Health insurance after 60, but before medicare

[farmerEd]

Greetings all.

Trying to figure out if its possible for us to retire soon.

We are both employed, and both make good money - but are burned out and want to travel; maybe in a year or two - but will need health insurance for about 5 years before medicare kicks in.

Don't want to use COBRA (~$2500/month), and don't want to go bare.


I live in Mass, so was looking at the mass health connector website.

Plugged in our zip code and various income amounts from $36K to $60K and was actually quite surprised to see that there are plans we would qualify for as low as $50/month and up to $270/month.

But my real question is - will assets count at all when determining eligibility?

Plan would be to very little to no actual 'employment income' (maybe pick up a few shifts here and there for fun), so we can technically make our income just about anything we want - and would live off of money we have saved in our non-retirement accounts. We have plenty of money to 'retire' based on a 4% rule, but not planning on tapping that until at least 65.

House, cars and all of our kids education is all paid for - zero debt - so honestly picking up $36k in income, plus drawing at least that amount each year from our after tax savings, is more than enough for us to do what we want - and then at 65 we can start tapping the real nest egg.

Because we can control our actual income, and then use that plus an already-taxed money to live on, we can qualify for almost free health insurance.

So question is, to me this seems to go to be true, is it? Will having significant assets disqualify us from getting a subsidized plan? seems like it should, but I can't see anywhere on the site where it is mentioned.

 

[chassis]

healthcare.gov

Assets aren't part of the question.

side comment: COBRA prices are proof that the US healthcare industry is morally and ethically bankrupt.

 

[finnski1]

I am not familiar with the Mass health system but believe it is very similar to ACA. IF so then assets do not count, only your annual MAGI. Obviously this would be very important to know ahead of time.

 

[Aerides]

So question is, to me this seems to go to be true, is it? Will having significant assets disqualify us from getting a subsidized plan? seems like it should, but I can't see anywhere on the site where it is mentioned.

The ACA law is based in taxes and income, no, assets do not mean anything in determining the price you pay for a plan on the exchange. You enter your expected income for the upcoming year and that is how your subsidy is calculated.

 

[jim584672]

So question is, to me this seems to go to be true, is it? Will having significant assets disqualify us from getting a subsidized plan? seems like it should, but I can't see anywhere on the site where it is mentioned.

You will never be asked about assets.

Income is defined as...
https://laborcenter.berkeley.edu/wp-content/uploads/2021/03/2021-03-MAGI-Summary.pdf

 

[farmerEd]

follow up questions

Honest to god, this just seems too good to be true - last time I look into this (maybe 15 years ago, there was not this option that I knew of anyway).

Was almost depressed lately thinking I would need to be a corporate slave for at least another 7 years or eat the almost $25K year premiums.

I'll say it again - WOW, just WOW - I feel like I just won the lottery, and all of a sudden the impossible just became possible.

SO related question - can we qualify if we both leave our 6 figure jobs in the first year and simply declare what we think we will make for the upcoming year?

Are there annual reporting requirements or audits, and if you happen to get a windfall some year (say you are getting a subsidy for a estimated $36K income but picked up some contract end ended up making $80K instead, how or when does that get reconcoiled?

 

[PaunchyPirate]

farmerEd, you are a perfect candidate to use the Affordable Care Act (ACA) exchange for your health insurance needs until you reach Medicare eligibility. In MA, that is the Health Connector website you have researched. I retired at age 56 and have been using the ACA exchange to get good, affordable coverage. Like you are suggesting, I manage my income via savings and investments to obtain subsidies that help cover the cost of the premiums. As other's have said above, your assets are not considered when determining subsidies. Just your annual income.

On the downside, anything can change. As you probably are aware, the ACA has been a hot topic for over a decade now in the world of politics. Changes of administration can change the laws governing the finances of the ACA benefits. But it looks like 2022 will be pretty much just like 2021, with the exception of any rate increases the insurance companies have added. In 2023, the current temporary subsidy increases and an elimination of the income cap cliff that were granted as part of Covid relief legislation are scheduled to go away, so things could get more expensive in that year. However, it's possible the Biden administration will be successful in getting those subsidy levels for future years to.

ACA is very much a year-by-year thing. But it's been pretty stable now for a few years and I think that the efforts to totally dismantle it seem to have subsided.

Welcome to the world of ACA and managing your income.

 

[jim584672]

SO related question - can we qualify if we both leave our 6 figure jobs in the first year and simply declare what we think we will make for the upcoming year?

Are there annual reporting requirements or audits, and if you happen to get a windfall some year (say you are getting a subsidy for a estimated $36K income but picked up some contract end ended up making $80K instead, how or when does that get reconcoiled?

You estimate the next year and reconcile at tax time.

 

[PaunchyPirate]

Honest to god, this just seems too good to be true - last time I look into this (maybe 15 years ago, there was not this option that I knew of anyway).

Was almost depressed lately thinking I would need to be a corporate slave for at least another 7 years or eat the almost $25K year premiums.

I'll say it again - WOW, just WOW - I feel like I just won the lottery, and all of a sudden the impossible just became possible.

