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Daveh

ACA-- Decrease income to increase subsidy

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This is a good article for those under 65, using ACA for health insurance, and looking for a strategy to increase subsidies if your income is too high. This is just a matter of planning. These are all perfectly legal.   No fishy stuff.     Dave    http://xpostfactoid.blogspot.com/2017/12/steering-clear-of-subsidy-cliff-in-aca.html

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This is one of the issues with ACA that bothers me a great deal. The first example is of a family who deliberately reduced their annual income by $24,000 to receive a $27,000  subsidy.  Setting up a system that allows folks to voluntarily reduce their working hours to fall below a threshold, but more than make up the difference with a subsidy seems crazy. Essentially taking money from taxpayers to replace money that they were previously earning, and could continue to earn. 

I have a good friend that took early retirement from a very well paying job, and now received a significant federal subsidy under ACA. He is literally a millionaire, but most of his money is tied up in IRA's, and for now he is drawing the subsidy. 

Many folks are in favor of some type of "safety net" for those in society who can't afford health care. But the ACA as it currently exists seems to provide generous subsidies to folks who have other options. And this article is a great example of how to exploit that system. 

Perfectly legal. Agree. Sensible?? Not so much to me...

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3 minutes ago, mptjelgin said:

This is one of the issues with ACA that bothers me a great deal. The first example is of a family who deliberately reduced their annual income by $24,000 to receive a $27,000  subsidy.  Setting up a system that allows folks to voluntarily reduce their working hours to fall below a threshold, but more than make up the difference with a subsidy seems crazy. Essentially taking money from taxpayers to replace money that they were previously earning, and could continue to earn. 

I have a good friend that took early retirement from a very well paying job, and now received a significant federal subsidy under ACA. He is literally a millionaire, but most of his money is tied up in IRA's, and for now he is drawing the subsidy. 

Many folks are in favor of some type of "safety net" for those in society who can't afford health care. But the ACA as it currently exists seems to provide generous subsidies to folks who have other options. And this article is a great example of how to exploit that system. 

Perfectly legal. Agree. Sensible?? Not so much to me...

There is no question that the subsidies are built that way but I'm not sure what a good alternative is.  Means test with assets?  That would be a mess to report on their already-too-complicated web site.  Additionally,  what would be the formula for including it into the tax credit equation?

Essentially ACA wants uninsured people to become insured, through any means possible.  To a large degree it has succeeded.

 

 

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Those are fair comments. I guess I would take a different approach to the solution. 

A recognized, on all sides, defect in the ACA structure is the so called subsidy cliff. There is a very dissatisfied, understandably, vocal group of people who make just enough to not get subsidies but cannot realistically afford insurance off the ACA especially when you factor in the high deductibles. The proposal on the table had been to restructure the subsidy cliff into a more gradual hill.

I can remember discussion of the issue of people with retirement savings taking early retirement before the Act was passed so I can tell you that the issue you raised was considered. There were numerous considerations. One was that there were many older workers with medical conditions essentially locked into their existing employer since preexisting conditions and cost would prevent them from taking early retirement. Also the argument was made that the same policy reasons the government had in encouraging people to save for retirement through 401 (k), IRA, Roth IRA also applied in deciding not to count their savings in determining eligibility for subsidies and thus force them to deplete all savings before being eligible for getting insurance. Finally, remember that employers do deduct their cost for insuring employees. So the government does subsidize the employed getting insurance. However, those same deductions are not available to individuals buying on the open market. In many respects the ACA was intended to put those without employer's insurance on equal footing with those who get insurance through there employer. So, I disagree with your assertion that the article explains how to exploit the system as the system was designed with these very considerations in mind.

 

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19 minutes ago, Greg Schoenberg said:

There is no question that the subsidies are built that way but I'm not sure what a good alternative is.  Means test with assets?  That would be a mess to report on their already-too-complicated web site.  Additionally,  what would be the formula for including it into the tax credit equation?

Essentially ACA wants uninsured people to become insured, through any means possible.  To a large degree it has succeeded.

 

 

I agree Greg. Thy wanted them insured as that in the long run is actually cheaper---not to mention the moral considerations.

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One of my coworkers said a while back that he is having more kids so his taxable income will be low enough to qualify for subsidies.  They just had the second kid - plan is for 4 or 5.

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1 hour ago, oldbutspry said:

One of my coworkers said a while back that he is having more kids so his taxable income will be low enough to qualify for subsidies.  They just had the second kid - plan is for 4 or 5.

I am not sure that is a viable economic argument, but if it is, it shows that the cost of health insurance per child is a lot higher than the rest of the cost of raising a child, a true travesty.

