†



forbin4040 said:   He deducts EVERYTHING as a business expense.
††How can you tell?

I did not see that in his blog

forbin4040 said:   He deducts EVERYTHING as a business expense.
† then that number is his income. The number before deductions is just revenue

well you can not deduct everything as business expense

it has to be business related

as far as I see his business income is very small but investment income is high

investment inc† $12K
other income $3K
consulting $125
Deposits $35

it is not the business income it must be something else

So I am still confused


Few points.

1) They didn't verify his income and his projection was off for the year.†
2) Majority of the income is from dividends (12k in Dec, which is usually the highest income month). This wouldn't be *every* month's income.
3) He must likely will have some of this subsidy clawed back /recalculated when he files his 2016 taxes (I hope).

He just replied to my question
-----------------------------

~~Much of the $16k income in December was in tax-deferred accounts, and thatís a once per year occurrence (year end dividends from mutual funds). Our annual adjusted gross income is closer to $40,000. For our household, the max AGI is around $115,000 I think (family of 5). So we could still get some fat subsidies even with a much higher income.

fleetwoodmac said:   well you can not deduct everything as business expense



† Well you can, the question is if the IRS will allow it

Why would he count dividend income in tax-deferred accounts as income? He can't spend it if he's 35...

I got the revenue part

This is a 5 person family so Obamacare subsidy starts at 115K for 5 people family okay I got that

So with all that income how did he manage to lower the AGI to $115K? That is what I don't understand

That isn't his monthly income. It's his quarterly income - he said that most of the income was quarterly dividend payments on his investments, and that his investment income in the other months is almost zero.

This looks like a guy who is very frugal and managed to save a good sized nest egg to retire at 33, and is now living off that nest egg by continuing his frugal lifestyle. So even though he has a high net worth, his income is very low and his expenses are even lower.

workindev said:   That isn't his monthly income. It's his quarterly income - he said that most of the income was quarterly dividend payments on his investments, and that his investment income in the other months is almost zero.

This looks like a guy who is very frugal and managed to save a good sized nest egg to retire at 33, and is now living off that nest egg by continuing his frugal lifestyle. So even though he has a high net worth, his income is very low and his expenses are even lower.

††He has 3 kids and a wife and his real income and AGI is 40K. Then he has to pay taxes on top of that

But when you read the blog he lives large and just took a cruise vacation with 3 kids

Something is missing from the story

His November income was $785
http://rootofgood.com/november-2016-financial-update/

He has irregular income so you can't just take 1 month and multiply by 12. As workingdev pointed out most of his income is dividends and those are generally paid quarterly.

fleetwoodmac said:   
workindev said:   That isn't his monthly income. It's his quarterly income - he said that most of the income was quarterly dividend payments on his investments, and that his investment income in the other months is almost zero.

This looks like a guy who is very frugal and managed to save a good sized nest egg to retire at 33, and is now living off that nest egg by continuing his frugal lifestyle. So even though he has a high net worth, his income is very low and his expenses are even lower.

††He has 3 kids and a wife and his real income and AGI is 40K. Then he has to pay taxes on top of that

But when you read the blog he lives large and just took a cruise vacation with 3 kids

Something is missing from the story

††

The article lists his annual living expenses for 2016 at $38,991 total.

He said the cruise vacation cost $697 total. † †I just skimmed it.. he probably used miles or points or some other discount.

He's a frugal early retirement blogger. † ††


fleetwoodmac said:   He just replied to my question
-----------------------------

~~Much of the $16k income in December was in tax-deferred accounts, and thatís a once per year occurrence (year end dividends from mutual funds). Our annual adjusted gross income is closer to $40,000. For our household, the max AGI is around $115,000 I think (family of 5). So we could still get some fat subsidies even with a much higher income.

† So, the title of this thread is not correct then?† He doesn't have $192k annual income ($16k*12mo).

fleetwoodmac said:   He just replied to my question
-----------------------------

~~Much of the $16k income in December was in tax-deferred accounts, and thatís a once per year occurrence (year end dividends from mutual funds). Our annual adjusted gross income is closer to $40,000. For our household, the max AGI is around $115,000 I think (family of 5). So we could still get some fat subsidies even with a much higher income.

