No HI benefit; Not ACA qualified; What to expect?

U

ut2sua

Recycles dryer sheets
Joined
Dec 6, 2007
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380
Hi all,
I am new to this forum. DW and I are 49 and 53 (+2 sons 21 & 24). We are currently in CA, and we are leaning toward RE in a couple years if not earlier. Due to our expected income after RE (100K->120K/year), we probably will need to pay for the full cost of HI. I am asking for input from those already FIREd (or those having health insurance knowledge) to learn more about the cost of various health care plans in different locations (HI cost could be one critical factor in our decision regarding where to live after FIREd). What you are currently paying and location as well as the pros vs cons of the various level of HI would be extremely helpful to us. Many thanks in advance for all your input.
 
Technically, as long as you meet minimum income levels, you are ACA qualified. The ACA refers to the entire law and program. And in CA, even below the minimum, you'd be ACA qualified into the medicaid expansion.

Now, you won't qualify for ACA subsidies if you are above the maximum income threshold (adjusted gross), but you still shop an ACA plan just like those that do get subsidies. It's the same insurance, just the price is different.

As far as location, it's different for everyone, down to your county/zip. From providers to plans, you name it. You might want to check out healthsherpa dot com to browse.

For example, we have a Florida Blue Bronze plan. About 1k for the two of us pre-subsidy, per month, with a 6k pp deductible, which we chose to have an HSA eligible plan. I could pay up to 3k per month for a platinum lower-deductible plan, but we've been happy with our bronze plan and with BCBS so far.
 
For at least 3 years - starting with 2020 - you'd be in premium tax credit range if you are a California resident. The state increased the "cliff" for California residents for 3 years. CA taxpayers are paying for the premium tax credits above the federal premium tax credits. The new income "cliff" is 600% of federal poverty level.

For a family of 4, the income cliff is $154,500 in California.

https://www.coveredca.com/see-if-you-qualify-for-financial-help/
 
Aerides said:
Technically, as long as you meet minimum income levels, you are ACA qualified. The ACA refers to the entire law and program. And in CA, even below the minimum, you'd be ACA qualified into the medicaid expansion.

Now, you won't qualify for ACA subsidies if you are above the maximum income threshold (adjusted gross), but you still shop an ACA plan just like those that do get subsidies. It's the same insurance, just the price is different.

As far as location, it's different for everyone, down to your county/zip. From providers to plans, you name it. You might want to check out healthsherpa dot com to browse.

For example, we have a Florida Blue Bronze plan. About 1k for the two of us pre-subsidy, per month, with a 6k pp deductible, which we chose to have an HSA eligible plan. I could pay up to 3k per month for a platinum lower-deductible plan, but we've been happy with our bronze plan and with BCBS so far.
Click to expand...
Thank you for sharing Aerides; Since DW and I are relatively healthy, our choice would probably lean toward something similar to yours. I will check out the online site you mentioned tonight. Does ACA qualified means that pre-existing conditions are don't-care (same premium; no question asked)? Thanks.
 
ut2sua said:
Thank you Cathy63. I tried the site and it seems to require me to sign up for an account to give me any quote number. Is this expected? Thanks.
Click to expand...

You don't need to create an account to "what if" on coveredca.com.... You use the "shop and compare button on the first page. It asks general questions - income, zip, household size... then gives you the options.
 
rodi said:
For at least 3 years - starting with 2020 - you'd be in premium tax credit range if you are a California resident. The state increased the "cliff" for California residents for 3 years. CA taxpayers are paying for the premium tax credits above the federal premium tax credits. The new income "cliff" is 600% of federal poverty level.

For a family of 4, the income cliff is $154,500 in California.

https://www.coveredca.com/see-if-you-qualify-for-financial-help/
Click to expand...

Thanks for the info Rodi. This info is news to me, so it is helpful. Is Coveredca a CA state version of ACA?
 
rodi said:
You don't need to create an account to "what if" on coveredca.com.... You use the "shop and compare button on the first page. It asks general questions - income, zip, household size... then gives you the options.
Click to expand...
Yes. It works. I entered 80k/yr income for 4 just to try out, and I do get quite a large subsidy (~1.5K/month). This totally surprises me. Do you know if after 3 years, these benefit will go away or will the subsidy be good for any 3 years in the future? Many thanks.
 
It's hard to predict where healthcare coverage will be 3 years down the road. Also, your children will soon be too old (26) to be covered on your family plan so will need to factor that into your calculations for expected healthcare cost and subsidy you may get.
 
ut2sua said:
Thanks for the info Rodi. This info is news to me, so it is helpful. Is Coveredca a CA state version of ACA?
Click to expand...

