As I discussed last week, as of January 1st we are likely moving to an ACA (Affordable Care Act) approved plan. We saw that using a representative set of plans from Kaiser for our family of 4 the annual premiums would be somewhere between $11,000 and $18,000. However this doesn’t include any relief due to the premium tax credit (PTC).
The PTC is designed as a tax credit for those who have an annual income up to 4X the government defined poverty income. Currently for a married couple this is around $98,000 per year. Our income is not going to be anywhere near that as our only expected income will be due to dividends and any top up due to drawing down from our accounts. Of that draw down only the capital gains portion counts as income so if we draw down say $25,000 then the capital gains portion is likely to be only about $10,000.
So if we are living on around $70,000 a year then our anticipated ‘income’ is likely to be only at most $60,000. We are clearly within the threshold for PTC assistance. Obviously these credits are not really designed for people like us, but that is the way the law is set up so we will take advantage of it!
The PTC can be taken at the time of sign up, with the additional premium given directly to the insurance company by the federal government. People wont know exactly what their income will be so any reconciliation takes place at tax time.
Lets go back to those 9 Kaiser plans (remember they ranged from, $11,000 to $18,000 without any PTC). Now, with PTC, the premiums for the year range from $1,660 to $6,300 using $60,000 as our annual income. I do notice that the actual discount is not consistent across the plans but these numbers are much more reasonable than before.
As mentioned before we obviously need to do more due diligence on the actual plan as there is a minefield of terminology from the type of plan, typically an EPO or PPO (PPOs have wider networks than EPOs) to whether our current doctors are in the plan and how much some of our current medications are covered.
There is no requirement to actually get your insurance on the exchange, you can get it off-market by going straight to the insurance company. However, if you buy an off-exchange plan you do not get the PTC credits, so for us with our lower income it doesn’t make sense to even look off market. However my understanding is that these are often cheaper than on-market plans for those with higher ($100,000+) incomes.
Open enrollment starts tomorrow, and remember that the $600 fine for not having health insurance is still in place, although the actual enforcement may not be as rigorous as under the previous administration.
A couple of useful websites.
The official exchange marketplace is at healthcare.gov. This is currently being used by 39 states, the other 11 are using state run marketplaces. The idea is exactly the same but they use their own website. Note that Oregon is one of 3 states that runs a state exchange but utilizing the federal website. Oregon did attempt it’s own website but it was an IT disaster and they gave up in the end.
Although the healthcare.gov website is actually surprisingly (!) easy to use I found that policygenius.com was a good site for comparing market and off-market plans. Note that only healthcare.gov currently has the 2018 numbers available, but that will presumably be changed tomorrow.