Calculating the cost of health insurance is a complicated and stressful exercise when you’re retiring early. Hear Jason’s experience with his first full year using the California ACA Exchange and learn how Eric arrived at his budget of $350K, his worst case scenario. We discuss how to choose a plan, ACA subsidies, differences by state, and other alternative options. If you missed our earlier healthcare episode, be sure to see the link below in the Show Notes.
Show notes may be found below the video
If you missed our earlier healthcare insurance episode, “Healthcare is my Second Highest Cost in Early Retirement”, it’s a great one to review. In that video, we were joined by a career HR benefits expert, and covered a huge diversity of topics – unlike the ACA focus here. We talked about Medicare, COBRA, Long Term Care, prescription drug coverage, among others.
In this episode we mentioned a number of useful resources primarily for US residents seeking healthcare that we’d like to share with you. Note that many apply whether you are on a FIRE path or traditional retirement age.
Healthcare.gov is the best starting point when it comes to information about Affordable care Act (ACA or “Obamacare”) plans. In many cases, you will be directed to a state-run plan with its own website, but this is not always the case. Presently, a number of states have federally-run, state-federal partnership, or federally-supported plans. Where there isn’t a state exchange, you’ll see options and apply for coverage directly from healthcare.gov.
Choosing a metal tier is an essential part of selecting an ACA plan. This chart from healthcare.gov explains the details of the Bronze, Silver, Gold, and Platinum options available. Importantly, the plan categories are based on how you and your plan split the costs of your health care. As Eric mentioned, they have nothing to do with quality of care.
ACA plan subsidies are a topic we spent some time on in the episode. Many on a FIRE path plan on having incomes well within the limits where cost-reducing subsidies apply. Typically, as long as your household income is below 400% of the Federal Poverty Limit (FPL), these apply. When you investigate ACA coverage options, information will be provided on your eligibility for these based on the income information you supply. Importantly, in 2021 and 2022, provisions of the American Rescue Plan (ARP) legislation made further improvements to eligibility, eliminating so-called “subsidy cliffs”.
Obamacare Optimization in Early Retirement is a great Go Curry Cracker article that goes into extensive details on ACA optimization, for those ready for a deeper dive. It’s worth noting that this is just one of a number of good ACA-related articles on GCC, which you can access via this tag.
States where Obamacare plans cost the most in 2021 is an interesting post from Policygenius that digs into the diversity of plan costs across US states. Some states have much higher average costs by plan, so this is a key factor worth investigating when considering where to live if you will rely on ACA plans.
Healthcare Sharing Ministries (HSMs) are an option of interest to many. We’ve decided they weren’t for us, as they’re not bound by the same requirements as true insurance plans. That said, this page seems to be a reasonable starting point for high level information on a number of options available. If you have interest in these plans, be sure to dig deeper. Many user stories are available online via Reddit and other sources. For information on the potential downsides of HSMs, we found this recent John Oliver segment very eye-opening. Caveat emptor, friends.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.