Free Health Insurance?

[refi]

I just signed up through the state site and it came out that I can get premium insurance for FREE. Given the cost of crippling health insurance costs, I wanted to validate this is accurate as this is quite the opposite.

I'm 44 and in fairly good shape. I just started FIRE now and am using real estate cash flow to support myself instead of withdrawals. Given my depreciation, interest, and repairs, my net real estate income is $0, so that's where I believe I'm eligible. My dividends were about $8k last year and will be around $10k this year and will have comparable in bank interest, so I don't think that is enough to push me out of the lowest income brackets since i'm in a VHCOL area.

Anyway, just seeing if anyone else is getting "free" insurance or I'm missing something. Thanks!

 

[SecondCor521]

Yes, it's somewhat common for early retirees who can manage their AGI low enough to qualify for fully subsidized ACA insurance. It is more common among younger folks, because the subsidies are based on income and family size, and the insurance can be partially based on age.

I did it for several years while my kids were in college. I could file as HOH, got the AOTC, and actually was able to do essentially tax free Roth conversions to soak up the various tax credits.

The one caveat I can think of is that you'll only end up with [-]free[/-][-]government subsidized[/-]taxpayer subsidized health insurance if your actual AGI next year is low enough. If you estimate lower than actual, you might end up with the situation of paying back some or all of the subsidy. See the bottom of Form 8962 for details.

 

[Fermion]

Well, I wouldn't say it is TOTALLY free.

It looks like in 2024 we will be paying $1.22 a month while receiving a $1296 additional monthly subsidy for a silver plan with $0 deductible and $700/yr max out of pocket.

I could have possibly made it free, but I wanted to feel like I was chipping in something.

 

[CRLLS]

Watch your income closely. I can easily be wrong on this. If your income is too low they may put you in Medicaid. I believe there is a minimum requirement for ACA. Check that out before making firm plans.

 

[street]

Watch your income closely. I can easily be wrong on this. If your income is too low they may put you in Medicaid. I believe there is a minimum requirement for ACA. Check that out before making firm plans.

Yes, and you don't want that. CRLLS is right look into minimum requirement.

 

[refi]

Got it, so make something, but don't make too much

I still have a side hustle that might generate income, so I guess if I go over, I'll just pay the penalty, the $0 health care is a bonus at this point. No sense in exerting too much energy trying to stay in a middle range.

Thanks for the info, folks!

 

[FLSUnFIRE]

Ignoring actual cash-flow needs for a moment, I sell appreciated assets to get to my target taxable income in Nov/Dec once I know what my earned and interest/dividend income will be in order to optimize my taxes. Right now that means MAGI for ACA. If I end up liquidating more than my cash needs, I reinvest with the stepped up basis giving me more flexibility to manage taxes in future years.


If MAGI/ACA wasn't a factor for me, I would realize LTCG up to the top of the 0% bracket each year and step up my basis but for now the subsidy is more valuable to me than stepping up my basis.

 

[Northforker]

Watch your income closely. I can easily be wrong on this. If your income is too low they may put you in Medicaid. I believe there is a minimum requirement for ACA. Check that out before making firm plans.

This!!! In Kentucky if a household of 2 has an AGI below $26,500/yr, ACA coverage is not eligible. Medicaid is the only option. We steer our AGI to about $34,000/yr and our Silver plan cost $413/month. 2 years to go until medicare eligible!

 

[aaronc879]

Yes, and you don't want that. CRLLS is right look into minimum requirement.

Why not? I didn't need to take enough out of my IRA to reach 100% poverty level so I signed up for my states equivalent to Medicaid and it works just fine. No premium this year and most I would pay is $8/mo depending on my income. To stay on ACA I would have had to take extra early withdrawals from my IRA and the penalties that come with that so Medicaid is the better choice IMO.

 

[N02L84ER]

aaron, if you don't need the money to spend you can do Roth conversions to increase your income/MAGI to stay out of Medicaid and there are no penalties on conversions.

 

[aaronc879]

aaron, if you don't need the money to spend you can do Roth conversions to increase your income/MAGI to stay out of Medicaid and there are no penalties on conversions.

I don't think that is a good option for me. I am in a unique situation that is definitely not enviable by anyone on here. I am too disabled to work but not disabled enough to get any benefits at age 44. I need to make $200K in an IRA and $80K in a ROTH last me a bare minimum of 18 years until I reach 62 so I can get SS benefits. I also have a house with $150K equity but would like to try to keep that indefinitely. SS will only pay me around $1000/mo at age 62 so not sure I can make this work. Maybe I could get a reverse mortgage at age 62. Healthcare will be free or near free no matter what so that's good at least.