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2 hours ago, pjstough said:

I am not sure that is a viable economic argument, but if it is, it shows that the cost of health insurance per child is a lot higher than the rest of the cost of raising a child, a true travesty.

I'm sorry, but that sounds silly.  The cost of raising a child is only as high as a parent wishes to make it.  It can actually be very inexpensive.

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3 hours ago, oldbutspry said:

I'm sorry, but that sounds silly.  The cost of raising a child is only as high as a parent wishes to make it.  It can actually be very inexpensive.

LOL----Glad you did not raise me. I would say that there are certain fixed costs involved with raising a child such as housing, clothing and food that can only be lowered so much without getting a visit from Child Protective Services. I would say having children to get a better deal on health insurance is perhaps the worst reason I ever heard to have kids and especially looney when you consider the ACA may not be around in a couple of years.

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3 hours ago, oldbutspry said:

I'm sorry, but that sounds silly.  The cost of raising a child is only as high as a parent wishes to make it.  It can actually be very inexpensive.

Yea, be like these parents, just think of all the money they saved on food.

 

http://www.kcci.com/article/opening-statements-begin-in-nicole-finn-murder-trial/13994506

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wow paul. that is extreme.  I don't know oldbutspry and I immediatly thought of replying within minutes of the posting.  I am for now giving him a watch for now. It sounds like a knee-jerk post without thinking it through and lord knows I have made a few.  I would like to think that in an inperson conversation with someone you know this would across a totally different than on the flat internet postings.   AND remember when we get to know him better we can feel free to totally dog-pile him like we do KIRK sometimes.:D I do get your point though Paul as I was thinking my kids are all over 40 and can still be expensive and a PIA but I love 'em anyway and wouldn't trade off even one of them. (ok maybe one:)) Hey they didn't get any bargain either when they picked me.

watch out oldbutspry, I may be looking for you next time I hit El Paso--fair warning:wacko:

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10 hours ago, Daveh said:

certain fixed costs involved with raising a child such as housing

Well sure, if you figure half the costs of a 4 person family are due to the kids then you can include half the mortgage, electric bill, water, cable, internet, etc.  But that's not an honest accounting for most people.  The wife and I rent a 4 bedroom house for just the two of us.  We might would rent a 1 or 2 bedroom house but how are you going to find one of those with a garage in a decent neighborhood?  The simple fact is that most people would buy a 4 bedroom house (or bigger) regardless of whether they have kids.  And their refrigerator, water heater, internet, etc. costs don't change much either.

As for clothing, I'm sure we never spent over $500/year for clothes.  An additional $200/month for food.  And miscellaneous expenses for gifts, sports, etc. might raise the cost to 350 per month.

My question would be:  What the heck are you buying your kids that is so expensive?

 

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10 hours ago, pjstough said:

Yea, be like these parents, just think of all the money they saved on food.

 

http://www.kcci.com/article/opening-statements-begin-in-nicole-finn-murder-trial/13994506

So you're saying food is what makes raising kids expensive?

You know, a huge continuum exists between neglecting children and overindulging them.  I don't see why you automatically jumped to the most ridiculous example.

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36 minutes ago, bigjim said:

wow paul. that is extreme.  I don't know oldbutspry and I immediatly thought of replying within minutes of the posting.  I am for now giving him a watch for now. It sounds like a knee-jerk post without thinking it through and lord knows I have made a few.  I would like to think that in an inperson conversation with someone you know this would across a totally different than on the flat internet postings.   AND remember when we get to know him better we can feel free to totally dog-pile him like we do KIRK sometimes.:D I do get your point though Paul as I was thinking my kids are all over 40 and can still be expensive and a PIA but I love 'em anyway and wouldn't trade off even one of them. (ok maybe one:)) Hey they didn't get any bargain either when they picked me.

watch out oldbutspry, I may be looking for you next time I hit El Paso--fair warning:wacko:

I'm not sure what you mean.  Plenty of poor people raise great kids.  Saying that kids are neglected if the parents don't spend crazy money on them just seems wrong to me.

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Do you or did you have children?  Nothing wrong with it either way but I do believe in almost all cases you won't understand it. Not everyone spends big dollars on stuff for their kids and true enough even kids raised in the worst possible way can turn out great but that doesn't mean they should be raised that way. In theory for the kids to be raised in poverty the parents must be in poverty and I don't think I know anyone sane that wants to live in poverty.  I don't think you will understand it looking at from the perspective you are using.  Heck I know lots of people that got a pet and found it was more expensive and troublesome than they thought it would be. I am not always good at explaining so I hope this was helpful and I know sometimes I need to lay off trying to be funny as I am not always good at it.

