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COBRA or Bronze ACA?
Old 11-09-2013, 09:10 AM   #1
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COBRA or Bronze ACA?

After a really bad beginning the MA Health Connector website is working almost as well as it was before all the ACA changes. The plans have larger out of packet maxes, but have cheaper premiums than before, particularly when you factor in the subsidy.

My goal is to keep my income around $35k, that will keep me comfortable and keep the tax bill down, and it also gives me a nice healthcare subsidy.

My choice is whether to buy a cadillac COBRA plan at $429 a month that has deductible of $250 and covers the vast majority of costs after that or go with an inexpensive Bronze plan that will cost me $169/month but has a $2000 deductible and a $6350 annual out of pocket max. I'm 52, and healthy. I did have out patient surgery 3 years ago to remove a pressure related cyst, but don't take any drugs and have good blood pressure.

https://www.unicarestateplan.com/pdf...nGuide2013.pdf

https://www.mahealthconnector.org/In...40976455148455
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Old 11-09-2013, 12:32 PM   #2
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Do you know what you spend on health care in an average year? For us the Bronze plan HSA comes out best among our choices because in most years we do not spend much more on health care than what other policies would cost in premiums alone.
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Old 11-09-2013, 12:42 PM   #3
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Originally Posted by daylatedollarshort View Post
Do you know what you spend on health care in an average year? For us the Bronze plan HSA comes out best among our choices because in most years we do not spend much more on health care than what other policies would cost in premiums alone.
HSA also reduces income (assuming HSA contribution) which should both increase subsidy and provide triple federal tax benefit (in, growth and out).
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Old 11-09-2013, 12:53 PM   #4
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HSA also reduces income (assuming HSA contribution) which should both increase subsidy and provide triple federal tax benefit (in, growth and out).
Right, excellent points. I haven't had an HSA before but from what I understand we can now deduct expenses like glasses and dental visits. We no longer have dental insurance so having the dentists visits be tax deductible helps lower that cost, too.

And the HSA deduction helps keep us from the 400% FPL cliff.

We have been very happy with alternative medicine for most minor illnesses, aches and pains, so if we don't have any big medical expenses next year and we can keep our MAGI low, our health care costs might be as low as $4 a month for premiums. How cool is that?
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Old 11-09-2013, 01:08 PM   #5
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Do you know what you spend on health care in an average year? For us the Bronze plan HSA comes out best among our choices because in most years we do not spend much more on health care than what other policies would cost in premiums alone.
I spend almost nothing on healthcare. I had that small out patient surgery 3 years ago, but no chronic illness. So I was leaning towards the Bronze plan.
But there is more to consider. Under current rules I will qualify for that cadillac MA state health insurance as a retiree when I am 55 (in 2.5 years) and will pay $105/month. So that's a no brainer, but MA is in the process of changing those rules and I might have that benefit completely removed. As I am a UK citizen I also have the option to become resident in the UK and receive NHS treatment at zero cost to me.

Whatever I choose I'll fund an HSA. This is one recommended by Vanguard. is it any good?

Vanguard Funds List
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Old 11-09-2013, 01:13 PM   #6
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HSA also reduces income (assuming HSA contribution) which should both increase subsidy and provide triple federal tax benefit (in, growth and out).
Yes I was thinking of the HSA if I get the high deductible plan, but it won't change my taxable income at all as it will just allow me to increase my IRA to ROTH rollover, still that's a good thing.

Even if I get state healthcare and have to stop contributing I can use the funds to pay things like prescriptions, co-pays etc. or eventually Medicare premiums.
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Old 11-09-2013, 01:42 PM   #7
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Whatever I choose I'll fund an HSA. This is one recommended by Vanguard. is it any good?

Vanguard Funds List

Yes, that one is good but perhaps not the best depending upon one's situation.

The one downside to HSAs that I've found is that there is no optimal account option for those who want to use them as a super-IRA. This is due to added fees/expenses for account administration not used by these people - at least for many years.

