ACA Subsidies

[Scuba]

I've seen several threads where people are very concerned about ACA subsidies being reduced or eliminated. The ACA hasn't been around that long and most on this forum seem to be quite conservative with financial decisions. Many have not even assumed they will get Social Security in retirement in their financial projections, and SS has been in effect decades longer than the ACA. So I am interested to understand - for folks that are so worried about losing ACA subsidies, did you count in getting the subsidies throughout your retirement? Or has it just been a nice windfall that will require adapting back to your pre-ACA lifestyle if they are eliminated?

 

[MichaelB]

My financial plan does not depend on ACA or Medicare subsidy, and I would consider any subsidies as a windfall.

A healthcare subsidy we did receive was untaxed employer provided health care benefits. It's not easy to estimate the savings, but over a career it has to be considerable.

 

[pb4uski]

We have a unique situation that the value of ACA subsidies to us is not particularly significant so we have decided to forgo them in favor of Roth conversions at a low tax rate until SS and RMDs begin.

 

[RunningBum]

Nice windfall, but when I retired in 2011 I had a $167/month premium. I knew it'd go up, with health care costs beating inflation and also higher premiums as I get older, but it's already $489 without the subsidy ($316 with). Almost 3x in 6 years. I can manage that and higher, but it's an unpleasant surprise. Even with the subsidy, it nearly has doubled in 6 years, but the subsidy takes out the age increase. As I understand it, this year I'd be paying $316 this year even if my unsubsidized premium was much higher even if I was 64. Without the subsidy I lose that age increase protection. And I haven't seen anything in the new proposal actually addressing rising health care costs, though I don't want to get into the political side of it so I'll stop there.

 

[bradaz2488]

I'm still on a grandfathered HD BCBS policy so not getting ACA subsidies. My guess is that before ACA individual healthcare policies were available in a variety of flavors that allowed you to get a cost effective policy for your needs that would increase higher then inflation but probably not more then 3X (7.5%) per year. Since ACA my HD individual policy has increased 63% in 4 years (16%/year) and I even had to increase the deductible to bring down the cost. If this rate of inflation continues I will run out of money due to healthcare cost. I assumed a 7.5% inflation rated for healthcare, but if I assume a 16%/year increase we run out of money when I'm 80 and DW is 77. I find it hard to believe that it will continue to increase an average of 16%/year, but it is very sobering and scary seeing the effect of this on our ER plan given the unknowns surrounding healthcare. I'm one of those that did not assume I would get SS so we have some buffer built in our plan. We will just have to adjust our plan to the situation. We are 11 & 14 years away from Medicare and we are both healthy with no pre-existing conditions. I know I'm willing to just roll the dice if cost just get too outrageous and we will take our chances to be self insured and negotiate prices when we have to go to the doctor or hospital. I will not let them take my new found ER freedom away.

 

[MichaelB]

My guess is that before ACA individual healthcare policies were available in a variety of flavors that allowed you to get a cost effective policy for your needs that would increase higher then inflation but probably not more then 3X (7.5%) per year.

Actually, that guess would not be correct. Prior to ACA, insurers routinely denied policies to individuals with pre-existing conditions and rescinded policies for unfortunate individuals whose use suddenly increased.

Insurance premiums increased by more than 10% per year for the entire decade preceding implementation of the ACA.

Edit to add - this yearly report by KFF shows the progression of healthcare insurance cost in the US (exhibit 1.11). Premiums for large group family coverage rose from $5.8k in 1999 to $18.1k in 2016.

The cost of healthcare is expensive.

 

[AllDone]

Actually, that guess would not be correct. Prior to ACA, insurers routinely denied policies to individuals with pre-existing conditions and rescinded policies for unfortunate individuals whose use suddenly increased.

Insurance premiums increased by more than 10% per year for the entire decade preceding implementation of the ACA.

Edit to add - this yearly report by KFF shows the progression of healthcare insurance cost in the US (exhibit 1.11). Premiums for large group family coverage rose from $5.8k in 1999 to $18.1k in 2016.

The cost of healthcare is expensive.

+1

We're not eligible for ACA subsidies and we have no access to tax-subsidized health insurance through previous employers. Fortunately, we are able to pay full price for age-rated insurance theough the ACA. However, like most older people, we are beginning to accumulate "pre-existing conditions" and do not want to see our premiums spiral out of sight as we develop increased risk for actually using the insurance.

In 2007, long before the ACA, my employer's health insurance premium rose 27% in a single year, so no, I don't believe that insurance prices will increase at roughly the inflation rate because there is absolutely no historical example of that occurring.

We are fortunate to live in California where the ACA was well implemented. My OOP is $6250, but my recent knee replacement cost me $2300 OOP and my silver plan insurance also pays 70% of my follow up PT. I probably won't reach my OOP this year.

