Subsidy Amounts By Income For The Affordable Care Act (Obamacare)

Patriotic dog and US flagThe Affordable Care Act (Obamacare) is a potentially great way to help lower income individuals afford health care. I’m a supporter of ACA despite the trappings of ever bigger government running our lives because disease and accidents do not discriminate between rich or poor. In a nation as rich as ours, nobody should die or get stuck in a permanent loop of poverty just because they can’t afford medical treatment.

The two most common reasons why people don’t retire earlier are: 1) Lack of money and 2) Uncertainty regarding health care access and costs. As an early retiree in 2012 with a full 30 years to go before being eligible for Medicare benefits, I was worried about health care until I did some research on cheap health care alternatives. Now that I’ve spent a good amount of time studying what healthcare.gov has to offer, I’m not worried but thrilled for the potentially millions of other people who don’t have health care or who have no desire to work into their 60s.

I’ve also discovered that even millionaires will be eligible for health care subsidies. More equality is a welcome relief from the constant class warfare rhetoric and discriminatory policies we hear from Capital Hill.

OBAMACARE SUBSIDY AMOUNTS BY INCOME

When it comes to paying income taxes and receiving health care subsidies, it’s generally better to be middle to lower middle class. The philosophy on Financial Samurai is to be wealthy but blend in with the crowd. Staying in the shadows is even more important as an early retiree because we are no longer contributing as much to society, yet we don’t look as old as we should which may anger some people. We already paid our dues in the form of taxes, hence why we retired. One tip for early retirees is to never tell anybody you’ve retired. Instead, tell them you are unemployed, a consultant, or an entrepreneur to deflect envy and potentially garner sympathy.

The below are four charts I painstakingly put together by inputting income levels in the Kaiser Family Foundation Subsidy Calculator. A Silver Plan is used in the example where the insurer will pay for 70% of the medical expense. Premium expense is capped at 9.5% of income, and out of pocket expense excluding premium expense ranges from $6,350 for a single individual up to $12,700 for a family of four. You are welcome to play around with the calculator to fit your situation.

SUBSIDY BY INCOME FOR FAMILY OF FOUR

ACA Subsidy By Income Family Of Four Chart

SUBSIDY BY INCOME FOR FAMILY OF THREE

Family Of Three Subsidy By Income Chart

SUBSIDY BY INCOME FOR MARRIED COUPLE NO CHILDREN

Subsidy By Income Chart Obamacare Married Couple No Kids

SUBSIDY BY INCOME FOR SINGLE INDIVIDUAL

Subsidy by income for single individual obamacare

ANALYSIS OF INCOME LIMITS FOR SUBSIDIES

* Poverty levels: Income under $23,550 to be exact for a family of four (two adults, two children), $20,000 for a family of three, and $11,490 for an individual are considered poverty levels in the United States. The calculator spits out $0 subsidies, which is a glitch, implying such applicants pay $0 to next to nothing for annual health care premiums.

* Phaseout levels: Income of $94,200 or higher for a family of four, $78,000 for a family of three, $62,000 for a married couple with no kids, and $45,960 for single individuals will no longer receive government health care subsidies. The basic math is 4X the poverty level as determined by the government. Despite the phaseout, the good thing is that it looks like the max % of income one has to pay annually in premiums gets fixed at 9.5% of gross salary no matter what you make.

* Other levels of coverage: The premium and subsidy amounts above are based on a Silver plan. You have the option to apply the subsidy toward the purchase of other levels of coverage, such as a Gold plan (which would be more comprehensive) or a Bronze plan (which would be less comprehensive).

* Out of pocket costs: The out of pocket costs excluding premium costs are capped, depending on your situation. For example, a family of four making $50,000 cannot exceed $10,400 for the silver plan for example. The out of pocket increases to a maximum of $12,700 for a family of four making $94,000. The out of pocket costs for an individual making $30,000 cannot exceed $6,350. It’s good to see these out of pocket costs limited, however, they still seem quite high. A family making $50,000 a year should bring home roughly $35,000-$40,000 after taxes. To spend 30% of their after tax income on health care is a large percentage. Hence it is always important for people to continue saving no mater what their income level. The point is at least we know our backstop cost and can plan accordingly.

ACTION PLAN TO TAKE ADVANTAGE OF HEALTH CARE SUBSIDIES

It’s obviously better to make so much money where you have no problem affording unsubsidized health care. However, let me share some ways in which everybody can better benefit from government subsidies and not just the middle income to lower income population.

* Maximize your pre-tax retirement contributions. The current 401(k) max contribution is $17,500 for 2014. Both spouses can therefore contribute $35,000, thereby lowering their modified adjusted gross income (MAGI) in order to gain more government health care subsidies. The same idea goes for contributing $5,500 each to your IRA for $11,000 total. As you can see from the chart, if you can reduce your MAGI by $45,000 then you will receive roughly $4,000 more a year in health care subsidy! (Read How Much Should I Have In My 401(k) By Age?)

* Start an S-Corp or LLC. Starting a business is a way to reduce your taxable income by deducting all business related expenses. Everyone should check with an accountant first about deductions before going ahead because each business is different. There is a lot of overlap in terms of business expenses and general lifestyle expenses. For example, if you are a Scuba Diving Instructor, how are you going to put together your course and write about your experiences online about scuba diving in the Maldives without going to the Maldives? There’s no law saying you can’t enjoy yourself on business.

* Become a rental property owner. All expenses related to operating your rental property are tax deductible. Add on the non cash expense of depreciation and you’ll easily be able to reduce your rental income and pay less taxes. If you have a rental property in Bora Bora, you can deduct your transportation costs to get there. Not bad at all. (Read How To Pay Little To No Taxes For The Rest Of Your Life)

* Own income producing assets and be debt free. Let’s say you own $1 million dollars worth of property outright that generates operating income of $45,000 a year (4.5% net rental yield). You have no other income, but you have no debt so life isn’t too hard supporting your family of four. Your family qualifies for $5,640 a year in health care subsidies and you only have to pay $2,650 a year. Another example is amassing a $3 million dollar stock portfolio yielding $90,000 a year in dividends with a $25,000 a year deduction in primary mortgage interest. Your MAGI is $65,000 meaning that you and your family of four still qualify for $2,600 a year in health care subsidy as multi-millionaires.

* Check with private exchanges online. Like every good deal shopper, you shouldn’t just rely on one source. I checked with eHealthInsurance.com for very similar plans for a family of four and for an individual and here’s what I came up with: $950 a month for a family of four with a $5,000 max deductible and $210 a month for a 35 year old individual in good health with a max deductible of $2,000. There are many options tailored to each individual case. For those of you who have much higher incomes than $94,000 for a family of four and more than $30,000 per individual and can’t adjust your MAGI down any further, going the private exchange looks like the better option.

Bottom line: It is much better to have a high net worth and low adjusted gross income instead of a high adjusted gross income and low net worth to take advantage of government subsidies. I’m sure the government realizes this as well, which is their way of encouraging individuals to save and invest for their future. By accumulating a healthy amount of assets, the government will also reward you with subsidies. (Read The Average Net Worth For The Above Average Person and What Should My Net Worth Be By Income?)

HELPING EACH OTHER LIVE

As you can see from the charts above, income plays the key role in how much subsidy an individual or a family gets. Together, we are helping subsidize lower income groups to gain health care access that they deserve. Helping others is what being a good citizen is all about.

