ACA question: family plan vs 2 individual plans

[Fermion]

I am not seeing a way to calculate the costs of us purchasing a family plan compared to purchasing each an individual plan.

I have read about some of you doing this to avoid the combined deductible, which makes a lot of sense. The family plan MOOP is $13,200 where the individual plan MOOP is $6600. If only one person gets sick and has big bills, that is a savings of $6600 a year.

The problem is all the calculators ask for household income.

Example (using the Kaiser calculator US average):

Married couple, both age 45, silver family plan, household income $40k

$274 a month premium with a $350 subsidy, max out of pocket $13,200

Married couple, age 45, buying separate plans, household income $40k

$274 a month premium (per person!) with a $38 subsidy, max out of pocket $6600

Single person, age 45, buying individual plan, income $20k

$84 per month premium with $228 subsidy, max out of pocket $2,250



Is this just another example of a marriage penalty or am I supposed to divide the household income by 2 in the calculator for married couples buying individual plans?

Health Insurance Marketplace Calculator | The Henry J. Kaiser Family Foundation

 

[photoguy]

I went through this issue on CoveredCA as we went from 2 individual plans to 1 family plan (with embedded not aggregate deductible). The short answer is there's no subsidy penalty for a married couple with individual accounts compared to a family plan but you may have to claim the subsidy at tax time (instead of getting it in advance).

I believe that when using the calculator to compute the price for 1 individual of a married couple, it does not consider how much you spouse will be paying for healthcare. Thus the computation of the subsidy on the website is lower than the proper amount. Other state websites may handle this correctly but CoveredCA does not.

So one option is to have 2 individual accounts, pay the $274x2/month and then get the proper subsidy amount back when you file 2015 taxes. However, because the website thinks the amount you spend on healthcare is a lower percentage of your income than in reality, you may not qualify for cost sharing (lower max OOP, deductible, copays, etc.)

Another option is to have a family plan, get the proper subsidy and cost sharing upfront. In theory, this may expose you to a combined deductible but you can check beforehand whether your plan uses the embedded or aggregate deductible. On Covered CA I believe all plans except for HSA use the embedded deductible. In which case, there is no benefit to using 2 individual plans (unless you want different metal levels, or insurance companies). Obviously you need to check this for your state & region.

Your third option of dividing the family income / 2 makes me uneasy due to misrepresentation and possible issues that may come up when they try to verify income. You would also have to pay back some subsidy when doing 2015 taxes as the amount ($228x2) would be too large.

 

[rodi]

Yep - coveredCA's issues with having 2 or more different plans for your family when you have a subsidy pretty much suck. I was assured that it will be fixed by next year. (Was supposed to be fixed by open enrollment this year.)

I'm hoping to get the subsidy back at tax time next year.

 

[Sue J]

I did this on the Federal Exchange site. I filled out the application for a couple, married filing jointly, using combined household income.

After you submit the application you get to the part where you can select your plan. There is a place to create GROUPS. Put yourself in one group. make a second group for your spouse. Now you can pick individual plans for each of you and you each get a portion of the subsidy, for us it was 50/50. We both got the same plan, but they are individual plans with separate deductibles.

The calculators and estimates site don't allow you to look at it this way, it's always shown for both of you getting the same policy in a family plan. For us, our cost estimates and subsidy were just double the actual individual plans, so I just divided by 2 when looking at the estimates.

We also talked about this here -
http://www.early-retirement.org/forums/f38/aca-insurance-and-subsidies-74636.html

 

[Fermion]

Sue, what about the cost sharing aspect for max out of pocket costs? We likely will qualify for cost sharing on the deductible in addition to subsidy for the premium. My understanding is cost sharing is use it or lose it.

 

[Nunthewiser]

I did what Sue J did, but DW and I got separate plans. She is younger (53) but a bigger "consumer" of health care than I (at 60). So, she got a Silver plan that, with cost sharing, has a 1100 deductable and max OOP of $1100. If we had gotten the same plan, these would have doubled, and as I should be healthy, we would together have had to spend $2200 before we got anything back. I got a Bronze HSA plan that cost $0, but has a ded/MaxOOP of $6200. It's a risk, but will save us several thousand if history holds up this year.

 

[Senator]

There are a lot of penalties. When I FIRE, I fully expect my DGF of 24+ years to get 100% subsidy on both the premium and a plan with $0 OOP costs.

I will be covered by the VA, and maybe an additional catastrophic plan.