We've FIREd, so our income in 2019 will be derived from Roth IRA conversions and long term capital gains we elect to create through our taxable accounts. Next year, the only insurer in our state, Blue Cross Blue Shield, has made some changes to their Silver plans that gives us a pretty wide range of options for how we want to handle insurance. The Second Highest Cost Silver Plan, which is what our income-based insurance premium amounts are based on, includes an out-of-network maximum out-of-pocket amount. The cheaper Silver plan does not have an out-of-network max OOP amount. Of course we understand that if we get hit with an out-of-network medical emergency it's likely that we'll be balance billed for whatever our insurance won't cover so I'm not sure how much this would matter. The good news is our BCBS insurance is in-network across the entire country if we use facilities in other states that are in-network with their local BCBS network.
A benefit of going with the cheaper Silver plan is that our income can be higher while we still pay nothing for health insurance premiums because our ACA subsidy is based on the higher cost Silver plan. After running the numbers using the cheaper Silver plan, we could declare $22,000 more in capital gains while still paying no insurance premium. We'd pay state tax on that money, but not federal tax because we're in the lowest two tax brackets where capital gains are taxed at 0%. The trade off for this increased income is significantly higher deductibles and maximum out-of-pocket values on our health insurance. We are not expecting any significant healthcare expenses next year, and both plans have co-pays for regular doctor visits so it would take something like blood tests, MRIs, or hospital stays to run up the deductible.
Income | Roth conversion | Capital gains | Ins. deductible | Ins. Max OOP |
$31,170 | $21,400 | $0 | $500 | $1,200 |
$41,560 | $21,400 | $12,000 | $1,200 | $5,000 |
$51,950 | $21,400 | $22,000 | $8,000 | $12,800 |
I'm not sure if we should take the more expensive Silver plan and have a limit to any potential out-of-network costs (that the insurer would cover) or if we should take the cheaper plan and then consider having a higher income with the potential for higher out of pocket healthcare costs during the year.