 

[GenXguy]

My ACA silver plan premium looks like it will be around $100, but the out of pocket can be pretty high:

$3,000 Individual/ $6,000 Family In-Network
$13,900 Individual/ $27,800 Family Out of Network

And they state that you may receive additional charges from an out of network provider through balance billing that the plan won't cover. Of course, premiums aren't included as part of your max out of pocket.

A PPO plan actually had out of network out of pocket as "unlimited"!

 

[mountainsoft]

Watch your income closely. I can easily be wrong on this. If your income is too low they may put you in Medicaid. I believe there is a minimum requirement for ACA. Check that out before making firm plans.

Our income dropped well below the ACA minimum when my wife first retired in April. We were put on a Medicaid plan until my wife's pension started in October. Other than the stigma of being on Medicaid, it was a really nice plan and about as free as you can get. No premiums, no copays, free labs, free medications, etc. We had the same Kaiser doctors and services we had while my wife was working.

We're now on an ACA plan, but our income is still low enough to qualify for subsidies that provide us free ($0 premium) health coverage with Regence Blue Cross. Of course, you still have copays for doctor visits, lab work, prescriptions, etc. Surprisingly, those costs are going down for us on the upcoming 2024 updates.

 

[Fermion]

It is funny but I used to think...ok, just make it to 65 and we have medicare!

Now I am dreading turning 65 and paying a lot more than we do now.

 

[aja8888]

It is funny but I used to think...ok, just make it to 65 and we have medicare!

Now I am dreading turning 65 and paying a lot more than we do now.

No problem, you can get set up with a very inexpensive Medicare Advantage plan then!

 

[gauss]

Why not? I didn't need to take enough out of my IRA to reach 100% poverty level so I signed up for my states equivalent to Medicaid and it works just fine. No premium this year and most I would pay is $8/mo depending on my income. To stay on ACA I would have had to take extra early withdrawals from my IRA and the penalties that come with that so Medicaid is the better choice IMO.

+1 There is much carry over stigma to receiving Medicaid. It use to be more associated with "welfare" recipients. With the Medicaid expansion that happened in most states, this is less of an issue.

Objectively there is very good coverage available for low or no cost if you qualify for Medicaid. Copays and out of pocket maximums are limited also.

If you are on subsidized ACA vs Medicaid you are receiving legal taxpayer subsidies for your medical insurance in both cases (assuming you were honest on your application).

-gauss

 

[gauss]

It is funny but I used to think...ok, just make it to 65 and we have medicare!

Now I am dreading turning 65 and paying a lot more than we do now.

Are you comparing Medicare costs to a Employer provided plan or a heavily subsidized ACA and/or Medicaid plan? If so then I guess that might make sense.

As to the advice that was posted to just go on a Medicare Advantage plan to save money, just realize that this may cost you dearly later in life when care starts getting [-]denied [/-] managed.

My late DM was effected by this and dead within 6 weeks after being sent directly home from the hospital due to Medicare Advantage not approving rehab care. They don't tell you on the TV ads that when you sign up for a Medicare Advantage Part C plan that you are surrendering your Part A/Part B rights and are ,instead, opting in for managed care.

-gauss

 

[jim584672]

I'm in the free zone. Got locked into Medicaid due to the pandemic. But now in the NY "Essential Plan" which is free up 200% FPL ($29K), which will rise to 250% ($36.5K) in April 2024. There is really no difference between the Medicaid Managed Care plans and the Essential plans, except EP has more out of pockets. MCO maxOOP $200, EP maxOOP $2000.

 

[gauss]

My ACA silver plan premium looks like it will be around $100, but the out of pocket can be pretty high:

$3,000 Individual/ $6,000 Family In-Network
$13,900 Individual/ $27,800 Family Out of Network

And they state that you may receive additional charges from an out of network provider through balance billing that the plan won't cover. Of course, premiums aren't included as part of your max out of pocket.

A PPO plan actually had out of network out of pocket as "unlimited"!

What I learned recently is that those "Family" limits are actually kind of misleading. We had a family OOP max of $14,000 or so and I thought we would be on the hook for the full amount the year DW had major surgery (ie a week in ICU to recover). Nope -- only $7,000. The individual limit applies to each individual even if they have a family policy. The family limits would tend to only come into play when you have a large family with lots of folks on the policy.

