Author Topic: Affordable Care Act/Obamacare/HSA question  (Read 3646 times)

ecochica

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Affordable Care Act/Obamacare/HSA question
« on: October 09, 2013, 05:30:21 PM »
I'm hoping folks can help me with an ACA plan question, as I just started looking at plans in our area.

Previously, we paid $521/month for a high deductible, HSA-qualified plan, and we maxed out our HSA contribution.  Under the ACA, an HSA plan would cost us $723/month.  There is a higher deductible, cheaper plan available: $597/month, but no HSA.  My hunch is that it's worth it to pony up for the HSA eligible plan.  $200/month (over our current plan) is a lot of extra money for us and will reduce our ability to max out our HSA contributions, but I'm guessing that even if we reduce our HSA contribution by a bit, reducing our taxable income somewhat through an HSA will be better for us financially?  (And... now that I think about it... may increase our ACA tax credit as well.)  Thoughts?

Numbers Man

  • Guest
Re: Affordable Care Act/Obamacare/HSA question
« Reply #1 on: October 09, 2013, 05:58:47 PM »
Here are the numbers, it depends on whether or not you have a sickness. Also, the higher your tax bracket, the better the $723 looks. BUT, you have to be committed to maxing out the HSA contribution. I would pick the $597 monthly plan.

                                                                                 $597 Plan                                           $723 Plan

Yearly cost                                                                 $7,164                                                $8,676


Tax Benefit of
Contributing $6,550
and assuming 28.0% federal tax Bracket
Which is income from $143k to $217k                          ---0----                                               (1,834)

Net Out of Pocket                                                        $7,164                                                $6,842     







chasesfish

  • Magnum Stache
  • ******
  • Posts: 3176
  • Age: 37
  • Location: Texas
Re: Affordable Care Act/Obamacare/HSA question
« Reply #2 on: October 09, 2013, 06:13:07 PM »
I'm hoping folks can help me with an ACA plan question, as I just started looking at plans in our area.

Previously, we paid $521/month for a high deductible, HSA-qualified plan, and we maxed out our HSA contribution.  Under the ACA, an HSA plan would cost us $723/month.  There is a higher deductible, cheaper plan available: $597/month, but no HSA.  My hunch is that it's worth it to pony up for the HSA eligible plan.  $200/month (over our current plan) is a lot of extra money for us and will reduce our ability to max out our HSA contributions, but I'm guessing that even if we reduce our HSA contribution by a bit, reducing our taxable income somewhat through an HSA will be better for us financially?  (And... now that I think about it... may increase our ACA tax credit as well.)  Thoughts?

Wow, that's terrible!

I think both options are terrible, can't you keep your old insurance if you like that?

ecochica

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Affordable Care Act/Obamacare/HSA question
« Reply #3 on: October 09, 2013, 06:19:00 PM »
Thanks Numbers Man.  I am NOT a Numbers Woman, so I appreciate that.  So if our income is significantly lower (~$80K), how does that tip the scales?

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3176
  • Age: 37
  • Location: Texas
Re: Affordable Care Act/Obamacare/HSA question
« Reply #4 on: October 09, 2013, 06:25:59 PM »
Umbels Man - I think it's gets a little better, HSAs are also pre-FICA

Numbers Man

  • Guest
Re: Affordable Care Act/Obamacare/HSA question
« Reply #5 on: October 10, 2013, 10:57:10 AM »
Without knowing your tax situation. The back of the envelope calculation would be that you would get a tax credit of $983 with you being in the 15& tax bracket instead of the 28% tax bracket. You would have to pay $723 a month or $8,676 a year plus the HSA contribution of $6,550 (I'm assuming you are married) to get a tax benefit of $983. So you would be paying $14,243 out of pocket or about 18% of your income, albiet the $6,550 would be sitting in an HSA account.

Therefore, the $597 plan would be more economical since you would be paying $7,164 a year or about 9% of your income.

Insanity

  • Handlebar Stache
  • *****
  • Posts: 1026
Re: Affordable Care Act/Obamacare/HSA question
« Reply #6 on: October 10, 2013, 11:04:15 AM »
Without knowing your tax situation. The back of the envelope calculation would be that you would get a tax credit of $983 with you being in the 15& tax bracket instead of the 28% tax bracket. You would have to pay $723 a month or $8,676 a year plus the HSA contribution of $6,550 (I'm assuming you are married) to get a tax benefit of $983. So you would be paying $14,243 out of pocket or about 18% of your income, albiet the $6,550 would be sitting in an HSA account.

Therefore, the $597 plan would be more economical since you would be paying $7,164 a year or about 9% of your income.

I think it depends on what the deductible difference is and how likely that deductible is of being met. 

Numbers Man

  • Guest
Re: Affordable Care Act/Obamacare/HSA question
« Reply #7 on: October 10, 2013, 11:14:44 AM »
Without knowing your tax situation. The back of the envelope calculation would be that you would get a tax credit of $983 with you being in the 15& tax bracket instead of the 28% tax bracket. You would have to pay $723 a month or $8,676 a year plus the HSA contribution of $6,550 (I'm assuming you are married) to get a tax benefit of $983. So you would be paying $14,243 out of pocket or about 18% of your income, albiet the $6,550 would be sitting in an HSA account.

Therefore, the $597 plan would be more economical since you would be paying $7,164 a year or about 9% of your income.

I think it depends on what the deductible difference is and how likely that deductible is of being met. 

I use insurance for catastrophic events. A difference in deductible is a variable expense that only needs to be breached when there are illnesses. In my years of raising kids, I have only hit the deductible about 4 times (3 times due to childbirth) over the last 30 years. So THE op should just write a check to account for any higher deductibles. I would be looking at the total outflow from my budget if I were the OP. BTW - I just read the original post and have no idea what an ACA Credit is.