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Say you live in a (red) state that hasn't chosen to expand Medicaid under the ACA.  Say your income is just low enough for Medicaid under the ACA, and thus too low to qualify for subsidies on the exchange (Say what? How did that happen?? Sigh).  OK--you've been screwed by your spiteful Republican governor/legislature.  What can you do about it?  For some people, I believe there is a solution.

One thought is to lie.  Inflate your expected income to qualify for a subsidized plan on the exchanges.  This may not work out and come back to haunt you at tax time, when your actual income is reported.  I'm not sure exactly how this will work, but you may be on the hook to repay the subsidies you received (need to do more research here).

However, what if you could adjust your income up a bit in a completely kosher fashion?  Let's say you have a traditional IRA.  You could convert some or all of that IRA to a Roth IRA in 2014 and your Adjusted Gross Income will increase by the amount of the conversion.  You owe taxes (if any, considering your low income level overall) on the additional income. But if you are lucky enough to be in this position, voila, you have increased your taxable income for next year.  Obviously, this scenario is only going to work for people who are:

A. Not too far below the income cutoff for subsidies, and/or
B. Have enough money in a traditional IRA (or 401k rollover, etc) to make this work.

If you are in this position, you should probably be converting your IRA to a Roth in any event, since your income taxes must be low at this point--pay them (if any) now and save that money tax free forever.

I hope this is helpful for someone.  Here's hoping the states that have opted out of Medicaid expansion see the light going forward.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    HeyMikey, Pluto, oldpotsmuggler, leeleedee

    Obama is still my guy.

    by AKguy on Wed Nov 06, 2013 at 05:08:04 PM PST

  •  Too funny. (2+ / 0-)
    Recommended by:
    annecros, oldpotsmuggler

    As if anyone willing to lie in this circumstance isn't willing to lie on tax returns.

    One thought is to lie.  Inflate your expected income to qualify for a subsidized plan on the exchanges.  This may not work out and come back to haunt you at tax time, when your actual income is reported.
  •  make a bet. (6+ / 0-)

    have the wager due in a promissory note, elect to recognize it all in year one, and then have the other party forgive the note as a nontaxable gift.

    poof! income from nothing.

    •  Get caught making a "mistake" and the fine ... (0+ / 0-)

      is as much as $25,000; outright fraud will get you a fine of $250,000 (plus probably some years behind bars).  Worth the risk?  Nope.

      "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

      by Neuroptimalian on Thu Nov 07, 2013 at 06:11:56 AM PST

      [ Parent ]

  •  AKguy - I don't think you would have to return (3+ / 0-)
    Recommended by:
    johnny wurster, HeyMikey, Pluto

    the subsidy if your actual income was less than you declared. In theory you should be eligible for a larger subsidy, if there was a lower tier in the formula. However, people should very carefully read the forms and see what level of liability they are assuming by making a false statement. Because it's a forecast my guess is that the liability is very different than signing other government forms.

    "let's talk about that"

    by VClib on Wed Nov 06, 2013 at 06:33:01 PM PST

  •  In Oregon (2+ / 0-)
    Recommended by:
    HeyMikey, RhodeIslandAspie

    If your income is low enough to qualify you for Medicaid, the application clearly states that upon death, your estate will be liable for all of the cost of any medical services you received while on Medicaid.  This includes your house and any property you own and assigns rights to the state to attempt to collect these monies owed from parents or spouse.

    • When a person that received OHP/HK dies, OHA or its designee may recover from the “estate” (as defined in ORS
    416.350) of the person the amount of OHP/HK received by the person starting at age 55. This includes monthly
    payments made by OHA or its designee to coordinated care organizations. In cases where the person receiving
    benefits is in an institution (such as a nursing home) for 6 months prior to death, the state will recover money for
    all OHP/HK provided regardless of age when received. OHA or its designee will not claim this money if the person
    receiving benefits is survived by a natural or adopted child that is under age 21, blind, or meets Social Security
    Administration criteria as permanently and totally disabled. If the person receiving benefits is survived by a spouse,
    OHA or its designee will wait until the spouse dies and submit a claim to the spouse’s estate.
    • If you receive both OHP/HK and Medicare, after you die, OHA or its designee may recover from your estate the
    amount that OHA or its designee paid, on your behalf, to the federal government for Medicare Part D prescription
    drug coverage. Effective January 1, 2014, the Oregon Legislature has mandated that reimbursement of Medicare
    Part D payments made on your behalf will be recovered the same way as OHP/HK.
    • I give OHA rights to pursue and get medical support from a spouse or parent.
    •  "Parents"--probably only for minors? (1+ / 0-)
      Recommended by:
      oldpotsmuggler