††
fleetwoodmac said:   I got the revenue part

This is a 5 person family so Obamacare subsidy starts at 115K for 5 people family okay I got that

So with all that income how did he manage to lower the AGI to $115K? That is what I don't understand

††
Didn't you already answer you're own subsequent question? Activity in tax-deferred accounts doesn't count towards AGI. And Jerosen pointed out that the guy's income is irregular so you can't take December's 16k * 12 to get the annual amount.

I'm not a regular reader of the blog in question but his post on taxes is pretty good for those inclined towards early retirement.†

-

I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
Yeah I don't really understand why they removed the asset †test for Medicaid. † They could have kept the asset test but simplified it or changed the cut off to at least avoid millionaires getting free medicine.

But unless you game the system like this guy did most people with high net worth will have relatively high income.†


ach1199 said:   
fleetwoodmac said:   He just replied to my question
-----------------------------

~~Much of the $16k income in December was in tax-deferred accounts, and thatís a once per year occurrence (year end dividends from mutual funds). Our annual adjusted gross income is closer to $40,000. For our household, the max AGI is around $115,000 I think (family of 5). So we could still get some fat subsidies even with a much higher income.

† So, the title of this thread is not correct then?† He doesn't have $192k annual income ($16k*12mo).

† OP: Can you edit the misleading title?

UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
But yet if the family was irresponsible, blew all their money, and lived paycheck to paycheck so as to pass an asset test you would have no problem paying for their healthcare?†††

jerosen said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
But unless you game the system like this guy did most people with high net worth will have relatively high income.†


† How did he game the system? The rules were set and he follows them.†

brettdoyle said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
But yet if the family was irresponsible, blew all their money, and lived paycheck to paycheck so as to pass an asset test you would have no problem paying for their healthcare?†††

† they wouldn't pass the income test then

brettdoyle said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
But yet if the family was irresponsible, blew all their money, and lived paycheck to paycheck so as to pass an asset test you would have no problem paying for their healthcare?†††

† Poverty is not always, or even usually, the result of irresponsibility. And no, I have no problem with all of us together paying for universal health care for everyone.†

tennis8363 said:   
jerosen said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††
But unless you game the system like this guy did most people with high net worth will have relatively high income.†


† How did he game the system? The rules were set and he follows them.†

††
Yes he followed the rules. †

I don't think "gaming the system" implies bending/breaking the rules explicitly but instead is using the system to manipulate it or milk to your own benefit in opposition to the desired intent. † † If you disagree on the definition then fine, call it whatever you want.


UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

† This is an otherwise able-bodied, working age guy who decided not to work, and now the rest of us pay for it and subsidize his lifestyle. †He listed grocery expenses of $200 for a family of 5, so there are no doubt food subsidies (Food Stamps, SNAP) involved as well.†

After reading, I think there may be some kind of mental illness involved here. There is no way anybody could think sitting at home and playing NES and mooching off society is the good life. Add to that all the extreme steps he takes to save money. †They never leave the house if they only fill the gas tank up every few months. They eat at other's houses as often as they can to save money. He spent $51 on Christmas presents for his 3 kids. †Of course, saving money is good, but it looks like it consumes his life. †It's like the opposite of a hoarder.†

fleetwoodmac said:   
workindev said:   That isn't his monthly income. It's his quarterly income - he said that most of the income was quarterly dividend payments on his investments, and that his investment income in the other months is almost zero.

This looks like a guy who is very frugal and managed to save a good sized nest egg to retire at 33, and is now living off that nest egg by continuing his frugal lifestyle. So even though he has a high net worth, his income is very low and his expenses are even lower.