Yes, CoveredCA is the California state version of the national healthcare exchange. If you are thinking about moving to another state, you can check out your options for those areas at healthcare.gov. That national site will direct you to the state exchange sites for states that have one, and it will give you the pricing for states that don't.

ut2sua said:
Yes. It works. I entered 80k/yr income for 4 just to try out, and I do get quite a large subsidy (~1.5K/month). This totally surprises me. Do you know if after 3 years, these benefit will go away or will the subsidy be good for any 3 years in the future? Many thanks.
Click to expand...

There are two subsidies: the federal subsidy, which has no official time limit; and the CA subsidy, which is in effect from 2020 to 2022 unless it gets extended by the legislature. If you qualify, and the government continues to provide subsidies, then you could get one every year until you're both 65 and have to go on Medicare. The subsidy is based on how many people are on your healthcare plan and your total household income.

If you are covering a 21 yr old and a 24 yr old, don't forget to include everything they earn plus any taxable scholarships they receive as part of your family's income. If the 24 yr old has graduated college and started a career job, you might be way over the $80K you entered for testing, and it might be better to have him sign up for his employer's health plan and just cover your family of 3 on an ACA plan. You have to really work the numbers every which way to figure out what's best.
 
If you have control over your MAGI income, it might pay to keep it under the 400% of federal poverty level. $100K MAGI - $25K unsubsidized health premiums = $75K. The 400% of FPL is $67,640, plus you can add in ~$7K HSA contributions to that if you have a HSA policy. You don't necessarily have to keep your spending under that limit. You can do things like drawdown funds from after tax accounts or borrow from a HELOC to make up the difference. By staying under the 400% FPL limit our health insurance premiums go from around $28K this year to $2 a month (not $2K just $1 each).
 
zinger1457 said:
It's hard to predict where healthcare coverage will be 3 years down the road. Also, your children will soon be too old (26) to be covered on your family plan so will need to factor that into your calculations for expected healthcare cost and subsidy you may get.
Click to expand...

Yes. Good point Zinger. By the time I RE, my older son may hit 26. I need to think 3 or mostly 2 instead of 4. Thanks.
 
My wife and I are on the Kaiser bronze HSA plan and the cost is $1300/mo.
 
cathy63 said:
Yes, CoveredCA is the California state version of the national healthcare exchange. If you are thinking about moving to another state, you can check out your options for those areas at healthcare.gov. That national site will direct you to the state exchange sites for states that have one, and it will give you the pricing for states that don't.



There are two subsidies: the federal subsidy, which has no official time limit; and the CA subsidy, which is in effect from 2020 to 2022 unless it gets extended by the legislature. If you qualify, and the government continues to provide subsidies, then you could get one every year until you're both 65 and have to go on Medicare. The subsidy is based on how many people are on your healthcare plan and your total household income.

If you are covering a 21 yr old and a 24 yr old, don't forget to include everything they earn plus any taxable scholarships they receive as part of your family's income. If the 24 yr old has graduated college and started a career job, you might be way over the $80K you entered for testing, and it might be better to have him sign up for his employer's health plan and just cover your family of 3 on an ACA plan. You have to really work the numbers every which way to figure out what's best.
Click to expand...

Thanks Cathy. I learned that I need to think 2 or 3, but not 4.
 
daylatedollarshort said:
If you have control over your MAGI income, it might pay to keep it under the 400% of federal poverty level. $100K MAGI - $25K unsubsidized health premiums = $75K. The 400% of FPL is $67,640, plus you can add in ~$7K HSA contributions to that if you have a HSA policy. You don't necessarily have to keep your spending under that limit. You can do things like drawdown funds from after tax accounts or borrow from a HELOC to make up the difference. By staying under the 400% FPL limit our health insurance premiums go from around $28K this year to $2 a month (not $2K just $1 each).
Click to expand...

Yes. The saving is significant. I have been thinking all along that we need to bear the full cost of HI. Thank you for sharing your thought (and math which made lots of sense to me) Daylatedollarshort.
 
RobbieB said:
My wife and I are on the Kaiser bronze HSA plan and the cost is $1300/mo.
Click to expand...

Thanks for sharing Robbie. Much appreciated. I switched to Kaiser for a few years now (company HI), and I like it. I don't mind having Kaiser after I FIREd
 
I would not plan on the extended tax credits/subsidies after 2022... I'm using the three years to do some extra roth conversions, and move some money from pre-tax to post tax.... I couldn't do as much of that under the normal ACA cliff because of the risk of loss of premium tax credits if I blew past the income cliff...

But if you're still working for 3 more years - it's a non-issue (non-help) for you.

Yes - factor in kids income... almost got bit by that this past year since younger son got a job that pushed us closer to the cliff than I wanted. (the extended income range for CA didn't go into effect till 1/1/2020.)

