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Old 09-20-2017, 01:02 PM
 
1,057 posts, read 515,228 times
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Quote:
Originally Posted by craigiri View Post
Being as the average cost per person for health care in the USA is 10,600 per year - if you are a married couple ("average") you should be paying about 21K per year.

If you pay less someone else is paying for you.

Your post just shows the problem...you weren't paying the "real" cost in either case, but paying 1/2 the real cost didn't make you happy.

It's our system in a nutshell. We focus on the wrong thing - namely "me me me" and how little I can get away with, whilst always shoving the real costs off onto others, the fed debt and our children.

Who profits from this? ALL the Corporations......involved. Big time....

I always like to present a small example of the Average American Family today.

They have two children - for a total of 4 people, so at the average health care is 40+K per year.
The kids are in school - 24K per year.
The Military and Security State are hard at work spending lots of money - 5K per year (more, actually)

That's about 70K in taxes said family should be paying BEFORE their roads are plowed of any other of the MANY services we all consume.

Yet - you will find families like that complaining about their 4K per year property tax and 15K per year health insurance costs.

Try as we may, there is no way to balance the books. As long as we are willing to pray at the dual altars of:

1. Profits - even to the extent of predatory capitalism
and
2. ME - my "job" in life is to take advantage of every system to whatever extent I can.

It can't work and it doesn't work. We have already gone broke - and what is worse is that we are dying earlier than we should and suffering more.

Imagine is a store advertised "Twice the price and guaranteed to cause you harm". You'd LOL. Yet that is the system many support.

I know we are talking philosophy and morals here. But as "elders" that is part of our job. The Founders and others thought deeply about this stuff. Jefferson even suggested we redistribute everything every 50 years (obviously it not the right idea, but they all agreed that accumulated generational wealth was the worst possible thing for the Nation they hoped to create).

If I spend most of the fairly large estate I have built up before we (wifey and I) pass, so be it. We have a disabled adult daughter who we spend large amounts of money on also....and will continue to do so (even tho she is married and has resources).....

I guess my attitude is "that is what money is for". I watch my parents generation and I see these elders acting as if they want to be buried with their millions or whatever. Silly. But I can't convince them otherwise - I have tried. They'd rather play the game until the end instead of having it a little better.
I was single and 50 years old when I was paying 250/mo for an individual market rate policy with Kaiser. No subsidies at all. When ACA came in, the cost of that "equivalent" policy went to 600/mo.

By controlling my income, I'm still with Kaiser, since Kaiser became a Medicaid option for existing policy holders when expanded Medicaid came with the ACA.

Who in their right mind would NOT take their same exact policy for nothing, vs paying what would now be about 900/mo for it? THEY forced MY hand into making a decision. I didn't ask for anything. And I never voted for the dude anyway....
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Old 09-20-2017, 01:12 PM
 
29,777 posts, read 34,863,854 times
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Quote:
Originally Posted by Cabound1 View Post
I was single and 50 years old when I was paying 250/mo for an individual market rate policy with Kaiser. No subsidies at all. When ACA came in, the cost of that "equivalent" policy went to 600/mo.

By controlling my income, I'm still with Kaiser, since Kaiser became a Medicaid option for existing policy holders when expanded Medicaid came with the ACA.

Who in their right mind would NOT take their same exact policy for nothing, vs paying what would now be about 900/mo for it? THEY forced MY hand into making a decision. I didn't ask for anything. And I never voted for the dude anyway....

Folks who believe in free markets and practice that thought in their own lives will do as you do and feel it is natural. Others who prefer more government intervention will be more likely to go with the program. However those happily rolling with the program need to understand that others will use their market skills to act in their own best self interest which is for many natural.
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Old 09-20-2017, 01:54 PM
 
7,920 posts, read 5,037,155 times
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Quote:
Originally Posted by craigiri View Post
...Try as we may, there is no way to balance the books. As long as we are willing to pray at the dual altars of:

1. Profits - even to the extent of predatory capitalism
and
2. ME - my "job" in life is to take advantage of every system to whatever extent I can.

It can't work and it doesn't work. We have already gone broke - and what is worse is that we are dying earlier than we should and suffering more.
While the two above-mentioned factors matter, I'd aver that the dominant reason for America's high healthcare costs is that so many people are employed, if only tangentially, in the healthcare industry. It's a huge jobs-program - and to support the salaries of all of those people, we end up with very expensive healthcare.

