Would you risk no insurance and ACA Penalty?

[Fishingmn]

DW and I (53/54) went to semi-retired status in late 2015 and were on Individual health plan for 2016. Our rental income and some consulting income means we don't qualify for subsidies. Doing HSA plan -

2016 Premium w/ $13k deductible - $8,400/yr
2017 Premium w/ $13k deductible - $12,800/yr

We live in Minnesota where there's been lots of news about our system.

So the question - It looks like the ACA penalty for no insurance would be around $2,500-3k. With no insurance we'd have to pay all in cash but right now we are basically going to pay the first $26k in medical expenses.

We are both pretty healthy. It seems like there's a 98% chance that we'd be better off not getting insurance. The problem is that 2% chance that we get sick which could be a killer. Of course, we could re-enroll in 2018 if needed.

Would anyone roll the dice and not get health insurance under these circumstances?

 

[MichaelB]

Would anyone roll the dice and not get health insurance under these circumstances?

No way. The financial risk is far too great. Not having health insurance was one of the few things that kept me up at night. Costly premiums irritate me but I sleep so much better.

 

[REWahoo]

No way. The financial risk is far too great.

+1

If the cost is unbearable consider looking for a low-stress job with health benefits.

 

[Fermion]

You are not saving $26k by having no insurance because the deductible would only need to be paid if you had big bills, which you would also have with no insurance (maybe higher bills with no company negotiating the rates).

So you are saving $12,800 - $2500 (penalty) - $500 (checkups and mam mograms included) = $9800

Would you risk $150,000+ of your portfolio to make just $9800 on a high risk investment? If so, head over to my biotech thread and we will get started.

 

[exnavynuke]

Risk:reward not worth it in my opinion.

 

[John Galt III]

Not sure what I would do in your situation, but I went without HI for a year in my 50's. Premiums were just too huge. I had a low paying job I liked, but with no bens. I shopped around for cheap medical services. Blood test for my hypothyroid was only $25. Paying cash for an annual physical was only $45. I suppose I was lucky I didn't need expensive care.

 

[Sarah S]

You do not have to get really sick to blow through 26k especially if you end up not being able to negotiate the cash price. I just had an overnight observation stay ( less than 24 hours- no surgery no specialist consult but blood xray and ekg) follow up was pcp, 3 blood values which are among the cheapest around and one ultrasound cost was 9k cash. Less than 1/2 that with the insurance discount- partly paid by my insurance as my deductible is 2k

My point is that, although this in your case would still be a win, a slightly bigger issue would not be. Suppose you broke a bone? I did once, in a freak gym accident, when I was young and in superb health. 2 days in hospital,surgery, multiple doctor visits, multiple xrays and pt. That would a manageable loss for you. And something serious? Cancer, heart, some weird disease?

 

[Fishingmn]

Thanks for the feedback.

Thought I'd bring it up here before discussing with DW - she'd probably freak out about the idea too

 

[bingybear]

If the cheapest ACA plan costs more than 8.12% (maybe 8.13%) of your income, you can get an exception to the requirement to have insurance (i.e. no penalty). If this is true you loose the penalty.
There should be some catastrophic policies that on your state's ACA platform. In some states these will be less expensive if they are not priced by age. This is not the case in my state, but others have posted that these are available in theirs. It depends on the the choices your state made in setting up their implementation. Check out your state's site.
Would I go without insurance? No, full stop.
About 4 years ago I started having odd light headed spells that would last a few seconds or so. I went to the ER after 5 episodes in 5 days. They ran a few tests and admitted me for more (MRI, Eco Stress test and EEG). I was in the ER for a couple hours and admitted one evening and by 9:30pm the next night they found the problem... intermittently the electrical signals would not get to the bottom of the heart. Bill before insurance was approximately $48k and new hardware... dual chamber pacemaker. At that time I was in good health. Actually, I'm still in good health in my mind. I still can can do what I did before unless there are EMI constraints.

Typical year with the cardiologist (due to the pacemaker) is one short visit to the doctor and twice reading the data out of the pacemaker. This year and next he has added one test.

It's the unexpected for me that I'm insuring for, not the routine. Is it more expensive than I think it should be? Yes.

If you get into a car accident that is your fault or with an under insured driver... who pays for your care?
For me I will likely pay more in insurance that I benefit. Most do.

You need to make your choice of what to insure against.

 

[pb4uski]

....Would anyone roll the dice and not get health insurance under these circumstances?

No way. Think of it this way. Let's say you or your DW have some sort of medical event and it costs $250,000 at rack rates. Without insurance, you are on the hook for $250k, but let's say you can negotiate it down to $175k... your total cost is $178k with the penalty. With insurance, your worst case is $26k (assuming you stay in network) so that is a difference of $150k. Is it worth paying the $10k difference between the HI premiums and the penalty to avoid the risk of a $150k or higher loss?

I view health insurance as simply financial protection insurance with an added benefit of getting access to negotiated rates for health care services for our normal stuff.

On other angle to check out, if the lowest bronze level premium exceeds ~8% of your income then you may be able to buy catastrophic coverage even though you are over 30. In many states, there is not a big discount between bronze and catastrophic coverage but in some states, there is a significant difference (~40% discount in my state for example).

 

[gauss]

Nope! You also gain access to the discounted "in-network" provider rates via the insurer--especially if you use the large dominant player in your area.

Without insurance there are no limits on what the providers can charge you.

I look at the premiums as half "insurance" and half "group purchasing".

