Author Topic: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?  (Read 3624 times)

jfer_rose

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Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« on: November 29, 2019, 09:56:46 AM »
Happy Black Friday, fellow mustachians!

Like any good consumer on this day, I am shopping. For health insurance. Having become lean FI, I quit my job this year and I'm in the process of applying for 2020 insurance coverage on Healthcare.gov. By mid-2020, I plan to attempt to get a (hopefully) fun part-time job related to woodworking.

If I go ahead and do this, I have absolutely no clue what my income will be. I understand that when applying for coverage on Healthcare.gov, it is best to underestimate income. So that is what I have done. Based on my estimate, I am eligible for subsidies, but given my uncertain income, I was thinking I would not take the subsidy until time to do my 2020 taxes (given that my income could increase substantially such that I am no longer eligible for the subsidy). So question #1: does this approach make sense?

Question #2 and my main reason for posting here: Does anyone have any thoughts to consider when deciding whether to choose between bronze or silver level plans? The gist of the question is: how much should I care about the cost-sharing reductions you are only eligible for if you pick a silver-level plan? More details if you care to get into the weeds with me:

I generally don't use a lot of healthcare-- over the last few years I had a $1500 deductible and I can't recall when I ever met that. I can get a bronze plan for less than the subsidy I'm being offered at my income estimate. So if my income stays low, I would not end up paying out of pocket for the insurance. However, my deductible would be a huge chunk of what I have stashed in my HSA. But if I pick a silver plan, I would be eligible for cost-sharing reductions and have a significantly lower deductible. I'm trying to figure out if that's worth the extra premiums. The silver plan I would pick is $128 per month more than my favorite bronze plan and if I ended up staying eligible for the subsidies, I would pay about $110 per month to have the insurance out of pocket. If I ended up not being eligible for the subsidies, it would be a pretty big chunk of my lean FIRE monthly budget.

Thank you in advance for sharing any wisdom that will shed light on my decision!

geekette

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #1 on: November 29, 2019, 11:24:47 AM »
For us, with the cost sharing reduction on the silver plans, while we never meet the deductible, give us each a couple GP visits free and low copays for prescriptions. With the bronze plans, we’d have to meet the deductible before anything was covered. It really depends your usage and on the plans available in your area, though.

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #2 on: November 29, 2019, 01:18:05 PM »
We're in the same boat.

In our state, kids in a family of four are covered by Medicaid up to an annual household income of $81k, more than three times the poverty level. We don't even plan to get close to this. Therefore we're only shopping on the exchange for my wife and me.

We have a bronze HSA-qualified plan available to us. It has a $5,000 deductible per person, with 20% coinsurance after that until we hit the $6,750 out of pocket max.

Supposing we remain below 200% of the poverty level, which shouldn't be too difficult for us, we could pay an additional $2,130 in premiums to upgrade to a silver plan with a $600 deductible and 10% coinsurance up to the $2,700 out-of-pocket max. The first four primary care visits would be exempt from the deductible and only have a $10 copay under this plan.

This cost-sharing silver plan would be a great deal if we tended to consume many medical services at all. The break-even point between the two plans would be at roughly $3,000 of non-preventive medical bills, or even a bit less if we would need to use some of those primary care visits. The thing is, the only time my wife or I have hit this level of medical spend in our adult lives is when she has given birth.

In our case the bronze plan is a bet that we'll remain generally healthy all year. If we do, we win as much as $2,130. If one of us spends a month in the hospital, we'll lose as much as $2,500 compared to the silver plan. If we both spend a month in the hospital, add another $4,000 to our losses. Given our history this is a bet where the odds are in our favor, the downside risk is limited, and is within our ability to pay. Sounds like a bet we should take!

Beyond this basic comparison of our medical expenses, the bronze HSA plan gives us the ability to improve our position going forward. We're likely to become less healthy as we age, making the cost sharing subsidies become more valuable as time goes on. Meanwhile when our kids leave the house our ACA family size will be going down, thus reducing the income limit where the cost sharing subsidies will be available. Put the two together and it's to our advantage to spend down the taxable account as much as possible and do a fair amount of Roth conversions while we're younger and healthier, so that we can maintain a much lower MAGI when we're older and less healthy.