By way of analogy, food is inexpensive because we've become so efficient at growing, transporting and processing so much food with so little labor. If instead of 2% of the populace being involved in food-production, the number were 20%, it's likely that a box of cereal would cost $30, a dozen eggs $15, and so forth.

Quote:
Originally Posted by craigiri View Post
...I watch my parents generation and I see these elders acting as if they want to be buried with their millions or whatever. Silly. But I can't convince them otherwise - I have tried. They'd rather play the game until the end instead of having it a little better.
There's a simple psychological explanation for this. After devoting decades to saving and accumulating and investing, one comes to think of one's money as an integral part of one's self - as tantamount to one's essence. Would you be willing to have a hole drilled through your skull, for a portion of your brain to be scooped out, funding this or that purchase? That's how some people come to regard their money. Their lives become essentially just a rote task for generating and accumulating money. To spend that money, whether on personal indulgences or charity or solving world hunger, would be tantamount to wrenching apart their very self.

Quote:
Originally Posted by EveryLady View Post
My brother doesn't share the details. From he's said, most of the investments are in taxable accounts or ROTHs. His income is low enough that any capital gains and qualified dividends from the taxable accounts are at the zero percent bracket. In addition, he invests in index funds (Vanguard) that minimize turnover. Focuses on building capital then withdraws the needed amount for living expenses. There's no structuring of the portfolio to forgo high investment income, although he does maintain a certain stock-bond ratio for overall stability.
When last I checked, the dividend yield of the S&P 500 was around 1.7%. So, if a person has just $1M invested in the Vanguard S&P 500 index fund, doing zero trades or redemptions all year, that generates around $17K in dividends alone. Sure, they’re mostly qualified dividends, perhaps enjoying a very low federal tax rate, if that’s one’s only income. But they still count towards ACA subsidy-eligibility. Now raise that portfolio to $2M. For a single person with no dependents, the dividends alone (again, no trades, no redemptions) annihilate any prospects for an ACA subsidy.

This has nothing to do with personal spending habits. If one lives in a cave, hunts for food, and rubs two sticks together to ignite a fire, even then, that Vanguard S&P 500 index fund is producing dividend income. And even if we go to tax-exempt investments, thus avoiding federal income tax, that still won’t get us around the modified-AGI calculation for ACA subsidies.

Bottom line: I have no moral qualms about “rich” people getting an ACA subsidy; none whatsoever. What I can’t fathom is how this is actually done.
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Old 09-20-2017, 02:46 PM
 
1,057 posts, read 515,228 times
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Quote:
Originally Posted by ohio_peasant View Post
While the two above-mentioned factors matter, I'd aver that the dominant reason for America's high healthcare costs is that so many people are employed, if only tangentially, in the healthcare industry. It's a huge jobs-program - and to support the salaries of all of those people, we end up with very expensive healthcare.

By way of analogy, food is inexpensive because we've become so efficient at growing, transporting and processing so much food with so little labor. If instead of 2% of the populace being involved in food-production, the number were 20%, it's likely that a box of cereal would cost $30, a dozen eggs $15, and so forth.



There's a simple psychological explanation for this. After devoting decades to saving and accumulating and investing, one comes to think of one's money as an integral part of one's self - as tantamount to one's essence. Would you be willing to have a hole drilled through your skull, for a portion of your brain to be scooped out, funding this or that purchase? That's how some people come to regard their money. Their lives become essentially just a rote task for generating and accumulating money. To spend that money, whether on personal indulgences or charity or solving world hunger, would be tantamount to wrenching apart their very self.



When last I checked, the dividend yield of the S&P 500 was around 1.7%. So, if a person has just $1M invested in the Vanguard S&P 500 index fund, doing zero trades or redemptions all year, that generates around $17K in dividends alone. Sure, they’re mostly qualified dividends, perhaps enjoying a very low federal tax rate, if that’s one’s only income. But they still count towards ACA subsidy-eligibility. Now raise that portfolio to $2M. For a single person with no dependents, the dividends alone (again, no trades, no redemptions) annihilate any prospects for an ACA subsidy.