-gauss

 

[Cobra9777]

You are not saving $26k by having no insurance because the deductible would only need to be paid if you had big bills, which you would also have with no insurance (maybe higher bills with no company negotiating the rates).

So you are saving $12,800 - $2500 (penalty) - $500 (checkups and mam mograms included) = $9800 ...

Plus you mentioned doing the HSA plan. So I assume you're making HSA contributions. If so, you'd need to factor in the value of the immediate deduction (depends on bracket) as well as ongoing tax savings. Once you're 55, the contribution amount increases and the tax savings can be a meaningful offset to the cost of health insurance.

I'll admit, it's hard for me to get my head wrapped around the numbers you posted. Not sure how I would react if I was facing that. But as others have stated, there's no way I'd go without insurance. A perfectly healthy family member was recently diagnosed with Stage 1 non-Hodgkin's lymphoma, which is fairly common, easily treated, and has a very high survival rate. Treatment included 5 chemo sessions followed by 2 weeks of daily radiation. Gross cost before insurance = $175K.

 

[ivinsfan]

Well let's talk about this since I live in the great state of MN too. First question, are your assets all in protected areas, house you live and or IRA's they can't get at that for medical bills.

Second question, for anything but an emergency you are going to have to get thru the billing offices for treatment. You'll need to pay all up front costs at a minimum.

Third question if you drop your current policy consider it gone. We have now enrollment caps and getting re-enrolled might prove impossible. You could get a Blue Plus HMO but that's the only one that isn't capped. Are these caps legal, IDK, but since they just threw them on 30 days ago, they will be in place for at least 2017. Right now current policyholders are not affected by caps.

 

[MRG]

Wouldn't even think about it. Woke up this spring with a special kind of pain. The kind no male could ever ignore. Few hours in the ER was 20k after the insurance companies discount.

All that money for a few tests and bottle of pills, and a diagnosis of "don't know".

 

[whatnot]

No - the risk is too high. Hopefully, you will not need the insurance, but if you have a serious illness or an accident, you will not have to worry about how your treatment will be paid. This is the last thing that you will want to deal with at that time.

I just went to a funeral for a 57 year old friend who had just retired. Very healthy, exercised regularly and was in very good shape. He died from complications from pneumonia. You just never know when a sudden illness will happen. We always think it will happen to someone else.

 

[Big_Hitter]

I wouldn't.

 

[walkinwood]

No. The risk of having an expense large enough to affect portfolio survival over our lifetimes is too high.

 

[ExFlyBoy5]

Yeah, I wouldn't think of skipping insurance. I am a young, healthy guy and had to have my gall bladder out back in February. Without insurance, I would have been on the hook for about $25,000. And the DW had a spinal tumor removed last year, and that would have cost us over $200K...and since it wasn't an emergency (yet), we would have had to pay OUT OF POCKET before they operated.

That risk is simply way too great for me.

 

[Which Roger]

Would anyone roll the dice and not get health insurance under these circumstances?

I wouldn't do it, and I wouldn't recommend that somebody else do it. But that being said, the math might favor doing it for someone who (1) is comfortable taking such a risk, and (2) is in perfect health and has had near-zero medical expenses over the past couple of years, and (3) has "more than enough" money, so portfolio survival would not be threatened if the very-unlikely-but-worst-case occurred, where they had to pay a couple hundred grand out of pocket in 2017.

 

[rodi]

Insurance doesn't just avoid the penalty - it gets you the "negotiated rates". I'm on a HDHP with HSA. Last year (2015) we hit a patch of bad luck for medical incidents. (Kids and sports injuries) and racked up major medical bills. But when I look at what it would have been without insurance - we're talking about a factor of 7!!!! So the 9k we paid would have been $63k. Even stuff like DH's statin drug, which he pays about $4/month would be a ridiculous $300/month without insurance according to the pharmacy EOB.

Insurance is worth it just for the negotiated rates.

 

[RunningBum]

Is moving to a lower health insurance cost area an option for you?

 

[scrabbler1]

I had led a rather healthy life until the middle of 2015 when I became sick and needed 12 days in the hospital to take care of not one but two significant problems. The unadjusted hospital bill was $63k and that didn't include all the doctor visits while I was in the hospital and shortly after. But simply having insurance, even a so-so ACA Silver plan limited my costs to the ~$6,400 max OOP amount.


I changed plans for 2016 so all I am on the hook for are the $50 copays for the doctor visits and zero for the drugs. I had another small ailment a few months ago which cost me only about $700 thanks to the greatly reduced negotiated charges. I don't worry about the small stuff like that, but I surely want protection for the "Big One" like what happened to me last year, or else my ER would be in danger. The ACA subsidy keeps my premiums down a little (not a lot; I am near the MAGI max).

 

[socca]

For 2017, I am not going to log in to healthcare.gov, select the lowest-cost bronze plan, and sign up. Instead, I'm going to carefully consider all of the options before purchasing an on-exchange or off-exchange plan, including various forms of partial and total self-insurance. This will be unpleasantly time-consuming, but as a skinflint I've been known to exhaustively investigate options for purchases much less costly than modern health insurance.

 

[devans0]

The biggest reason that people declare bankruptcy is health costs. Insurance companies get discounts by volume bargaining. Unless you are so rich that you can self insure, I don't recommend dropping insurance.

 

[Walt34]

The biggest reason that people declare bankruptcy is health costs.

Exactly. No way would I consider going without it, especially after seeing the bills for my cardiac issues the last couple of years.