Those with pre-existing conditions and who are considered of lower health can no longer be denied health care or discriminated against. Yes, Obamacare creates somewhat of a moral hazard when it comes to exercising and eating healthy. However, just as the rich help subsidize the poor through a progressive tax system, the healthy will subsidize the less healthy through the Affordable Care Act. In order to prevent Americans from forsaking their health too much it’s likely that large preventative health care campaigns will be launched to teach Americans about healthier living.

The largest point of contention will likely be how the government determines what income levels are poverty levels and what income levels are considered too much to receive subsidies. It’s difficult to live on less than $20,000 a year as an individual in San Francisco for example, yet the poverty level is $12,000 and below. Healthcare.gov does address cost differentials to some extend by state. It’s too bad a family of four can no longer receive subsidies if they make $94,000 while living in expensive Manhattan where a three bedroom apartment can easily cost over $5,000 a month in rent.

I don’t think there will be push back if large asset owners with low incomes can also receive subsidies. We aren’t going to punish a 55 year old widow who can’t find a job that pays more than $35,000 a year but who owns a nice house that was purchased 30 years ago worth $2 million are we? Of course not.

The greatest benefit from the Affordable Care Act is that if you or your family are experiencing hard times, you will be highly subsidized until income improves. Having at least disaster insurances is tantamount. For those who are considering quitting their jobs to do something new, or others who’ve decided to get out of the rate race early, you’ve now got one less thing to worry about.

Recommendation: I encourage everyone to shop around for private health insurance, especially given the debacle with The Affordable Care Act. The internet has really helped lower the cost of insuring yourself and your family. eHealthInsurance has some of the lowest rates and best coverage given they have the largest network. They are based right here in the Bay Area, and I have met a number of their representatives. Check with eHealthInsurance.com to save money and ensure your financial health.

Regards,

Sam

 

 

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Winston says

    Great article, Sam! I’m glad you took the time to look into it and break down the numbers for all of us. Unfortunately, I think that most of the people that are against the ACA/Obamacare have reached that stance on principal instead of by examination.

    • Nathan says

      I am opposed to the ACA because the economics don’t make sense. Subsidizing more people into an insurance market, while at the same time limiting or reducing compensation for such services (Medicare) will only result in shortages of Doctors taking new patients and increasing wait times to see specialists. If you subsidize you get more of it (demand curve shifts right, P increases, Quantity increases), limiting compensation reduces the supply of such services (supply shifts left, Price increase, quantity decreases) result: Ambiguous shift in quantity of care, and price definitely increases.

      • Financial Samurai says

        Nathan, that’s what private health networks are for. People who have financial means can simply opt to pay more for better service. My doctor has a $1,500/year concierge plan that provides weekend access, an even more comprehensive physical, and his private mobile for questions.

        I’ll sign up if my health begins to deteriorate. The ACA doesn’t restrict people from paying more and getting better service if they want to pay more. We’re talking about helping the uninsured and those who can’t comfortably afford health care.

        • Nathan says

          Private exchange insurance plans are still subject to affordability targets set forth in the ACA and the cadillac tax for rich benefits. For companies that are in both public and private exchanges the risk pool to the company is the same so premiums will rise on the private exchanges when the reimbursement rates are capped in the public option. You are not insulated.

      • Rick Caputo says

        Please, the only docs quitting are the ones close to retirement . Docs love medicare because they must be paid in 14 days. My friend wrote the software. I believe the oath they took doesn’t mention money.

        • mark says

          Can you source this?
          I have a friend that runs a physical therapy practice and she is always complaining about how inconsistent the government payments are.

      • smibbo says

        WHen price changes, demand nor supply curves shift. When it is price that changes, there is movement along the curves. That’s called a change in quantity demanded. That’s econ 101 and that’s exactly what’s happening now with the ACA: lower prices have resulted in increase in quantity demanded. That doesn’t necessarily predict anything about supply.

  2. Cash Rebel says

    I hadn’t looked at the charts too closely until this point because I have employer sponsored health insurance, but you make a really strong point. If you can bring your taxable income down to a reasonable level, you can get great subsidies even though you’re a millionaire. Now I need to sort out whether I’d have a moral dilemma with doing that. Probably not, it’s just playing by the rules…

    • Financial Samurai says

      Being asset heavy and income light is the name of the game. The government is fully aware of this and by giving subsidies to lower income folks, they are indirectly ENCOURAGING people to save and invest their money over their lifetimes. This is great for personal finances long term. Not sure where the moral dilemma is coming from to build assets unless you think the government is unaware of their policies.

      • Mr. 1500 says

        Cash Rebel hit on just what I was thinking. So, if I have $2,000,000 in the bank, but can live on $30,000, I can get insurance at an incredible discount.

        I too feel a bit weird about it, but like you pointed out, I’ve already paid a load in taxes.

        I wonder if this will decrease unemployment. Perhaps it will unleash a load of newly minted retirees creating job openings?

        • Financial Samurai says

          Indeed, one of the key positives of ACA, subsidies for millionaires!

          Have a $2 mil portfolio yielding 3% for $60,000 and no debt and get a $3,700 a year subsidy according to my chart above!

          The government is encouraging us to save aggressively, invest and build assets! A win for the nation.

  3. Holly@ClubThrifty says

    I think that the subsidy levels are ridiculous for a lot of reasons. $94,000 is not that much money and I’m offended that that’s considered the cut-off for the “rich.” My personal premiums will double under the ACA from $377 per month to $738 per month and we’ll still have a 10K deductible with a maximum out of pocket of $12,700. If we pay our premiums and hit our out-of-pocket max, we will spend over $21,000 on healthcare in a year. That, to me, is completely absurd. Of course, we could get a plan with a lower deductible but that would just cost more per month and wouldn’t be a good value unless one of us got extremely sick.

    The ACA is not affordable except to those on the very bottom who are getting highly subsidized premiums.

    • Financial Samurai says

      I don’t think President Obama is saying $94,000 for a family of 4 is “rich.” I think he’s saying that if you make $94,000 or more, you no longer need subsidy. He told us during his re-election campaign that $200,000 or more in income is considered rich, and the level where he wants to raise taxes.

      I think making $94,000 in Indiana is not bad no? And you mentioned in your excellent post (http://clubthrifty.com/affordable-care-act-cruel-joke-middle-class/) that you guys make “much more than $94,000,” so is it really that bad? This is how those who are making over $380,000 a year for the longest time were feeling, paying 36% Federal and now 39.6% Federal taxes and being demonized despite paying the most taxes.

      What health care plan/network were you using first? Have you checked out a place like eHealthInsurance.com to get a free private exchange quote to see how it compares yet? That’s what I recommend for folks making much more than the subsidized amounts as determined by ACA.

      At the end of the day, it’s about helping the poor and those struggling to get by.

      • Holly@ClubThrifty says

        We have Anthem now for $377 per month but our plan expires next year. I checked the exchange and the cheapest plan was $738 per month with a 10K deductible. I also checked eHealthInsurance.com and found that the cheapest plan was over $800 per month.

        I’m sorry, but cutting off subsidies at 94K is pretty much the same thing as a tax. If, at the end of the day I’m paying significantly more than other people, what difference does it make? I also remember distinctly when President Obama said that the ACA would lower premiums “by up to $2,500 for a typical family per year.”

        Are we not a typical family? Two 34-year-old adults with two small children? And yes, $94,000 is plenty of money in Indiana but it isn’t enough to justify such absurd premiums with a high deductible to boot.