I use HSA Bank/TD Ameritrade but both my wife and I have relatively large balances which makes it more attractive. HSA Administrators is certainly a reasonable option. Others here may have other suggestions.
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Old 11-10-2013, 05:15 PM   #8
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Yes, that one is good but perhaps not the best depending upon one's situation.

The one downside to HSAs that I've found is that there is no optimal account option for those who want to use them as a super-IRA. This is due to added fees/expenses for account administration not used by these people - at least for many years.

I use HSA Bank/TD Ameritrade but both my wife and I have relatively large balances which makes it more attractive. HSA Administrators is certainly a reasonable option. Others here may have other suggestions.
Just a double check on the HSA withdrawal rules. I can use the money tax free for medical expenses, but not premiums other than Medicare Parts A and B right? and after 59.5 I can withdraw the money without penalty for anything, but would have to pay tax on the money just like an IRA.

Also if I move back to the UK could I use the HSA money to pay for the costs of private health care in the UK?
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Old 11-10-2013, 06:03 PM   #9
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Just a double check on the HSA withdrawal rules. I can use the money tax free for medical expenses, but not premiums other than Medicare Parts A and B right? and after 59.5 I can withdraw the money without penalty for anything, but would have to pay tax on the money just like an IRA.

Also if I move back to the UK could I use the HSA money to pay for the costs of private health care in the UK?
Yes, you may use the funds tax-free for medical expenses but not health insurance premiums. Just FYI, if you 'bank' receipts beginning when you open your account you may reimburse yourself at a later date (tax-free) for those non-reimbursed expenses from previous years.

Yes, you may use HSA funds to pay for Medicare premiums parts A, B and some others (and there are some excluded but I'm not sure which).

No, unlike an IRA for an HSA you must wait until age 65 to withdraw funds penalty-free.

Yes, after age 65 if the withdrawn HSA funds are not used for medical expenses they will be subject to income tax.

I am unsure about using the HSA $ for health care expenses in the U.K.
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Old 11-10-2013, 07:21 PM   #10
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One word of caution.. not all bronze plans or high deductible plans are HSA eligible. The reason may be they have some extractable benefit prior to fulfilling your minimum deductible -- although you may not even be aware of it.

So if the plan you are considering is not clearly labeled or designated as HSA eligible, you may want to inquire why not.
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Old 11-11-2013, 05:27 AM   #11
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I am unsure about using the HSA $ for health care expenses in the U.K.
Medical expenses incurred outside the US are deductible and HSA eligible. Exception would be drugs that are not available in the US. Nutritional supplements are also deductible if the they have been recommended by a medical practitioner.
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Old 11-11-2013, 09:24 AM   #12
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......Nutritional supplements are also deductible if the they have been recommended by a medical practitioner.
True, but ACA has made this a bit of a PITA. ACA now requires that for any supplements to be HSA-eligible expense, inc OTC, they must be specifically prescribed (inc documented prescription) as treatment/prevention for specific disease/disorder (i.e. not for general nutrition or well-being). IOW, the specific supplements are being prescribed as "medication" (e.g. fish oil, niacin, vit D, CoQ10, etc.).

Affordable Care Act: Questions and Answers on Over-the-Counter Medicines and Drugs
Publication 969 (2012), Health Savings Accounts and Other Tax-Favored Health Plans
http://www.irs.gov/pub/irs-prior/p502--2012.pdf
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Old 11-11-2013, 01:58 PM   #13
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Medical expenses incurred outside the US are deductible and HSA eligible. Exception would be drugs that are not available in the US. Nutritional supplements are also deductible if the they have been recommended by a medical practitioner.
That's good to know. Now I have no reason not to do that HSA if I'm eligible. I'm currently healthy so a high deductible plan looks the best, and at a cost in premiums of $169 per month it's inexpensive too. Hopefully my state's retiree health care rules won't change and I'll get a Cadillac plan with $250 deductible for $100/month in 2.5 years. If that changes and I get a chronic illness and will have to pay thousands out of pocket each year I'll just move back to the UK........and I'll be able to pay for what few health expenses I have with HSA dollars, although I think that the HSA will not be tax free in the UK.
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