ACA Alternatives

[TripleLindy]

Assuming no action is taken on the ACA, either with the subsidies or something new, many early retirees under 65 are faced with substantial premium increases. We’re personally staring at a potential $34k premium that includes a $7500 per person deductible.

I’ve not researched alternatives since we first signed up for an ACA plan back in 2018. At that time, the indemnity plans were full of exclusions, like pre-existing conditions. My impression was that they really wouldn’t cover much. Health ministries were vague to non-committal regarding actual coverage.

Has anyone found a viable alternative to the ACA? I’m hoping someone on this board has found something I’m not aware of.

 

[Hyper]

We started looking ours over today.

Ours increased close to 20%.

We didn't even use HC this year to date, thank the great Lord!

I see no way forward with the ACA.

Congress will have no choice but to address HC in the next few years!

There's absolutely no way we can let the HC ins companies to continue with these cost.

 

[cathy63]

Our premiums will nearly quadruple. You can buy directly from the insurance company, but for us the premiums are the same regardless of which way we buy. To get anything cheaper we'd have to switch to a catastrophic plan, which as you say doesn't cover everything and would also mean switching doctors.

 

[RetiredHappy]

We further dropped our off exchange plan to a Bronze HSA plan in 2026 to at least get some tax deduction benefits, and it is still 30% more than our 2025 Bronze plan.

 

[Pluperfect]

Health ministries were vague to non-committal regarding actual coverage.

That's because there is no actual coverage.

 

[CalBird]

Borrow against your house to lower your AGI.

 

[COcheesehead]

So if I understand your numbers, that’s $2208/month without the deductible. That’s not bad. You likely have an income problem and I would address that.

 

[Fermion]

Borrow against your house to lower your AGI.

This. I don't quite see how people are not able to get under the $80,000 or so a couple needs in MAGI to still get a subsidy. Does everyone just happen to have a $90,000 pension except me?

 

[COcheesehead]

This. I don't quite see how people are not able to get under the $80,000 or so a couple needs in MAGI to still get a subsidy. Does everyone just happen to have a $90,000 pension except me?

Show me the numbers on how this could work. Interest + closing costs vs offsetting HC costs.

 

[RetiredHappy]

This. I don't quite see how people are not able to get under the $80,000 or so a couple needs in MAGI to still get a subsidy. Does everyone just happen to have a $90,000 pension except me?

There are many situations where income for a couple is way north of $80K before Medicare:
- Started SS (younger spouse starts at 62).
- One spouse (already on Medicare) is older and already on SS and taking RMD.
- Dividend income
- Not thinking of consequence, turned IRA into annuities that started at 60 yo.

 

[Fermion]

There are many situations where income for a couple is way north of $80K before Medicare:
- Started SS (younger spouse starts at 62).
- One spouse (already on Medicare) is older and already on SS and taking RMD.
- Dividend income
- Not thinking of consequence, turned IRA into annuities that started at 60 yo.

Don't start SS until 65
#2 is harder, if the couple is very different ages...that is indeed a toughee
#3 means either very specific stock investments or a huge taxable portfolio. The S&P500 pays about 1.16% in dividends, so to get $80,000 out of it you would need $6.9 million in your taxable, at which point you really could just self insure for medical
#4 oops

 

[CalBird]

This. I don't quite see how people are not able to get under the $80,000 or so a couple needs in MAGI to still get a subsidy. Does everyone just happen to have a $90,000 pension except me?

Maintaining life style? Someone who has money but doesn’t want to push up the income to lose the subsidy. Borrowing won’t cause any income increase.

 

[COcheesehead]

Maintaining life style? Someone who has money but doesn’t want to push up the income to lose the subsidy. Borrowing won’t cause any income increase.

But it increases expenses.

 

[CalBird]

But it increases expenses.

But you get to delay selling your assets which can potentially grow and make up the borrowing expense.

 

[COcheesehead]

But you get to delay selling your assets which can potentially grow and make up the borrowing expense.

Do the math.

 

[bada bing]

Do the math.

The math is pretty clear. It is comparable to your take on SS claiming, where early claiming leaves money in investments. Borrowing for expenses leaves equivalent money invested. It's not unreasonable to expect the investment returns to at least match the borrowing costs. The only difference is the AGI numbers.

Margin loans against appreciated brokerage positions are another option for some situations. As discussed in other threads, this is a favored way for the uber-wealthy to avoid taxable income altogether.

 

[COcheesehead]

The math is pretty clear. It is comparable to your take on SS claiming, where early claiming leaves money in investments. Borrowing for expenses leaves equivalent money invested. It's not unreasonable to expect the investment returns to at least match the borrowing costs. The only difference is the AGI numbers.

