COBRA looks like the better choice for me. Am I missing something?

[seaturtle]

Hi there! I was an occasional MMM-reader about a decade ago, started lurking in the forums about 6 months ago (when I hit my rough FIRE number), and quit my job at the start of last month. I am expecting to go back to paid work eventually, though probably not this year. I'll post a full case-study at some point, but the pressing thing right now is health insurance since I'm closing in on the 60 day deadline to sign up for a marketplace plan.

I'm 34F, based in WA, and mostly healthy except for some pesky anxiety. I finally found a therapist who I like, but she doesn't take insurance. However, my former workplace's PPO plan reimburses for about 60% of the cost, which looks like it will make COBRA the right choice for this year.

Other than therapy, my expected healthcare usage is 1 annual checkup (with bloodwork), and 1 dermatologist visit (skin cancer runs in the family). I already did the checkup so the dermatologist is all that remains for this year. Before I quit I was also going to PT every week as part of recovery from a surgery I had 2 years ago, but my PT agreed that at this point it would be more beneficial for me to consistently do my exercises at home than continue to come in for appointments (I was still going because I wasn't making time for it otherwise).

Projected income and deductions:

• 42500 W2 income for Jan+Feb
• +5000 interest (using 2023 numbers)
• +8000 dividends (using 2023 numbers)
• - 12700 401k contribution
• - 2625 HSA contribution
• =~40,000 taxable

Basic COBRA vs. Bronze plan stats:

	COBRA (PPO)	Lifewise Essential Bronze (EPO)
Monthly Premium	$650	$140
Remaining deductible	$757.05 (Full deductible was 1750, but have already spent 992.95)	$6500
Out of Pocket Max	$2750	$8900
Copay/Coninsurance	10% coinsurance after deductible.	$50 copay for primary care, 35% coinsurance after deductible.

Expected cost for rest of year on COBRA plan: $10914 ($10894 for just premiums+therapy) 

• Premium: 650*10 = 6,500 
• Therapy (out of network): 4394
  
  • Total cost per appointment is $260. $153 of that counts towards deductible. After deductible, my cost per appointment is $106.
  • To reach deductible: 757.05/153.39 = 4.9355 appointments (completed via 4 February+1 March appointments)
  • March: 260 + (106*3) = 578
  • Rest of year: (106*4)*9 = 3,816
  [li]Add $20 for post-deductible dermatologist appointment (last year it was $17)
• 6500+4394+20 = 10914

Expected cost for rest of year on example Bronze plan:$11690 ($11520 for just premiums + therapy)

• Premium: 140*8 = 1,120  (starting from May 1) 
• Therapy: 260*4*10 = 10400  (Starting from March 1 for fair comparison. Not covered at all by any ACA plan)
  
• Dermatologist: $170 (Estimate based on cost after in-network discount last year). Might be $50 if it counts as "primary care" (no deductible) instead of "specialist" (hits deductible)
• 10800+1120=11920 +170 = 12090

So it looks like as long as I'm going to therapy every week, COBRA is the better deal? I am hoping to eventually downshift to appointments every 2 weeks (or even once a month), but my anxiety changed shape when I quit (better in some ways, worse in others) and I'm now working through a program that will take at least 11 more weeks, so it's not going to be any time soon. If I switched to fortnightly appointments before September then the exchange plan is slightly cheaper, but I don't know that I want to bet on that.

Some other thoughts in favor of COBRA:

• Lower out of pocket max, by at least $4500 (depending on the Bronze plan)
• National network, with some out-of-network coverage (vs. local-only network with no OON coverage one the ACA plan)
• I keep my HSA and don't have to worry about unwinding what would be an overcontribution if I only had it for 2 months (there is a bronze HSA plan with $10/mo more in premiums that could solve this though)
• I don't have to worry repaying premium subsidies if I happen to make more income. The ACA plans are a bad deal if I have to pay sticker price.

Is there anything I'm missing?