        I don’t have a problem “helping the poor and those who are struggling to get by.” However, I do have a problem with people making 94K possibly having to pay 20% or more of their income for healthcare. I also have a problem with my family’s premiums doubling just to subsidize all of that. I don’t think there’s a certain income level where you aren’t allowed to complain about your premiums doubling. And if there were, it definitely shouldn’t be 94K.

        And, for the record, I’ve always been for single payer WITHOUT the health insurance compaies involved, WITHOUT the ridiculous income penalty cut-offs, and WITHOUT policies that encourage individuals to earn less.

        The ACA was sold as the “next best thing” to single payer. It isn’t. The ACA is going to be awful for the economy when millions of people have thousands of dollars less per year to spend and invest. It doesn’t take an economist to figure that out.

        • Financial Samurai says

          I agree it does suck that your premiums are doubling. One thing to consider is that your premiums would have gone up next year with Anthem, regardless. So the question is, by how much incrementally due to ACA?

          Do you think the ACA will help create sympathy for the highest income earners who pay the highest marginal tax rates and highest absolute tax dollars and still are asked to pay more? Perhaps the ACA will inadvertently reduce class warfare as more middle class entrepreneurs who voted for higher taxes without having to pay more themselves start feeling the pain of the wallet.

          I’ve always believed that first the government will come for the rich, and then they will come for everyone else. Perhaps this is happening now as health is unavoidable. But at least folks who need health care most will gain access.

          You mentioned you guys make much more than $94,000 a year. $94,000 a year is like making $200,000 in San Francisco given our $840,000 median home price which buys something not so desirable. Let’s say your much more figure is $125,000 a year in Indiana. At $300,000 equivalent a year in SF, I’d be annoyed with the increase, but I would just chalk it up to the way things will be.

          I’ve seen America’s future, and I’ve embraced it. There’s no point fighting the Government as they will run you over. Instead, we must think smarter and shelter our income or at least downplay what we make. Big brother is watching. Always.

        • Holly@ClubThrifty says

          “Do you think the ACA will help create sympathy for the highest income earners who pay the highest marginal tax rates and highest absolute tax dollars and still are asked to pay more? Perhaps the ACA will inadvertently reduce class warfare as more middle class entrepreneurs who voted for higher taxes without having to pay more themselves start feeling the pain of the wallet.”

          I think that could be accurate. I personally think that 200K is a low bar to set for higher tax rates anyways since so much of the wealth in this country is accumulated at the very top. I think I’m slightly biased because of the people I’m surrounded with, but I still feel like 200K is middle class. My brother and SIL in law make 200K and live nearly month to month because they have six kids and live in the most expensive town in the state.

        • Rick Caputo says

          People have not read the bill, there is no mandate. If you don,t pay the fine the law states the gov. won’t come after you. and prevents liens to collect . Page 139

      • JT says

        Fellow Hoosier here. $94k in Indiana is a lot — easily $200k in SF since there are plenty of high-quality homes that are in the $100k range, and our state income tax is flat at ~3%. A family of four could max retirement accounts, own a home, and potentially pay for private schooling for their kids on roughly that income.

        It’s worth noting that Indiana will have some of the highest Obamacare premiums in the country. Why? I’ll admit my own ignorance here and say I have no idea whatsoever, but would welcome any explanation.

        I partially agree with Holly. I think her primary concern is how the subsidies phase out. Up to $94k you can only pay up to 9.5% for health care. One dollar past that and, in Holly’s example, your max could be 20%+. It’s kind of like how earning $113k sucks because payroll taxes hit 100% of your income.

        I’m not too keen on Obamacare, but I do like the fact that I know I can get health insurance no matter my employment situation or my health. For single people who can’t rely on a spouse’s health care, the freedom to choose a career without consideration for coverage is an intangible that has monetary value. As a single dude, I dig it. Without it I would be forced to make suboptimal decisions just for insurance coverage starting at age 26.

        tl;dr We’re all biased by our own position.

        • Holly@ClubThrifty says

          Hey fellow Hoosier! =)

          Also keep in mind that we just sold our house in Hancock County and are moving to Hamilton County where housing is significantly higher. So, $94,000 doesn’t go as far as it would in Hancock County or nearly any other county in the state.

          Our higher income this year is mainly due to the fact that I basically worked two-full time jobs from January through April. Next year, it might be less and we could be nearly subsidy levels after contributing to SEP IRA, health savings account, etc. So, we may actually fare better next year than we would this year.

          Honestly, I never think it’s a bright idea to “chalk things up to how they’re going to be and live with it.” Sure, complaining won’t change anything but quietly accepting it isn’t an option either. I think we should all complain about things we’re unhappy about, loudly if needed. Otherwise we all might as well bend over, grab our ankles, and quit watching the news or caring about anything altogether.

          • greg says

            As far as I can tell, the ACA uses MAGI to determine your subsidy. This means that you will NOT be able to use your SEP or IRA’s, 401 k’s or Health Savings accounts to lowere your inceome for subsidey purposes.

        • Financial Samurai says

          If you can buy a high quality home for $100,000-$150,000 in Indiana and earn the same, then that’s like Holly making $1-$1.5 million a year in SF since that’s what a good quality home in a safer location costs!

          I would not bother protesting a $800/month premium if I was making $1-$1.5 Mil. I’d count my lucky stars! :)

        • Financial Samurai says

          JT, I think we know why Indiana may have some of the highest premiums. It’s based on the health levels of the Indiana population.

          But then again, $1,000/month for a family of 4 would be good value for folks living in NYC, California, Jersey etc, so maybe Indiana isn’t so expensive at all.

        • Jenna says

          Good point about income and median house price. If you’re making much more than $94,000 a year in Indiana, that sounds like a great income!!!

      • Pam mccarty says

        I work for the WIC program. Everyday we see people who are on government programs who come in with Coach purses, nice phones and are going out of town on trips. So many of the women on WIC are not married and are having children left and right. After working there for 24 years I do not feel the way I used to about helping the “poor” Now I feel we are giving the store away and those who come after us and work and make any kind of money are going to be paying for those who don’t for many years to come. Pam

        • Holly@ClubThrifty says

          Yeah, but my 160K house in Hancock County would sell for about 175K in Hamilton County, not 1.5 million!!!!! =)
          Plus, living in Hamilton county will allow me to send me kids to the top-rated schools in the state…for free.

          • Financial Samurai says

            The point is if you are earning $125,000 and can buy an awesome house for $175,000, that’s like earning $1,000,000 to buy an awesome house for $1,350,000 based on JT’s example.

            Your $175k house might very well sell for $1.5 million in a middle of the road SF neighborhood.

            Just think paying more for ACA as your patriotic duty and all is good! If it makes you feel better, I’ve paid more than $1 million in federal taxes alone over 13 years since college. I doubt I’m getting that much more in benefits than the median income earner.

  4. Austin says

    First of all, this is a great article.

    The ACA is anything but affordable. Fascism.

    Sure, we can game our taxable income down to play the system. But, only like 3% of population has the both the intelligence and drive to do that.

    • Financial Samurai says

      Austin, how is the ACA unaffordable when before the ACA there were no subsidies? There’s no gaming the system. Our government is encouraging us to invest in assets and businesses to build wealth. They know if we become financially fit, the government won’t have to take care of us as much. So as a reward for building a lot of assets, we can retire earlier and potentially gain subsidies as well.