      I suspect the parents are only liable if they're the ones applying for their minor child to be on Medicaid. Difficult for me to imagine 50-year-old Joe Blow applying for Medicaid and his 90-year-old mom being liable for his medical expenses.

      But that's just my guess.

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

      by HeyMikey on Wed Nov 06, 2013 at 06:57:18 PM PST

      [ Parent ]

    •  I believe that's always been the case (2+ / 0-)
      Recommended by:
      HeyMikey, oldpotsmuggler

      with Medicaid. That didn't start with the ACA.

      Just another underemployed IT professional computer geek.

      by RhodeIslandAspie on Wed Nov 06, 2013 at 07:16:44 PM PST

      [ Parent ]

      •  It started about fifteen, twenty years ago, as I (0+ / 0-)

        recall. And it's not totally universal, because of how various states define the phrase "Homestead Exemption". Also, there's become a cottage industry based on teaching folks how to subvert this system, but I have to admit that I'm glad that I didn't end up needing to try to sort through what is probably a garbage dump of info looking for some small number of gems.

        There can be no protection locally if we're content to ignore the fact that there are no controls globally.

        by oldpotsmuggler on Wed Nov 06, 2013 at 07:57:00 PM PST

        [ Parent ]

    •  I just posted on something similar on a different (0+ / 0-)

      diary. Here it is:

      That isn't new - that's always been part of
      Medicaid, or the state variants thereof. In this country where access to health care is not an absolute right, and still isn't, if you have expenses beyond your financial means, medicaid will kick in, even if you are fairly well to do, but they get to put a lien on your house to pay for some or all of it if and when you die.

      I repeat, this is not new; this has been in place for a decade. Also, if you go into a nursing home and need medicaid to pay for it, and most do, the nursing home gets most of your retirement check to pay for it.

      People don't know about this until they go up against it. I understand why they don't want someone eating up tens of thousands of dollars in medical care and then leave a mansion to their kids, but this his middle class and low middle class income people hard.

      The ACA didn't create this, it inherited the situation. If it doesn't seem fair, it isn't. The government expropriates Grandmas house for the price of keeping her alive. But if we thought we lived in a fair country, we wouldn't be on the Daily Kos trying to change things, would we?

      Just another underemployed IT professional computer geek.

      by RhodeIslandAspie on Wed Nov 06, 2013 at 07:52:39 PM PST

      [ Parent ]

  •  Problem: (1+ / 0-)
    Recommended by:
    annecros

    If you're too poor to get a subsidy (again--how the fuck did we get here?) then you probably can't afford the deductibles and copays that would be part of any policy you'd get by inflating your income.

    So you still couldn't actually go to the doctor.

    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Wed Nov 06, 2013 at 06:59:15 PM PST

    •  Nearly true, I think, but not quite. Medical care (0+ / 0-)

      in this country has now degraded to the point that it's becoming more common to be at least somewhat better off being not well off financially and having some insurance dollars in the mix, than being not well off financially and having absolutely no chance of any insurance company payment to help out.

      Many billing items are intentionally inflated, and deductibles and copays are still not universally required to be met as cash up front.

      But it's also true that these things are likely to keep getting worse unless and until we finally do get Single Payer.

      There can be no protection locally if we're content to ignore the fact that there are no controls globally.

      by oldpotsmuggler on Wed Nov 06, 2013 at 08:06:34 PM PST

      [ Parent ]

    •  Not necessarily true (1+ / 0-)
      Recommended by:
      LarryLK

      Some people have significant assets but little income.  They can afford to go to the doctor, no problem.  They still need insurance.

