Does anyone understand Obamacare?

[mountainsoft]

As I mentioned in my original post, the purpose of this exercise is to figure out the most we would pay for healthcare in a year so I can factor that cost into our retirement budget. If we spend less that would be great, but I don't want to underestimate our costs.

As I understand it, the out-of-pocket maximum includes copays, coinsurance, and deductables:
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/

So it seems like I should just be able to add up the annual cost of premiums and the max out of pocket cost to get an annual total for the year.

Kaiser Gold 0/20 has a $5064 annual premium and $7250 OOP-Max for a total of $12,314 per year.

Kaiser Silver 3500/30 has a $3372 annual premium and $6300 OOP-Max for a total of $9672 per year.

Kaiser Bronze 5000/50 has a $0 annual premium and $7750 OOP-Max for a total of $7750 per year.

Unless I'm missing something the Bronze plan seems like the no-brainer? Rather than figure out how much each plan pays for various services, I just assumed we would pay out of pocket up to the OOP-Max per year. Of course, insurance will cover some portion of those costs, but for the purpose of budgeting I didn't see that it mattered.

Does this sound correct or am I overlooking something with my estimations?

Also, does anyone know if we have to use Kaiser pharmacy if we have a Kaiser medical plan? It seems many medications can be bought at places like Walmart or online pharmacies cheaper than the Kaiser pharmacy in these plans.

 

[ivinsfan]

Mountain is this a subsidized plan otherwise how are you getting a 0 premium..if you have a substantial subsidy then these number make more sense. Be advised if your subsidy includes cost sharing and thus a lower deductible it's my understanding you can't fund an HSA...

 

[mountainsoft]

Mountain is this a subsidized plan otherwise how are you getting a 0 premium..if you have a substantial subsidy then these number make more sense. Be advised if your subsidy includes cost sharing and thus a lower deductible it's my understanding you can't fund an HSA...

Yes, these quotes are with subsidies. I know costs will change in coming years, but I need a number I can start with in our budget. I can always update my budget plans as we get closer to retirement.

I am not considering HSA options at this time.

 

[ivinsfan]

Yes, these quotes are with subsidies. I know costs will change in coming years, but I need a number I can start with in our budget. I can always update my budget plans as we get closer to retirement.

I am not considering HSA options at this time.

Well then you have your answer as to why the number seem so off. If you would have mentioned that first we could have saved you a lot of confusion...

Sorry I see from your follow up post, I was the one that was confused..

 

[mountainsoft]

Well then you have your answer as to why the number seem so off. If you would have mentioned that first we could have saved you a lot of confusion...

I did? In post #1: "I'm only comparing plans from Kaiser Permanente with subsidies based on our estimated income."

It wasn't the numbers that confused me, it was trying to find a meaningful way to compare plans with different copays, coinsurance, deductables, out-of-pocket maximums, etc. I just need a number for healthcare I can use in my retirement budget. If it ends up costing less, fine, but I don't want to drastically underestimate.

It seems the best way to do this is to ignore the cost of individual visits and just look at the worst case expense: Annual Premiums plus the Out-of-Pocket Maximum. If I am understanding this correctly, that should be the most I would pay in a year (for one person, twice that for a couple).

 

[Texas Proud]

Insurance companies offering numerous combinations of premium, deductible, total out of pocket, etc, is nothing new and definitely not the consequence of Obamacare, If anything, the ACA simplified this.

Most people never dealt with it because the employer did when choosing insurance plans for job health benefits. Ask any benefits coordinator. Health insurance complexity is designed by the insurance companies.

I was going to say the same thing... the question you have is the same with employer insurance so it is not Obamacare... the only thing Obamacare did was give you many more options than your employer gave...


Your thought is correct in that the calculated max is the premiums and max OOP... however, the copays do not count and you keep paying them all year... not a game change IMO...




Then I do two calcs, one is max and one is what do I expect if a normal year... it is the second one that I am most interested in... I can afford to do one year out of many for the max but the constant year after year of paying more than you need for health care adds up..

 

[ivinsfan]

I did? In post #1: "I'm only comparing plans from Kaiser Permanente with subsidies based on our estimated income."

It wasn't the numbers that confused me, it was trying to find a meaningful way to compare plans with different copays, coinsurance, deductables, out-of-pocket maximums, etc. I just need a number for healthcare I can use in my retirement budget. If it ends up costing less, fine, but I don't want to drastically underestimate.

It seems the best way to do this is to ignore the cost of individual visits and just look at the worst case expense: Annual Premiums plus the Out-of-Pocket Maximum. If I am understanding this correctly, that should be the most I would pay in a year (for one person, twice that for a couple).

My bad I didn't catch that one and got caught up in the max OOP quagmire..

And you should research cost sharing at that income level your max OOP could lower again it's for a budget number but still...