The HSA eligibility will give us the ability to shift $7,100 from our taxable account to our HSA. We'll need to sell some mutual fund shares to do this, but even with the extra capital gains it's still going to be a net decrease of $5-6,000 to our MAGI. All else being equal this will let us take a higher ACA premium subsidy than before. Also by moving $7,100 from an account where growth counts toward MAGI to an account where it doesn't, we'll be able to more easily maintain a lower MAGI going forward. That $7,100 is currently throwing off roughly $150/year in annual dividends, and the embedded gains will only increase as time goes on.

Also since we're not buying the cost-sharing plan we don't have to make sure to keep our income below 200% of the poverty line. Every additional dollar of income does still come at a cost of a ~15˘ hit to our premium subsidies, but that cliff at 200% of the poverty level won't exist. This gives us a bit more leeway to pursue Roth conversions now while we have the child tax credit cancelling out the federal income tax on them.

Financial.Velociraptor

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #3 on: November 29, 2019, 05:32:27 PM »
In Texas all the Bronze plans are high deductible.  That's fine by my as I prefer a HSA compatible plan.  I've been able to engineer my MAGI for 5 out of 7 years of FIRE to pay net zero in premiums after subsidy.  I pay out of pocket at insurance rate for my annual doctor's visit ($40) and medication ($600/yr) via pre-tax money from my HSA debit card.  Flu shots are less than free as I get a 25 dollar walmart gift card from my provider for getting vaxxed.

If I needed a lot more services and wanted to lower my deductible, and didn't mind losing the HSA tax benefit, I'd have to go Silver.

RWTL

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #4 on: November 30, 2019, 03:34:03 AM »
I'm a few years away from FI, but am interested in this thread.  Posting to follow.

Runrooster

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #5 on: November 30, 2019, 07:41:37 AM »
Why not take the fully allowed subsidy?  Repayment is often maxed out at a low amount, so you'll save more than by waiting until tax time. Just make sure you have the liquidity to repay.

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #6 on: November 30, 2019, 12:20:19 PM »
@jfer_rose, re bronze vs silver, based on what you wrote in the OP, I'd suggest bronze.

Two factors not articulated in your post are whether you have readily accessible liquid funds beyond the HSA in case of need, and what state you're in. I'm going to assume that your liquidity is sufficient. Note that the key factor is maximum Out Of Pocket (OOP) cost, and that is directly stated in the plan information, shown in the comparisons of plans when shopping on the healthcare.gov website if you're using the federal exchange. If you're going to be FIRE, you should have enough liquidity to cover the OOP on even a bronze plan.

Prices are different in different service areas, some states have their own exchanges, and I think eligibility cutoffs can vary between states that accepted "Medicare exapansion" and those that didn't. My initial remark is a general guess, but you might get more precise comments if you want to specify your state.

In past years, I was confident of maintaining low income, and have usually gotten a Silver plan. My income might rise next year, so I expect to pick a bronze plan myself for 2020. That way if I'm healthy, as happens most years (including this year), I can possibly have near-zero premiums net of subsidy in the event of a moderate increase (say from 14k to 26k), and minimize the premiums if I have little to no subsidy (say, 40k income).
« Last Edit: November 30, 2019, 12:23:51 PM by BicycleB »

arebelspy

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #7 on: November 30, 2019, 07:19:56 PM »
Following!

In our state, kids in a family of four are covered by Medicaid up to an annual household income of $81k, more than three times the poverty level. We don't even plan to get close to this.

Yeah, it's pretty crazy. We're a family of 5, and can make tons of money and still have totally free healthcare for the kiddos.
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Paul der Krake

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #8 on: November 30, 2019, 08:08:00 PM »
If you're the "usual" early retiree, it's much, much easier to create some income out of thin air than to reduce it. I've declared an income smack in the middle of the CSR 94 band because in my state the Silver + CSR plans are much better than the bronze plans, and not much more expensive.