SO related question - can we qualify if we both leave our 6 figure jobs in the first year and simply declare what we think we will make for the upcoming year?

Are there annual reporting requirements or audits, and if you happen to get a windfall some year (say you are getting a subsidy for a estimated $36K income but picked up some contract end ended up making $80K instead, how or when does that get reconcoiled?

Subsidies for a year are based on your ESTIMATE of income for that year. For example, on November 1st you can sign up for 2022 coverage. During the enrollment process, you estimate your 2022 income. It is unrelated to your 2021 income. You MAY be asked to justify your estimate since they do look at your tax records. If you are asked, you can simply write a letter indicating that your income will drop to $xx,xxx in 2022 due to no longer being employed. That's all it takes.

Any subsidy differences that happen due to not accurately estimating your income are reconciled when you file income taxes. So for 2022, you would reconcile this in early 2023 on your 2022 taxes. You will pay back any subsidy you didn't qualify for. If you actually underestimated your income, you will have additional subsidy added in to your tax return.

 

[VanWinkle]

healthcare.gov

Assets aren't part of the question.

side comment: COBRA prices are proof that the US healthcare industry is morally and ethically bankrupt.

More likely prices are inflated in the private industry due to the government involvement in supplying healthcare to the masses with the ACA. Check prices prior to the ACA and after a year. 2500 a month for healthcare never happened before the price was subsidized by the government. It is the same for any other product or service the government infringes into the free market. BTW, I am a fan of the ACA and do not mean to denigrate the program as it has helped many early retirees and low income families. U S Healthcare is a business just like any other.

 

[farmerEd]

thanks

Well I will say it one more time - wow. Too good to be true, but sounds like it is true this time - appreciate the responses, and now that I know the keyword 'ACA' I have found a lot of other related posts on this forum.

All of a sudden a whole new world has opened up for me.

 

[PaunchyPirate]

Also, if you put aside the financial aspects of using an ACA healthcare plan, some other things to consider are:

1. Can you find an ACA plan that has your preferred doctors, hospitals, prescriptions "in network" or at least provide an out-of-network price that you can live with. In some locations, the ACA coverages seem to be less desirable than some non-ACA insurance plans.

2. ACA plans and pricing vary based on your zipcode location. A plan may be available in one zip code, but not in another zipcode very near you. Prices may differ between the 2 zip codes. So just keep this in mind if you ever consider a move. There are often very significant differences between locations in different states.

3. In some locations, you MAY be able to purchase better insurance coverage off of the ACA exchange. But you'll pay more.

4. In order to get the ACA subsidies, you must purchase your insurance thru the ACA exchange in your state. Off-exchange plans are not eligible for subsidy.

5. Read the plan coverages in detail. Many will only cover full healthcare within your geographic location. I believe they are all required to cover Emergency Care nationwide. But that would likely be limited to Emergency Room visits. It is always pretty nebulous what coverage will be if you're out of the state and require hospitalizing. Someone will have to determine what constitutes an "emergency" at that point. However, your current employer-provided coverage may also have this issue.

 

[PaunchyPirate]

One more.... Be aware that ACA subsidies are based on your Modified Adjusted Gross Income (MAGI). This includes W2 income, Interest income, Dividend Income, Capital Gains Income, and Income derived from Tax-Free Interest investments. Basically take your Adjusted Gross Income from your last tax return and add in any tax-free income you had as well. That's the income that your subsidy is based on.

*Check the official MAGI definition on the ACA websites. There are a few other types of income that gets added in or not, but I've identified the major ones.

 

[finnski1]

Well I will say it one more time - wow. Too good to be true, but sounds like it is true this time - appreciate the responses, and now that I know the keyword 'ACA' I have found a lot of other related posts on this forum.

All of a sudden a whole new world has opened up for me.

Yes I had the same reaction a few years ago. Enjoy your retirement!

 

[DireWolf]

A couple thoughts after skimming thru this thread…

If you realize your projected income will change, I think technically you are supposed to go onto the marketplace and update things. But, yeah, it all gets reconciled on taxes.

Since you have flexibility in what your income is, you might want to look at keeping income low enough for a silver enhanced plan. You basically get a platinum level plan for very affordable this way, with a low deductible and low out of pocket max. Staying under 200% of FPL is ideal (up to 250% you can still get an enhanced plan, but OOP Max goes up sharply). Although check into MA specifically, it may differ from the typical ACA in ways that benefit you

 

[RetiredAt55.5]

Are there annual reporting requirements or audits, and if you happen to get a windfall some year (say you are getting a subsidy for a estimated $36K income but picked up some contract end ended up making $80K instead, how or when does that get reconcoiled?

There is an income cliff, that if exceeded results in getting $0 subsidy. So, unexpected income can result in having to pay back your entire subsidy at tax time.

The cliff was removed just for 2021 and 2022. It's possible that this could be extended beyond 2022, but I wouldn't count on it.