 

[mountainsoft]

you should research cost sharing at that income level

The Silver plan in my last three quotes was a cost sharing plan. It really wasn't remarkably different from the non-cost sharing version of the same plan. About 10 bucks less per month, and 1000 less max OOP. All of the copays and coinsurance remained the same.

The Bronze plan still comes out ahead, mostly because of the zero premiums with the subsidies.

My wife and I are both still fairly healthy and don't spend much on healthcare (even before insurance pays). I don't take any medications, she only takes one. I'm sure our health will probably decline over the next decade, but I'm more worried about major hospital visits than the typical doctor visits and blood tests.

 

[ivinsfan]

The Silver plan in my last three quotes was a cost sharing plan. It really wasn't remarkably different from the non-cost sharing version of the same plan. About 10 bucks less per month, and 1000 less max OOP. All of the copays and coinsurance remained the same.

The Bronze plan still comes out ahead, mostly because of the zero premiums with the subsidies.

My wife and I are both still fairly healthy and don't spend much on healthcare (even before insurance pays). I don't take any medications, she only takes one. I'm sure our health will probably decline over the next decade, but I'm more worried about major hospital visits than the typical doctor visits and blood tests.

Mind if I ask why you aren't considering an HSA..?

 

[mountainsoft]

Mind if I ask why you aren't considering an HSA..?

Mentally it's just another level of complexity in an already complicated area.

However, we currently don't qualify for an HSA since we're on my wife's health plan through her work (better than anything we can buy privately, and way too expensive to pay for under COBRA).

Even if we had a high deductible plan that qualified for an HSA, we don't have any extra money right now to save there. I'm currently directing all of our savings to our Roth accounts.

Once we retire (just over four years hopefully), we won't have any income to direct to an HSA. Even if we did I don't see any advantage to pulling healthcare costs from an HSA instead of a Roth. There were better plan options than the HSA plan anyway.

 

[sengsational]

Low utilizers that have low enough income to get the PTC subsidy typically find the bronze HSA plans are optimal because 1) the premium savings is so large between bronze and silver, and 2) they're really "buying the max out of pocket", which is usually about the same between the plans.


There are some scenarios where the silver plan with cost sharing could come out better, but it would be unlikely for a couple that doesn't typically need healthcare. If you acquired a condition that needed lots of visits, you'd only have to deal with whatever fraction of a year was left after you went from healthy to not. And if "something big / bad" happened, the bronze would be fine because you'd pay roughly the same max out of pocket.

 

[sengsational]

Once we retire (just over four years hopefully), we won't have any income to direct to an HSA. Even if we did I don't see any advantage to pulling healthcare costs from an HSA instead of a Roth. There were better plan options than the HSA plan anyway.

Four years...you've got plenty of time to learn why an HSA is awesome. It's basically a "Super Roth" because you get to subtract it from your income. I take money out of a tIRA and max-out the HSA every year. Doesn't cost a dime in taxes (because it's subtracted from income), and that money goes from getting taxed when I take it out to coming out tax-free.


This all presumes that you pay medical bills with "regular money" and let the HSA compound tax-free...you treat it just as if it were a Roth account (pulling from it last).


But I think for the long-term planning you're doing, HSA's can be ignored.

 

[Texas Proud]

Low utilizers that have low enough income to get the PTC subsidy typically find the bronze HSA plans are optimal because 1) the premium savings is so large between bronze and silver, and 2) they're really "buying the max out of pocket", which is usually about the same between the plans.


There are some scenarios where the silver plan with cost sharing could come out better, but it would be unlikely for a couple that doesn't typically need healthcare. If you acquired a condition that needed lots of visits, you'd only have to deal with whatever fraction of a year was left after you went from healthy to not. And if "something big / bad" happened, the bronze would be fine because you'd pay roughly the same max out of pocket.

For this year I have 4 people on the plan... and the difference between a bronze and a cost sharing silver is HUGE... it was not even a consideration as the max OOP for the family was like $22K vs $3K or $5K, not sure... the deductible is $7000 vs $1500...

 

[mountainsoft]

you've got plenty of time to learn why an HSA is awesome.

Continuing my quest to understand the various plan options. I watched an old Dave Ramsey video talking about HSA's and he mentioned getting a high deductible HSA eligible plan even if you didn't get an HSA account.

That never occurred to me. I thought you HAD to have an HSA account if you had an HSA eligible plan. I figured the two were a required pair.

Does anyone here have an HSA plan WITHOUT the HSA savings account? The max OOP is significantly lower with the HSA plan.

I still need to run some numbers on what a "typical" year would be for us to see which plan would make the most sense.

 

[ivinsfan]

Continuing my quest to understand the various plan options. I watched an old Dave Ramsey video talking about HSA's and he mentioned getting a high deductible HSA eligible plan even if you didn't get an HSA account.