The CSRs really, really add value. I would realistically only choose the bronze option if I was quite certain that:
1) I could max out the HSA
2) I was basically not going to need any medical attention this year

By the end of the year I should know what my income will pencil out as, and can do Roth conversions and tax gain harvesting if I'm too low. If I'm too high, that's life, better luck next time. Remember that if you end up picking up some work, not all is lost! You can defer it by sticking it in a (solo) 401(k) or a traditional IRA.


For illustration purposes, here is what could happen next year for us.

Baseline facts:
- married couple, no kids
- declared ACA income 28k
- expected dividend & interest income from taxable investments: 10k

Scenario 1:
No work at all in 2020. By December it becomes apparent the only income we have is the 10k, so to remain in the ACA's good graces we convert about 18k of pre-tax income to Roth.

Scenario 2:
Pick up about 35k worth of consulting work throughout 2020, bringing income to 40k. This can be reduced entirely by sticking about ~17k of it in.pre-tax vehicle like the tIRA or solo 401(k), bringing us back down to the target 28k of income.

Scenario 3:
Maximize tax-advantaged buckets and OPTIMIZE ALL THE TAXES. We shoot for exactly the work income necessary to fill up two solo 401(k), with employee and employer portions, plus two tIRAs. The math is complicated because of some circular calculations but this means we can earn up to ~75k of self-employment income and still only show our target 28k for ACA purposes.

Scenario 4:
Complete and utter early retirement failure. We bring in 300k of self-employment income. Okay, there's nothing than can be done here, even with all the pre-tax vehicles there's no way we can hit the target 28k. You'd have to incorporate and do all sorts of crazy shit to shield the income. Just pay the full price for premiums. The exchange might be pissed because we were so far off, but hey circumstances change.


I encourage you to do the same exercise for your own situation. Come up with the most plausible 3-5 scenarios and see which plan makes the most sense and what you can do to keep things reasonably optimized. If you want to really go crazy throw in some life events in there like childbirth, marriage, etc.



Paul der Krake

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #9 on: November 30, 2019, 08:09:41 PM »
In our state, kids in a family of four are covered by Medicaid up to an annual household income of $81k, more than three times the poverty level. We don't even plan to get close to this.

Yeah, it's pretty crazy. We're a family of 5, and can make tons of money and still have totally free healthcare for the kiddos.
My theory on this is that the government really, really wants kids to have health insurance. If it's entirely free, less responsible parents aren't as likely to make the decision not to enroll them.

arebelspy

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #10 on: November 30, 2019, 10:03:25 PM »
In our state, kids in a family of four are covered by Medicaid up to an annual household income of $81k, more than three times the poverty level. We don't even plan to get close to this.

Yeah, it's pretty crazy. We're a family of 5, and can make tons of money and still have totally free healthcare for the kiddos.
My theory on this is that the government really, really wants kids to have health insurance. If it's entirely free, less responsible parents aren't as likely to make the decision not to enroll them.
Agreed. My wife scored some nice healthcare while pregnant, too.

I like that this state takes care of vulnerable citizens (children and pregnant women). It was one of four factors that made me settle here.
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jfer_rose

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #11 on: December 01, 2019, 09:47:32 AM »
I really appreciate all the responses, thank you!

@Paul der Krake -- I don't understand everything about the ACA. In particular, I don't understand in your hypothetical scenario 1 why you would need to do the Roth conversion to stay in the ACA's good graces. I see why having too much income would cause a problem, but I don't understand why there would be a problem with having less income than estimated. What am I missing? I like your approach of laying out various scenarios and thinking through plans for each.

@Runrooster -- This is another area where I don't yet understand the ACA. I thought the Cost Sharing Reductions did not need to be repaid if your income was higher than estimated, but I had not heard that subsidy repayment was capped. That said, I had a conversation in real life that has me rethinking my stance on taking the subsidies. Argument being: better to have my money earning interest and then pay during tax time rather than give the government and interest free loan.

