My Health Insurance Strategy Makes Sense, I think..

[jschaefs]

Alright Mustachians, I'll be interested in getting your take on this..

I work for a small company that is providing $200 month in lieu of health insurance. I am 38 and not a big consumer of health care. I don't have prescriptions nor any pre-existing conditions. I am in good health, exercise regularly and have a good diet.

All of the ACA-compliant health plans I have looked at run over $200/month ($218 is the cheapest I found). I currently am on a non-ACA-compliant catastrophic plan that runs me $60/month. In my mind, this is sufficient. The penalty for non having an ACA compliant plan will be $738 for me in 2016. Going with the non-ACA-compliant catastrophic plan and paying the penalty will total: $1,458. Purchasing the ACA-compliant plan will come to $2,616. I should note that the ACA-compliant plan has a high deductible and does not seem like it provides much more coverage or benefit than the non-compliant plan. Am I missing something? Has anyone else went this route?

I should note that part of my motivation for going with the non-compliant plan is that I'd like to take the money I save and use it for other health care priorities such as dental work.

[jim555]

Based on your numbers (738/.025=29520*.08=2361/12=196.75) you should pay no more than $196.75 per month for the second lowest cost silver plan with the subsidy. 

What are the differences between the catastrophic plans?  I would make sure it had no $$ limit on the coverage.  Maybe you can get an exemption if all plans available are not affordable?

[jschaefs]

Thank you and good question. The non-compliant catastrophic plan does have a limit of $2 million and a $5,000 deductible. When I went on the exchange, the cheapest plan I found was $218 for a bronze which included a subsidy. That plan has a $6,300 deductible. Perhaps I'm missing something, but not seeing anything cheaper than that here in ND.

At the end of the day, it seems the risk factors in going with the non-compliant plan are worth the much lower premium. Especially considering the compliant plan is also a high deductible product. Plus, it frees up money in my health care budget to take care of other priorities such as dental work.

[Tom Bri]

I work for a company that sells these catastrophic non-ACA plans. Some are great, others are not.
Can you give me any coverage details? For example, are there fixed dollar limits for particular types of services? For example, in your benefits section, does it say anything like: Max benefit paid to an outpatient surgical facility $1000/day.
If it has these limits, then I wouldn't want to have that plan.

On the other hand, some of our plans are true major medical plans, just with very high deductibles and no preventative benefits. These plans are not bad.

[letired]

Does any of your options allow for HSA accounts? It seems like something to look into to maximize the advantage of whatever plan you go with.

[Axecleaver]

Double check the math on the penalty. A lot of people get this wrong. Penalty is the higher of 2.5% of your gross income above the tax filing cutoff of $10,150, or $695, whichever is higher. Details here:
https://www.healthcare.gov/fees/fee-for-not-being-covered/

Consider getting an HSA compliant plan and establishing an HSA. Contributions to a health savings account are tax-free and can be used for either medical expenses (dental qualifies) or saved until retirement. The contribution limit in 2016 is $3350.

[Tom Bri]

However, see https://www.healthcare.gov/fees/fee-for-not-being-covered/

If I'm unemployed, do I have to pay the fee?

    It depends on your household income. If insurance is unaffordable to you based on your income, you may qualify for an exemption from the fee. Other exemptions are based on low income too. Learn more about exemptions and how to claim them.

What happens if I don't pay the fee?

    The IRS will hold back the amount of the fee from any future tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee.

[nobodyspecial]

As a poor confused Canadian can I just ask - was there any point in the proposing of the health system where anyone stood up and just asked WTF ?

[jorjor]

However, see https://www.healthcare.gov/fees/fee-for-not-being-covered/

If I'm unemployed, do I have to pay the fee?

    It depends on your household income. If insurance is unaffordable to you based on your income, you may qualify for an exemption from the fee. Other exemptions are based on low income too. Learn more about exemptions and how to claim them.

Most people who would be unemployed would also be eligible for premium subsidies. Those subsidies would limit the second lowest cost silver to about 9.5% of income (for the 300-400%, actual percentages is indexed year-to-year). That person would be able to buy down to a bronze plan that most likely costs less than 8% (again, indexed by year) after premium credits. That person would have a plan available to them that would disqualify them from that particular income exemption. Assuming the OP's calculation of their penalty is correct, they have "affordable plans" (by definition of the law) available to them that disqualify them from the income exemption

There is an exemption that came about from the "If you like your plan, you can keep your plan!" arguments that one can claim pretty easily.