[secondcor521]

Does the ACA plan premium include the ACA subsidy?  Based on your information and a guess on ZIP code, the subsidy should be included in your analysis:  https://www.kff.org/interactive/subsidy-calculator/#state=wa&zip=98102&income-type=dollars&income=40000&employer-coverage=0&people=1&alternate-plan-family=&adult-count=1&adults%5B0%5D%5Bage%5D=34&adults%5B0%5D%5Btobacco%5D=0&child-count=0

Have you looked at a Silver plan with CSRs?  If you can get your AGI under 250% of FPL, you might find a Silver plan that has much lower deductible / OOP max.  This might partially address your first bullet point at the bottom of your post.  At your age, the subsidy (see KFF calculator above) probably makes a Bronze plan free and a Silver plan fairly cheap.

I'm pretty sure all ACA plans have to provide emergency / urgent care when out of network.  May be limited though, and your point there is generally valid.

On the repayment aspect:  First, repayments are limited if your AGI is below 400% FPL (which yours probably will be this year) - see line 28 of Form 8962.  Second, if you're making more money, then you probably have gotten another job, hopefully with health insurance.  In that scenario, you can stop the ACA plan and would not have to pay full sticker price.

[lhamo]

Is your current monthly/quarterly income limited to the dividends?  If so then you are below the cutoff for Apple Health (WA state Medicaid).  Apple Health looks at regular monthly income, and once you get on it you can stay on it as long as your monthly income does not exceed the limit for more than two months in a row.  This is true even if your annual income goes above the limit.  Crazy system, but I've been on Apple Health since 2016 and have stayed on even through a house sale where my capital gains taxes put me well above the annual limit -- went in to change to an ACA plan and was told a one time bump in income does not get you kicked off.

A Healthcare Navigator can get you signed up immediately.  Even if your therapist doesn't take Apple Health (usually only big community mental health agencies take it it my experience), your out of pocket costs for therapy will be much lower than the Cobra premiums.

In the Seattle area I have found the Molina Apple Health network to be very robust and sufficient for my needs.  They have UW medicine included and I have been able to continue to see specialists at Harborview (eye and sleep stuff) and Fred Hutch (cancer screenings) without significant issue, though waits for appointments can sometimes be long.  Neighborcard health offers basic dental.

[seaturtle]

I think on further reflection the main thing isn't the cost, it's that I'm not ready to let go of my current providers / being able to go where I please if something goes wrong. I'm still feeling sluggish after nearly two months off work, and while I'm fairly certain that I am just burned out and will recover, the hypochondriac part of me that worries there's something else I haven't identified yet.

@secondcor521, yes the premium I listed ($140) includes the subsidy of $214. I could get the cheapest HMO Bronze plan for $70, but the plans with a decent network started at $140.

Re:silver plans, I could theoretically reduce my income via an IRA deduction and just barely squeeze into the 200-250% FPL range. It's tempting, but from what I understand I *also* need to manufacture some income for April in order to avoid getting automatically placed on Medicaid, so it gets dicey. It's good to know that the APTC repayment is limited - repaying would be no problem if I picked up a full-time job, but I was mostly concerned about the case where I make a couple thousand dollars doing odd jobs over the summer, and it puts me over 250%. I also can't seem to find anything about repaying cost-sharing reductions, which feels crazy to me, but I guess makes sense from a not-worth-the-paperwork perspective?

So...I think I'll stick with my COBRA security blanket for now, but re-evaluate in September. Depending on how I'm feeling, I can either optimize income for silver plan subsidies in time for open enrollment, or get ready to take the leap to Medicaid. It's good to know that UW Medicine accepts Medicaid - some of my friends have had good experiences there, so that makes it a little less scary (even though it feels like no one else takes it).

[secondcor521]

I also can't seem to find anything about repaying cost-sharing reductions, which feels crazy to me, but I guess makes sense from a not-worth-the-paperwork perspective?

CSRs are not repaid / reconciled.