@BicycleB -- liquidity is not at all an issue. If anything, I have too much of that. Wisconsin in the state. And I think I am leaning toward bronze. I've used so little healthcare in the last few years that it seems to make the most sense and I'm not on any prescriptions. My only hesitation is whether it would cause me to delay seeking medical attention for something that really merits it.

@Financial.Velociraptor -- The opportunity to put more $ into my HSA is appealing with the Bronze plan.

@seattlecyclone -- It was helpful to see the logic you use in making your decision!

@arebelspy -- So glad to see you posting on my thread! I am still so glad you were able to come to my meetup back when I lived in DC.

Paul der Krake

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #12 on: December 01, 2019, 10:21:19 AM »
@Paul der Krake -- I don't understand everything about the ACA. In particular, I don't understand in your hypothetical scenario 1 why you would need to do the Roth conversion to stay in the ACA's good graces. I see why having too much income would cause a problem, but I don't understand why there would be a problem with having less income than estimated. What am I missing? I like your approach of laying out various scenarios and thinking through plans for each.
Ha! I can see how that would be confusing if you're missing that particular piece of information. What you need to know is that there are Medicaid eligibility bands, and ACA subsidy eligibility bands, and the rules for both are very complicated with a lot of idiosyncrasies. The amounts depend on your family size, your state of residence, and a million other things. In the most egregious cases, you could end up in a situation where you are on the hook for the entire premium you thought was going to be subsidized. Search for "medicaid coverage gap" if you feel so inclined.

To keep things short, at the lower end of the income spectrum, where subsidies are the highest, it can be very difficult to "undo" things. You really don't want to subject yourself to the reconciliation process, it's a nightmare. If you're going to be on Medicaid, make sure to be on Medicaid for the entire year. If you're going to be on the ACA subsidy wagon, don't fall off the wagon.

Proceed at your own risk. :)


seattlecyclone

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #13 on: December 01, 2019, 10:24:05 AM »
@Runrooster -- This is another area where I don't yet understand the ACA. I thought the Cost Sharing Reductions did not need to be repaid if your income was higher than estimated, but I had not heard that subsidy repayment was capped. That said, I had a conversation in real life that has me rethinking my stance on taking the subsidies. Argument being: better to have my money earning interest and then pay during tax time rather than give the government and interest free loan.

You're right that the cost sharing reductions don't need to be repaid. You are supposed to update your income with the exchange if it starts being more or less than you estimated, at which point they could switch you on or off of a CSR plan. The healthcare.gov page on this uses "should" rather than "must" language on this though, and I know of no penalty for failing to report an increase beyond just needing to repay some premium subsidy at the end of the year.

The cap on repayments is new to me as well, but looking into it further I found that it does exist! The amount is based on your filing status and actual income as a percentage of the poverty level. You will need your income to end up below 400% of the poverty line for your repayment to be limited. See page 15-16 of the instructions for Form 8962 for the amounts that might apply to you.

Another reason to err on the side of underestimating your income: any subsidy repayment is lumped in with your regular tax, prior to credits, in the overall tax computation. This means that non-refundable tax credits (such as the child tax credit, saver's credit, foreign tax credit) can be used to offset the premium subsidy repayment. If a low tax liability would have caused some of these credits to be wasted otherwise, this is money you will receive only if you underestimate rather than overestimate your income.

jfer_rose

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #14 on: December 01, 2019, 01:03:03 PM »

Ha! I can see how that would be confusing if you're missing that particular piece of information. What you need to know is that there are Medicaid eligibility bands, and ACA subsidy eligibility bands, and the rules for both are very complicated with a lot of idiosyncrasies. The amounts depend on your family size, your state of residence, and a million other things. In the most egregious cases, you could end up in a situation where you are on the hook for the entire premium you thought was going to be subsidized. Search for "medicaid coverage gap" if you feel so inclined.