This has nothing to do with personal spending habits. If one lives in a cave, hunts for food, and rubs two sticks together to ignite a fire, even then, that Vanguard S&P 500 index fund is producing dividend income. And even if we go to tax-exempt investments, thus avoiding federal income tax, that still won’t get us around the modified-AGI calculation for ACA subsidies.

Bottom line: I have no moral qualms about “rich” people getting an ACA subsidy; none whatsoever. What I can’t fathom is how this is actually done.
Use capital losses to offset those dividends from the s and p index, or keep any dividend producing positions in the tax deferred accounts.

If you are questioning why anyone would actually do so because of the lifestyle changes, that's a different question.

I'm single, no kids, no heirs. I live in the Bay Area in a 2500 sq ft fully updated house. I have 2 paid off cars, one is a porsche. I come and go as I please. I play golf a couple times a week, I eat (and drink) wherever I want, whenever I want, no nickel rubbing there. I don't travel extensively anymore as I was all over the place when I was working, and I'm done with it. I spend my time volunteering, mostly with animal rescue groups. Basically, I do exactly what I was doing while I was working - except working. The only "sacrifice" I can think of that I've made in the 13 years of retirement has been replacing the BMW with a Honda when the engine blew.

I need about 35k a year to live, and for the time being, can easily generate that without hitting the AGI line. Call me crazy, but I don't think I've missed out on anything, and I don't think it's immoral.
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Old 09-20-2017, 03:03 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,958,918 times
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Quote:
Originally Posted by ohio_peasant View Post
Bottom line: I have no moral qualms about “rich” people getting an ACA subsidy; none whatsoever. What I can’t fathom is how this is actually done.
The key is that one doesn't need to do this forever. If one retires at, for example age 62, they only need to care about the ACA for three years.

Most people do not have $2M or even $1M in taxable accounts. Yes there are some, but more typical is the case where one's financial net worth is mostly in their home and in 401k/403b/IRA/etc accounts.

All one needs is "enough" money in savings and/or Roth accounts to bridge the gap. Again, let's say one retires at age 62. They can pull a bit out of taxable 401k to show enough income to qualify for ACA (assuming they are not trying to go on Medicade). The rest just comes straight out of the savings account, or a Roth account if they have one. In principal there's really no limit to how much a person can spend with this approach, and still get the max ACA credit.

Another thought, although I'm not sure if this works... extract living expenses out of home equity during ages 62-64, and then pay it back later after one is on Medicare.

Last edited by hikernut; 09-20-2017 at 03:23 PM..
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Old 09-20-2017, 03:45 PM
 
29,777 posts, read 34,863,854 times
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Isn't the ACA about lowering health cost for folks? If so even if it does that for millionaires shouldn't that be ok? On the other hand if it is about wealth redistribution and making the affluent pay more just to make them pay more I can see how this thread has kept going.
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Old 09-20-2017, 04:05 PM
 
1,922 posts, read 4,607,760 times
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Quote:
Originally Posted by ohio_peasant View Post
While the two above-mentioned factors matter, I'd aver that the dominant reason for America's high healthcare costs is that so many people are employed, if only tangentially, in the healthcare industry. It's a huge jobs-program - and to support the salaries of all of those people, we end up with very expensive healthcare.
Just to add to the above post. Other reasons for the US having high health care costs are: fee for service system, which means docs are paid based on the number of procedures and tests, rather than outcomes. Moe tests, more procedures = more $$ for docs.

Also, end of life heroics are extremely expensive (open heart surgery on 85 year olds, for example), and often don't extend life by more than a few months, with the quality of life sometimes worse.

In addition, the cost of drugs in the US is exorbitant, with no end in sight. Many supposedly "new" drugs are just minor modifications of older drugs that work just fine, but Big Pharma jacks the price and extends the patent for another 20 years, shutting out generics.

And "pay to delay" tactics used by Big Pharma, paying companies that manufacture generics to NOT develop a generic, so Big Pharma can keep cashing in.

Only a few examples of why the US healthcare system is the most expensive in the world, with poorer outcomes than the rest of western Europe, for example.

Anyway, a few thoughts about high healthcare costs. Interesting thread.
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Old 09-20-2017, 04:05 PM
 
7,920 posts, read 5,037,155 times
Reputation: 13571
Quote:
Originally Posted by Cabound1 View Post
Use capital losses to offset those dividends from the s and p index, or keep any dividend producing positions in the tax deferred accounts.

