Author Topic: Non-ACA-qualified term health insurance questions...  (Read 3029 times)

Pancake

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Non-ACA-qualified term health insurance questions...
« on: December 14, 2016, 01:45:58 PM »
Hi Everyone, question about the ACA as seems to be a popular topic lately...

I couldn't find anything specific to my situation.  I recently semi-FIRED and didn't opt for COBRA since an HSA-qualified ACA plan was less than half price, since my wife and I are healthy mid 30's healthy kidless people the high deductible is no issue.  Well, come 2017 that plan is going bye-bye as are almost all plans for my county (Chelan county in WA state).  There is now nothing left but a few overpriced HMO plans, none of which are HSA-eligible.

So my question, for two healthy people like us, does it make sense to buy a term health insurance plan and pay the tax penalty for it being non-qualified?  Yes, it has limitations, but we are healthy, not pregnant and cannot become so, and have no pre-existing conditions.  It is significantly cheaper ($100 vs $650 for similar coverage with $2m lifetime max and 11mo term) so even with the tax penalty of $1650 (estimated based on our predicted 2017 AGI) it comes to $263/mo.  Yes, I am maxing i401k and doing everything to get MAGI down, but our self-employed income is a bit too high to get a subsidy.  However, it would take quite a subsidy to make up that price difference.  Since I cannot get an HSA-eligible ACA plan I can't contribute to that in 2017 regardless.  Unless you can contribute to HSA from any high deductible plan, but I'm pretty sure you cannot and it has to be ACA-compliant.

It seems like this makes sense and then just wait to see how the whole Trump ACA situation unfolds for 2018.  Anybody disagree?

stoaX

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Re: Non-ACA-qualified term health insurance questions...
« Reply #1 on: December 14, 2016, 04:18:23 PM »
Sorry to hear about the somewhat sucky situation you've got going on.  You are right that to contribute to an HSA it must be both tied to an ACA and HSA compliant plan.   

I can't really comment on your plan of action...it sounds like you still have protection but the costs of even a typical medical problem that hits healthy people, like a broken ankle, can be quite a bit more than most people would expect.   

Pancake

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Re: Non-ACA-qualified term health insurance questions...
« Reply #2 on: December 14, 2016, 04:26:04 PM »
Thanks for the reply, good to know about the HSA part.

Yes, I know it would not be fun to pay out of pocket for an injury, but I'm pretty conservative and carry (too much of) an emergency fund so we'd be well covered in that department.  I'm just wondering if there are any hidden issues I don't know about like I won't qualify for something in the future if I choose this method.

Jammu

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Re: Non-ACA-qualified term health insurance questions...
« Reply #3 on: December 14, 2016, 10:08:26 PM »
Your plans are sucky (I looked).

I think he pays for the broken ankle out of pocket even with the offered plans on the exchange.

Looks like the savings are about 4k for the year? Assuming no medical situations. Your strategy makes sense to me.

I think the continuous coverage thing ppl are talking about could potentially be an issue if they don't grandfather non compliant plans. But nobody knows for sure.

« Last Edit: December 14, 2016, 10:10:29 PM by Jammu »

Paul der Krake

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Re: Non-ACA-qualified term health insurance questions...
« Reply #4 on: December 14, 2016, 11:56:15 PM »
Your analysis is good. Assuming your penalty projection is correct, I would probably do the same in your shoes. $650/month for 2 adults and a high deductible is not affordable.

msilenus

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Re: Non-ACA-qualified term health insurance questions...
« Reply #5 on: December 15, 2016, 12:13:43 AM »
How sure are you that the plan pays out if you get really, seriously, million-dollars-in-claims sick?

During the ACA congressional hearings one of the major insurance company CEOs said that they rescinded "only" 1% of plans per year. He was trying to make that sound like a small number. It's not.  They don't seriously check the applications until they're asked to write big checks.  So that's when you find out if you actually have insurance.  Mull that over.

Are you sure you don't have any pre-existing conditions?  I read a story about a guy who got his health care rescinded for failing to declare that he'd taken Accutane as a kid.  "Sorry.  Lied on your application.  Now you're expensive, so we're dropping you."

Here's another story along those lines, that shows how aggressive insurance companies can be about stopping loss on expensive individual-market claims:
http://www.cnn.com/2009/POLITICS/06/16/health.care.hearing/

Everything in that story is flat-out illegal and nonsensical for ACA plans, because pre-x isn't a factor in coverage.

