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  #1  
Old 05-30-2018, 01:22 PM
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yoyo yoyo is offline
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Default ACA/health insurance if between ages 62 and 65 and retired

I'm a few years away from needing to do anything, but I've been wondering about paying for health insurance after leaving full time professional work but before turning age 65. I looked at healthcare.gov and the premiums are very high.

I ran the following scenario:

Married couple both age 62, non-smokers
Zip code: 28904 Clay county NC
Income: 135k

Bronze premiums ~$26+k/year, Silver ~$34+k/year, both with significant OOP/deductibles.

However, since these premiums > 8.something% of income, can get ACA mandate exemption as unaffordable, so catastrophe coverage is an option. Is cat coverage available only outside the exchange? Who are the primary writers of health cat coverage? We don't have any significant health or Rx issues to manage.

We can do Cobra for 18 mos, but trying to figure out how to manage the other 18 mos.

So my Health actuary peeps, can you provide any guidance on options, strategies, etc.?

Last edited by yoyo; 05-30-2018 at 01:54 PM..
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Old 05-30-2018, 01:38 PM
career changer 2 career changer 2 is offline
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Can you lower your income for those three years so the feds subsidize your coverage? Take money from a roth IRA rather than 401k.
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Old 05-30-2018, 01:54 PM
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Originally Posted by career changer 2 View Post
Can you lower your income for those three years so the feds subsidize your coverage? Take money from a roth IRA rather than 401k.
that's an option, i'll have ~$500k cash on hand.

is there a lookback at income from prior years when checking for subsidy eligibility?
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Old 05-30-2018, 02:02 PM
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Career Changer is right. Best strategy is to pull from assets that don't get recognized as income. Get your recognized income below 400% FPL for premium subsidies. Below 250% FPL for cost sharing subsidies.

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Originally Posted by yoyo View Post
that's an option, i'll have ~$500k cash on hand.

is there a lookback at income from prior years when checking for subsidy eligibility?
No, there is no asset test or any lookback to qualify for the subsidy itself. You might have some issue getting them to believe that your income dropped to the point that you qualify for subsidies, but that can usually be dealt with from what I've read. In any case, the subsidy to your monthly premium is just an advance on the premium tax credit. If you didn't get the subsidy and you should have qualified for it, you should end up getting it back through a tax refund, to my understanding.
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Old 05-30-2018, 02:06 PM
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is there a lookback at income from prior years when checking for subsidy eligibility?
No, and no asset criteria as well, subsidies are ultimately based on actual Modified AGI as filed on your tax return at the end of the year.

A preliminary subsidy amount is calculated when you enroll on an exchange, but then the final subsidy amount is determined when you file taxes for that year.
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Old 05-30-2018, 02:36 PM
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This is helpful, thank you.
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Old 05-30-2018, 02:52 PM
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Career Changer is right. Best strategy is to pull from assets that don't get recognized as income. Get your recognized income below 400% FPL for premium subsidies. Below 250% FPL for cost sharing subsidies.



No, there is no asset test or any lookback to qualify for the subsidy itself. You might have some issue getting them to believe that your income dropped to the point that you qualify for subsidies, but that can usually be dealt with from what I've read. In any case, the subsidy to your monthly premium is just an advance on the premium tax credit. If you didn't get the subsidy and you should have qualified for it, you should end up getting it back through a tax refund, to my understanding.
This is true for the premium subsidy (APTC), but not for the benefit subsidy (CSR).

Ideally you want to be around 100%-149% of the FPL (or maybe 133%-149% if your state expanded Medicaid). Then you get maximum benefit and premium subsidies.

If you miss-estimated your income at the beginning of the year then the government settles with you at tax time for the premium subsidy, but you get to keep the benefits of the benefit subsidy (CSR).
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Old 05-30-2018, 02:55 PM
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Originally Posted by BruteForce View Post
This is true for the premium subsidy (APTC), but not for the benefit subsidy (CSR).

Ideally you want to be around 100%-149% of the FPL (or maybe 133%-149% if your state expanded Medicaid). Then you get maximum benefit and premium subsidies.

If you miss-estimated your income at the beginning of the year then the government settles with you at tax time for the premium subsidy, but you get to keep the benefits of the benefit subsidy (CSR).
Yes, that's right. I should have been clearer on that.
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Old 05-30-2018, 03:02 PM
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Quote:
Originally Posted by BruteForce View Post
This is true for the premium subsidy (APTC), but not for the benefit subsidy (CSR).

Ideally you want to be around 100%-149% of the FPL (or maybe 133%-149% if your state expanded Medicaid). Then you get maximum benefit and premium subsidies.

If you miss-estimated your income at the beginning of the year then the government settles with you at tax time for the premium subsidy, but you get to keep the benefits of the benefit subsidy (CSR).
It sounds like there are strategies to maximize both premium and benefit subsidies provided you can manipulate your modified AGI to fall within certain ranges.
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Old 05-30-2018, 04:07 PM
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It sounds like there are strategies to maximize both premium and benefit subsidies provided you can manipulate your modified AGI to fall within certain ranges.

Agree with all the above. Because of your ages and nuances with the way plans are priced (Silver plan prices, which determine the amount of your premium subsidy, are artificially inflated in most states due to the Federal government's decision to no longer pay for cost-sharing reductions for low income people), you should be able to get a Bronze plan on the exchange with a $0 monthly premium if you can manage your income to be at/below about $50k (300% FPL for a family of 2).

There is additional subsidy for even lower income levels, but the subsidy decreases significantly as you increase your income and disappears altogether at 400% FPL (as Mr. F noted).
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