      Consider someone not working, aged less than 65 (no Medicare), with $1,000,000 in IRA accounts, living on Social Security (if 62 or older) and/or drawing down savings outside retirement accounts to pay the bills SS doesn't cover.  Taxable income could easily be too low to qualify for subsidies.  Such a person could calibrate his income with IRA to Roth rollovers such that he makes just enough to qualify.

      I realize this is not typical.

      Obama is still my guy.

      by AKguy on Wed Nov 06, 2013 at 08:07:09 PM PST

      [ Parent ]

    •  This is true for a friend of mine (0+ / 0-)

      Not re the ACA but re employer provided insurance. She just went from temp to permanent and became eligible to buy the employer health insurance. It is good insurance. But she can't afford the premiums.

  •  I think this is an excellent idea. (0+ / 0-)

    Even a temp or seasonal job can push you over the top.

    Good thinking.


    __________________
    "A strange game. The only winning move is not to play."
            -- Joshua, aka WOPR (War Operation Plan Response) automated nuclear-launch super-computer. "War Games," 1983.

    by Pluto on Wed Nov 06, 2013 at 07:11:01 PM PST

  •  I found this, it might be of use (1+ / 0-)
    Recommended by:
    JamieG from Md

    I found this article on the ACA site. Look at the top item where it reads "what is my state isn't expanding medicaid? Hope this helps. By all means, speak with a navigator on this.

    Just another underemployed IT professional computer geek.

    by RhodeIslandAspie on Wed Nov 06, 2013 at 07:35:29 PM PST

    •  Thanks for the info... (0+ / 0-)

      ...although I don't personally need it right now.  My son may be in the market, however, in a couple of years--potential impoverished college grad, depending.

      Obama is still my guy.

      by AKguy on Wed Nov 06, 2013 at 07:56:18 PM PST

      [ Parent ]

  •  if you are willing/able to pay the (0+ / 0-)

    tax on the money wouldn't it be relatively easy to create income? The whole system seems to be based around forcing people to DECLARE income they would rather not declare, not the other way around. If you report income that you received as cash how would the irs prove you DIDN'T receive that cash? What if you found someone in a similar situation and claim to have hired each other to do work of equal value? Isn't barter of that nature technically taxable?

    Unless there is an error in my understanding, I think the IRS is quite amenable to people declaring extra income. Perhaps that might change with the creation of the health care subsidies but trying to verify small relatively small sources of income on the tax returns of low income individuals seems like it would be quite a headache for the irs.

    Of course you would have to pay the tax on that income, but if only a small increase is needed to become eligible for a subsidy perhaps the taxes owed would be far less than the value of the subsidy received.

  •  IRS guide (1+ / 0-)
    Recommended by:
    JamieG from Md

    I'm finding this IRA website useful.  You would think that healthcare.gov would link to useful sites like these if they're not going to provide the info themselves.

  •  Excellent advice (0+ / 0-)

    I was wondering what would be a simple, legal solution to this problem.

  •  When I was a student, I took on a job delivering (0+ / 0-)

    newspapers in the summer.  Didn't make much money, but when it came time to do my taxes I needed to have a higher "income" to qualify for the Earned Income Tax Credit (EITC) (I do have kids).  As a peper deliverer, I was considered self-employed, so when I had H&R Block do my taxes, I asked if I had to declare all of my actual expenses, they looked at me as if I were crazy, but I explained that if I don't count all my expenses, then I can get EITC.  So, while I declaired all the money I collected from the subscribers (over $10,000), I didn't have to declare my cost ($8,500), so I was able to claim an "income" of $10,000 (or whatever level was needed in order to get the max EITC of $2,400 or so...) this was over 10 years ago, so the exact numbers escape me, but this might be a way for some folks to be able to "earn" enough to qualify for the plan.

  •  Cheating/Lying not a good move. (0+ / 0-)

    The IRA thing and other stuff ala Mitt Romney is a good move.

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