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Pulling a little money out of IRA to qualify for ACA subsidy... ethical?
- Thread starter hoosierdoc
- Start date
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Oh, absolutely no argument about it being better. Unfortunately, what you mentioned about employers not providing insurance to part time employees was exacerbated by ACA instead of making it better. A lot of full time employees suddenly found themselves "part time" by having their hours cut back so the employer wouldn't have to pay for their insurance (as required by ACA). While they voluntarily paid for it in the past for full time employees, they saw rates going up, or maybe just saw an easy out to cut costs, so the easiest soloution? Less full time employees and more part timers, and possibly even more people on the welfare rolls. Unintended consequences. At least I would like to think it was unintended.
I never once said you “should”. I consider calling someone unethical to be a pretty serious attack on character, particularly for this sort of thing. ymmv
I'm curious, do you consider what the owners of the businesses are doing (hiring multiple part timers vs less full timers) to be unethical, since they are doing it to avoid paying benefits?
Agreed, and you get this often when government intervenes in markets (employment market in this case).
Please provide a detailed definition of business ethics as it relates to providing a good or service at a margin to a voluntary consumer or end user.
Essential, consumable or luxury? Obamacare doesn’t have a voluntary consumer though.
Why is that you don't think you "should"? I'll tell you, it is because you know you shouldn't. In other words, deep down you already know the answer to the ethical question.
Well, wealthy people using the legal process in order to qualify for subsidies that were meant for the poor is an example of a lack of character, so, yeah.
There is a difference between legalities and ethics, just like there is a difference between taking tax deductions and receiving subsidies.
Not giving as much as possible, is not the same thing as getting as much as possible.
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Is there though? There are a lot of people in this country that think nobody should get to take tax deductions. After all, by reducing the amount of tax one pays takes money out of the coffers for the poor (among other things of course), does it not? Is there really a difference between taking money out of the coffer and not putting it in the coffer to begin with? I suppose it could be argued that those taking the deductions (not putting in to the coffer) AND taking money out of the coffer (subsidies) are double dipping, which might be seen as an ethical issue.
Yes there is, on both counts. IMHO, you are wrong.
Look, Doc asked a question, I answered it. No where did he say anything about making anyone else happy about the answer. You guys will just have to live with the fact that I think your view is unethical and your various attempt to confuse the issue aren't going to change my opinion.
Fair enough, and I wasn't trying to prove "right" or "wrong" or confuse the issue. Just offering a different viewpoint of what I perceive to be two sides of the same coin.
Says the guy who is yet to give the ethical standard he believes is being violated...
Ethics are supposed to be standards or rules, yet no one here can do any better than citing their interpretation of some ephemeral "intent" they are gleaning from those idiots we sent to Congress as well as the "need" of some dude they have never met.
Being an ******* doesn't automatically make one unethical. Being a cop who writes ticky-tacky tickets doesn't make him unethical, it makes him a jackass. Same goes for someone who runs the tax system like this. I wouldn't do it, but that does not mean that he is unethical.
Interesting responses in this thread. It seems that those that claim it to be unethical have never had to try and buy affordable health insurance on their own since their employer offers it. What some in this thread don't seem to understand is that the ACA destroyed the private health insurance market in favor of the marketplace insurance forcing people to make these types of decisions.
When I first retired I had a nice policy that was close to what my ex-employer offered at a cost I could afford after deducting the premiums from my taxes. That lasted 1 year before most of the health insurance companies in Indiana pulled out of offering private individual policies leaving only a few carriers that offered both private and market place polices. The problem became private policies were very expensive and the coverage wasn't good. Their marketplace polices were just as bad on coverage but with the subsidy the monthly premiums are still expensive but somewhat affordable. For both types the premiums raised dramatically in a short time forcing people to look more closely at the market place policies to afford the current monthly premiums, hard to plan ahead and save enough money when everything changed basically overnight.
What I don't think some are understanding is that if you take the subsidy you CAN NOT deduct the premiums you paid off your taxes. So in reality the majority of the subsidy is the amount you would get back on your taxes, your just getting it early and spread out over 12 months to help pay for the current premiums instead of a lump sum the following year. It seemed is was a move to force people on to the failing market place Ins policies to help keep them afloat.