When I was budgeting for retirement I used my employers COBRA rates as a budget input... Turns out that wasn't realistic since my (large) employer had a great deal with Kaiser, low co-pays, no deductible. For the same amount of money I was able to get a high deductible HSA plan... and unfortunately, hit the max deductible/max OOP the first few years. (Darn teenagers. 2019 was the first year we didn't come close to the deductible. I retired in 2014, and went on high deductible, HSA plan in 2015).

I like to budget for worst case... So if you go with a high deductible, make sure you have the reserves to pay the deductible and Max OOP... just in case... and the income to refill those reserves, if need be.

Curious - is the $80k you mention gross or net? Premium tax credits are based on MAGI - which is basically AGI but with some things added back in - like IRA/401k contributions.
 
One last thing... if you are not sure you'll qualify for subsidies you can opt to get them 'after the fact' as a tax refund. Because we had minor age children there is a spot that the kids don't qualify for mediCAL, (medicaid for kids in CA) but coveredCA thinks they are qualified. This happened to us twice... And it's a nightmare to get out of - and you're kind of in limbo for insurance. My solution was to 'estimate' my income higher - above the income cliff, and pay full premiums, then get the tax credits at filing time. That worked well for us. I received this suggestion from helpful members of this forum.
 
rodi said:
I would not plan on the extended tax credits/subsidies after 2022... I'm using the three years to do some extra roth conversions, and move some money from pre-tax to post tax.... I couldn't do as much of that under the normal ACA cliff because of the risk of loss of premium tax credits if I blew past the income cliff...

But if you're still working for 3 more years - it's a non-issue (non-help) for you.

Yes - factor in kids income... almost got bit by that this past year since younger son got a job that pushed us closer to the cliff than I wanted. (the extended income range for CA didn't go into effect till 1/1/2020.)

When I was budgeting for retirement I used my employers COBRA rates as a budget input... Turns out that wasn't realistic since my (large) employer had a great deal with Kaiser, low co-pays, no deductible. For the same amount of money I was able to get a high deductible HSA plan... and unfortunately, hit the max deductible/max OOP the first few years. (Darn teenagers. 2019 was the first year we didn't come close to the deductible. I retired in 2014, and went on high deductible, HSA plan in 2015).

I like to budget for worst case... So if you go with a high deductible, make sure you have the reserves to pay the deductible and Max OOP... just in case... and the income to refill those reserves, if need be.

Curious - is the $80k you mention gross or net? Premium tax credits are based on MAGI - which is basically AGI but with some things added back in - like IRA/401k contributions.
Click to expand...

Thanks for sharing Rodi. I would imagine if the kid(s) has high income, we have the option to not count them in (?)
The $80k is just a number that I tried. One of my weakness is I haven't live under a budget for a long time. We spent $ relatively wisely, just not keeping a budget ever. I learned quickly from this forum that is something I need to work on. Since we have a family of 4, the spending will be roughly ~120k/yr plus or minus 20k, I think. I seem to be able to gather that $ taking out of pre tax IRA/401k is part of the MAGI(?)
 
rodi said:
One last thing... if you are not sure you'll qualify for subsidies you can opt to get them 'after the fact' as a tax refund. Because we had minor age children there is a spot that the kids don't qualify for mediCAL, (medicaid for kids in CA) but coveredCA thinks they are qualified. This happened to us twice... And it's a nightmare to get out of - and you're kind of in limbo for insurance. My solution was to 'estimate' my income higher - above the income cliff, and pay full premiums, then get the tax credits at filing time. That worked well for us. I received this suggestion from helpful members of this forum.
Click to expand...

Thanks for the helpful guidance Rodi. I will keep that in mind.
For those as uneducated as I was/am on ACA, I found a helpful link below.
All info agreed with everything everyone has mentioned on this thread + some more details beyond what the link title says
https://www.healthinsurance.org/obamacare/will-you-receive-an-obamacare-premium-subsidy/

Another link giving info on how MAGI below.
Again nothing is different than what I have learned from this thread, just some additional details
https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/
 
ut2sua said:
Thanks for sharing Rodi. I would imagine if the kid(s) has high income, we have the option to not count them in (?)
The $80k is just a number that I tried. One of my weakness is I haven't live under a budget for a long time. We spent $ relatively wisely, just not keeping a budget ever. I learned quickly from this forum that is something I need to work on. Since we have a family of 4, the spending will be roughly ~120k/yr plus or minus 20k, I think. I seem to be able to gather that $ taking out of pre tax IRA/401k is part of the MAGI(?)
Click to expand...

Rodi, I just want to add (to answer your question) that the $80k MAGI *could* be our budget if I make plan to have the additional needed $ to come from after tax accounts.
 
We took our youngest off our taxes as a dependent and got him his own ACA policy when he was in college because with assorted part-time and contract jobs we never knew what his income would be year to year. Young people policies are relatively cheap. It just seemed easier and cheaper than risking us going over the ACA cliff on our more expensive premiums due to his income, which often changed and we couldn't always predict in advance.
 
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