EDIT: http://articles.latimes.com/2009/jun/17/business/fi-rescind17
« Last Edit: December 15, 2016, 12:16:32 AM by msilenus »

Pancake

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Re: Non-ACA-qualified term health insurance questions...
« Reply #6 on: December 15, 2016, 12:41:55 PM »
This is why I posted it...  I started looking around at reviews on the only company offering the term insurance in my area (HCC) and let's just say they are not great.  Full of horror stories about not paying for anything due to pre-existing conditions.  Apparently broken leg while snowboarding = pre-existing condition.  So I guess I just pay $6000/yr for an ACA plan knowing that it's only useful if I have a major incident costing more than the $14300 out of pocket max.  $20,000min for a major event.  Hey at least I can get my annual physical for "free!"  haha

msilenus

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Re: Non-ACA-qualified term health insurance questions...
« Reply #7 on: December 15, 2016, 01:05:41 PM »
This is why I posted it...  I started looking around at reviews on the only company offering the term insurance in my area (HCC) and let's just say they are not great.  Full of horror stories about not paying for anything due to pre-existing conditions.  Apparently broken leg while snowboarding = pre-existing condition.  So I guess I just pay $6000/yr for an ACA plan knowing that it's only useful if I have a major incident costing more than the $14300 out of pocket max.  $20,000min for a major event.  Hey at least I can get my annual physical for "free!"  haha

Apparently the actuarial value of being able to sell fake insurance is about $500/month. :D

FWIW: I'm not certain self-insurance is wrong.  I mean: it's a huge risk.  But .... personally ... I'd probably do that before buying a non-compliant junk-plan. 

I also don't play the lottery.

Paul der Krake

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Re: Non-ACA-qualified term health insurance questions...
« Reply #8 on: December 15, 2016, 01:09:16 PM »
I would take insurance reviews with a grain of salt. The internet is filled with people who have an axe to grind against insurance companies and will write horror stories either by spite or because they didn't understand their policies. There is a department of insurance to oversee every licensed company after all.

Pancake

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Re: Non-ACA-qualified term health insurance questions...
« Reply #9 on: December 15, 2016, 02:31:21 PM »
Agreed, but I read the reviews with that in mind.  It's pretty obvious when someone doesn't understand their coverage or didn't read into it enough, but most of the bad stories are about being denied for pre-existing conditions going years and years back even though they aren't remotely related to the current condition.  Also a lot of complaints about contacting them being very difficult, claiming they didn't receive mail or info from doctors (despite the doctors having evidence of sending), or "our fax machine was broken that day" type of stuff.  Pretty much lying and dragging things out so long that people give up or sue them.

I read bad reviews on the ACA providers too, but they were more about favorite doctors dropping off the network, or dumb customer service people.  Nothing about not paying which is the big deal with insurance.  I've had to deal with that before with life insurance, lawyer, the whole deal, and I'd prefer to not have to do that again if something happens.

I did find an HMO "choice" bronze plan for $430/mo for 2 people on the exchange.  Not too bad, I guess.  It has high deductible and no HSA, but PCP visits are $35 copay with no deductible and doesn't require referrals to see a specialist which was always my main complaint about HMOs.  Basically it's catastrophic coverage with a minor bonus for just-in-case minor events.



NoNonsenseLandlord

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Re: Non-ACA-qualified term health insurance questions...
« Reply #10 on: December 24, 2016, 12:09:17 PM »
Worse case, you get sick and sign up the next enrollment period.  You only pay a penalty of you have a refund is what I hear, I am not sure.

No one will go without healthcare.  Whether they pay or not.  Your auto insurance will pay for most auto injuries.

Of course, it could be catastrophic, it depends on how lucky you feel.

NCGal

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Re: Non-ACA-qualified term health insurance questions...
« Reply #11 on: December 30, 2016, 06:28:20 PM »
Have you researched healthcare sharing ministries? With the major ones you'd be exempt from the penalty. We signed up for ACA but looked at Liberty Healthshare as a backup. Google health share ministries comparison.

Dusty Dog Ranch

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Re: Non-ACA-qualified term health insurance questions...
« Reply #12 on: December 30, 2016, 08:27:56 PM »
I can't add much, but thought I'd wave hello from Okanogan County. I can sort of commiserate: in theory I have multiple choices of insurance carrier at work, but only one actually operates in NCW.

mousebandit

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Re: Non-ACA-qualified term health insurance questions...
« Reply #13 on: December 30, 2016, 08:48:03 PM »
I hadn't heard the phrase "term health insurance" before.  What exactly is that, and how does it differ from regular health insurance policies?  I understand term life insurance vs whole life. 

Thanks!