††He has 3 kids and a wife and his real income and AGI is 40K. Then he has to pay taxes on top of that

But when you read the blog he lives large and just took a cruise vacation with 3 kids

Something is missing from the story

† $40k with 3 kids would result in no tax liability. Likely negative liability due to tax credits.†

workindev said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

† This is an otherwise able-bodied, working age guy who decided not to work, and now the rest of us pay for it and subsidize his lifestyle. †He listed grocery expenses of $200 for a family of 5, so there are no doubt food subsidies (Food Stamps, SNAP) involved as well.†

After reading, I think there may be some kind of mental illness involved here. There is no way anybody could think sitting at home and playing NES and mooching off society is the good life. Add to that all the extreme steps he takes to save money. †They never leave the house if they only fill the gas tank up every few months. They eat at other's houses as often as they can to save money. He spent $51 on Christmas presents for his 3 kids. †Of course, saving money is good, but it looks like it consumes his life. †It's like the opposite of a hoarder.†

††

If you read further you see the 2016 total spending on groceries is $5753. † †The low amount in December might be due to spending half the month on a cruise ship. †

And his ~$40k income is above the income eligibility limits for food stamps. † Plus I'm pretty sure SNAP still has an asset test.


workindev said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

† This is an otherwise able-bodied, working age guy who decided not to work, and now the rest of us pay for it and subsidize his lifestyle. †He listed grocery expenses of $200 for a family of 5, so there are no doubt food subsidies (Food Stamps, SNAP) involved as well.†

After reading, I think there may be some kind of mental illness involved here. There is no way anybody could think sitting at home and playing NES and mooching off society is the good life. Add to that all the extreme steps he takes to save money. †They never leave the house if they only fill the gas tank up every few months. They eat at other's houses as often as they can to save money. He spent $51 on Christmas presents for his 3 kids. †Of course, saving money is good, but it looks like it consumes his life. †It's like the opposite of a hoarder.†

You should read the blog before making these assumptions. They live in a town where they can bike everywhere, they go on vacations for months at a time, etc, etc. They live a very fulfilling lifestyle for them... and you know what, that is all that matters. They made a choice and are happy. I would much rather be in his shoes than sitting at my desk not spending time with family.†

Also, no food banks or food stamps (at least I think I recall him mentioning they won't do those).

I have read quite a few of the early retirement blogs and the people who respond negatively are the ones who know they will be working until they are dead and don't have a thing to show for it, either.†

workindev said:   
†$40k with 3 kids would result in no tax liability. Likely negative liability due to tax credits.†


††
Yeah. † †I don't know how it figures out exactly as I didn't look at how his income breaks down. † But he's likely not paying any income taxes or a minimal amount and he might be getting refundable credits.




It's very possible to be rich and still qualify for the ACA subsidy. You could have most of your net worth in a paid off house and tax-exempt accounts, and be living off of taxable savings that don't throw off much taxable income. Plus FWF tactics †that pay in miles/points are currently tax-free, so it's entirely possible to travel a lot even with a low income. That's pretty much me right now.†


Most of these me-too blogger types are full of shit! Try to project their small success as something big to get reader base and visitors to their blog site - so they can make more money out of advertising and affiliate programs.

Take their success stories with pinch of salt.

UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.

††

I'm one of those people - 1.2m net worth and my kids are on medicaid.† This is because of 2 things: 1) my state used the medicaid expansion to raise the AGI to which children are able to get on the program - in my case, for a family of 4, as long as you have an AGI under $74k, you qualify.† 2) I contribute the MAX to our HSAs, to our SEP IRA's, and to Traditional IRA's.† Our gross is usually between $100k and $150k, but between ordinary business deductions and these contributions, we can usually get it down below the limit.† Our annual living expenses (not counting extras) are usually at around $42k, so this is fairly easy for us to manage.† Health insurance premiums for the adults are the one thing that's crazy out of control in our budget.†

TravelerMSY said:   It's very possible to be rich and still qualify for the ACA subsidy. You could have most of your net worth in a paid off house and tax-exempt accounts, and be living off of taxable savings that don't throw off much taxable income. Plus FWF tactics †that pay in miles/points are currently tax-free, so it's entirely possible to travel a lot even with a low income. That's pretty much me right now.†
† There was a regular poster on this site who is in this situation. I recall him initially being opposed to ACA and most things progressive, but then he sold his business, retired early, and his income dropped to nothing and then he got cheap/free medical insurance. IIRC, he was worth in the millions.