Regarding the Medicaid coverage gap, I just found the article below quite helpful. Assuming it is accurate, it looks like I only have to worry about meeting the minimum income right now as I am enrolling for coverage:
https://thefinancebuff.com/federal-poverty-levels-for-obamacare.html

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #15 on: December 01, 2019, 01:17:13 PM »
To keep things short, at the lower end of the income spectrum, where subsidies are the highest, it can be very difficult to "undo" things. You really don't want to subject yourself to the reconciliation process, it's a nightmare. If you're going to be on Medicaid, make sure to be on Medicaid for the entire year. If you're going to be on the ACA subsidy wagon, don't fall off the wagon.

Proceed at your own risk. :)
I was on Medicaid for part of a year and it wasn't a problem  Those months on ACA a metal plan are reconciled based on yearly income, for those months you are on it.  The Medicaid months have nothing to reconcile since subsidies don't apply.  Reconciliation wasn't a nightmare, let Turbotax do its magic.

Paul der Krake

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #16 on: December 01, 2019, 02:29:58 PM »

Ha! I can see how that would be confusing if you're missing that particular piece of information. What you need to know is that there are Medicaid eligibility bands, and ACA subsidy eligibility bands, and the rules for both are very complicated with a lot of idiosyncrasies. The amounts depend on your family size, your state of residence, and a million other things. In the most egregious cases, you could end up in a situation where you are on the hook for the entire premium you thought was going to be subsidized. Search for "medicaid coverage gap" if you feel so inclined.


Regarding the Medicaid coverage gap, I just found the article below quite helpful. Assuming it is accurate, it looks like I only have to worry about meeting the minimum income right now as I am enrolling for coverage:
https://thefinancebuff.com/federal-poverty-levels-for-obamacare.html
Right, so this is were it gets fuzzy...

In the last couple of years, taxpayers were bit by the "unforeseen changes in income". That led to bad press, so the IRS came up with a rule that essentially said "look if we can reasonably think you did your best and failed to project accurately, you get a pass".

The other thing that's confusing is that the language on exchanges tend to be about your current income, even though what matters is next year's income. This is fine for most people who don't really get a say in how much they get paid, but not tax-savvy early retirees who can pretty much choose whatever they want. Specifically, in order to qualify for this you need to have provided "accurate" information to the marketplace, and it's really hard to provide "accurate" information to the marketplace when it's your last year of work. The phrasing of the questions makes it hard to make it do what you want it, and there is no expert mode available.

All this to say, avoid yourself a lot of heartache and try really hard to stick to the ACA income bands if that's what you want.

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #17 on: December 01, 2019, 02:57:51 PM »
Right, so this is were it gets fuzzy...

In the last couple of years, taxpayers were bit by the "unforeseen changes in income". That led to bad press, so the IRS came up with a rule that essentially said "look if we can reasonably think you did your best and failed to project accurately, you get a pass".

The other thing that's confusing is that the language on exchanges tend to be about your current income, even though what matters is next year's income. This is fine for most people who don't really get a say in how much they get paid, but not tax-savvy early retirees who can pretty much choose whatever they want. Specifically, in order to qualify for this you need to have provided "accurate" information to the marketplace, and it's really hard to provide "accurate" information to the marketplace when it's your last year of work. The phrasing of the questions makes it hard to make it do what you want it, and there is no expert mode available.

All this to say, avoid yourself a lot of heartache and try really hard to stick to the ACA income bands if that's what you want.
My income dropped from huge to minimal, all I did was estimate the next year's income.  I was never was asked for documentation or proof.  I guess YMMV.

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #18 on: December 01, 2019, 03:51:07 PM »
Another reason to err on the side of underestimating your income: any subsidy repayment is lumped in with your regular tax, prior to credits, in the overall tax computation. This means that non-refundable tax credits (such as the child tax credit, saver's credit, foreign tax credit) can be used to offset the premium subsidy repayment. If a low tax liability would have caused some of these credits to be wasted otherwise, this is money you will receive only if you underestimate rather than overestimate your income.