I think there was a regulation that came out in the later part of the last decade that affirms this. An individual on a family policy will not be assessed anything more than they would if they had an individual plan.

 

[Ian S]

As to the advice that was posted to just go on a Medicare Advantage plan to save money, just realize that this may cost you dearly later in life when care starts getting [-]denied [/-] managed.

My late DM was effected by this and dead within 6 weeks after being sent directly home from the hospital due to Medicare Advantage not approving rehab care. They don't tell you on the TV ads that when you sign up for a Medicare Advantage Part C plan that you are surrendering your Part A/Part B rights and are ,instead, opting in for managed care.

-gauss

Indeed they don't! I've listened carefully to a few of the commercials and they always repeatedly mention extra benefits you may be entitled to but NEVER the fact that your care is "managed" and may be denied. It's odd to me that drug ads have to give lip service to all the potential harmful side effects but Medicare Advantage ads don't have to. I understand that for some with limited resources, MA may be the only viable option but, as a means of simply saving a few bucks early in retirement when you are apt to be healthier, then IMHO, no thank you!!

 

[gauss]

^
Thanks for the validation Ian S.

Glad I am not the only one who see's it this way. As my friends and I approach Medicare age, I try to educate them on this, but a barrage of TV commercials probably negates much of my efforts.

All (and OP) , thanks for tolerating my venting.

-gauss

 

[GenXguy]

What I learned recently is that those "Family" limits are actually kind of misleading. We had a family OOP max of $14,000 or so and I thought we would be on the hook for the full amount the year DW had major surgery (ie a week in ICU to recover). Nope -- only $7,000. The individual limit applies to each individual even if they have a family policy. The family limits would tend to only come into play when you have a large family with lots of folks on the policy.

I think there was a regulation that came out in the later part of the last decade that affirms this. An individual on a family policy will not be assessed anything more than they would if they had an individual plan.

Well of course individual applies to any single person, that's how it's always worked even with my work plans over my career. The individual limit is the max out of pocket for one person, even on a family plan. The family out of pocket limit comes into play with more than one person using health services. You can hit that family out of pocket with JUST TWO PEOPLE when each has some healthcare expenses hitting the individual limit. It does NOT have to be a large family with lots of people on the policy.

 

[Fermion]

Well of course individual applies to any single person, that's how it's always worked even with my work plans over my career. The individual limit is the max out of pocket for one person, even on a family plan. The family out of pocket limit comes into play with more than one person using health services. You can hit that family out of pocket with JUST TWO PEOPLE when each has some healthcare expenses hitting the individual limit. It does NOT have to be a large family with lots of people on the policy.

But it is meaningless with 2 people as the two individual numbers are exactly half of the family number. So great, you have double protection against max oop, both on the individual level and the family level, but with just 2 people, the family number could be 1 zillion dollars and it would make no difference.

 

[GenXguy]

Are you comparing Medicare costs to a Employer provided plan or a heavily subsidized ACA and/or Medicaid plan? If so then I guess that might make sense.

As to the advice that was posted to just go on a Medicare Advantage plan to save money, just realize that this may cost you dearly later in life when care starts getting [-]denied [/-] managed.

My late DM was effected by this and dead within 6 weeks after being sent directly home from the hospital due to Medicare Advantage not approving rehab care. They don't tell you on the TV ads that when you sign up for a Medicare Advantage Part C plan that you are surrendering your Part A/Part B rights and are ,instead, opting in for managed care.

Some people are getting into Advantage plans or Medicare Direct Contracting, not by choice.

https://www.early-retirement.org/fo...ional-medicare-to-advantage-plans-114780.html

https://thehill.com/blogs/congress-...threat-to-medicare-youve-never-even-heard-of/

https://boomerbenefits.com/medicare-direct-contracting-dce-what-does-it-mean-for-you/

 

[GenXguy]

But it is meaningless with 2 people as the two individual numbers are exactly half of the family number. So great, you have double protection against max oop, both on the individual level and the family level, but with just 2 people, the family number could be 1 zillion dollars and it would make no difference.

That wasn't the point. I was responding to a comment that said it would only come into play with a LARGE family. But it comes into play with MORE THAN 1 - you could HIT that family max out of pocket with just two people on the policy, or just 3 people (and the family max out of pocket is NOT 3 times the individual limit), so it is absolutely NOT meaningless. That's why the limit is there. You don't have to have some huge family for the max out of pocket family limit to come into play. That's the point.

I'm the only one on my policy, and I always knew the individual limit applied.