If you are questioning why anyone would actually do so because of the lifestyle changes, that's a different question.

I'm single, no kids, no heirs. I live in the Bay Area in a 2500 sq ft fully updated house. I have 2 paid off cars, one is a porsche. I come and go as I please. I play golf a couple times a week, I eat (and drink) wherever I want, whenever I want, no nickel rubbing there. I don't travel extensively anymore as I was all over the place when I was working, and I'm done with it. I spend my time volunteering, mostly with animal rescue groups. Basically, I do exactly what I was doing while I was working - except working. The only "sacrifice" I can think of that I've made in the 13 years of retirement has been replacing the BMW with a Honda when the engine blew.

I need about 35k a year to live, and for the time being, can easily generate that without hitting the AGI line. Call me crazy, but I don't think I've missed out on anything, and I don't think it's immoral.
Oh, no qualms or remonstrations from me on that regard. For a single person of moderate habits, with no children or other dependents, living in a paid-off house, $35K/year is plenty, even in so-called high cost of living areas. Here in the rural Midwest, even half of that amount is sufficient. The problem, by my reckoning, is neither how to live modestly, nor how to leave alone a large portfolio, without turnover or jumpy activity.

Where I get confused is that aspect of portfolio-management, that allows one’s modified AGI to look small. Maybe that’s more of a focused question for a professional accountant. For instance, if one’s holdings are composed of index-funds of various flavor (US large-cap, US small-cap, US mid-cap, international, etc.), there really are no losses to harvest.

Quote:
Originally Posted by hikernut View Post
The key is that one doesn't need to do this forever. If one retires at, for example age 62, they only need to care about the ACA for three years.

Most people do not have $2M or even $1M in taxable accounts. Yes there are some, but more typical is the case where one's financial net worth is mostly in their home and in 401k/403b/IRA/etc accounts.
OK, understood. But let me give an admittedly outlandish (though not impossible) example. Suppose that you're a young lawyer, a junior associate in a firm, who was recruited to defend a corporate client in some intellectual-property case. The client grows disgusted with the firm. Our young lawyer quits, starts his own firm, and goes to work for the client as lead-attorney. 5 years later, the case closes, with a resounding victory. The lawyer, barely in his/her mid-30s, receives a $25M payout... closes his/her firm, and retires... to a cabin in Idaho. He/she has 30 years before reaching Medicare eligibility age, and lives for essentially $0/year, as some ascetic survivalist. But... what to do for health insurance? Note that I said nothing about actual health CARE - since this ex-lawyer of ours lives in the forest, with no medical doctors nearby. The point is simply how to stay legal, with health-insurance coverage, at minimal cost.
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Old 09-20-2017, 04:29 PM
 
3,088 posts, read 820,707 times
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Quote:
Originally Posted by ohio_peasant View Post
...

When last I checked, the dividend yield of the S&P 500 was around 1.7%. So, if a person has just $1M invested in the Vanguard S&P 500 index fund, doing zero trades or redemptions all year, that generates around $17K in dividends alone. Sure, they’re mostly qualified dividends, perhaps enjoying a very low federal tax rate, if that’s one’s only income. But they still count towards ACA subsidy-eligibility. Now raise that portfolio to $2M. For a single person with no dependents, the dividends alone (again, no trades, no redemptions) annihilate any prospects for an ACA subsidy.

This has nothing to do with personal spending habits. If one lives in a cave, hunts for food, and rubs two sticks together to ignite a fire, even then, that Vanguard S&P 500 index fund is producing dividend income. And even if we go to tax-exempt investments, thus avoiding federal income tax, that still won’t get us around the modified-AGI calculation for ACA subsidies.

Bottom line: I have no moral qualms about “rich” people getting an ACA subsidy; none whatsoever. What I can’t fathom is how this is actually done.
Point taken about the index fund producing income. Pre-retirement, Dear Brother used to complain about working primarily to pay taxes on his investments. ROTHs were his friend (but limited). He was never able to take much advantage of 401Ks but maybe he did so more than I realize. Dunno exactly how he's structured retirement finances although becoming fairly tax savvy and financially sophisticated is part of how he stayed retired. A couple of other posters have chimed in here. If I had to *guess* he probably meets your scenario of around $2million (certainly no more, condo valued at about $400,000), single, no dependents ... still in Vanguard index funds almost certainly. I'd guess that he spends under $20,000 a year.

