“Money for nothing and your health care for free…”
Not exactly the line from the 1985 Dire Straits hit, but lately it seems to fit the mantra of many in the country, especially after the Affordable Care Act passed and everyone learned about “subsidies”.
“I want my, I want my, I want my subsidies…”
According to the ACA, and when our government decides to enforce our nation’s laws (keep in mind that the ACA passed in 2011 and was put on hold for a while), everyone must have health insurance or else. But for those who happened to be earning below certain specified amounts, they just may qualify for “money for nothing and health care for close to free”. The qualifications are outlined below:
And here is the issue:
If you happen to underestimate your income or “earn” more than what you stated, you will have to pay back at least some of that “free money”. Just like how Mark Knopfler had to fork over a co-writing credit to the insufferable Sting for his 8-seconds of crooning back in ‘85.
According to NOLO, the following chart shows how much individuals and families will be required to pay back:
The example that NOLO provides:
“Ernest, a 45-year-old single self-employed writer who lives in San Francisco, obtained health coverage through the California health insurance exchange (covered.ca). He estimated that his 2014 income would be $30,000. Based on his age and income, he qualified for a premium assistance of $216 per month, or $2,592.
However, it turns out that Ernest had a better year than he thought he would: He actually earned $40,000 in 2014. Based on this income, he was actually entitled to premium assistance of only $109 per month, or $1,308. He received $1,284 more in assistance than he should have. However, he only has to pay back $1,250 because this is the cap for people at his income level. Had his income been $46,000 or more, he would have to pay back the entire $2,592”.
Apparently, many people who received a subsidy in 2014 did in fact have a better year than they anticipated. According to Mark Steber, chief tax officer for Jackson Hewitt, roughly 53% of clients who received subsidies had to repay part or all of it, with the largest being $12,000.
CNN reports that H&R Block is claiming that over 3.5 million taxpayers will have to pay back part of their subsidy.
And this is not the only payback that is part of the ACA.
States that accept the Medicaid Expansion, meaning that the federal government is going to pick up 100% of that state’s Medicaid bill for two to three years and will then pick up about 90% of it going forward, must also enact the Medicaid Recovery Act.
Under this act, to quote: “For individuals age 55 or older, states are required to seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries”.
The states have the ability, especially those that have enacted Filial Support Laws, to seek reimbursement from next of kin and even trusts. The act does provide for protections for certain people, to quote: “States may not recover from the estate of a deceased Medicaid enrollee who is survived by a spouse, child under age 21, or blind or disabled child of any age. States are also required to establish procedures for waiving estate recovery when recovery would cause an undue hardship”.
But has this happened?
Yup, and it has happened a few times. But one example that should wake everybody up is the case of Arnold and Vesta Melby.
According to the Des Moines Register, “in 1991, the Monona County farm couple created separate, irrevocable trusts that apparently made them appear poor enough to be eligible for Medicaid if they needed it. Nine years later, Vesta qualified for the health insurance and the state paid for her care. She died in 2002, the same year Arnold began receiving Medicaid benefits. By the time he died in 2009, taxpayers had paid about $320,000 in nursing and medical bills for the couple.
“A year after Arnold’s death, his children sold the family farm in Monona County for about $900,000. Earlier this month (Jan 2014), the Iowa Supreme Court determined the estate had to repay Medicaid”.
Even though they created an “irrevocable trust”, even though they moved their money more than 5 years before needing care, their estate still had to pay.
Ultimately, if you have the money, no matter what you do, if you try to “move your assets” in order to qualify for free health care, you will pay…eventually.
And yes, they will go after your children…once they are old enough.
According to the Washington Post, as of April 2014, the Treasury Department was “intercepting” tax refunds from both the state and the IRS.
The article, titled “Social Security, Treasury target taxpayers for their parents’ decades-old debts”, focused on one Mary Grice, who had her tax refund blocked for a debt that her father owed to the federal government.
The issue: this debt was over 4 decades old. Apparently, as reported by the Washington Post: “When Grice was 4, back in 1960, her father died, leaving her mother with five children to raise. Until the kids turned 18, Sadie Grice got survivor benefits from Social Security to help feed and clothe them.
“Now, Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter. Why the feds chose to take Mary’s money, rather than her surviving siblings’, is a mystery.”
By the way, Mary Grice is not alone. The article goes on to state that, “the Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years.”
Again, this article was posted in April and the Treasury Department already collected $1.9 billion.
As stated before, if you have the money, there is no need to try to pull a fast one over on the government, because they are just going to go after your children. Instead, why not just try to plan for the costs that are associated to your health?
This concept may be novel for financial firms and your employer, two groups that are supposed to provide you information to aide you in planning for your financial future. They even have a fiduciary responsibility to do so. But this is not a novel concept for others firms such as Money Guide Pro and our firm, Jester Financial Technologies.
And as always, if you’re going to move those refrigerators, if you’ve got to move those color TVs – try to lift with the legs, not the back. Your children can’t afford for you to get hurt.
For a free estimate on what you can expect to incur as a cost for your health coverage in retirement, please see our site at www.yourretirementcosts.org.