ACA effect on retirement rates

[BellBarbara]

ugh if trump repeals aca one of will need to go back to work. we would only be able to get insurance from assigned risk pool. we live in mass so hope mass brings back it's previous plan.

i think we will have a year to figure it out. we retired at 56 and 54 because we could get health ins with no pre-existing cond issues (no subsidy needed). if we can't we will need to get some for 5 more years.

[gauss]

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Originally Posted by gauss I don't have pre-existing conditions, but I understand the risk to those in the individual market, under the old system. The outcome of the 2012 presidential election and the likely upholding of the ACA was a key enabler of my actual ER in early 2013. MegaCorp HR was also asking me if I was ready to come back from my leave of absence (dependent care) at this time too so the timing was good. DW still has employer coverage and retiree coverage awaits, but either of those could change at any time. I didn't want to take the ER plunge until I was confident that "Medical Bankruptcy" was no longer a potential outcome. The ACA prohibitions on individual medical underwriting of premium rates combined with the must-issue rules facilitated this in our case. -gauss

And hindsight is 20-20!

-gauss

[pb4uski]

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Originally Posted by NW-Bound In the 50s, most people did not have health insurance. Even Medicare came about only in 1965. It was before my time, but I was told that people just paid for doctor visits with cash, and it was not expensive. It was not too different than having to pay for car or home repair. For larger hospital bills, people were paying in installments. ....

No, there certainly was health insurance in the 1950s. It was different from health insurance as we know it today, and focused principally on hospitalization and surgeries... and as you said, smaller medical services were paid for in cash.

Quote:

Unlike the Blue Cross plans, which generally provided specified services, hospital expense policies generally took the form of reimbursement of charges for room and board and ancillary services up to specified amounts. Surgical expense policies provided for reimbursement of surgical charges up to a specified allowance for each operation. A number of companies soon began writing similar insurance under individual policies. By 1951, the insurance companies were covering as many persons under hospital expense policies group or individual-as Blue Cross. From the start, surgical insurance by insurance companies grew faster than the medical service prepayment plans.

https://www.ssa.gov/policy/docs/ssb/v28n12/v28n12p3.pdf

[NW-Bound]

Quote:

Originally Posted by pb4uski No, there certainly was health insurance in the 1950s. It was different from health insurance as we know it today, and focused principally on hospitalization and surgeries... and as you said, smaller medical services were paid for in cash...

As mentioned, that was before my time (and I was not born in the US), and I just retold a story by a friend who's now 70.

He told me about his experience growing up. His father was a milkman, and did not have insurance. My friend said his father managed to get health care for them all with no insurance, nor government help.

Of course back then, there was no fancy-schmancy MRI machines, exotic cancer treatments, etc... One had to be careful of not getting sport or recreational injuries, because it could mean death or becoming invalid. Things were simpler then. You got really sick, you died. No multi-million-dollar treatments like we do have now.

[pb4uski]

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Originally Posted by MichaelB Not really. That would be the case for homeowners or life insurance. Health insurance is a product that comes in-between and intermediates both the provider and the consumer, taking from both. By creating preferential prices for insurers and unaffordable, exorbitant prices for consumers, health care providers and insurers combine to make insurance too risky to not have. Financial risk minimization is no longer the primary purpose.

WADR, I disagree. For me at least, and many others I suspect, financial risk minimization is the primary purpose of health insurance, closely followed by what you indicated... access to negotiated rates for medical services.

I buy health insurance because I want to mitigate the financial risk of a health event that costs more than my $6k deductible and could be $100k or more. A nice byproduct is that I get access to negotiated rates for the first $6k of medical services that I use in a year.

[pb4uski]

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Originally Posted by GTFan But the problem is that the premium just to get that basic coverage is now $1k a month or more for many couples. So add another $12k+ a year to that. I think most of us here can handle that, but the ones that truly need the help (just over the subsidy cutoff) are complaining loudly that they can't afford it. And I don't blame them. Whatever, probably doesn't matter at this point. The ACA as we know it will probably not be around in 2018.

Agreed... that is why I would like to see health insurance totally divorced from employment... the group market eliminated and everyone buys individual insurance with some subsidies for those whose premiums are unaffordable... that way everyone would be treated the same and your insurance would not change if you change jobs or get laid off for a couple months or whatever....just dreaming though... it will never happen.

