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ACA Insurance = Ouch !

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  • ACA Insurance = Ouch !

    I retired at the end of 2017 and stayed on COBRA from company insurance plan for the 18 months I am allowed to by law, need new insurance July 1. Just researched and purchased a new private health insurance package for myself and spouse, ages 59 &56. We got kind of a mid level plan with high deductibles. Eye and dental coverage will now be out of pocket. Our income is in excess of the threshold (I think $67,000) where you can get discounts so we are paying full price to the tune of $1,185 per month.

    If you are thinking about retiring before medicare age and don't have other sources of health insurance, make sure you know what you are getting into. We knew it was going to be expensive and kind of planned for it, but it still stings when you start writing those checks for something you hope you never have to use.

  • #2
    It would be interesting to know what your deductible, coinsurance, and maximum out of pocket amounts are. I'm guessing that until you $30K or more in expenses including your annual premiums, you likely aren't getting a dime from the insurance company.

    But aren't you glad it's so affordable?
    How can you have any pudding if you don't eat your meat?

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    • #3
      Yep, one of the big problems with our system is that insurance has always been tied to employment. When you have to buy your own, it costs a fortune. There's really no way around that. Get the highest deductibles and copays that you can afford to.

      This is why so many people keep at least a part time job after retirement to bridge the gap until Medicare.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
      * There are no shortcuts to anywhere worth going.

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      • #4
        So the takeaway is make sure your income is below the 67k threshold! I'm afraid I will end up in this predicament in the future. But I'd think we'd be below the threshold as long as we waited to start our pensions. Lots of planning and strategizing will need to be done.

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        • #5
          Originally posted by Thrif-t View Post
          So the takeaway is make sure your income is below the 67k threshold!
          If our income would be below 67K, I wouldn't be retiring.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

          Comment


          • #6
            ACA subsidies are determined by your modified gross income, or MAGI, which is your adjusted gross income plus any tax exempt interest income. So, if you retire before age 65 and Medicare kicking in, you can try to manipulate your adjusted gross by harvesting tax losses to offset capital gains or using money in savings accounts to live off of, for example. It's definitely something to consider and Mr. Money Moustache, ChooseFI, and the Mad fientist are all podcasts/websites that have discussed strategies to counter this problem.

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            • #7
              Originally posted by disneysteve View Post

              If our income would be below 67K, I wouldn't be retiring.
              You live in a higher cost of living area and are in a higher income bracket than us. We will live fine off of a 60k income as long as our kids are out of the nest. Our gross income is 80k now.

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              • #8
                Originally posted by txex86 View Post
                ACA subsidies are determined by your modified gross income, or MAGI, which is your adjusted gross income plus any tax exempt interest income. So, if you retire before age 65 and Medicare kicking in, you can try to manipulate your adjusted gross by harvesting tax losses to offset capital gains or using money in savings accounts to live off of, for example. It's definitely something to consider and Mr. Money Moustache, ChooseFI, and the Mad fientist are all podcasts/websites that have discussed strategies to counter this problem.
                This works great to bridge between retirement and 65. There are folks that have multi-million dollar portfolios paying $200/mo for ACA because they keep their MAGI below the threshold. You can withdraw a lot of money from a taxable account before you hit that $67k limit which is after the $24,500 personal exemption, so it is really $71,500. I could pull $350k from my taxable account right now and only generate $40k of income.

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                • #9
                  Originally posted by corn18 View Post

                  This works great to bridge between retirement and 65. There are folks that have multi-million dollar portfolios paying $200/mo for ACA because they keep their MAGI below the threshold. You can withdraw a lot of money from a taxable account before you hit that $67k limit which is after the $24,500 personal exemption, so it is really $71,500. I could pull $350k from my taxable account right now and only generate $40k of income.
                  Ah. For some reason I was thinking all the money I take out counts as income but it doesn’t. Yes, staying under that limit is probably relatively easy for most folks.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment


                  • #10
                    Moral of the story is, make yourself poor so you can afford insurance.
                    How can you have any pudding if you don't eat your meat?

                    Comment


                    • #11
                      Originally posted by TexasHusker View Post
                      Moral of the story is, make yourself poor so you can afford insurance.
                      Great idea !
                      Actually the agent was suggesting all these different ways to get your income below the threshold so we could get some discounts.
                      Had to explain it aint gonna happen anytime soon. Have been setting up investments for a long time so we would have plenty of income in retirement.

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