 

[RetiredHappy]

Medical insurance has always been expensive - even before ACA became law. Doctors and hospitals have to be paid. If you can make use of ACA subsidies, then you get incredible savings. My 59 yo age-rated Silver medical insurance off-exchange private plan will cost me $1,002 per month in premiums starting 1/1/2022. Personally, I feel that it is fair cost. Besides subsidies to those who qualify, ACA has also been beneficial to pre-Medicare age people by reducing the cost difference between the oldest group and the youngest group. I am grateful.

Most employees have no idea how much medical insurance costs the companies when they are provided with coverage. I can't wait to be eligible for Medicare at 65.

 

[Sarah S]

Ed One thing to know with the MA connector is if you are below a certain subsidy level not all the plans show up.( at least that is how it used to be) I didn’t have a subsidy but being curious I looked at how it worked and saw that the plan I had ( Tufts - regular not the limited one) didn’t show

This may not matter to you but do check the networks when deciding. In Boston to get my preferred doctors ( MGH) I needed BC, HCHP or regular Tufts. This may differ by location of course and networks change but if something were to happen you want access to your preferred providers. The three I listed seemed to be accepted widely

 

[Z3Dreamer]

FarmerEd - Once you get familiar with how the whole thing works, may I suggest choosing a plan that is HSA eligible, if you like bronze plans?

DW and I have been/will be on ACA plans from 2017 to 2022. DW is a cancer survivor, so before ACA, I was going to have to work until age 65. My EUREKA moment was shortly after the Supreme Court upheld the ACA. I figured that I better start reading about the ACA. Then I saw an article that said the ACA was really a middle class early retirement vehicle. I believe that I retired a year later.

 

[farmerEd]

Ed One thing to know with the MA connector is if you are below a certain subsidy level not all the plans show up.( at least that is how it used to be) I didn’t have a subsidy but being curious I looked at how it worked and saw that the plan I had ( Tufts - regular not the limited one)

This may not matter to you but do check the networks when deciding. In Boston to get my preferred doctors ( MGH) I needed BC, HCHP or regular Tufts. This may differ by location of course and networks change but if something were to happen you want access to your preferred providers. The three I listed seemed to be accepted widely

I did notice that - if I put in a low number, I get three plans to choose from, and a higher income I get more choices - so does that mean those other plans are truly not available? or is there a way to access them once you know your subsidy number?

 

[farmerEd]

I did notice that - if I put in a low number, I get three plans to choose from, and a higher income I get more choices - so does that mean those other plans are truly not available? or is there a way to access them once you know your subsidy number?

Also wondering, if I put in a higher number, and get a better more expensive plans to choose from, but thenI do my taxes and report the lower number - I'll get my subsidy back, but would I be still able to keep my plan? or are you forced into the cheaper ones? Need to figure that one out.

Have what I consider a 'gold-plated' plan right now thru my fortune 50 employer, hate to give it up, but not as much as I would hate working for 7 more years.

 

[pb4uski]

I did notice that - if I put in a low number, I get three plans to choose from, and a higher income I get more choices - so does that mean those other plans are truly not available? or is there a way to access them once you know your subsidy number?

Don't worry about that. IF you have substantial tax-deferred money (401k, tIRA, etc... and most corporate slaves do) then you'll want to take advantage of those low income years to do low tax cost Roth conversions and that will provide income. The balancing act is finding the sweet spot and include any lost subsidies in calculating the cost of the Roth conversion, but it will still likely be beneficial... especially if once you both start any pensions and SS and RMDs begin that incoem pushes you into a high tax bracket (22% or more).

 

[Sarah S]

I don’t think so but you could pay during the year and then if you qualify get it back on taxes. That doesn’t work for any costsharing help which is real time though

Re compared to work plans the tufts I had ( aside from deductibles and copays with silver) was as good as any I had at work

 

[chassis]

More likely prices are inflated in the private industry due to the government involvement in supplying healthcare to the masses with the ACA. Check prices prior to the ACA and after a year. 2500 a month for healthcare never happened before the price was subsidized by the government. It is the same for any other product or service the government infringes into the free market. BTW, I am a fan of the ACA and do not mean to denigrate the program as it has helped many early retirees and low income families. U S Healthcare is a business just like any other.

@VanWinkle agree that healthcare is a business. Do you now, or have you in the past, received compensation from the healthcare or health insurance industry?

 

[pb4uski]

More likely prices are inflated in the private industry due to the government involvement in supplying healthcare to the masses with the ACA. Check prices prior to the ACA and after a year. 2500 a month for healthcare never happened before the price was subsidized by the government. It is the same for any other product or service the government infringes into the free market. BTW, I am a fan of the ACA and do not mean to denigrate the program as it has helped many early retirees and low income families. U S Healthcare is a business just like any other.

While what you write might have been true in some parts of the country, it's definitely not true in my experience... we were on individual health insurance prior to ACA and then for ACA... premiums were not that much different after ACA than before ACA where we lived. The year before ACA our premiums went up 13% and the first year of ACA they were up 8% and were less than double digits each year thereafter (in fact, for us in 2019 was a $3/month decrease).

Medical service costs for private health insurers had been cross-subsidized for many, many years prior to ACA because of Medicare and Medicaid.... limits on Medicare and Medicaid reimburement rates pushed costs over to the much bigger private plans... the impact of adding ACA was relatively insignificant.