      Please elaborate on your position as to why you think ACA is unaffordable and fascist. The median household income is ~$52,000 a year. There are subsidies up to $94,000 for a family of four, which means the large majority of the population can receive subsidies if they want to retire early, work a part-time job, travel, be an entrepreneur, etc.

      • Austin says

        Sam,

        You clearly take offense to my concerns with the ACA.

        First of all, I respect you and your intelligence. I am quite sure that you have interesting insights into this matter. I don’t care to enter into an argument and am more than willing to consider alternative viewpoints.

        My concerns with the ACA stem from the fact the populace will naturally need to subsidize those subsidies which were not a concern before the ACA. The subsidies you speak of must be paid for by someone. You say, “the median household income is ~52,000 a year” and that there are subsidies up to $94k for a family of four. Surely I don’t have to remind you that that makes up roughly 90% of the population. In effect, 10% of the population will be subsidizing 90% of the population. This, certainly, is not capitalism. At best this is socialism. I would be tempted to say that this is at worst corporatism but it is not.

        And, here is why it is not corporatism. Within the insurance field there is a concept known as the “death spiral”. A recent NPR broadcast discusses death spiral in depth. In short, the idea is that if a particular health care provider takes on too high of an at risk profile they will naturally have to raise rates across the board to compensate for those who burden the actuarial tables. The following year, when the price rises take effect, they will naturally face attrition from those healthy customers who can no longer afford the increased premiums. This phenomena compounds to lead the corporation into a “death spiral”. It’s a legitimate concern that the health care system, forced by the government, could face the same set of events in aggregate. Already we are seeing providers revoke policies literally by the hundreds of thousands.

        But, from a short sighted sense. I suggest running your own circumstance through an exchange and see what kind of premiums and deductibles you receive. I have done so. I found that the premiums were roughly what I would expect while the deductibles for the “silver” plan were in the 6k-10k world. Way way way above what I would find acceptable. Thus, unaffordable as a practical matter.

        • Financial Samurai says

          Austin, I’m not offended at all about your concerns for ACA. I have similar funding concerns, but the American way is to pass the costs off to our children and to let rich people pay for it. Who am I to go against the American way?

          Just like how a progressive tax gets the rich to subsidize the poor, the ACA is no different to help the poor and the unhealthy.

          $6-10K out of pocket is a lot for the Silver plan, however, how many of us actually get into accidents or medical situations that requires us to spend $6-10K? It’s not every year. And during those none years, everyone is hopefully saving.

          There’s no point fighting ACA b/c it’s here to stay.

  5. Untemplater says

    Thanks for making this so easy to understand! I’ve been a bit confused on how the ACA works but now it all makes sense. The tables you made are really helpful to grasp what’s being offered too. I certainly hope there will be more corresponding education and outreach for people to better learn how to stay healthy, exercise, and eat right. We need to get more preventative conditions like type 2 diabetes, obesity, heart attacks, and strokes in better control.

  6. Konrad says

    Hi Sam, thought-provoking post as always. I wonder how you came up with your figures for subsidy amounts? I used the Kaiser calculator to which you linked and it confirmed that the income cutoff for premium subsidy for a single person was 400% of federal poverty level or $45,960 in 2014. This is quite a bit higher than the $30,000 you cite in your table. Thanks!

    • Financial Samurai says

      Konrad, I was wondering the same thing, but when I plug in any number above $30,000 per individual (1 person in family, 1 adult over 21, no kids) out comes the $0 subsidy error. I went back again and plugged in $35,000, $40,000, $45,000 and it still comes out as zero. Being consistent and going up to 400% of federal poverty level would seemingly make sense, but I don’t see it.

      What is the subsidy amount for $35,000, and $40,000 you see?

      • Konrad says

        Subsidy @ $35,000 income is $1,062/yr.

        Subsidy @ $40,000 income is $587/yr.

        Which makes sense since it ties to the 9.5% cost of premium % to income calculation.

        But do a Google search and you’ll the $45,960 maximum income for subsidy cutoff is well documented. Weird.

        • Financial Samurai says

          Doesn’t add up given the calculator spits out a $181 subsidy for an individual making $29,000 a year. A $1,062/year subsidy on $35,000 a year when the plan only costs $2,535 a year in this example sounds like a lot. Must be different plans as the explanation for why the subsidy stops at $30,000.

          But I hear you on the $45,960 maximum income for an individual = 400% of poverty level.

          Did you get the numbers from the calculator linked in the post?

  7. Done by Forty says

    This is one of the more thoughtful pieces I’ve seen written on the ACA by personal finance bloggers. As you noted, the key for early retirees is acquiring assets and minimizing taxable income. And I love the notion of the healthy subsidizing the cost of healthcare in the same way that high earners subsidize via taxation – great comparison.

    • greg says

      Not minimizing taxable income..that would be much more fair..you have to minimize you MAGI. That is your AGI after you add back in your IRA and/or 401K deductions and other deductions…

  8. Kristy says

    I think people are complaining because even if you have private insurance currently your rates are going to almost double. I do not have evidence of this myself (yet), but have heard from others whose insurance premiums are skyrocketing. As Holly said, even if you make $94,000 a year, if your premiums are $800 a month that is still a lot of money to be spent on healthcare.

    Before having children, my premiums at the office were $1,600 a month, which included maternity coverage. I still had copays of $20 a visit and a deductible (though I can not remember it was at the time). I work for a small company and they can not (or will not) pay for the coverage for their employees, however, they do offer insurance. After having children, our family switched to a private insurer where we pay $518 a month. That is a huge savings. Even though it did not cover my sons tube surgery when he was 1 to the tune of $3,000…..we still saved on premiums.

    I don’t mind helping other people who are struggling, but my guess is that the people who really need the insurance are not going to sign up, even with the subsidies. Thus, the premiums are still going increase for everyone that does use it. I could be wrong, but from what I have seen and heard from my husband’s employees, they are not planning on signing up for the health insurance. They are going to pay the fine.

    • Financial Samurai says

      Score one for the private exchanges then to save you 40%? It just seems like ACA simply provides more options for all income types across all work types.

      The other question is, if more money is being paid with less service, then who is making all the money? We have to invest in those entities! Unless of course the entity is the bottomless pit government.

      • Kristy says

        I would say the ACA provides options for the lower income levels, however, for the higher earners they are going to pay more regardless (or so it appears based on my limited knowledge and anecdotal evidence). I also agree with Steve below, I just don’t have faith in the government to handle this correctly. We will see what happens I guess.

      • Kristy says

        By the way, I still can’t log into the site to see what my premiums will be. I tried again last night so I could compare what I am currently paying through a private company to what I would have to pay for the ACA.

  9. Stevo says

    I mentioned in my last post that due to the ACA my current premiums went up 50% and my deductibles more than doubled. My insurer stated in the letter this was directly related to the ACA. The latest correspondence this past week was to inform us retirees that there will be a meeting in January to inform us of the likelihood that our group will get another rate hike and be kicked off the dental and Vision portions of our plan come April. Less insurance, increased costs, increased out of pocket. I expect the next correspondence to be even more dismal.

    Now that I’ve come across as a selfish sob, let me say I’m for insurance for everyone. Utopia has arrived! I just don’t have faith in our government to do it right. 300,000 people received notice in Florida that they will be kicked off their plans. It looks like this is where we’re headed for me and my retired friends in Vegas too.

    Sam, if the government were a private business would you invest in the ACA over Humana, USPS over FedEx. So far for me none of the promises were kept. There have been nothing but surprises. Bad ones.