That never occurred to me. I thought you HAD to have an HSA account if you had an HSA eligible plan. I figured the two were a required pair.

Does anyone here have an HSA plan WITHOUT the HSA savings account? The max OOP is significantly lower with the HSA plan.

I still need to run some numbers on what a "typical" year would be for us to see which plan would make the most sense.

It not mandatory to fund the HSA...but if you a managing income for ACA it's a great tool to help after the end of the year. If you are not getting earned income it's literally the only tool. HSA don't have to be funded until April 15th.

 

[mountainsoft]

I decided to run some estimated numbers based on what might be an "average" year for my wife and I. 4 doctor visits, 8 labs, and 2 prescriptions each. We currently don't have this many doctor visits or prescriptions (I average about $500/yr of costs before insurance), but I'll assume this might be typical in coming years.

I used our current explanation of benefits to come up with an OOP cost of $280 for a doctor visit and $80 for a lab test. Prescriptions were based on each plan. Costs include premiums with subsidies, and account for deductibles and the OOP Max.

Bronze 7500/30% HSA = $4160
Bronze 5000/50 = $2940
Silver 3500/30 CSA = $5532
Gold 0/20 = $6184

The basic Bronze plan was the clear winner, even better than the HSA plan. I also ran the estimates again with what might be a "heavy" year, 8 doctor visits, 16 labs, and 4 prescriptions each.

Bronze 7500/30% HSA = $8320
Bronze 5000/50 = $7260
Silver 3500/30 CSA = $7692
Gold 0/20 = $7304

Again, the basic Bronze plan was the winner, though surprisingly the Gold plan was starting to make more sense. However, unless one or both of us develops a chronic health condition, this is way beyond our normal healthcare needs. We did not reach the deductible with any of these estimations.

Any significant emergency that requires a hospital stay is going to hit the out-of-pocket maximum. Silver CSA is best in this regard at $6300/person, while the basic Bronze is highest at $7750/person. While it's impossible to predict, it's hopefully an event that only happens once every few years at most. I think it makes more sense to plan for a more typical year, with a bit of a buffer to cover those more random significant scenarios.

Based on the numbers I've run, I think the Bronze plan should work well for us, and the $8000/yr I'm budgeting for healthcare in retirement should be fairly safe. Now I just have to wait and see what happens with healthcare in the next four years before we retire.

 

[jeffst]

I'm trying to estimate what our healthcare expenses might be when we retire using the Washington Healthplan Finder (for Washington state, of course).

Mid 50s, work for MEGACORP that has decent benefits, pays okay, work from home which gives me freedom. Not a high stress position.

Have thought about ERing, numbers look good through the various retirement tools.

But when I look at ACA in our state I was disappointed to see how few providers accept it. And in some cases very few specialists to choose from.

Have others experienced the same?

 

[Texas Proud]

Continuing my quest to understand the various plan options. I watched an old Dave Ramsey video talking about HSA's and he mentioned getting a high deductible HSA eligible plan even if you didn't get an HSA account.

That never occurred to me. I thought you HAD to have an HSA account if you had an HSA eligible plan. I figured the two were a required pair.

Does anyone here have an HSA plan WITHOUT the HSA savings account? The max OOP is significantly lower with the HSA plan.

I still need to run some numbers on what a "typical" year would be for us to see which plan would make the most sense.

Not sure why... the plans I saw were the same deductible being HSA or not... and HSA is worse as they cannot offer a low copay for all visits... you have to pay 100% until you reach deductible..

 

[blueskyk]

A couple of thoughts and an ACA question. I too, find the ACA (and healthcare coverage costs in general) require a great deal of research and wisdom-seeking from those who have a better understanding than myself. Healthcare coverage reminds me a lot of income taxes in that regard - if you really want to navigate either in an optimal way for your own circumstances, it takes a helpful tribe. I made serious use of the spreadsheet offered earlier in this thread and am grateful to the developer (may your generosity return to you many times over).

While it took a fair amount of effort to sort out the best path for us, we were grateful for the option and could not have ERd without it and the subsidy. And, like some others noted here, will breath a little easier when we make it to Medicare next year.

And now my question (I’ve searched for this but not found anything so apologies in advance if it’s repetitive): DH and I will turn 65 in the same year, 2020; me in April and DH in Nov. Will the income limit applied in 2020 be for a two person household even if both people are not on the ACA for the entire year?

Also, I started wondering - what happens if one of the household dies? How does the subsidy get calculated then? Is the surviving spouse income now limited to the single person household income limit?

That would really suck I think and is why we keep a stash of Roth funds available. It’s a little weird when I look back on all the work DH and I have done to manage ER - healthcare costs and the planning to manage them have taken up most of the oxygen in the room.

