@oldmom4896 - I was not intending the word “manipulation” to have a negative connotation. I don’t think of the word “loophole” as having a negative connotation either. Using the system, whatever the system may be, to one’s advantage is just smart. All I meant was that some people have more control over their stream of income than others.
There are people that definitely manipulate their income to be able to take advantage of the ACA subsidies. This is a topic of discussion on many FIRE sites. If you can double or triple your income in one year, then you can have almost nothing for a year or two and get free insurance.
There is a moral component IMO, although nothing illegal about it of course. But it rubs me the wrong way when people deliberately impoverish themselves in order to get free money from the gov’t. Maybe I’m just jealous because I wasn’t smart enough to set up my situation to be able to do this.
There’s only a small number of people who can do this, I think, and if Congress had wanted to avoid it they would have put in some sort of asset test. It’s a difficult problem though - if you exclude any asset category like IRAs or equity in your house, then people will abuse that. But if you count non-spendable assets like house equity, then people who are truly income-poor can get screwed. Plus collecting all that data, it would be like filling out a FAFSA every year for everybody. So the trade-off is simplicity vs. some people being able to work the system.
I’m way more aggravated by the cliff, though, where one extra dollar of income can cost you $15,000+. That’s just idiotic. They should have extended the %age cap to a much higher income than 4x the poverty rate.
^Reminds me of an old poster who said his millionaire mom gets a free cell phone from the gov because she is low income.
I believe the good Judge’s analysis applies equally in the case of taking an ACA subsidy.
Those in the capitalist class (including those who successfully did the FIRE thing) tend to have more opportunity to manipulate income than those in the labor class. Obvious examples include when to take capital gains and capital losses.
Of course, the upper capitalist / plutocrat class probably is not bothering with chasing ACA subsidies like some in the lower capitalist class may be, but is probably chasing bigger game, like reducing income, gift, and estate taxes in amounts orders of magnitude greater than ACA subsidies. Or perhaps chasing other government money (e.g. some for-profit colleges enrolling marginal students with deceptive marketing practices to cash their direct loan and (if applicable) Pell grant checks).
It’s not like I am outraged or anything. But the ACA subsidy has nothing to do with taxes, it’s a welfare program whose finances are administrated by the IRS as a matter of convenience.
For those who may be thinking about using COBRA to tide them over from early retirement to Medicare eligibility - I went to a meeting for pre-retirement at my job and we were told that COBRA coverage is not sufficient to establish continuous coverage for Medicare eligibility. I have not looked into this further because H will not be eligible for Medicare for another 2 years and I am 3 years younger, so it’s not on my immediate radar, but the concept stuck in my mind. I was thinking about retiring when H hit Medicare, going into practice with a friend and using COBRA. I will have to research this issue further before I opt to retire when H hits Medicare age since I don’t want to lose Medicare eligibility.
Seriously, you have to have continuous coverage to get Medicare? I thought you just had to be 65 and sign up in time. Good grief, why do they make everything so tough? I have a long ways to go before Medicare, but it sounds like plenty to learn.
“Seriously, you have to have continuous coverage to get Medicare? I thought you just had to be 65 and sign up in time.”
I’ve never heard this before, either. Either something is being lost here in translation or something changed.
Plus, COBRA is full insurance coverage.
This doesn’t make sense to me.
I also don’t understand why COBRA wouldn’t be enough, it’s a continuation of what you had before. Unless it’s a case of not lasting long enough to cover the entire time period.
“I thought you just had to be 65 and sign up in time.”
that is correct.
@techmom, NO ONE has to have had previous medical insurance coverage to qualify for Medicare. Your Cobra coverage may not LAST long enough to tide you over, so you may have to get individual insurance for any gap in coverage.
“Generally, Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease (permanent kidney failure requiring dialysis or transplant). Medicare has two parts, Part A (Hospital Insurance) and Part B (Medicare Insurance). You are eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years.”
https://www.hhs.gov/answers/medicare-and-medicaid/who-is-elibible-for-medicare/index.html
No mention of need for continuous, previous medical insurance.
Continuous coverage in the context of COBRA refers to delaying signing up for Part B after initial eligibility (65th birthday). Usualy, if you’re already on COBRA when you become eligible you’ll automatically lose COBRA coverage because it’s usually secondary to Medicare. If you’re already eligible for Medicare when you become eligible for COBRA you can take COBRA but it doesn’t usually make sense to do so. Coverage through COBRA doesn’t give protection from the Part B late enrollment penalty. Also, when COBRA coverage ends, there is no Special Enrollment Period to sign up for Medicare so someone my have to wait till the following Jan to enroll (coverage then doesn’t begin till the following July).
That’s not correct. Once you get to 65 you are eligible for Medicare with no penalty. Continuous coverage not needed when you turn 65.
What the retirement person probably meant to say is that IF you continue in COBRA past age 65, then you will be subject to penalties when you finally enroll in Medicare. And since COBRA does not count as continuous coverage, one should drop my COBRA at age 65 and enroll in Medicare (which is what I am doing).
Once I age into Medicare, da’ wife has an automatic extension for a additional 36 months of COBRA.
I probably misheard (which is a better option than the person having misspoken), though it does seem that there could be a Part B issue, per @Onetogo2 if you are on COBRA when you turn 65.
In any event, my gaffe merely highlights the need for each of us, in our individual circumstances, to figure out what is going on. My H has a friend, a retired LEO, who didn’t file for Medicare timely thinking he could continue to use his retirement health care. By the time he learned he couldn’t, he had passed whatever time period there was and he now pays a monthly penalty, for the rest of his life.
If you have questions about Medicare, please consider talking with your State Dept of Health’s Office on Aging SHIP program. The SHIP staffers and volunteers are trained to give you unbiased, current, accurate info about Medicare, Medicaid, and any other programs you may be interested in.
And Part D…
Why would anyone who is 65 and Medicare eligible choose Cobra instead?
A retired coworker of mine decided to purchase insurance through our employer, which is allowed, after age 65 and NOT sign up for Medicare. We all tried to tell her that she was going to pay a penalty when she finally converted…and we told her that for four years. Her penalty is huge.
In addition, she was paying well over $10,000 a year for this employee plan as a full pay single. Medicare plus THE most rich and expensive supplement would not have been that costly.
She just wouldn’t listen.
Now back to the Stock Market drop. I think it will come back - for a variety of reasons. I was planning on adding another investment with our 401k (going from 3 to 4 funds), and I followed through today. Our funds went down between Oct 1 and Oct 13 by 7.11%; lost some of the gains made in 2nd and 3rd Q but still up for the year 4.6%. In the funds for the long haul. Any speculation on market segments (US, not interested in foreign) moving forward?
well, if the Saudi’s continue to play hardball re Kashoggi, and they may very well do so, oil prices WILL go up [ remember the Oil embargo of the 70’S?] , and THAT will have a negative impact on the stock market.
I’d keep powder dry until it shakes out [but if Amazon or Apple go down some more I’m getting back in, as those 2 behemoths are either still growing fast and / or are making tons of money without having to take on debt to finance expanding operations/ businesses.]
ymmv