I will point out that he wasn't referring just to food. He started off considering the cost of health insurance.

Edited by bigjim

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2 hours ago, bigjim said:

Do you or did you have children?  Nothing wrong with it either way but I do believe in almost all cases you won't understand it. Not everyone spends big dollars on stuff for their kids and true enough even kids raised in the worst possible way can turn out great but that doesn't mean they should be raised that way. In theory for the kids to be raised in poverty the parents must be in poverty and I don't think I know anyone sane that wants to live in poverty.  I don't think you will understand it looking at from the perspective you are using.  Heck I know lots of people that got a pet and found it was more expensive and troublesome than they thought it would be. I am not always good at explaining so I hope this was helpful and I know sometimes I need to lay off trying to be funny as I am not always good at it.

I will point out that he wasn't referring just to food. He started off considering the cost of health insurance.

Our child is grown now (23) and out on his own.  I had always heard that children are expensive but I found that not to be the case.  And no, we weren't living in poverty but we always lived below our means.  I think that's something our culture in general could use a lot more of.

I've thrown numbers out there and what the money would go for.  Why don't some of you that think children are expensive throw out some numbers of your own?  I'm genuinely curious to know what you think additional money needs to be spent on.

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I would say it varies greatly due to personal circumstance.  I have a step granddaughter that was born with cerebal palsy and that has been very expensive.  My kids were not awfully expensive considering all but had to do without a lot that I feel was my job to provide if  possible like more support for college. Due to unexpected circumstances it was fairly limited. Yes they turned out OK but that isn't the point.  Clothes can be anywhere from reasonable to very expensive. Even supporting their extra curricular like sports etc can be costly.   Again it is a matter of perspective and from mine it can be expensive and sometimes is. Just having health insurance that covers the kids is expensive to very expensive.

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Interesting thread! I just wrote what I thought was a good response to some comments here, but after reading it again I realized that my reply was a bit political, as are several others here. For that reason, I deleted all of that good reply.  Healthcare is clearly an important issue, but a difficult one to avoid politics in discussing. :huh:

Edited by Kirk Wood

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Now you have me wondering what you were going to say Kirk!

I don't think this conversation is political--I just think it is a little silly and off topic. Fun and interesting though.

We really aren't  discussing the ACA anymore just generally that it is a bad idea to have kids for purposes of tax and subsidy planning.  I agree with Oldbutspry that parents may spend too much on kids these days. I suspect most of us old farts feel that way.   I am just saying that to have kids for the sole purpose of reducing tax liability or increasing subsidies is ludicrous. Kids aren't crops or  livestock. You are making a lifetime commitment of time and love which far exceed any money considerations.    Can't we all agree that having kids to save money is a really bad idea regardless of political party. Seems like a basic human decency and common sense issue.

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21 minutes ago, Daveh said:

Now you have me wondering what you were going to say Kirk!

:P  Better kept for an in-person discussion.  I tend to be moderate politically so neither side really likes my views. 

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6 hours ago, Daveh said:

We really aren't  discussing the ACA anymore just generally that it is a bad idea to have kids for purposes of tax and subsidy planning.  I agree with Oldbutspry that parents may spend too much on kids these days. I suspect most of us old farts feel that way.   I am just saying that to have kids for the sole purpose of reducing tax liability or increasing subsidies is ludicrous. Kids aren't crops or  livestock. You are making a lifetime commitment of time and love which far exceed any money considerations.    Can't we all agree that having kids to save money is a really bad idea regardless of political party. Seems like a basic human decency and common sense issue.

I wasn't endorsing my coworker's plan. Just pointing out that laws can have perverse consequences. Same guy makes decent money but doesn't use his 401k.  I asked him how he intends to retire and he says his kids are his retirement plan. He figures they have to take care of him when he's old. Some cultures do that so whatever. Just don't whine if it doesn't work out.

The whole health insurance thing is a symptom of the actual problem. The problem is the cost of health care. I think all hospitals/medical care facilities should be forced by law to post price lists for all the procedures/services they perform. They need to face public scrutiny and possibly ridicule for some of their pricing. That would be the first step to bringing costs under control.

Edited by oldbutspry

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15 minutes ago, oldbutspry said:

I wasn't endorsing my coworker's plan. Just pointing out that laws can have perverse consequences. Same guy makes decent money but doesn't use his 401k.  I asked him how he intends to retire and he says his kids are his retirement plan. He figures they have to take care of him when he's old. Some cultures do that so whatever. Just don't whine if it doesn't work out.

