Another Silver vs Bronze situation to analyze

[Trawler]

I am 56 and DW is 59 both in ok health but I do control BP Cholesterol and gout thru medication and sleep apnea with C-pap . The past 4 years our average OOP costs for prescriptions and doctor visits is approx. $2K per year. We have been utilizing a bronze plan with HSA this year and can take the hit if we went to hospital. Next year our subsidy has increased much more than plan prices thus are lookin at the following two scenarios. We mange income thru Roth conversions and cap gains to be what ever is most efficient given our situation.

1. Bronze plan with $7550 HSA and $6400 Per Person Deductible and MAX OPP or $12.8 Max OPP for both of us. Premium would be zero and could have $49.5 in cap gains and Roth conversions. We do not Itemize on taxes thus would incur about $2.1 K in Fed income tax. Pay $2200 for LTC ins out of HSA.

2. Silver cost sharing plan NO HSA $500 deductible per person and max OPP $1,500 per person and max OPP for both of us is $3K. Monthly premium $232 per month or $2784 per year. Could have $25K in gains and Roth conversions. Would not itemize and incur approx. $500 in Fed income tax.

Note income from all sources(cap gains distributions interest etc.) other than conversions is about $6K per year.

Have been converting as our tax bracket under today's law will be 25% when RMD kick in.
So trying to calculate weather moving to silver with less conversions and no HSA is a better move for us.

Thanks in advance for you insight.

 

[MBSC]

I am 56 and DW is 59...

1. Bronze plan with $7550 HSA...

The 2018 standard HSA contribution limit is $6900. EACH of you can make a $1000 catch-up contribution into their own HSA account for a total of $8900.

 

[Mr._Graybeard]

If your average medical expenditures total $2K per year and the silver premiums total $2700, it looks like a no-brainer to me.

 

[ivinsfan]

I know you're sincere but there are a lot of posters here who pay rack rate for HI....your question's like someone asking should I get the cheesecake or the chocolate cake for dessert...you have the numbers.this seems a little like gloating over your excellent position..JMO..pick a plan how can you go wrong?

 

[pb4uski]

I would stay with the bronze plan. If I am interpreting your numbers correctly you are paying less that 7% on your Roth conversions vs 25% later and that is real money.

 

[Rianne]

We have an ACA sweet spot this year. Be grateful and be happy you have the choice you do. I am befuddled as to why this happened, I was thinking our premiums would be $24K after all the confusion. Now, our premiums might be $7.95/month as our taxable income is @ 50K. Am I in the up side down? Loved Stranger Things BYW.

 

[sengsational]

...pick a plan how can you go wrong?

It's that old "money is fungible" thing...if you can select a road that costs a couple of thousand less, and there's little down side risk, well then, that's quite a few nice dinners out (or whatever you do to treat yourself). The fact that you "should" be paying ten thousand if you weren't getting the PTC doesn't factor into it.

 

[Trawler]

The 2018 standard HSA contribution limit is $6900. EACH of you can make a $1000 catch-up contribution into their own HSA account for a total of $8900.

Thanks for the heads up. I did not now we could both contribute the catch up. After reading I checked it out and yes we can we just have to set up an account
in each of our names when you have a family plan. We only have one Joint account now and are going to change that.

 

[Sue J]

I had the heath insurance discussion (he wants bullet points but I want to show off my color coded spreadsheets) with DH yesterday. We are looking at 2 Bronze plans, one with an HSA and one without. We are leaning toward the HSA one because of the ability to lower taxable income with the HSA contribution.

Our medical expenses in 2017 have been very small with a nice Silver plan and I guesstimate $1500 - $2500 in normal expenses on these two Bronze plans.

The prices are CRAZY high this year but luckily so are the subsidies, leaving us with rock bottom monthly premium costs and room for extra taxable income before we lose any subsidy.

Since our talk yesterday I'm running numbers... trying to figure out which option is better to fund the HSA. Should I take money out of my Inherited IRA or my Traditional IRA. Or is there no difference? The only difference I can see is that the Trad can be converted to Roth, where the Inherited cannot. But if it is used for the HSA, I don't think there is any difference. We don't have available cash for 100% of the HSA contribution because we had a son get married this year and we paid cash for a new used car.

NOT GLOATING, but it's a nice problem to have. Other years the numbers didn't work this way and we were squeezed between smaller subsidies and big increases in premium costs.