Thank you for this @seattlecyclone!!!

I happen to be a FIREee on ACA with (probably) three kids in college next year.  Since part of the AOTC and all of the Other Dependents Tax Credit are non-refundable, this is an idea that may improve my tax situation for 2020 by quite a bit.

BicycleB

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #19 on: December 01, 2019, 05:55:25 PM »
The last time I had to document income after leaving a job, I simply provided a letter explaining that I no longer worked at that job, that my income in the next would likely come from withdrawals of retirement funds, and that my best estimate of the amount was $14,000.

In Michigan, I'd be using something like $17,000. I leave a little wiggle room because the big loss is if I get shuffled into Medicaid. I'm probably overcautious by using this "extra" income, but that's what I've been doing. Though in fact I need that amount long term. I only needed the letter one year, after that I used tax info from previous year. I can't guarantee the letter is acceptable; there may have been more flexibility when I started it. Obamacare itself was just starting at the time.

arebelspy

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #20 on: December 01, 2019, 10:31:25 PM »
Another reason to err on the side of underestimating your income: any subsidy repayment is lumped in with your regular tax, prior to credits, in the overall tax computation. This means that non-refundable tax credits (such as the child tax credit, saver's credit, foreign tax credit) can be used to offset the premium subsidy repayment. If a low tax liability would have caused some of these credits to be wasted otherwise, this is money you will receive only if you underestimate rather than overestimate your income.

Thank you for this @seattlecyclone!!!

I happen to be a FIREee on ACA with (probably) three kids in college next year.  Since part of the AOTC and all of the Other Dependents Tax Credit are non-refundable, this is an idea that may improve my tax situation for 2020 by quite a bit.
I always find it so awesome when someone even as experienced as yourself finds new wrinkles to optimize.
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secondcor521

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #21 on: December 02, 2019, 11:48:47 AM »
Another reason to err on the side of underestimating your income: any subsidy repayment is lumped in with your regular tax, prior to credits, in the overall tax computation. This means that non-refundable tax credits (such as the child tax credit, saver's credit, foreign tax credit) can be used to offset the premium subsidy repayment. If a low tax liability would have caused some of these credits to be wasted otherwise, this is money you will receive only if you underestimate rather than overestimate your income.

Thank you for this @seattlecyclone!!!

I happen to be a FIREee on ACA with (probably) three kids in college next year.  Since part of the AOTC and all of the Other Dependents Tax Credit are non-refundable, this is an idea that may improve my tax situation for 2020 by quite a bit.
I always find it so awesome when someone even as experienced as yourself finds new wrinkles to optimize.

It's quite nice to come across these ideas.  The interesting thing for me is that they are really gems of ideas.  Having read and studied financial stuff for a long time, there are few ideas that are new to me.  But, when I come across one, they can potentially earn or save me thousands of dollars.  In fact, you posted a thread a few years ago now that has earned me thousands.

Even if I don't find a gem on any given day, it's still interesting to read.

So I continue reading.

...

On the idea, for anyone considering it, there are a few things to think about:

1.  Yes, the mechanics of the idea work as @seattlecyclone describes.

2.  You have to decide how ethical it is to underestimate ACA income.

3.  There is a limit anyway; if you underestimate horribly, your repayment will be limited.  That limited repayment amount will be the amount that you can use to soak up the nonrefundable credits.  See line 28 of Form 8962 and its related instructions.

...

There is another wrinkle that I've found for those using the AOTC.  For me I already have $4000 of qualifying expenses for the AOTC for both of my kids in college this year.  But if I end up with unused AOTC credit, I can reduce those qualifying expenses (by reimbursing myself for them from 529s) until the unused AOTC credit disappears.  Voila, even more tax efficiency!  (In my case, I have excess funds in the 529s I'm trying to drain.)

...

There really are lots of ideas out there that become apparent once your brain is not all wrapped up in work.