 

[sengsational]

mountainsoft, do your numbers account for the Federal tax break for an HSA?



Let's say you have a traditional IRA and are 55 or older... you can pull $8,000 out of your IRA and put it in the HSA and not pay a dime of taxes. It shows as income near the top of the 1040 but gets subtracted off a few lines below.



So if your marginal tax rate was 20%, the HSA would have a $1600 tax benefit on Federal taxes and possibly more on state taxes.


blueskyk, generally it's based on what is on the tax form, so the person count is 1 or 2, not any fraction. If you have tax software on your computer, make a fake return for future years and play with it... you'll gain a pretty good idea of how it works just by answering the interview questions as if the alternative scenario had happened.

 

[jj]

I'm trying to estimate what our healthcare expenses might be when we retire using the Washington Healthplan Finder (for Washington state, of course). To keep things "simple" I'm only comparing plans from Kaiser Permanente (what we have now through my wife's employer) with subsidies based on our estimated income. Unfortunately, I'm getting buried in all the premium, deductable, copay, coinsurance, and other lingo to make any meaningful comparison.

The healthplan finder gives an "estimated out of pocket cost, INCLUDING premiums". But that's obviously useless as it estimates a $350/mo plan as costing $1900 for the year (350x12=4200?).

I assumed if I had a $1000 deductible we would pay out-of-pocket until our costs got over $1000. Then insurance would cover a portion of the additional expenses until we reached our out-of-pocket-maximum (say $7500). Then we would pay nothing over that. But none of the examples I see on Kaisers plans work anything like that, and don't include enough detail to understand where the costs are going.

I'm just trying to estimate our "worst case" healthcare expenses. I could just add the premium and max out-of-pocket cost, but that would be overkill. We had one major hospital expense last year ($80K before insurance), but most years we only spend $2k to $5K per year per person (before insurance).

How on earth do you make sense of this stuff to make any meaningful estimation?

How do you choose between gold, silver, bronze or decide what deductible to select?

Bonkers over complicated...

For example, why would I pay $430/month for a Gold plan (no deductible) with a $7250 out of pocket max, when I could pay $0/month for a bronze plan (5000 deductible) with a $7750 out of pocket max?

If it were planning for this I would work out these same figures for the last couple of years before the first of you qualifies for Medicare. Say, you are 62 and 64... just look at what a couple that age pays... that'll make your eyes water.

Of course, the ACA could have been replaced by then, but it's still worthwhile knowing what someone that age would pay now, for planning purposes.

 

[mountainsoft]

mountainsoft, do your numbers account for the Federal tax break for an HSA?

No, I was only comparing the total costs of each plan, not where the money came from. The HSA eligible plan generally came out worse than the equivalent bronze plan. As TexasProud said, the HSA plan requires you to pay everything out of pocket until you reach the deductible, whereas the basic bronze plan provides at least a few lower copays for doctor visits. Both plans had zero premiums with subsidies.

The HSA may work better in different states, in different situations, or with different income levels. For us it would not work out as the best plan.

Of course, this is all speculation at this point. Who knows what will happen with Obamacare over the next four years. The plans I'm comparing today may not exist when we're ready to retire. Still, it gives some rough numbers for planning purposes and I know better what to look for and how to compare the various plans.

 

[sengsational]

True that the ACA may be different four years from now and no need to settle on anything if it's just for modeling. But if I were making the model, I'd multiply my HSA contribution by my marginal tax rate and subtract that from the cost of the HSA insurance because Uncle Sam is giving you a tax break for putting money into an HSA and offering no such tax break for other plans.

 

[ivinsfan]

No, I was only comparing the total costs of each plan, not where the money came from. The HSA eligible plan generally came out worse than the equivalent bronze plan. As TexasProud said, the HSA plan requires you to pay everything out of pocket until you reach the deductible, whereas the basic bronze plan provides at least a few lower copays for doctor visits. Both plans had zero premiums with subsidies.

The HSA may work better in different states, in different situations, or with different income levels. For us it would not work out as the best plan.

Of course, this is all speculation at this point. Who knows what will happen with Obamacare over the next four years. The plans I'm comparing today may not exist when we're ready to retire. Still, it gives some rough numbers for planning purposes and I know better what to look for and how to compare the various plans.

Yes but don't underestimate the flexibility of the HSA on staying under the cliff, if you have ANY chance of going over that cliff HSA funding could be worth it's weight in gold.

 

[Mr._Graybeard]

True that the ACA may be different four years from now and no need to settle on anything if it's just for modeling. But if I were making the model, I'd multiply my HSA contribution by my marginal tax rate and subtract that from the cost of the HSA insurance because Uncle Sam is giving you a tax break for putting money into an HSA and offering no such tax break for other plans.

Yep. In my state I'd add in a 6% state income tax as well.