Once upon a time, President Obama told the nation, “If you like your health insurance, you can keep it.” Our insurance company recently sent us a letter informing us that because our policy did not comply with the requirements of the Affordable Care Act, it will no longer be available.
We aren’t the only ones having our policy cancelled. The conservative media is full of outrage over this, exclaiming “President Obama lied!” I was confused when I saw it. This is news? I’m reminded of an old headline from The Onion satirical newspaper, “Politician Accidentally Tells Truth!”
The liberal media counters that policies are being cancelled only because they don’t meet the minimum standards demanded by the ACA, and therefore everybody who has had a policy cancelled will now get better coverage.
But here at Go Curry Cracker, we ignore the media hype, sensationalist headlines, and political ranting and just look at the facts. Let’s do that now
Health Insurance for Permanent Travelers
As permatravelers, we spend little time in the United States, although our home base is in Seattle, WA, and we return there periodically.
We are generally healthy people. We eat a lot of fruit and vegetables, do a lot of walking, and practice good oral hygiene. For the occasional doctor visit or dental cleaning, we just pay cash. We have found health care outside the US to be of high quality and reasonable cost.
So why do we have health insurance at all? There is only one reason: In case we develop an extremely expensive disease. Cancer can cost 100’s of thousands of dollars to treat. In the unlikely event that one of us develops such an illness while roaming the globe, and IF we decided to get treatment in the US, our high deductible health plan would limit our cost of treatment to $17500 per year. For this privilege, we pay the insurance company $2,796 per year, and expect they will not spend a penny of it on our healthcare. We are outside the system, but still need to pay into it
I think of it as protection money, like how you might pay the mafia to prevent them from burning down your home. (I think some people call that extortion.)
Without insurance, previous US laws would have allowed insurance companies to say, “Sorry, that cancer thing you have… that is a pre-existing condition. You will have to pay for that yourself. Or die.” That seems a reasonable, if incompassionate thing for a business to say; and thus we’ve paid our protection money
Affordable Care Act Changes to US Law
Does this change with the ACA? The changes that affect us directly, along with other early retirees and permanent travelers include:
- Minimum Essential Coverage
Certain things that the Department of Health and Human Services (HHS) considers essential must be covered, e.g. maternity care and prescription drugs. Many insurance plans did not cover these “essential services” - An Individual Mandate
Every person in the US must have health insurance or pay a penalty. This increases the size of the risk pool, lowering average costs for everybody (young & healthy people pay more, older & sick people pay less) - Tax Subsidies, the Advanced Premium Tax Credit
Individuals and families with Adjusted Gross Incomes below 400% of the Federal Poverty Line will receive direct subsidies to help offset the cost of insurance. These subsidies can be paid monthly by the government directly to the insurance company - Equal Access to Care
Every US resident can now get insurance, regardless of pre-existing conditions or health history, without penalty. Nobody can be denied coverage or charged more than their healthy peers. Once a person has insurance, full coverage begins immediately without a wait period
How the ACA Changes Impact Permatravelers
How do these 4 main changes affect permanent travelers? Let’s look at each item individually:
- Minimum Essential Coverage
We had health insurance for the sole purpose of protecting our wallets from a major disease, and thus our policy didn’t cover things like childbirth and prescription drugs. The new recommended policy from our insurance company now covers these things, has lower deductibles, and comes with a Health Savings Account option. But it also costs more, increasing in price from $233 a month to $501. This makes sense. I would expect more coverage to cost more (although we don’t need more coverage.)
- Individual Mandate
We already had health insurance, so in theory this doesn’t affect us. If we decided to self-insure, we would have to pay a penalty. In 2014, this is $95 per person or 1% of taxable income, whichever is greater. For the two of us, this would be a total penalty of $190. (Taxable income is Adjusted Gross Income minus standard deduction, personal exemptions, and HSA contributions. This is $26,550 in 2014, meaning we would need to earn more than $45,550 to pay a larger penalty. IRA and 401k contributions would increase this further.) In 2015, the penalty increases to the greater of $325 per person or 2% of income, and in 2016 and beyond it increases to the greater of $695 per person or 2.5% of incomeThere is one very interesting loophole in this whole penalty thing, however. If you pay no federal income tax, then you are not required to pay the penalty. All the more reason to never pay taxes again.