ScreamingHeadGuy

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #22 on: December 02, 2019, 01:57:52 PM »
Another reason to err on the side of underestimating your income: any subsidy repayment is lumped in with your regular tax, prior to credits, in the overall tax computation. This means that non-refundable tax credits (such as the child tax credit, saver's credit, foreign tax credit) can be used to offset the premium subsidy repayment. If a low tax liability would have caused some of these credits to be wasted otherwise, this is money you will receive only if you underestimate rather than overestimate your income.

This is an awesome thing to learn.  Thank you.

Threshkin

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #23 on: December 02, 2019, 09:44:45 PM »
One of the difficulties I have tweaking my income is that traditional to Roth conversions need to be done before the end of the calendar year but I don't get the other data I need to accurately calculate my other income until February or later.  I make due with best guess estimates but it can become a struggle if I under estimate our taxable income from other sources.  I want to minimize my insurance costs while still converting as much Traditional IRA money to Roth each year.

If you haven't submitted your traditional to Roth conversion request yet you should get on it right away.  It can take a couple of weeks to process and the holidays shorten the time available.

3+ years post FIRE and loving it!

smoghat

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #24 on: December 04, 2019, 09:05:13 PM »
We’ve always done Bronze. Silver does’t pay unless you have massive medical expenses. But then we don’t get subsidies. I am offended when I hear people take the subsidies in order to FIRE. To me, that’s like FIRE’ing with income from welfare, but then again that’s my opinion and an uncommon one on this web site.

BicycleB

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #25 on: December 05, 2019, 11:48:59 AM »
Today I read that sometimes Gold plans are cheaper than Silver, despite supposedly having higher actuarial value of payments:

https://www.healthinsurance.org/obamacare/will-you-receive-an-obamacare-premium-subsidy/

seattlecyclone

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #26 on: December 05, 2019, 01:32:22 PM »
Today I read that sometimes Gold plans are cheaper than Silver, despite supposedly having higher actuarial value of payments:

https://www.healthinsurance.org/obamacare/will-you-receive-an-obamacare-premium-subsidy/

This is due to cost-sharing subsidies and a practice called "silver loading." For the first few years of the ACA, Congress reimbursed insurers for the cost-sharing subsidies given to offset deductibles and other out-of-pocket costs for low-income households. When the Republicans took over a few years ago they tried to do everything possible to weaken the ACA. They weren't able to get the votes for a full repeal, but they were able to strike the cost-sharing reimbursements from the budget. That brings us to the present situation where the ACA requires insurers to offer these cost-sharing subsidies to income-qualified folks who sign up for silver plans, but doesn't pay them for the extra costs. It's an unfunded mandate.

Where does the funding for this come from now? Premiums. Some states require insurers to spread this cost across all of their ACA customers, while most allow the extra cost to be factored into the silver plans alone. This is called "silver loading."

I think the joke is on Congress here. Silver plan premiums are still used as the reference point for the premium tax credits across all ACA plans. The sticker price of the second-cheapest silver plan has now increased by $X to pay for the cost-sharing subsidies, but the premium tax credit has now gone up by $X for all households under 400% of the poverty line, whether they go with a silver plan or a bronze plan or even a gold plan. I have a hard time imagining that this maneuver to defund the cost-sharing subsidies will be a net positive for the federal budget.

What does this mean for us as consumers? A few things:
* The premium cost for a silver plan no longer represents the 70% actuarial value of the non-cost-sharing-subsidized version of that plan. It now represents a weighted average of the different values for different customers (94% for people under 150% of the poverty line, 87% for people between 151-200%, 73% for people between 201-250%, and 70% for people making over 250% of the poverty line).
* Should the customer base for a particular silver plan skew heavily toward the 94%/87% group, the premium could easily be higher than for a gold plan from that same insurer, where the premium represents an 80% actuarial value.
* As the silver plans are the only ones "loaded" in most states, those who don't qualify for cost-sharing subsidies will likely find gold plans and bronze plans to be a better value for their money than a silver plan would be. As more unsubsidized silver plan customers realize this and switch to gold or bronze plans in future years, we should probably expect silver plan premiums to approach or even exceed gold plan premiums in more areas as time goes on.
* If you are in the income range where you qualify for the 94% or 87% cost sharing subsidy, the silver plan still represents a very good value for your money and is worth strong consideration.
* If you don't qualify for any premium subsidies and think the 70% actuarial value of a silver plan is the sweet spot for your family, you might want to look into whether any insurers in your area offer non-"loaded" silver plans outside of the exchange. Here in Seattle Kaiser Permanente does this. They have a couple of silver plans just a bit different from their exchange-offered ones, and the premiums seem quite a bit cheaper.