 

[Yarnstormer]

Does contributing to an HSA plan lower your income as far as the ACA is concerned? Wow we don’t have plans like that to choose from at all!

 

[audreyh1]

Does contributing to an HSA plan lower your income as far as the ACA is concerned? Wow we don’t have plans like that to choose from at all!

Yes, you get to deduct your HSA contributions right off the top. For us, we jointly contribute over $8000, and that gets chopped right off our gross income even before standard or Schedule A deductions.

 

[bingybear]

Thanks for the heads up. I did not now we could both contribute the catch up. After reading I checked it out and yes we can we just have to set up an account
in each of our names when you have a family plan. We only have one Joint account now and are going to change that.

I don't believe there is a joint option for HSA accounts. Yes you can reimburse expenses for one spouse from the other's medical expenses provided other requirements are met. But the account should not be joint, but in one or the others name.

To capture both catch up contributions is takes two HSA accounts, one in the name of each spouse.

 

[audreyh1]

Thanks for the heads up. I did not now we could both contribute the catch up. After reading I checked it out and yes we can we just have to set up an account
in each of our names when you have a family plan. We only have one Joint account now and are going to change that.

Right - your account is not joint. It belongs to one of you, even though contributions can be made up to the family limit and it can be used to pay medical expenses for anyone in the family.

So the other spouse needs to set up an account.

 

[Sue J]

In the years when we had an HSA (2014 and 2015) we just did one account and contributed the full family amount and 1 extra over 55 contribution. A second HSA would have had another yearly fee of $45. The additional $1000 would have saved us $100 in taxes (we were in the 10% bracket) but at the time I felt that the full amount plus a single over 55 contribution was plenty.

Looking over our records, in 2015 we reimbursed ourselves for our 2014 expenses of $12,856, which left a balance of $2,344. That has grown to $3,235 as of today.

 

[audreyh1]

Some of us use HSAs as tax-deferred investment vehicles. They should always be tax free if used to reimburse future medical expenses such as Medicare premiums. So we're not drawing on them now, just maxing out contributions and hoping for long-term growth before we start tapping into them.

We are in the AMT + NIIT tax bracket which means our marginal rate is 26% + 3.8% = 29.8%. So that extra $1000 for the second account is saving us $298 in taxes.

BTW - our plan is to use the funds to reimburse ourselves for our Medicare Parts B and D premiums to bridge the gap between ages 65 and 70 when we'll start taking SS which will then pay for our premiums.

 

[bingybear]

Some of us use HSAs as tax-deferred investment vehicles. They should always be tax free if used to reimburse future medical expenses such as Medicare premiums. So we're not drawing on them now, just maxing out contributions and hoping for long-term growth before we start tapping into them.

We are in the AMT + NIIT tax bracket which means our marginal rate is 26% + 3.8% = 29.8%. So that extra $1000 for the second account is saving us $298 in taxes.

BTW - our plan is to use the funds to reimburse ourselves for our Medicare Parts B and D premiums to bridge the gap between ages 65 and 70 when we'll start taking SS which will then pay for our premiums.

+1
I had an HSA compatible plan back around 2010 I think. This was an individual plan (DW had better insurance, but had a rule that if a spouse had HI offered, they could not use their plan. That was first time I had an HDHP. The individual funding did not get me to a level that the HSA would allow investment. In 2015 (RE year) I had a joint HDHP and funded it fully (not eligible for catch up). Since then we have fully funded, but have not redeemed any of the hsa. We have kept the medical expense info for later hsa withdraws.

Our plans are to save/invest these $ for use as a LTC funding at 0% tax. I don't expect it to be enough to cover LTC completely, but put a nice dent in it unless it happens too early.

If LTC is not needed, the HSA can be used for some HI premiums and health costs during medicare.

There are many good uses for HSAs

 

[Z3Dreamer]

Trawler (OP), we are in the same situation as you. We are not heavy medical users. Maybe a few thousand OOP. Ran a number of models assuming various usages, including heavy use. Silver, including premiums broke even or was worse than Bronze. So, if you throw in the HSA savings, Bronze HSA was always better for us.

YMMV

 

[Trawler]

Right - your account is not joint. It belongs to one of you, even though contributions can be made up to the family limit and it can be used to pay medical expenses for anyone in the family.

So the other spouse needs to set up an account.

Yes it is not a joint account it is in one of our names but we use it jointly for medical expenses. Thanks for clarifying for the group. We will open another account in spouses name for this year and add the other catch up for this year