    • Financial Samurai says

      Utopia for all Steve! Love it!

      Don’t look beyond insurance companies to blame ACA in order for them to jack up their premiums so they can simply make more profits. Everyone MUST fight and do their due diligence on insurance of all types since there are so many options.

      I would invest in anything that had a monopoly and the world’s mightiest arsenal of weapons to get people to do what I want. Give me all your money or die is a good business model!

      • Stevo says

        With regard to your last statement, I do wonder if there was collaboration between insurance and government on the ACA. The monstrosity wasn’t written overnight. Insurance lobbyists wrote it long before the 08 election and have found a way to use the government to bend the people to its will. They got 16% of the economy in the process. I think I would invest in the key players in the private sector who put the plan forward, they will profit handsomely. How do I find that out? Prob too late.

        Steve

        Las Vegas

    • JW says

      I think you’re confusing the ACA with the insurance company, it’s merely the law. Humana, Kaiser, BCBS, etc. are still providing the insurance (whether you buy through an exchange or through an HMO or some other avenue.) Your analogy is a kin to saying would you invest in the right to receive mail on weekdays over the USPS…

  10. Ken says

    I’m against the ACA because it’s just another tax. I don’t currently have health insurance, but now the Gov’t is requiring me to get it. Something I don’t want. And if I don’t get it I pay a fine. And every year the fine grows exponentially. They are requiring me to buy something I don’t want so it helps pay for people who cannot afford it. It’s Socialism. My wife and I combined make roughly 55k/year and we’ll have to pay at least $400/month for some crappy plan on the exchanges, a plan we don’t even want. That $400/month would better serve us staying in our pockets to pay for regular bills and expenses of living with the rising costs of inflation. But the Gov’t knows what’s best for us, we’re not allowed to make our own decisions, and we must obey. The fine is roughly $300 for us the first year, then $2,000 the second year we don’t get insurance, and then $12,000 the third year without insurance. Another thing that pisses me off is how everyone’s premiums will go up because they are now subsidizing people who make poor life choices that would normally bear the burden of higher premiums. People who smoke or are grossly overweight will cause everyone’s premiums to rise since they cannot be charged more for their “conditions”. And if they don’t get enough healthy people who don’t need health insurance paying for those that do the entire system will collapse. Who knows, maybe that’s what they want after all.

    • JW says

      I hope you’re also for gay marriage, pro-choice, and legalization of marijuana too, because those are issues where the gov’t imposes their will on the people. They’re also freedoms that a specific partisan line typically rejects, alongside the ACA, allowing them to be terribly inconsistent with their logic and reasoning.

      This is a program that finally requires all people with means to pay for their own coverage, as a responsible contributor to society. Frankly, I don’t want to pay for you or your wife when you (heaven forbid) get caught in an accident or with an ailment that you can’t afford the cost of healthcare for. And you can rest assured that you won’t have to pay for me!

      The mandate to have insurance is as much about self responsibility has taking care of yourself in the first place.

  11. Micro says

    My company is still going to offer us health insurance but they are switching us over to a high deductible plan. Because of this, we now qualify to open up HSA accounts. This will save me a lot of money in taxes and let me build up a nice e-fund for medical expenses when I get older and will likely need it. Even though I have to pay more for my prescription every month, the tax savings actually puts me ahead $700 next year. It might not be perfect (single payer would have been nice or at least a public option) but it at least attempts to address a huge problem we have. There are far too many who do not have access to basic health care. Which given the wealth of our nation, is ridiculous.

  12. Joe says

    Thank you for pointing out the access to care point. With all the rhetoric and buzzwords that get tossed around (fascism, big government, socialism, etc) critics never seem to offer an alternative solution to providing EVERY SINGLE American access to affordable healthcare. We are the United States for crying out loud. If anything the red tape surrounding ACA is simply an example of what too much focus on gaining consensus gets you in passing a bill.

  13. Justin @ RootofGood says

    Great post, Sam! I have to laugh at the level of contention among many posters. I mean I get their concerns, but so much outrage over a government program that is along the same vein as what EVERY OTHER INDUSTRIALIZED COUNTRY IN THE WORLD does?

    I for one look forward to living in the 21st century. A time when the poor, disadvantaged, and underserved can now get access to health insurance. They have always had healthcare, just the kind found at the emergency room. You know, the very expensive kind. The kind that taxpayers have been paying for already.

    The only logical argument for denying lower income citizens access to health insurance and health care is to deny them access to emergency rooms. Have a bouncer at the front door where the ambulances pull up. Proof of insurance or no admittance. They could even have an undertaker right next door to efficiently pick up the bodies left piled outside the emergency room when they can’t get emergency care. Either accept that scenario as optimal, or figure out a way to get care in a cost efficient manner. My 2 cents anyway.

    As for how to fare well under obamacare with the subsidies, you have it right. Keep your MAGI low enough to scoop up a decent subsidy. And for states that haven’t extended Medicaid, make sure you have enough MAGI to hit 100% of the federal poverty level or you won’t be able to get any subsidy (and can’t get on medicaid).

    One technique I plan on using to keep my income high enough (at 100% or 133% FPL) is the Roth conversion. I can convert enough of my Trad. IRA to Roth to get to a desired MAGI in any given year. This “income too low” problem is something I face as a very frugal financially independent person. Having 3 kids also means our FPL is a lot higher than a childless couple’s or a single persons.

    • Holly@ClubThrifty says

      “so much outrage over a government program that is along the same vein as what EVERY OTHER INDUSTRIALIZED COUNTRY IN THE WORLD does?”

      This is the problem as I see it. The ACA is not along the same vein as regular single payer that the rest of the industrialized world enjoys. The ACA discourages people from earning more and punishes those who do. It keeps the hugely profitable health insurance companies making billions of dollars per year. It does nothing to control costs or encourage the use of preventative care. And, we’ll still be burdened and hassled by health insurance company bills and red tape, huge premiums, and huge deductibles.

      I would be thrilled to have single payer paid for through progressive taxation. I agree that everyone deserves healthcare. This isn’t the way to do it.

      • Financial Samurai says

        Not sure how ACA discourages people from earning more. Instead, the ACA encourages people to:

        1) Make so much they don’t need subsidies
        2) Save and invest to build assets and live off those assets even if they are in the millions because subsidies are still given to millionaires.
        3) Start a business/buy rental properties to take advantage of deductions. Entrepreneurship and homeownership are two parts of the American dream.

        In no way am I feeling discouraged to make less money at all. Are you feeling discouraged to make less?

        • Holly@ClubThrifty says

          Sam,

          Please stop pretending that your financial inclinations are typical. Most middle class people aren’t going to use the ACA as a reason to buy investment property or start building massive assets that they can live off of. Most middle class people are just getting by.

          I personally am not feeling encouraged to earn less but I think those who are getting subsidies may. For instance, at certain thresholds you may lose part of your subsidy if you get a part-time job. And those who get Medicaid know that they need to keep their income under a certain level to keep it.

          My problem with the ACA isn’t how well it’s going to work out for YOU, or me for that matter. It’s about how it will work for everybody else. As I illustrated in my own post on the topic, a family making 50K with the bronze plan will either have to choose between highly subsidized premiums or a ridiculous deductible. The ACA sucks.

          • Financial Samurai says

            I can only speak for myself about how I feel, and I feel emboldened the ACA helps me get health care if I need to get health care through the government. Although I currently won’t get a subsidy, at least I know what the back stop cost is so I can plan accordingly. When there is a temporary tax cut, people don’t spend more, they SAVE because they feel taxes will simply go up the following year. With the ACA, this is a new permanent health care solution, so now people can mentally feel more comfortable about moving on to do something else, and can also budget accordingly.