- Tax Subsidies
Subsides vary by state, household size, and income levels. Below 138% of the Federal Poverty Line individuals and families are eligible for Medicaid. Above 400% of the FPL, subsides are eliminated. I used the tool at the Washington State Health Exchange to determine subsidies between those levels, shared in the chart below. (For other states, the Kaiser Family Foundation has a great subsidy calculator.) In our case, for every dollar earned between 138% FPL ($21,404) and 400% FPL ($62,040 for a family of 2), the subsidy is reduced by about $0.13 (effectively a 13% tax.) Unlike the calculations for income tax, Modified Adjusted Gross Income is used to determine the subsidy value, which means all income, including dividends, long-term capital gains, and municipal bond interest are included. In theory, one could tune income levels to maximize total subsidy
- Equal Access to Care
This is the most important change. Everybody has access to coverage, meaning nobody can be denied coverage or charged more for a pre-existing condition, be it cancer or diabetes. But wait, isn’t this the whole reason we have been paying protection money?!Does this mean anybody can have no insurance until they get sick, and then just apply for insurance and start treatment? Wouldn’t that abuse and destroy the system? It would, and to prevent this people are only allowed to enroll during open enrollment periods OR if there is a qualifying life event, which includes getting married, divorced, having a baby, changing jobs, or moving to a new state.In theory, people could still hack the system. Got cancer and need treatment? Get a divorce. Unemployed because you retired early and now you have a brain tumor? Move to a new stateBecause of this option to enroll whenever we return to the system, there is no need for us to continue to pay protection money and carry insurance we have no intention to use
Good-Bye Health Insurance
Effectively immediately, we are cancelling our old health insurance policy and replacing it with NOTHING. Good-bye health insurance
We will continue to pay all of our medical expenses out of pocket as needed. By pursuing this option, we save our $2,796 per year of extortion money and save the US government $3,780 per year in subsidy. It seems like a win win
As an added bonus, we will save an additional $350 in 2013 since we no longer have insurance. If we end up changing our minds, we have until March 31st, 2014 to enroll during the open enrollment period. In fact, everybody in the nation that can purchase from an exchange could decide to not pay for coverage until that date. Just schedule your next doctor appointment for April 1st
Because we pay no taxes, we are also not subject to the penalty due to ignoring the Individual Mandate.
If we were to reside in the US full time, things would be different. Our old insurance company is not participating in the Washington State Health Exchange, and therefore the policy they recommended is not eligible for subsidies. However, the plans on the exchange look similar. Using an estimated income of $30k, which pays for our average $3k a month travel minus a $6,550 contribution to an HSA, the exchange estimates our subsidy at $311.65 per month ($3,780 per year)
The cheapest Bronze plan (no HSA option) costs $48.23 per month after subsidy, or $162.50 for the the cheapest Silver plan (no HSA option.) The plan we like the best is a Bronze HSA plan with a maximum out of pocket of $5250 for $126 per month. A Silver HSA plan with max out of pocket of $1150 costs $235.89. Both options look better than the $233 we pay now
These are all great plans, but if we continue to take advantage of ROTH IRA Conversions and Tax Gain Harvesting, then the subsidy would go away increasing our costs.
In the end, I guess both the conservative and liberal talking heads were both right. We can’t keep our old plan, but we didn’t like it anyway. And yes, we did find something better :)
The Future
Overall, I’m optimistic about the future of healthcare in the US. Bringing 44 million uninsured people into the healthcare system should reduce long term costs, as preventative care is substantially cheaper than dealing with a health problem that has been ignored. And since we already pay for the the health care of the people who can’t afford care (hospitals don’t lose money, after all) this should lower costs
Although the ACA does help address some of the problems with the US health system, there is still a lot to do. I would like to see transparent pricing as in much of the rest of the world, where you know what care costs before you begin. It should be like McDonald’s, the price is on the menu. And US prices are still substantially higher than the rest of the world without providing better care. Perhaps future changes will address this
In the mean time, we will enjoy the lower healthcare costs elsewhere
So if I read this correctly, if you choose to get insurance, the subsidy would be paid for by those who may have less in assets than you, but who make a large enough income to not qualify for subsidies. In addition to paying a portion of your subsidies, they would be paying the full freight for their own health insurance premiums.