Margin loans against appreciated brokerage positions are another option for some situations. As discussed in other threads, this is a favored way for the uber-wealthy to avoid taxable income altogether.

Whoa, whoa you mixing so many things here. Social security, Uber wealth.
Show me how paying more in interest and expenses is better than paying more for health insurance, which is deductible for some. It’s a simple math problem. Show me the money.
My take on SS is not anywhere close to applicable here and wildly wrong.

 

[bada bing]

If the interest for borrowing is paid on money that remains invested, there presumably is an investment return on the retained money ? The reason it's "better" is because it allows one to avoid realizing income today. To avoid income taxes or qualify for income based subsidies. Borrowing money to invest is leverage. A well understood investment tactic. The return on investment is hoped to exceed the cost of borrowing.

I don't believe anyone is saying borrow money you don't have for consumption.

 

[CalBird]

Do the math.

Depending on each person’s tax situation, to make the math simple, assume 10% tax when selling assets.
Say you need to sell extra $50000 to meet your financial need.
Scenario 1: sell $50000 to have $45000 after tax money to spend. The added income could potentially trigger $20000 yearly subsidy loss.

Scenario 2: borrower $45000 cover the spending need. After one year $45000 + 6% interest becomes $47700. The delayed asset plus 8% growth becomes $54000. Then you sell the asset and pay 10% tax, you have $48600. Use this money to pay back the borrowed $47700 balance you still have some change left. And you didn’t add one cent to income.

In real situation, you don’t need to sell the asset and pay back after one year. You can do it until you start Medicare so no ACA to worry about.

 

[COcheesehead]

Depending on each person’s tax situation, to make the math simple, assume 10% tax when selling assets.
Say you need to sell extra $50000 to meet your financial need.
Scenario 1: sell $50000 to have $45000 after tax money to spend. The added income could potentially trigger $20000 yearly subsidy loss.

Scenario 2: borrower $45000 cover the spending need. After one year $45000 + 6% interest becomes $47700. The delayed asset plus 8% growth becomes $54000. Then you sell the asset and pay 10% tax, you have $48600. Use this money to pay back the borrowed $47700 balance you still have some change left. And you didn’t add one cent to income.

In real situation, you don’t need to sell the asset and pay back after one year. You can do it until you start Medicare so no ACA to worry about.

What if you don’t have to sell anything? Most if not all on here have cash to pay for current expenses.
I don’t see how incurring additional expenses to avoid losing a subsidy puts anyone ahead.
What about SORR? Sinking assets blow this scenario up.

 

[COcheesehead]

If the interest for borrowing is paid on money that remains invested, there presumably is an investment return on the retained money ? The reason it's "better" is because it allows one to avoid realizing income today. To avoid income taxes or qualify for income based subsidies. Borrowing money to invest is leverage. A well understood investment tactic. The return on investment is hoped to exceed the cost of borrowing.

I don't believe anyone is saying borrow money you don't have for consumption.

You keep avoiding the math.

 

[COcheesehead]

I am going to bed. You guys have fun with the concept of spending more saves you money.

 

[CalBird]

What if you don’t have to sell anything? Most if not all on here have cash to pay for current expenses.
I don’t see how incurring additional expenses to avoid losing a subsidy puts anyone ahead.
What about SORR? Sinking assets blow this scenario up.

Now you are deviating the discussion. If you have the cash to cover the expense then you all set.

 

[COcheesehead]

Now you are deviating the discussion. If you have the cash to cover the expense then you all set.

Nice try bud. Your premise was wrong to begin with.

 

[SecretlyFI]

So if I understand your numbers, that’s $2208/month without the deductible. That’s not bad. You likely have an income problem and I would address that.

I think he meant the premium is $34k a year for a plan that also has a $7500 per person deductible.

Show me the numbers on how this could work. Interest + closing costs vs offsetting HC costs.

I could see the math on this working. Let’s say a couple has 5 years before Medicare. They need $100k a year for expenses but want to keep their income at $80k or less for subsidies. So they need an extra $20k a year for the next 5 years.

I know when I setup a HELOC before retiring, to have “just in case”, there were no closing costs, so that part can be zero. Interest, at let’s say 7% on a $20k loan would be $1,400 for a year. Or, if they borrowed the whole 5 year’s worth of $100k, it would be $7000 initially, and go down as payments are made.

Now, granted, they’d also need to make those loan payments, of principle & interest. I know my HELOC has a repayment term of 15 years. A $100k 15 year 7% loan is a monthly payment of $900. But if this strategy means avoiding your health insurance spiking an additional $25k-$30k a year, I think you come out ahead in the borrowing scenario.

I’d also assume, after the 5 years and on Medicare, you’re in the clear to sell investments to pay off the loan in full. So it’s really a strategy to provide temporary cash and avoid generating it as income.