            And this post is also written for everybody else, not just me. That’s why I’ve included the subsidies for singles, couples, family of three, and family of four, which basically encapsulates 90%+ of the population who could potentially qualify. Nothing is perfect, but I choose to look at the positives since we can’t change the system now.

            Here is a recent comment below.

            “I for one is excited to enrolled in ACA. I’ve always had insurance through my employer and since I’m self employed now I had no insurance. I’m relatively healthy but do go in for routine check ups. I got turned away for service earlier this year by a doctor’s office who stated I should just go to the emergency room. I argued that the cost of ER for something that wasn’t an emergency would be astronomical. They said at least it would be “free.” Mind you I was ok to pay out of pocket but my money was no good. The doctor wanted insurance.
            Anyhow my premium is actually less than what I was paying when I was working as an executive with a comparable plan. I guess I am that target market who is young healthy guy who can help subsidize the others. I’m ok with that knowing I do have coverage in the event of a health emergency.
            My friend who is a contractor and using Cobra had been able to slash her cost close to 50% through the exchange.”

  14. Shaun says

    I’m wondering if any parts of obamacare help with any of the points listed in the “bitter pill” time magazine article which points out how hospitals massively overcharge patients/insurance companies for things like bottles of tylenol or basically everything they can. Tough to read that and even come up with words as to how frustratingly broken that system was/is. Hopefully bringing in millions more people isn’t just adding new customers to a broken system and there are actually reforms that make a difference in the law somewhere.

  15. krantcents says

    There are a lot of other reasons to reduce your taxable income than just medical insurance. Investing in a business or income property are great ways to increase your income and use the tax code to subsidize your effort.

  16. Joe says

    No complaint here. We are still on my wife’s employer sponsor plan. When she retires, our income will be pretty low so I’m sure pretty sure we’ll get a little subsidy.
    My mom should be able to get a lot of subsidy because she doesn’t make much at all. I’ll need to call up and enroll soon.
    I’d rather have public healthcare too. Hopefully we’ll get there someday.

  17. The Phroogal Jason says

    I for one is excited to enrolled in ACA. I’ve always had insurance through my employer and since I’m self employed now I had no insurance. I’m relatively healthy but do go in for routine check ups. I got turned away for service earlier this year by a doctor’s office who stated I should just go to the emergency room. I argued that the cost of ER for something that wasn’t an emergency would be astronomical. They said at least it would be “free.” Mind you I was ok to pay out of pocket but my money was no good. The doctor wanted insurance.

    Anyhow my premium is actually less than what I was paying when I was working as an executive with a comparable plan. I guess I am that target market who is young healthy guy who can help subsidize the others. I’m ok with that knowing I do have coverage in the event of a health emergency.

    My friend who is a contractor and using Cobra had been able to slash her cost close to 50% through the exchange.

    So for some of us it’s working.

  18. Maverick says

    Wow, I knew this topic would be a lightning rod. I thought I’d share my example. Like Joe/RB40 I’ll remain on my wife’s plan for now. The wife’s plan, like other corporate plans I assume, are being changed to align with the ACA. That means deductibles in the employee plan are going up in 2014. I tried to get on the government website to check out prices in my state…no go, system down or not working fully. I went to ehealthcare and their prices have gone up to match the ACA guidelines of the metallic plans. Bottom line is that healthcare cost for us two adults is ranging from $1,300 – ~1,500 per month in premiums when I compare to my wife’s corporate plan which is ~200 per month as payroll deduction.

    Now for my opinion. While I believe it would be nice to have a backstop for medical services, I just don’t trust my government to get this ACA working even close to the promises made…for years, if ever. I worked in the aerospace/defense industry and got to see just how poorly in general our US Government works on RFPs (request for proposals), their SOWs (Statements of Work) and requirements documents. If you want to know why projects usually go over budget and don’t meet expectations, go first to the requirements document. If you get a hold of it and read it, you will likely find it’s weak or bloated. In other words, you get what you ask for. This is why the Presidential helicopter got cancelled…the govt kept on adding technical requirements; more features, electronic hardening, increased protection from radiation, which adds more weight…so now I need more engine power…gee this is going to cost more! This is what’s now going on within the walls of the Canadian software company who wrote the code for the healthcare web site.

    Again, in principle I’d like for it to succeed, but I believe Obamacare will be the legacy that will haunt this president and well documented in the history books.

    • Financial Samurai says

      I wonder why we didn’t hire an American company to create healthcare.gov. Kick backs perhaps?

      $1,500 for you and your wife doesn’t sound right at all. How do you come to this? Did you use the calculator in the post? My examples above are pretty standard for couples and it’s nowhere near what you say.

      • Holly@ClubThrifty says

        It’s probably his age.
        I plugged in our info and changed it so that we were 54 instead of 34…plus our two kids. If we were 20 years older, the cheapest premiums available start at $1,241 per month and go up to $1,650 per month. If we were 64, we would be praying for Medicare to kick in because the cheapest premiums available would be $1,646 per month for a plan with a $10,000 deductible. To have a $5,700 deductible, our premiums would be over $2,100 per month. Should this be considered affordable for a family that makes 94K per year?

        • Holly@ClubThrifty says

          I also ran the numbers for a few different scenarios for my state (Indiana):

          Two 44-year-olds, no kids: plans start at $628 per month with a $12,000 deductible
          Two 54-year-olds, no kids: plans start at $952 per month with a $12,000 deductible
          Two 64-year-olds, no kids: plans start at $1,357 per month with a $12,000 deductible

          This is not affordable for families making $94,000 per year. A childless 54-year-old couple making slightly over $94,000 per year would have to pay almost $12,000 per year in premiums and still have a $12,000 deductible to hit before any coverage kicked in! If they got sick, they would have to pay over 25% of their GROSS INCOME in healthcare costs.

        • Financial Samurai says

          I would take 20 years of compounded returns and increased savings and pay $1,650 a month vs $800 a month. I bet people at 54 are much wealthier than people at 34. Makes sense. We have to compare relative variables. And as we’ve learned, assets are more important than income here. At 54, most people’s homes are very close to being paid off as well.

          Maverick, how much more percentage wise or absolute would you say your net worth is vs 20 years ago?

        • Maverick says

          In general, I’d have to agree with you FS. Let’s see, 20 yrs ago…gee, I dunno for sure, maybe 4X assets today excluding housing. I’ll say this, earlier this year when I solidified my early retirement dream, I did plan for just under $1,300/month for medical. I’m going to have to re-address my going forward spreadsheet plan and add an inflation factor of 8%/year for medical inflation and 3% for overall inflation to the remainder of my budget.

          [in deep thought] Maybe I should start a blog to help pay for medical? I feel odd without a hyperlink for my name! :)

        • Holly@ClubThrifty says

          Yeah, Sam..

          I don’t think that anyone is arguing that the wealthy won’t do okay. But, what about those who aren’t wealthy? What about my friend, for instance, who just got “the letter” from her insurance company that her plan is going to expire on March 1, 2014. They’re a self-employed married couple in their 50′s who have hit the 100K mark in income the past two years. And since they’re both healthy, they’ve been paying about $500 per month for a catastrophic plan.
          The letter from the insurance company stated that they’d have to pay over $1500 per month to stay on a similar plan that meets the new ACA guidelines. And they checked the exchange, and found nothing cheaper since they already have a very high deductible.