Also, don’t the experts say if enough young healthy people like you make a rational decision as you have done and not purchase the insurance, then the system implodes? Seems like those in Washington should have done some more thinking before we got so far into this.
Can’t blame you, you were smart enough to get ahead of the curve and retire.
Hi Mark
As I understand it, the funds to pay the subsidies come from a few different places:
– Hospitals getting Medicare payments will get paid less per service (effectively a reallocation of the existing Medicare tax)
– Businesses with more than $250k profit and workers with more than $200k earned income will pay an additional 0.9% Medicare tax
– Various taxes on health insurance companies, medical device manufacturers, tanning salons, brand name drugs, etc…
~4% of US families report income greater than $200k, and some of them would contribute to the subsidy directly.
For others that make a large enough income to not qualify for subsidies (earn more than 400% of the FPL) they will pay the full cost of their health insurance, but none of that money goes to subsidies. And in return for their payments, they have health insurance
I’m not an expert, but I would agree that if enough young healthy people decide to opt out that the system would implode. But that won’t happen. The current system is modeled off other Individual Mandate implementations, e.g. Romneycare, so there is data and history to back that up. The CBO estimates 2% of the population will pay the fine, e.g. not buy insurance even though they can afford it.
As to politicians and their possible lack of thinking, I can’t really blame them either. It is a very small percentage of the population that can choose to do what we are doing. Here is a short checklist:
– be financially independent
– not work
– pay zero tax (If you pay any tax, even $1, you have to pay the penalty which is particularly prohibitive in 2015 and beyond, better to just buy insurance)
– address all of your healthcare needs outside the United States (where you can afford to self-insure)
I wouldn’t be surprised if a means test is proposed in the future, as that would certainly prevent high net worth/low income people from receiving subsidies
Thanks for adding to the discussion
Jeremy
Thank you for writing this very informative post. I’ve actually been meaning to contact you about health insurance, but this post pretty much covers everything. My wife and I plan to do extensive travel when we hit FI, which can complicate the issue of health insurance. I was hoping to continue with a HDHP, but it looks like we’ll have better options.
If I understand your post, you plan to continue self insuring and only sign up for insurance if you have a serious health condition? I have to confess I would be scared to do the same, but only because of irrational reasons. Buying health insurance has been so thoroughly drilled into me that I would be afraid of not having it, even though I didn’t have health insurance the majority of my life.
I look forward to reading about how things turn out for you guys.
Hi Spoonman
Thank you, I’m glad you found the post to be helpful
If we stay in the US for an extended period, we will get health insurance on the Washington State Exchange, regardless of state of health. I don’t think it wise to self-insure in the US
Everything is more expensive in the US, and not because the care is better:
http://www.healthnewsreview.org/2012/03/comparing-health-care-costs-in-us-and-8-other-countries/
…a hospital stay costs an average of $1,825 in Spain, $5,004 in Germany and an average of $15,734 in the U.S. An appendectomy ranges from an average of $1,030 in Argentina, to $5,509 in Chile, to an average of $13,003 in the U.S…
So let’s say we are in Argentina, feeling bored, and decide to get my appendix removed. I feel fine paying $1,030 for it. Paying $13,003 in the US on the other hand… not so much. And that is average. Prices in the US are completely non-transparent, although Medicare recently did us a favor by publishing prices.
See this example:
http://www.healthnewsreview.org/2013/05/medicare-makes-big-news-with-big-data-dump-on-hospital-charges/
… the cost of treating chronic obstructive pulmonary disease… cost $7k at Lincoln Medical and Mental Health Center in the Bronx, but cost $99k at nearby Bayone Hospital Center in NJ…
So whose to say that a random hospital in the US wouldn’t charge us $53k rather than $13k for the same procedure?