So does the original question about ethics even apply? In most situations, (since most people fall into this income bracket) all the person is deciding is whether to take the tax savings up front or waiting until the following year. What isn't ethical is being forced to buy a product you may not want that mandates including coverage you do not need, (pregnancy, addiction services ect.) that increases the costs and reduces the overall benefits which requires these types of questions to be asked in the first place.
As far as the OP's original question, remember it's just a hypothetical question. Reducing your IRA by 22K isn't going to net anyone 13K worth of subsidy on their health insurance costs. The subsidy is based on income not a tax deferred asset so unless he's making close to 100% return on investment and taking that as income there's no way he can get that much as a subsidy. The overall numbers just don't add up. Though it is an interesting question on ethics.
When I first retired I had a nice policy that was close to what my ex-employer offered at a cost I could afford after deducting the premiums from my taxes. That lasted 1 year before most of the health insurance companies in Indiana pulled out of offering private individual policies leaving only a few carriers that offered both private and market place polices. The problem became private policies were very expensive and the coverage wasn't good. Their marketplace polices were just as bad on coverage but with the subsidy the monthly premiums are still expensive but somewhat affordable. For both types the premiums raised dramatically in a short time forcing people to look more closely at the market place policies to afford the current monthly premiums, hard to plan ahead and save enough money when everything changed basically overnight.
What I don't think some are understanding is that if you take the subsidy you CAN NOT deduct the premiums you paid off your taxes. So in reality the majority of the subsidy is the amount you would get back on your taxes, your just getting it early and spread out over 12 months to help pay for the current premiums instead of a lump sum the following year. It seemed is was a move to force people on to the failing market place Ins policies to help keep them afloat.
So does the original question about ethics even apply? In most situations, (since most people fall into this income bracket) all the person is deciding is whether to take the tax savings up front or waiting until the following year. What isn't ethical is being forced to buy a product you may not want that mandates including coverage you do not need, (pregnancy, addiction services ect.) that increases the costs and reduces the overall benefits which requires these types of questions to be asked in the first place.
As far as the OP's original question, remember it's just a hypothetical question. Reducing your IRA by 22K isn't going to net anyone 13K worth of subsidy on their health insurance costs. The subsidy is based on income not a tax deferred asset so unless he's making close to 100% return on investment and taking that as income there's no way he can get that much as a subsidy. The overall numbers just don't add up. Though it is an interesting question on ethics.
Timjoebillybob
Grandmaster
- Feb 27, 2009
- 9,394
- 149
I believe an early withdrawal from an IRA is considered income. So the person would qualify for the subsidy.
StuckinIndy
Plinker
If you are 48 years old, retired, and living on a sailboat, then you have paid much more into the system than you will ever take out. I wouldn't feel guilty for one second in that situation.
Whoever this person is should feel proud of their accomplishments.
Whoever this person is should feel proud of their accomplishments.
Depends.
A trad. IRA or 401K is "income deferment", that is you take part of you income, stash it away, and it grows until you need it. When you withdraw it, you pay taxes on it, just like earned income.
From what I can tell, the most you can get for a family of four is ~$7k, so I'm not sure where the $13k subsidy comes from.
Nevertheless, I consider it ethical. Lying, cheating, hiding income - all unethical. Working within the system and byzantine laws to minimize taxes and maximize credit - ethical.
What I consider unethical was Congress eliminating the penalty, but retaining the subsidy.
hoosierdoc
Freed prisoner
In an absolutey hilarious twist of fate the same guy had his dinghy stolen off his boat and is mad.
I am pointing out his hypocrisy. He has no problem taking my money when he doesn’t Need it for $23k, but someone takes his $3000 dinghy and it’s time to call the sheriff
I am pointing out his hypocrisy. He has no problem taking my money when he doesn’t Need it for $23k, but someone takes his $3000 dinghy and it’s time to call the sheriff
hoosierdoc
Freed prisoner
Yeesh, my post was deleted. Puh-thetic
I don’t recall reading anyone having considered the long-term effects of the IRA withdrawal. Everybody who’s complaining about this scenario being unethical isn’t thinking about how much the withdrawal would really cost a 48-year-old guy with the sailboat. If someone’s willing to take the hit on their IRA to get an Obamacare subsidy and it’s all within the scope of the law I say go for it.