[MichaelB]

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Originally Posted by pb4uski WADR, I disagree. For me at least, and many others I suspect, financial risk minimization is the primary purpose of health insurance, closely followed by what you indicated... access to negotiated rates for medical services. I buy health insurance because I want to mitigate the financial risk of a health event that costs more than my $6k deductible and could be $100k or more. A nice byproduct is that I get access to negotiated rates for the first $6k of medical services that I use in a year.

It doesn't make sense to argue the point. In a functional system you would be able to assess your risk and make a choice, perhaps choosing levels of risk and coverage (which you do with a catastrophic policy). When the price you pay as in individual varies by a factor of 5 or 10 with the price the insurer pays, you are captive and can no longer make a rational choice.

[NW-Bound]

Quote:

Originally Posted by pb4uski ... I buy health insurance because I want to mitigate the financial risk of a health event that costs more than my $6k deductible and could be $100k or more. A nice byproduct is that I get access to negotiated rates for the first $6k of medical services that I use in a year.

I like the risk mitigation part (that's what insurance is about), but hate the "negotiated price" part. It should be like car insurance. They pay for my collision damages, but I do not need them to negotiate the price of an oil change or car wash for me. It's like paying the Mafia for "protection".

We need transparency in hospitalization costs. Else, we cannot become educated consumers of health care. I know, I know, that some people do not want to be educated, and just want somebody else to write the check. But that attitude got us into this mess.

When people are hit in their pocket book they get smart really quick. Everybody knows to ask around to shop for best deals on TVs, smartphones, etc... They should be given info to shop for healthcare too.

[sengsational]

Quote:

Originally Posted by pb4uski WADR, I disagree. For me at least, and many others I suspect, financial risk minimization is the primary purpose of health insurance, closely followed by what you indicated... access to negotiated rates for medical services. I buy health insurance because I want to mitigate the financial risk of a health event that costs more than my $6k deductible and could be $100k or more. A nice byproduct is that I get access to negotiated rates for the first $6k of medical services that I use in a year.

I'm right there with you on that. It would be nice if we could get rid of the secret pricing contracts between insurance companies and providers, and have outcome data (allowing real consumer shopping pressures to arise). But mainly I don't want a $500k plus medical bill.

[NW-Bound]

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Originally Posted by pb4uski Agreed... that is why I would like to see health insurance totally divorced from employment... the group market eliminated and everyone buys individual insurance with some subsidies for those whose premiums are unaffordable... that way everyone would be treated the same and your insurance would not change if you change jobs or get laid off for a couple months or whatever....just dreaming though... it will never happen.

Once a group of people gets a preferential treatment, it is hard to take it away.

That is unless the group is small in number, and does not have an electoral power. Like a bunch of ERs.

[audreyh1]

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Originally Posted by Neill Hi, I assumed that the ACA might have a large effect on retirement. I seem to remember news on that and talk about job lock keeping people working etc. I just saw this paper and it suggests that the increases will be small in comparison to the total (1/2 a percent). https://deepblue.lib.umich.edu/bitst...4388/wp343.pdf Seems to fly in the face of stuff I read here but then again I don't qualify for subsidies so I have ignored it for the most part.

Hmmmm - moot point now I think.

[pb4uski]

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Originally Posted by NW-Bound Once a group of people gets a preferential treatment, it is hard to take it away. That is unless the group is small in number, and does not have an electoral power. Like a bunch of ERs.

Yes, God forbid that they actually do something because if makes sense for the many in the long run even though it adversely affects some in the short run. Hopefully the new administration feels they have a mandate to cut through such stuff.

[daylatedollarshort]

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Originally Posted by NW-Bound I like the risk mitigation part (that's what insurance is about), but hate the "negotiated price" part. It should be like car insurance. They pay for my collision damages, but I do not need them to negotiate the price of an oil change or car wash for me. It's like paying the Mafia for "protection". We need transparency in hospitalization costs. Else, we cannot become educated consumers of health care. I know, I know, that some people do not want to be educated, and just want somebody else to write the check. But that attitude got us into this mess. When people are hit in their pocket book they get smart really quick. Everybody knows to ask around to shop for best deals on TVs, smartphones, etc... They should be given info to shop for healthcare too.

