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.