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Old 16-06-2015, 17:32   #1
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ACA costs for early retiree/cruiser

I've asked this question before, but I have figured out the answer (for me at least and you may not be the same)

I plan sell everything and stop working next year. All I will have is cash savings and 401k savings. I'll be 56 and my wife 55. Since I will be doing this in Sept that first 3 months we will pay the full price of an ACA plan for health care because our income will not qualify for a subsidy.

If you don't know you need a certain amount of income to get a subsidy or you are going to pay full price. So if a couple makes $17500 a year they get no subsidy, but if they make $22000/yr they do.

I've figured out the answer and will post it (BTW turns out this is a typical forum)

So:

We withdraw $22000 from our 401ks, which counts as income (don't think I will pay a penalty but even if I do it is a savings).

This turns a ACA silver plan from a cost of $589 to $31 month. This saves $6,696/yr on the costs of the ACA plan. But I pay tax on it and after standard exemptions the tax is $1408 (2014 tables). So the ACA plan in basic terms (for all the super accountants that are going to say buts) cost $31x12 months plus $1408 income taxes = $1780 or $148.33/mo. This compares to to having less income and paying the $589/mo so you just saved $440.67/mo

And you could also just put the withdrawal money into a Roth IRA. But it doesn't really matter if I spend the money withdraw from the 401k instead of using cash savings for my living/cruising costs, or put it into Roth IRA for growth and later tax free withdraw far as this topic is concerned.

Thanks to those who helped in the question!!!
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Old 16-06-2015, 17:46   #2
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Re: ACA costs for early retiree/cruiser

Being not part of a group and not 62 yet makes healthcare pretty unreasonable for sure. I paid a lot before and really had little in benefits unless it was catastrophic.


Not sure I get the "have to make a certain amount of money part" though. really? Is it different in different states? Seems I know a couple people who make very little and pay very little for health care...?
I just checked my state and put in $18k per year and 58 YO. Starts at $39/month.
However, if you make below $17.5k then it refers to alternative plans for the poor that are possibly free.
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Old 16-06-2015, 18:20   #3
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Re: ACA costs for early retiree/cruiser

I'm sure different states have different amounts , and I did mine as a couple. And making less income and getting a Medicaid plan may not be the best choice for you.
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Old 16-06-2015, 18:59   #4
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Re: ACA costs for early retiree/cruiser

Getting a subsidy for making MORE money seems backasswards to me. Not saying it isn't true, just saying it doesn't seem right.
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Old 16-06-2015, 19:01   #5
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Re: ACA costs for early retiree/cruiser

https://www.healthcare.gov/lower-cos...r-lower-costs/

If your income is below a certain threshold, you are expected to apply for medicaid, rather than a subsidy.
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Old 16-06-2015, 20:54   #6
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Re: ACA costs for early retiree/cruiser

I thought that your assets or savings were a consideration not just you net income for determining plan qualifications. Are you sure your looking at all the info?

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Old 16-06-2015, 21:23   #7
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Re: ACA costs for early retiree/cruiser

Thought the same thing but the state (PA) says no, only your income is the qualifier, although it is managed by Medicaid it is actually a different system for people who make to much and have to much for Medicaid but who,s income is not enough to put you in the regular ACA marketplace. My wife and I got to select from 4 insurance plans. Already made a difference, wife had to have surgery last month and we have not seen a bill for anything as of yet. that would have cost 20K - 25K otherwise. I really would not have a problem having to pay 250 - 300 a month but I am not going to turn it down.

Now the next problem, all these plans are usually in group plans and using med services out of state could start to cost, what happens when your down south?
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Old 17-06-2015, 05:36   #8
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Re: ACA costs for early retiree/cruiser

You did not say where you going. Are you cruising outside the USA or just inside the USA. If outside the USA why get any insurance as it would probably not be worth much and prices are a lot less for medical in most of the rest of the world.


So why not just skip the whole thing and pay the penalty?
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Old 17-06-2015, 08:27   #9
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Re: ACA costs for early retiree/cruiser

Yes traveling outside maybe makes an ACA plan almost worthless. But for $31/mo may be worth having for a major problem and returning back


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Old 17-06-2015, 08:35   #10
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Re: ACA costs for early retiree/cruiser

Withdraws from a 401k before 59 I think results in a 10% penalty by the federal govt.
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Old 17-06-2015, 08:37   #11
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Re: ACA costs for early retiree/cruiser

Quote:
Originally Posted by oldragbaggers View Post
Getting a subsidy for making MORE money seems backasswards to me. Not saying it isn't true, just saying it doesn't seem right.
It does seem silly, but the idea is that those below the income threshold qualify for medicaid. So the federal subsidies pick up where the state medicaid ends. That works well except in states that refused to expand medicaid. In those states, there are people who are not poor enough to qualify for medicaid and do not make enough to qualify for subsidies. They call it the medicaid gap.

Btw, in the states that expanded medicaid, they determine medicaid eligibility based on a federal criteria that does NOT use assets. So savings, even when substantial, do not disqualify people with salaries under the threshold from medicaid.
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Old 17-06-2015, 08:43   #12
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Re: ACA costs for early retiree/cruiser

real happy to have va benefits in my situation
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Old 17-06-2015, 09:17   #13
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Re: ACA costs for early retiree/cruiser

Oh! Converting to Roth to create the qualifying income is genius! Thanks for the idea. We plan to take off at 58 (about two years from now). And after 59 1/2, we can just withdraw some IRA money directly.


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Old 17-06-2015, 09:28   #14
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Re: ACA costs for early retiree/cruiser

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Originally Posted by ttamerler View Post
Withdraws from a 401k before 59 I think results in a 10% penalty by the federal govt.
It is unless the 401K was from a company retirement plan and you retired from the company. This can happen at 30 years of service, 55 years of age and 15 years of service and maybe 62 years of age and five years of service. Been years since I worked in this stuff but I think this is Federal law that applies to many company retirement plans.

If the 401k has been opened by the individual then the early with drawl before 59.5 will hit the penalty box.

Later,
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Old 17-06-2015, 09:59   #15
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Re: ACA costs for early retiree/cruiser

Quote:
Originally Posted by oldragbaggers View Post
Getting a subsidy for making MORE money seems backasswards to me. Not saying it isn't true, just saying it doesn't seem right.
It's our government, probably is ass backwards.
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