          How would you feel if your expenses just rose $1,000 per month while you had two kids in college? How can you continue to dismiss these kinds of results when they’re so evident all across the country? All you have to do is read a few news stories to find hundreds just like this one. And, it’s only going to get worse as more people get kicked off of their plans and find our what kind of price increase they’re in the with the new exchange.

          • Financial Samurai says

            I would feel bad if I had to pay $1,000 more a month. But if I was making their type of income in Indiana with 25+ years of saving and investing under my belt, I wouldn’t expect anybody to feel sorry for wealthy ‘ol us. It would be my way of helping those with less financial means. It’s the same way every time I had to pay six figures a year in income taxes and the government raising taxes higher to 39.6%. Just gotta pay and hope the money gets redistributed to help others.

            Take a look at all the success stories of people saving $8,000+ a year online or even on Twitter.

    • Holly@ClubThrifty says

      But, your comment assumes that all people in their 50′s are well off, which you and I both know isn’t true. What about those who have had financial hardship? Or who haven’t “saved and invested” for the past 25 years and are just now trying to catch up?

      If you have to push down one segment of the population to pull up another, have you really accomplished anything? If you have to create a whole host of new problems to solve existing problems, have you really solved anything?

      There were winners and loser before the ACA took hold. All the ACA does is redefine who those losers and winners are.

      • Financial Samurai says

        Let’s talk specifically about your $100k friends because talking in generalities becomes an endless debate. How are they doing financially?

        I do believe someone in their 50s making $100k is generally more well off than someone in their 20s making $30k.

        • Holly@ClubThrifty says

          I think they’re doing fine but they have two kids in college. So, their monthly budget will take a $1,000 hit in the near future, and they don’t even get a lower deductible to show for it. She told me that they’re going to pay the penalty next year at least then see how it goes from there. I think they’ve earned plenty but it doesn’t sound like they have the room in their budget to pay $1,500 per month for healthcare.

  19. Maverick says

    The Canadian SW Co was the lowest bidder, I would presume. Now the Canadian company is getting a lot of help! I hope they have good contract administrators and lawyers, because this is going to be messy to clean up. From my understanding, many, many lines of code will be trashed an rewritten. I also understood our govt made updates and new requirements near the website launch date. Gee, good recipe for failure, right?

    Since I couldn’t get to the govt web site for quotes, my numbers are from ehealthcare and from my wife’s “retiree” plan prices. I’ve had colleagues from my former employer confirm these numbers as well. Not cheap to be an early retiree for medical. That’s why I firmly believe we need to ration healthcare more effectively to manage cost. People won’t like it, but that’s related topic for another day. :)

  20. Maverick says

    Oh, I just looked at Group CGI Inc., the Canadian SW Company. It appears that their stock actually went UP after the website launched! Moral here is to buy the healthcare stocks and take your dividends to pay the healthcare premiums. Can’t beat ‘em, join ‘em.

    • Financial Samurai says

      Damn, shoulda bought the company. Too busy trading Apple and Netflix stock.

      Anybody who goes against the government will be crushed, fined, and thrown in jail. We must comply and try to go with the flow. Lots to be made betting with the government and the Fed!

      Resistance is futile.

  21. D says

    Taxable Income does not = MAGI. In your dividend example you reduced income by the mortgage deduction, but the mortgage deduction reduces AGI to Taxable Income. Would have no impact on MAGI (which is basically AGI plus tax exempt interest IIRC). Now if it was margin debt, then the investment interest expense would lower yield, which would lower gross income, which would lower AGI. But margin debt is variable and has a lot more nasty elements than a fixed rate mortgage.

    That said, the real action for the asset rich, early retired is to get the cash into IRAs and other sheltered accounts, limit your income generation and use a HELOC, or spend down non-sheltered assets to handle cash needs without spiking the income.

    My guess is these games will be lessened when I am ready in ten or so. Alas.

  22. MH says

    @Ken
    So if heaven forfend something happens to you or your family, and your medical costs are 10s or 100s of thousands of dollars, you are going to go it alone? Or are you going to sign up on the way to the hospital? Or just let whatever happens happens?

  23. JW says

    Great article, Sam.

    I support the ACA, but I’m not blind to its shortcomings. Paying $800 a month for health insurance would be prohibitively expensive for me right now on a $100k+ income. However, it isn’t socialist…no one is required to get health insurance through this outlet. My corporate HMO is still going to provide affordable insurance for me…and many, many companies will be doing the same for their employees.

    I think we forget that this program is for ppl who can’t get coverage elsewhere or choose not to work some where that provides a group plan.

    Last, the ACA can only be improved upon, and IT WILL!

    At the very least we can all still vote in or out the officials that will (or don’t) make or fight for the changes we want, don’t let yourself become passive to politics – local and Federal!

    P.S. Sam, I believe the source on your charts is wrong, the data came from The Kaiser Foundation, no? I know what you were doing, but Let’s try to be honest with the facts so the readers aren’t mislead.

    • Financial Samurai says

      JW,

      This is the paragraph I wrote above the charts,

      “The below are four charts I painstakingly put together by inputting income levels from the Kaiser Family Foundation Subsidy Calculator. A Silver Plan is used in the example where insurance will pay for 70% of the medical expense. Premium expense is capped at 9.5% of income, and out of pocket expense excluding premium expense ranges from $6,350 for a single individual up to $12,700 for a family of four. You are welcome to play around with the calculator to fit your situation.”

      So as you can see, I give credit to Kaiser Family. And I indeed spent more than an hour creating these charts on my own. It’s like an artist who paints a famous landmark. I’m signing my name on my work. You are free to do the same.

      Regards,

      Sam

  24. Little House says

    Nice breakdown, Sam. I’m fortunate that my profession covers our health care benefits in full, but I’m holding my breathe this month as the new policies are rolled out. I’m a little concerned about how the healthcare act will affect them. As for retirement, I won’t be covered (I missed out on the “benefits for life”) and will have to fend for myself. Maybe by then this nationwide healthcare plan will have the kinks all worked out. Fingers crossed!

  25. Dorothy says

    I have a question some of you might think is stupid. But here goes… we are 2 people on social security income. We do not work outside the home, and one of us just went on Medicare a few months ago, the other is 63, so one person needs health insurance. We just had to cancel our insurance plan we had for so many years because it went up to over $1,600 a month for just one person based on a new age bracket.

    Anyway to get to my question….I went to the exchange site and put in all our info. Our combined SS checks are just around 27,500 total. Our monthly mortgage payments are 2,000 per month that we pay from our savings account. We don’t really have any other large expenses, cars are paid for, property tax is included in mortgage payment. When I put the info in at first, I did not put in any expenses or mortgage, just our SS income. It said a premium of 775.00 – 1,020.00 per month, choose between 4 plans, with a subsidy of over 700.00, so we would only be paying roughly between 50.00 – 250.00 depending on plan choice. Fine by me.

    When I had put in our figures with our mortgage payment in there, it kicked me into Medicad with no monthly insurance premium at all, so I eliminated the expenses section. I do not want Medicad and I want pay for this insurance every month. How does the mortgage deduction work? I saw it mentioned briefly in a post here but don’t understand it.

