Health insurance - 1st year of retirement

[Georgia Girl]

ACA/COBRA Question - if anyone can help me out, please.

DH and I plan to ER in 5/21. We will not qualify for ACA subsidy in 2021, but we will in future years. Are there any coverage options, other than COBRA, for the period 6/21 to 12/21?

Also, I assume I sign up in October 2021 for ACA and just provide the estimate of income I expect for 2022- is this how it works?


I apologize if this has been asked before- I wasn't having much luck with the search options.

 

[walkinwood]

ACA/COBRA Question - if anyone can help me out, please.

DH and I plan to ER in 5/21. We will not qualify for ACA subsidy in 2021, but we will in future years. Are there any coverage options, other than COBRA, for the period 6/21 to 12/21?

You could sign up for an ACA plan.

Also, I assume I sign up in October 2021 for ACA and just provide the estimate of income I expect for 2022- is this how it works?


I apologize if this has been asked before- I wasn't having much luck with the search options.

This may depend on the state. For the first year, I wrote a cover letter explaining that my large income for the previous year was due to one-time cap gains, and that my income in the next year would be within ACA limits & they accepted that.

Since our ER income tends to be lumpy and we seldom qualify, I now pay the full premium and if we qualify, we get a refund when we file our taxes.

 

[cathy63]

You can still sign up for ACA coverage even if you don't get a subsidy. You can also purchase insurance directly from the insurer, but around here prices and available plans are the same as buying on the exchange, so there's no particular benefit to buying direct as far as I can see (things may be different in your state).

Some benefits to staying on COBRA for the rest of 2021 are:
- if you are over 50, it's probably cheaper than a comparable ACA plan
- it probably has a much wider coverage area, so if you plan to travel it's good
- you don't have to start over with a new deductible mid-year

If you want to switch to ACA for 2022, then you sign up during open enrollment in 2021. I think it starts in November unless your state has its own exchange and has set different dates. Yes, you provide the estimate of your 2022 income. You will probably have to provide documentation to explain why your 2022 income will be so much lower than your 2021 income. States vary as to how hard it is to convince them that you're stating your income accurately.

 

[MBSC]

Are there any coverage options, other than COBRA, for the period 6/21 to 12/21?

Non-subsidized ACA plans can be purchased through the Marketplace exchange or directly from the insurer.

ACA-compliant Catastrophic Plans are an option if the cheapest Bronze exchange plan is more than 8.24% (2020) MAGI. They are basically a Bronze plan that is not HSA eligible but the premium can be lower. The provider network will probably be smaller than the COBRA plan. You can view current Cat Plan premiums here: https://finder.healthcare.gov/

More info on Cat Plans: https://www.healthinsurance.org/faqs/what-is-the-acas-catastrophic-plan-and-who-is-eligible/

If you are healthy, Short-Term Medical (STM) plans may be an option. They are not ACA-compliant, meaning they have medical underwriting and exclude pre-existing conditions. They do not cover preventive care. Prescription drug coverage can be lacking. They do a good job of paying injury claims but can be a little sketchy with illnesses. Read the exclusions list to be sure any physical activities you participate in are not exempt. Try to stick with well-known STMs like Golden Rule by UHC or National General.

There are Health Care Sharing Ministries (HCSM). However, most have a waiting period with very limited coverage the first few months so I would not recommend them in this scenario. They are not regulated by your state Insurance Commissioner and several have been in the news recently for not paying claims so due diligence is required.

As Cathy63 said, COBRA may be the best option for your specific situation after you have researched the others.

 

[USGrant1962]

As cathy63 said, you really should compare your COBRA offering to unsubsidized ACA. We stayed on COBRA for 18 months for reasons cathy63 mentioned - nationwide coverage and much better deductibles in a PPO - for the same price as an unsub ACA HMO with monster deductibles. I think the age rating issue is the key. Corporate plans are not age-rated like ACA is (even though the ACA age rating is slanted in favor of older participants).

 

[Georgia Girl]

Non-subsidized ACA plans can be purchased through the Marketplace exchange or directly from the insurer.

ACA-compliant Catastrophic Plans are an option if the cheapest Bronze exchange plan is more than 8.24% (2020) MAGI. They are basically a Bronze plan that is not HSA eligible but the premium can be lower. The provider network will probably be smaller than the COBRA plan. You can view current Cat Plan premiums here: https://finder.healthcare.gov/

More info on Cat Plans: https://www.healthinsurance.org/faqs/what-is-the-acas-catastrophic-plan-and-who-is-eligible/

If you are healthy, Short-Term Medical (STM) plans may be an option. They are not ACA-compliant, meaning they have medical underwriting and exclude pre-existing conditions. They do not cover preventive care. Prescription drug coverage can be lacking. They do a good job of paying injury claims but can be a little sketchy with illnesses. Read the exclusions list to be sure any physical activities you participate in are not exempt. Try to stick with well-known STMs like Golden Rule by UHC or National General.

I will look into this- thank you. We are very healthy so I would think the STM may be a workable option for us.

Follow-up question: can you get ACA plans mid-year? I assume so based on the responses, but just wondering if anyone knows for sure.

 

[MichaelB]

Follow-up question: can you get ACA plans mid-year? I assume so based on the responses, but just wondering if anyone knows for sure.

Yes, as long as you have a “qualifying event”. Job change is one, here’s a list https://www.healthcare.gov/glossary/qualifying-life-event/

 

[walkinwood]

I will look into this- thank you. We are very healthy so I would think the STM may be a workable option for us.

Be careful. Your priority should be protecting your savings. A few months of expensive health insurance premiums is a small cost to protect against an unforeseen illness that could decimate your savings.

 

[Aerides]

The benefits to cobra for 6 months - including continuity of plan, docs, deductibles, are probably well worth the cost. Especially with all the other retirement adjustments, it's not more change you can kick down the road until the next ACA enrollment.

I stayed on COBRA for 18 months. You can use HSA savings for the premiums for cobra (not for regular insurance premiums iirc).