Don't hate the player; hate the game. I don't hate Trump because he (likely) pays no taxes, but I hate that the tax code is set up in a way that he (and other very wealthy people) can get away with this. I learned how unfair the tax code is when I started my own business. I've heard from others, but most who are benefiting are keeping quiet. I'd be willing to pay more if we had a fairer system.†

tennis8363 said:   You should read the blog before making these assumptions. They live in a town where they can bike everywhere, they go on vacations for months at a time, etc, etc. They live a very fulfilling lifestyle for them... and you know what, that is all that matters. They made a choice and are happy. I would much rather be in his shoes than sitting at my desk not spending time with family.†

Also, no food banks or food stamps (at least I think I recall him mentioning they won't do those).

I have read quite a few of the early retirement blogs and the people who respond negatively are the ones who know they will be working until they are dead and don't have a thing to show for it, either.†


You are correct, I've looked at the blog for maybe 15 minutes now so I don't have the full context. But it is clear to me that the choice that they made isn't in a vacuum. Their lifestyle is being subsidized by other people because of the choice that they made. I would be a lot less critical if they managed all of this without leaching off society. †IMO, the services they are abusing are a safety net that should be for the destitute and those unable to provide for themselves. They are neither of these. They are people who chose to stop working to take advantage of these services.†

You are right, though, that I'll be working a lot longer than they did. But that is also a choice. From what I have read on that blog, it isn't an attractive lifestyle to me. I enjoy eating nicer foods, driving nicer cars, taking nicer vacations with my family, living in a nicer house. Sure, I budget, deal shop, use miles/points, and coupon for these things too. But I would go crazy sitting around playing an old NES, tracking spending, and clipping coupons every day. I actually get a lot of fulfillment out of the work that I do, and I think people are generally happier when they are productive. I have no interest in retiring early for that reason. I'd much rather be a net producer than a net moocher.†

That isn't to say there weren't some good money saving ideas there. Gotta hand it to that guy, he is pretty advanced in his ways to avoid spending money.†

deleted- incorrect info

Skipping 54 Messages...
LOOPHOLE said:   
UncaMikey said:   I'm a long time bleeding heart liberal, but I'm bothered by a guy with $1.7M net worth putting his kids on Medicaid.

Edited to add: live and learn. I thought I was up to date on health policy, but I did not know that the Medicaid expansion under the ACA eliminated the asset test. So, people with low incomes but high net worth can qualify for Medicaid. The logic behind this escapes me.


Don't you realize that the "limousine liberals" created this on purpose?† I don;t blame this guy for structuring his life around the laws but the entire Obamacare fiasco was designed not only for the poor and subsidized by the average family but for the elite & government employees. This guys situation is unique because of the fact that he was a Federal employee, so does the picture get a bit clearer now...Federal employee = special retirement accounts, etc. Now read this post by him:

  • JustinRoGJanuary 6, 2017 10:13 am †Our youngest was placed on Medicaid in 2016 but our older two ended up on our Unitedhealthcare insurance for some reason. But youíre right Ė looking at the numbers they should qualify for medicaid. I donít think weíll have any problems finding specialists since we live ďin the cityĒ with at least one large hospital that takes medicaid patients and the furthest drive to specialists would be UNC hospital in Chapel Hill, about 30-40 minutes away. Iím still a little dumbfounded that we donít owe any copays or deductibles for doctor/dentist visits on Medicaid (maybe we would if we made more??).


†††

† I believe most true liberals (and many moderates) want a single payer system or at a minimum, an option to purchase Medicare. The reason the ACA is unpopular is that many think it didn't go far enough.†

The ACA is a version of the plan Romney instituted in MA and similar to what the Heritage Foundation (a conservative think tank) proposed in 1989. https://en.wikipedia.org/wiki/The_Heritage_Foundation#Policy_inf... †As has been discussed on this forum ad nauseum, there is no way to take care of people with pre-existing conditions unless you require healthy people to pay into the system. You can either force healthy people to pay for the sick or you can go back to the system we had in the past in which people had to declare bankruptcy due to medical bills. Pick your poison.†



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