The whole health insurance thing is a symptom of the actual problem. The problem is the cost of health care. I think all hospitals/medical care facilities should be forced by law to post price lists for all the procedures/services they perform. They need to face public scrutiny and possibly ridicule for some of their pricing. That would be the first step to bringing costs under control.

Agreed

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On 12/7/2017 at 6:54 AM, oldbutspry said:

We might would rent a 1 or 2 bedroom house but how are you going to find one of those with a garage in a decent neighborhood?  The simple fact is that most people would buy a 4 bedroom house (or bigger) regardless of whether they have kids. 

I don't think that's true.  Not a single one of the many people I know who don't have kids lives in a 4-bedroom house.  Hell, the only people I know who live in a 4-bedroom house are a family of five.  And if you're looking at the hipster generation, they're moving toward smaller houses.

I'll agree that people's housing expenses don't necessarily have to go up because you add kids, but it's not because they already live in 4-bedroom houses, and they have a right to cram a big family into a small house, but they're going to hear about it from their kids and probably drive themselves crazy in the meantime.
 

Quote

 

As for clothing, I'm sure we never spent over $500/year for clothes.  An additional $200/month for food.  And miscellaneous expenses for gifts, sports, etc. might raise the cost to 350 per month.

My question would be:  What the heck are you buying your kids that is so expensive?

 

Even your numbers come up to over $1,000/month.  Does your co-worker's "decent money" salary really give him $12,000/year extra that he's not spending to put toward each kid? 

A quick internet search shows the average cost of day care to be $1,000/month.  That's expensive.

Auto insurance for a teenager.  That's expensive.

 

1 hour ago, oldbutspry said:

I wasn't endorsing my coworker's plan. Just pointing out that laws can have perverse consequences. Same guy makes decent money but doesn't use his 401k.  I asked him how he intends to retire and he says his kids are his retirement plan. He figures they have to take care of him when he's old. Some cultures do that so whatever.

A culture may do that right now, but given how rapidly things are changing these days, I wouldn't count on that being the case in 30 or 40 years.  And as pointed out above, nobody knows what the health insurance landscape will be next year, never mind at the end of the time it takes your co-worker to have his fifth kid.

As people have learned, even a 401K is not a sure-fire road to easy retirement, but it's vastly preferable to producing and paying for children in order for them to take care of you when you're old.  If nothing else, if you have five of them, it will invariably be an unequal burden on the various siblings, and that's going to cause fights and ill will.  If they're even still speaking to each other.  

I think your co-worker is pulling your leg.

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1 hour ago, Blues said:

I don't think that's true.  Not a single one of the many people I know who don't have kids lives in a 4-bedroom house.  Hell, the only people I know who live in a 4-bedroom house are a family of five.  And if you're looking at the hipster generation, they're moving toward smaller houses.

I'll agree that people's housing expenses don't necessarily have to go up because you add kids, but it's not because they already live in 4-bedroom houses, and they have a right to cram a big family into a small house, but they're going to hear about it from their kids and probably drive themselves crazy in the meantime.
 

Even your numbers come up to over $1,000/month.  Does your co-worker's "decent money" salary really give him $12,000/year extra that he's not spending to put toward each kid? 

A quick internet search shows the average cost of day care to be $1,000/month.  That's expensive.

Auto insurance for a teenager.  That's expensive.

 

A culture may do that right now, but given how rapidly things are changing these days, I wouldn't count on that being the case in 30 or 40 years.  And as pointed out above, nobody knows what the health insurance landscape will be next year, never mind at the end of the time it takes your co-worker to have his fifth kid.

As people have learned, even a 401K is not a sure-fire road to easy retirement, but it's vastly preferable to producing and paying for children in order for them to take care of you when you're old.  If nothing else, if you have five of them, it will invariably be an unequal burden on the various siblings, and that's going to cause fights and ill will.  If they're even still speaking to each other.  

I think your co-worker is pulling your leg.

I'll agree that the ability to buy a 4 bedroom house depends largely on income and the local price of housing.  I have lived in places with lower costs of living and my associates were generally able to choose the house they wanted.

You misread the numbers I provided for supporting a child.  The total was $350/month (that includes the $500/year and $200/month). We didn't require daycare and he had a motorcycle for transportation.

I've been working with this guy for over 2 years and he has been consistent in his views. There's a possibility our jobs could be going away and he said there's absolutely no way he could move from our city because he has to live nearby to take care of his parents and his in-laws.

 

Edited by oldbutspry

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