    Can you get in trouble for not claiming your mortgage payment as an expense deduction, in other words paying more for health insurance than you are really supposed to? Are mortgage payments in whole deducted from the income section to reach the MAGI that rates are based on? Is it the whole monthly payment or just the “interest” part of your monthly mortgage payment (excluding principal & property tax) that counts? Should our son be giving us the money to pay our mortgage payment to make it “legitimate” or paying it directly for us to eliminate that expense on our part?

    I truly do not understand this and hope someone can explain this part of it better. I’d be willing to pay up to 400.00 per month for medical insurance, but seems the government doesn’t want our money! We cannot afford the 1,600 premium for just one person by going off the exchange. Thanks in advance!

  26. Sam Davis says

    Saw on “Fox Noise” that if you accept a subsidy for healthcare beside Medicare – it is “Medicaid” & assets, (home) will become property of gov’t. Given its “Fox” I question this, but I am checking nonetheless. If true, this is alarming.

  27. LW says

    I am 51 and have a severe hereditary heart/aorta problem. I am asset heavy and income light. I have savings and investments, so I do not qualify for medicaid and in TX it is not an option anyway (TX is one of 26 states that opted out of medicaid increase). The act and the website did not plan for those 26 states opting out or for people who cannot work. I fall into a category of being too poor (no income) to get a subsidy. My premium went from $177/mo to $434/mo. I can afford to live for 10 more years if my health allows it and the stock market doesn’t tank. I have been denied disability even though I worked & paid in my entire life and will probably not live long enough to draw SS. Last year I worked parttime for 8 months and my condition took a dramatic downslide. I now have dissected carotids to go along with my severely dissected aorta. I am too sick to work, most of the time too afraid to leave the house. I watch my much wealthier friends get the great rates for the premium plan and cry. I was against ACA, but then thought it would actually help me – wrong. The only good thing I have received is the fact that no one can deny me insurance because of my bad health. I should have stayed with my old plan and then maybe I could afford to live a little longer. In my eyes, this seems to be not a plan for the poor, but for the wealthy.

    • jj says

      I am sorry about your situation. I am unclear as to what you would like to have happen though? I am a disabled person and have been for 15 years. I pay 100 for medicare. If you were to qualify for Medicare you would end up paying close to $400 a month for that if you are single if you included a medicare supplement, which you need with severe medical problems as medicare only covers 80%. I pay $185 for that. I know this because I tried to wing it for awhile without the supplement and it cost me much more. Then you must add on your prescription drug benefit. I pay 70 for that. So total I pay $365 and I have no assets but an old car and a house that is not close to paid for as I became disabled so young.

  28. Claire D says

    My husband and I net 28,000 a year at the moment in San Francisco and are being quoted about $600 per month for health coverage ( on the low end). Who do we call? This is impossible it’s almost a quarter of our income and we are just above the poverty line, but too poor to take this on.
    Thanks for any help
    Claire

  29. Sidney says

    Sam,
    I’m working on some modeling for a non-profit. Any chance you can send me the .xlsx of the screenshots in this post?
    sv

  30. jj says

    I am unclear as to how you have been able to afford your medical costs with such a cheap policy. I also have serious medical problems and when I had a mid range policy I was getting buried in debt with my medical problems. Now with ACA the max set at like 6000 max. I had around 20,000 out of pocket four years in a row just for prescriptions.

    I do not think people really had any idea what happened to a lot of us WITH INSURANCE if we developed a chronic health problem. They do not understand that prior to this you could easily loose everything you accumulated and end up on the street even if you had health insurance. Moreover, if we lost our insurance we were out of luck due to preexisting and were on the way to loosing our houses in order to pay for healthcare. I was so young when I got sick but I was lucky I had a retirement account I could start burning through and help pay my med expenses. I am not complaining because thank God I had it.

    Now I have medicare with prescription plan and supplement costs me around 360 a month and that is comparatively cheap. It does cover just about everything though. BTW I have a graduate degree and was known enough in my field that I could call just about any corporation in my field and gotten flown out for an interview and look around. I am putting this out there because people think if they worked hard and were good at their job and had health insurance they were safe with the old plans. Not true. Once I got sick that all education and experience meet absolutely nothing. I could have easily been homeless if medicare had not kicked in. And I luckily have lots of people that love me. My “good” insurance sucked long term.

  31. gw says

    ObamaCare is going to destroy my finances, my home and/or my health.

    And no, this is not some GOP troll saying this. I was a 2008 Obama campaign volunteer, the team leader for my community. And this is a true story…..

    Six months ago I heard Obama say on the news that if you like your health insurance plan, you can keep it. So I did, and ignored all the health care brouhaha this winter. I thought the first 2014 bill I received from my provider was for two months, and just paid it. Then found out yesterday that, no, it had been for ONE MONTH. My monthly premium had DOUBLED!

    I went into shock and scrambled, finding that though the new policy application period has passed, I qualified to seek a “marketplace” quote. But all the policies available are $200+ a month MORE than my previous policy, with less coverage!

    I can’t afford this! I’m 59 years old, living on savings. My income is too low to qualify for a “subsidy” and my state has no Medicaid expansion. I suddenly find I have the choice of going without insurance, risking my health. Or paying for a policy I can’t afford, at the cost of my savings, my assets and possibly my home.

    Go bankrupt, lose savings/house. Or lose access to health care. Which would you choose?

    I’m in great health, slender, active, healthy diet, rarely see a doctor outside of annual check-ups. I’m a smoker, but unlike everyone else, my blood pressure is low, I’m not obese and I’m not on any prescription drugs. Moreover I’m frugal and careful to stay out of debt. I’d be fine if not for current state of apoplexy.

    I have to decide today, for if I don’t buy a policy today there will be a gap in my coverage and I’m not sure I can buy a policy later. I’m in shock. Nobody cares. You remember the Obama campaign logo, with the road going into the hills? Well, I’m just the roadkill.

  32. Greg Collings says

    If MAGI is used for subsidey calculations, then one cannot lower his AGI by contributing to IRA’a and 401k’s correct?

  33. Linda says

    So does ira contributing count tward lowering magi under the afforadable care act or not? One site says yes and another will say no?

  34. Debbie says

    We were forced to change our individual insurance last Fall and could not find anything available that was not ACA. We always believed that as individuals who purchase their own health insurance we would have options of being in the ACA or out of it. Nay, nay that is not the way it works.

    We are 60 and 61 years of age and have our own very small business but it is a Sub S Corporation. We cannot retire at this point. The cost of insurance coverage has been devastating to our finances. Our cost for silver coverage (the standard on which the ACA is built) is over $15k per year and we have high deductibles. My husband was in the hospital this year for only two days. With our deductibles, copays and items not covered at all, we will pay over $23k for our premiums plus the medical bills, prescriptions, etc. That is if we have no further incidents this year. And we are healthy adults that have rarely used health care in the past.

    With income levels just above the subsidy thresholds this is anything but affordable. Our coverage before was better and it was $5k less per year – which is still a lot to pay. The percentage of our income that goes to healthcare is absurd and egregious.

    The ACA does not hurt the wealthy – they can afford it regardless of price. The ACA helps the poor. The ACA kills those of us on the lower end of middle America.

    • Financial Samurai says

      Debbie,

      I am very sorry to hear about the rising cost of health care for you. In any government-led change, there are winners and losers. $23K in medical bills is outrageous.

      Is it a possibility to make within the income limits in my chart to lower your premiums?

  35. Linda says

    We have an apartment building we would like to sell, how will the profit affect our health care subsidy? Also if we sell our primary residence is that income for the marketplace? We need to do something but want to do the right thing.

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