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #27 on: December 05, 2019, 02:38:36 PM »
Excellent post, @seattlecyclone

Question/nitpick, though:  Doesn't whether the state elected to silver-load or not affect your analysis?  As you note, most states (including mine, I'm pretty sure) did silver-load, but for those that don't the analysis probably looks different.

Out of curiosity, I looked briefly and the one Gold plan I could get was more expensive and seemed worse than all of the CSR87 Silver plans from the same insurer.

seattlecyclone

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #28 on: December 05, 2019, 03:43:52 PM »
Yeah, the CSR87 plans should
Question/nitpick, though:  Doesn't whether the state elected to silver-load or not affect your analysis?  As you note, most states (including mine, I'm pretty sure) did silver-load, but for those that don't the analysis probably looks different.

Yes, of course. If your state isn't silver loading then the price distortions I mentioned above won't exist.

Quote
Out of curiosity, I looked briefly and the one Gold plan I could get was more expensive and seemed worse than all of the CSR87 Silver plans from the same insurer.

This makes perfect sense. the CSR87 silver plans should offer better coverage than a gold plan, all else being equal, because the CSR87 plan covers 87% of its customers' overall medical bills, while the gold plan is only rated for 80%.

As to the relative premiums between the two, this will depend on how many people are paying silver prices for a 70% plan compared to how many people are paying silver prices for a 87-94% plan. The more of the latter group you get, the closer to an 87-94% price you have to charge for it. We don't have any silver plans costing more than gold plans from the same insurer here either. There are a couple of gold plans from the cheaper insurers that cost less than silver plans from the most expensive insurers here, but that's hardly an apples to apples comparison.

secondcor521

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Re: Enrolling in healthcare via Healthcare.gov: Bronze or Silver?
« Reply #29 on: December 05, 2019, 08:16:42 PM »
Yeah, the CSR87 plans should
Question/nitpick, though:  Doesn't whether the state elected to silver-load or not affect your analysis?  As you note, most states (including mine, I'm pretty sure) did silver-load, but for those that don't the analysis probably looks different.

Yes, of course. If your state isn't silver loading then the price distortions I mentioned above won't exist.

Quote
Out of curiosity, I looked briefly and the one Gold plan I could get was more expensive and seemed worse than all of the CSR87 Silver plans from the same insurer.

This makes perfect sense. the CSR87 silver plans should offer better coverage than a gold plan, all else being equal, because the CSR87 plan covers 87% of its customers' overall medical bills, while the gold plan is only rated for 80%.

As to the relative premiums between the two, this will depend on how many people are paying silver prices for a 70% plan compared to how many people are paying silver prices for a 87-94% plan. The more of the latter group you get, the closer to an 87-94% price you have to charge for it. We don't have any silver plans costing more than gold plans from the same insurer here either. There are a couple of gold plans from the cheaper insurers that cost less than silver plans from the most expensive insurers here, but that's hardly an apples to apples comparison.

I didn't look too carefully, as I'm deferring the decision to my ex-wife, with whom I still must cooperate to insure our daughter until this May.  But from what I recall the subsidized premium was about $20 higher per month ($270ish to $290ish) and the deductible and max OOP were both multiples higher on the gold plan.

For me I'll probably stick with my CSR87 silver if my daughter is on my insurance and drop to bronze (free after subsidy) if she is switched to her Mom's coverage for next year.  Waiting on ex at the moment but will probably ping her as open enrollment closes in 11 days.