The biggest problem for me right now is that the design of the replacement plan includes guaranteed issuance for PECs, but no mandate (continuous coverage requirements would serve as a type of mandate) which will result in the complete destruction of the individual insurance market as has happened every other time that this otherwise appealing combination has been tried.

Right now, I have minimal health issues and can afford to pay cash even for additional joint surgeries. My parents will also never need Medicaid subsidies to cover nursing home expenses. However, I could be diagnosed next week, for all I know, with a cancer or some other expensive condition that could endanger my long-term financial stability. I have car insurance, home owners insurance, umbrella insurance and I need to have access to health insurance.

 

[Fermion]

Prior to ACA we were working and getting a sizable healthcare subsidy because our employer provided us insurance and we didn't get taxed on that compensation.

Then ACA came along and all of a sudden our plan was called a Cadillac plan and thus our employer changed it to a high deductible plan to save them costs. We also started paying 3.8% on our investments since our income was above $250,000.

We saw they changed the rules on us so we adapted. We decided paying $60,000 a year in federal tax and an additional 3.8% in ACA tax was not as attractive as sitting in a hammock and getting a massive ACA subsidy. We then quit working and adjusted our MAGI down to 133% of poverty level (nearly exactly).

Now they want to change the rules again. It is annoying but we will probably figure out some way to work the system. It is like playing a game of baseball and in the middle of the game they decide you get 4 strikes instead of three, or you can't steal bases.

Probably no way to go back and get our $250,000+ a year income plus government subsidized employer insurance but I am sure I will figure out some other way. I consider it a challenge.

 

[scrabbler1]

Because my income is near the top of the range (just under 400% of FPL) to be eligible for an ACA subsidy, my subsidy is quite small, around $40 per month. It's nice to have, but it has no real effect on my budget nor my long-term ER planning. In fact, under the senate bill, mine would disappear because the max %-of-FPL limit would drop to 350%.


I received a letter from my insurance company telling me they have applied for a ~17% increase for 2017. Even if that increase is granted, with the small ACA subsidy I would still be paying slightly less than I was paying in 2010 (pre-ACA) after my rates went up 20% (and rose by another 25% in 2011).

 

[ShokWaveRider]

For us it is the difference between having healthcare and not having it. We rely on the subsidies and pre-existing conditions. Before ACA the ONLY way I could get HC was by working Period!

 

[AllDone]

My guess is that before ACA individual healthcare policies were available in a variety of flavors that allowed you to get a cost effective policy for your needs

I'm a retired primary care physician. Over the course of my career, I saw many people denied health insurance after losing employer based insurance through no fault of their own. I had at least two patients who died of treatable conditions due to lack of insurance. They were both good, hard-working grandmothers whose small-business employers could no longer afford employee health insurance and who had PECs that precluded individual insurance. Sure, they could have found other jobs, but at 60 or so, after years of working for the same employer, that's difficult to do. They both made poor decisions to LBYM and avoid emergency room treatment, opting to see their PCP the following day and dying during the night. Those are just the two that I know about, there may have been others.

 

[RetireAge50]

We are about to retire and although the subsidies would be great we are not relying on them. If health insurance becomes very expensive maybe we can purchase a catastrophic plan (as we are otherwise fairly healthy).

Worse case will be going with no insurance and then if one of us gets sick the other will go back to work for the insurance.

 

[FIREmenow]

................... They both made poor decisions to LBYM and ..............

Notwithstanding those already in a crisis or predicament, how do we keep from taxing an entire population to pay for the large group of (future) people who are not willing to take care of themselves physically or fiscally?

 

[Fermion]

Notwithstanding those already in a crisis or predicament, how do we keep from taxing an entire population to pay for the large group of (future) people who are not willing to take care of themselves physically or fiscally?

Actually the people who don't take care of themselves physically usually die pretty early and are lower cost than the people who do take care of themselves and live until 95, using up a lot of medical resources due to things that happen as we age no matter how well we take care of ourselves.

We should really encourage people to eat fast food so they die quickly in their 60s, saving the resources for the healthier people who need $1,000,000 of cancer treatment or LTC in their 80s.

 

[ShokWaveRider]

Notwithstanding those already in a crisis or predicament, how do we keep from taxing an entire population to pay for the large group of (future) people who are not willing to take care of themselves physically or fiscally?

I buy house and car and flood insurance every year and have had VERY few claims if any on any of them. (Touch Wood) That is the way insurance works. The Tax is just like Insurance when it comes to health care.

 

[Big_Hitter]

Notwithstanding those already in a crisis or predicament, how do we keep from taxing an entire population to pay for the large group of (future) people who are not willing to take care of themselves physically or fiscally?

one way to do it would be to give them free cigarettes

as another poster mentioned, those individuals typically have shorter life expectancies

 

[Walt34]

Thank you all for an interesting discussion.