He stopped working about 6 years ago at age 51 - admittedly into a Bull market. Sure, he probably utilizes income buckets or like structures. Definitely ladders CDs. No argument that this restricts potential income, but it's also part of a standard investment protocol to mitigate risk. Retired or not. He's now at about 70 (stocks) -30 (bonds, cash).

But about the living costs. ACA-aside, part of surviving a Bear market in your original scenario (4) almost has to be the ability to lower spending even more - absent untold millions. He has low fixed costs (condo fee, property taxes) with the potential for additional cuts on already low discretionary expenditures. He started off pretty nervous about all this, but is doing well enough that he at times spends somewhat freely.

That said, the ACA debate is a concern for that's a cost he formerly thought fixed (and minor) that now has the potential to be a budget-changer. Worse, his larger concern isn't having to pay a certain amount more per month for that might be offset by either changing withdrawal strategies or reducing expenses elsewhere.

His concern is that he's uninsurable. Period. Last month, there was surgery for kidney stones that didn't pass. No problem to write a check for many thousands of dollars (highest deductible policy possible - outside of negotiating costs down, insurance covered nothing); the issue is that THAT's now on his health record.

Last edited by EveryLady; 09-20-2017 at 04:39 PM..
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Old 09-20-2017, 04:42 PM
 
1,057 posts, read 515,228 times
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Originally Posted by ohio_peasant View Post
Oh, no qualms or remonstrations from me on that regard. For a single person of moderate habits, with no children or other dependents, living in a paid-off house, $35K/year is plenty, even in so-called high cost of living areas. Here in the rural Midwest, even half of that amount is sufficient. The problem, by my reckoning, is neither how to live modestly, nor how to leave alone a large portfolio, without turnover or jumpy activity.

Where I get confused is that aspect of portfolio-management, that allows one’s modified AGI to look small. Maybe that’s more of a focused question for a professional accountant. For instance, if one’s holdings are composed of index-funds of various flavor (US large-cap, US small-cap, US mid-cap, international, etc.), there really are no losses to harvest.



OK, understood. But let me give an admittedly outlandish (though not impossible) example. Suppose that you're a young lawyer, a junior associate in a firm, who was recruited to defend a corporate client in some intellectual-property case. The client grows disgusted with the firm. Our young lawyer quits, starts his own firm, and goes to work for the client as lead-attorney. 5 years later, the case closes, with a resounding victory. The lawyer, barely in his/her mid-30s, receives a $25M payout... closes his/her firm, and retires... to a cabin in Idaho. He/she has 30 years before reaching Medicare eligibility age, and lives for essentially $0/year, as some ascetic survivalist. But... what to do for health insurance? Note that I said nothing about actual health CARE - since this ex-lawyer of ours lives in the forest, with no medical doctors nearby. The point is simply how to stay legal, with health-insurance coverage, at minimal cost.
Ok Ohio, I'll take another crack at this......and if anyone else can explain better than me, please jump in.

Note that a few of us have mentioned that reducing AGI is generally only used on a short term basis. I cant see how anyone could count on reducing AGI to next to nothing without sacrifing asset appreciation on a long term basis. This is a very important point....it's not a viable long term strategy, but many can use it as a short term bridge to Medicare. A few years maybe. And if anyone knows of a way to do this long term, I'm all ears.... So your guy in the example can't do this for 30 yrs, imo.

I personally have been able to do it since ACA inception because at the inception, I had income producing assets in a tax deferred account, so no impact to AGI. I took money to "live on" out of my after tax accounts, but that was in the form of selling stocks at no gain, or a loss. No realized capital gains = no AGI impact. Basically taking advantage of the fact that I had stocks I could sell without taxable profit. Not viable long term.....I'll probably run out of losers next year.

So, in a nutshell.... it's a short term bridge strategy unless you've got endless stock losers.
It means keeping income producing vehicles in tax deferred accounts. Obviously, not everyone can do this, but many already have this in their retirement planning as a tax strategy. And lastly, the lower your yearly cash needs are (i.e., pay off debt) the better, because fewer stock sales means less likelihood for realized capital gains.

Did this help or confuse you more?
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