I negotiated 40% off a recent hospital bill for a family member. Did I get a good deal? Did they overcharge me and expect me to offer even less? Could I have gotten 60% off? Who knows. The whole process is absurd. It was like buying a used car.

[NW-Bound]

It's worse than buying a used car. With a used car, you get price guidance from the Blue Book.

And with a car, you test drive, and get to see what you are getting. Do we get any of that with hospital services?

[daylatedollarshort]

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Originally Posted by NW-Bound It's worse than buying a used car. With a used car, you get price guidance from the Blue Book. And with a car, you test drive, and get to see what you are getting. Do we get any of that with hospital services?

Too true!

[Lisa99]

ACA is the reason that DH and I were able to pull the plug at 49 and 54.

DH has a pre-existing condition that would have make the premium far too expensive for us to afford pre-ACA.

I retired in January and due to my severance package we received no subsidy so were in a high premium, high deductible plan. However, we stockpiled enough cash prior to retirement that it will be several years before we have to pull money from investments.

We have just enough income to keep us off the Medicaid roles so our subsidy next year will be about $750/month and very low deductibles. We plan to do full tune ups next year in case ACA changes dramatically.

[brucethebroker]

For those who asked earlier in the thread (I'm late to this party), ACA made semi-ER possible for us-pre-existing conditions and affordability. ACA handled both, and slashed the COBRA premiums by about 70%.

Once our CPA explained that HSA, IRA and SEP deductions reduce MAGI (and some can be applied at the last minute/tax time), we breathed easier. Also, by having a small business, the premiums are still deductible.

Planning is the name of the game. Others have mentioned using HELOC's to keep from taking taxable withdrawals from IRA's, etc. But it even goes deeper-want to sell a property? Better call the CPA for advice first.

BTW, I have stopped talking about ACA socially. Too many peers consider it a government handout and have strong/bitter opinions. Personally, I find it no different than the mortgage deduction, child care credits, rental property depreciation, IRA deductions, etc. Most of the time, the govt. uses tax policy to influence behavior, and our behavior has been influenced by the rules of ACA.

[Fermion]

I think we can manage insurance outside of ACA if we are allowed to go back to a catastrophic plan. I don't want to pay for a lot of the extra stuff required in a conforming ACA plan if I no longer can buy an ACA plan. I don't mind paying each time we go to a doctor and have a $30,000 a year deductible if our premium is only a few hundred a month.

I do think they should tax the employee on the value of the health insurance they are provided and tax pensioners on the value of their pension provided insurance. It seems a fair way to go if you are going to eliminate subsidies.

The other option is to greatly reduce our MAGI and just get in on Medicaid. People on here are smart and there is always a way to work the system on the low end the same way the 0.1% work it on the high end. If you sell your house for $300,000, you have at least 6 years of near zero MAGI with a $50,000 spend rate.

[broadway]

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Originally Posted by brucethebroker BTW, I have stopped talking about ACA socially. Too many peers consider it a government handout and have strong/bitter opinions. Personally, I find it no different than the mortgage deduction, child care credits, rental property depreciation, IRA deductions, etc. Most of the time, the govt. uses tax policy to influence behavior, and our behavior has been influenced by the rules of ACA.

Unless one has used it, most people have no clue about ACA.
They simply parrot the naysayers.
I use it and still don't know its full ramifications.
But my experience with it has been positive.

[BreathFree]

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Originally Posted by brucethebroker For those who asked earlier in the thread (I'm late to this party), ACA made semi-ER possible for us-pre-existing conditions and affordability. ACA handled both, and slashed the COBRA premiums by about 70%. Once our CPA explained that HSA, IRA and SEP deductions reduce MAGI (and some can be applied at the last minute/tax time), we breathed easier. Also, by having a small business, the premiums are still deductible.

It was my understanding you can not deduct ACA premiums from small business income.

You can deduct an individual health insurance plan's premiums as a business expence if the insurance was purchased by the business but then you are not eligible for ACA subsidies or you can use the ACA with subsidy but can not deduct from business income.

Am I incorrect on this?