And how much would our US based insurance pay for that appendectomy in Argentina? $0. So there is little point in having it. But in the US, not having health insurance is like playing Russian roulette. It is just a matter of time before you get shot
It’s a confusing subject. Would like to point out a few things:
1. The individual mandate tax penalty seems to be based upon Modified Adjusted Gross Income, not taxable income. http://obamacarefacts.com/obamacare-individual-mandate.php
2. Not filing taxes does mean no tax penalty. However, the tax penalty is taken from tax refunds only – so no refund means paying no penalty. Doubt that penalty ever goes away unless you eventually pay it – but can’t find a concensus on this.
3. Living abroad exempts you from the ACA requirements anyway. The IRS states: U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period. http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
As with any changes in the law, things are confusing. My understanding is different than what you shared in some cases, although the end result is effectively the same. Thank you for helping us all improve our understanding
1. From the link you shared:
“The fee for not having insurance in 2014 is $95 per adult and $47.50 per child (up to $285 for a family) or 1% of your taxable income, whichever is greater.”
It appears that the ACA uses the MAGI to decide the subsidy, but uses Taxable Income to decide the penalty. Either way, it is a small factor except for those with extremely high incomes
2. My understanding is the tax penalty should be added to any tax owed, regardless of whether a refund is applicable. Only when the total tax bill is $0 would the penalty not apply (which is different than owing no tax at filing time because withholding was greater than total tax. In this case I mean the total tax bill is really $0, as it was for us in 2013.) e.g. https://gocurrycracker.com/the-go-curry-cracker-2013-taxes/
3. Agreed. Americans living abroad can continue to insure (or not) as they did before, without penalty. In our specific case, we have been in the US for more than 30 days over the past few years, and this will likely be the case going forward (hard to predict)
Sorry, on point #2, didn’t specifically point you to the second link (on the IRS site) which also detailed the mechanics of the tax penalty:
“The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.”
Still can’t determine whether that accumulates from year to year, or if there might any future added interest or penalities involved in unpaid payments.
Purely as an academic exercise, I would assume it would be treated as any other tax due so interest and penalties would apply
But why not just pay it? (Or better yet, get health insurance?) Were we in the US, this is exactly what we would do
Where is your source for the claim that “If you pay no federal income tax, then you are not required to pay the penalty”? I can’t find anything supporting this on any government website or tax filing instructions. Here’s what I can find:
This page: http://www.irs.gov/uac/ACA-Individual-Shared-Responsibility-Provision-Exemptions has two exemptions from paying the shared responsibility payment that may be relevant. One is if “household income below the return filing threshold” the other is a hardship exemption if “your gross income is below the filing threshold”. Is one of these what you’re referring to? I can’t find any of the other exemption that seems to fit.
That page links to this page: http://www.irs.gov/uac/ACA-Individual-Shared-Responsibility-Provision-Calculating-the-Payment which claims that household income just another name for adjusted gross income. It also has the filing limits. So my interpretation is that you’re exempt if either adjusted gross income or gross income is less than your filing limit, which is $20,300 (since you’re married filing jointly and under 65).
Oh, just to clarify my earlier comment, qualified dividends count towards both gross income and adjusted gross income, even though they’re taxed differently.
At this moment, I’m not sure
Most likely I interpreted it from something I read on http://obamacarefacts.com
The relevant page on that website seems to be http://obamacarefacts.com/obamacare-mandate-exemption-penalty.php. I didn’t see anything about avoiding the penalty if you pay $0 in taxes; I just saw the same exemptions and hardships from the IRS website. I looked in the WayBack Machine to around November 2013, when you wrote this article, and the site looks a lot more sparse, but still nothing resembling the idea that if you pay $0 in taxes you’re exempt: https://web.archive.org/web/20131105053547/http://www.obamacarefacts.com/obamacare-mandate-exemption-penalty.php
In any case, that website is not a government source and carries no legal weight. The best they can do to back up their statements is linking back or quoting the IRS. Note the disclaimer “ObamaCareFacts.com is an independent website run by dogmediasolutions.com located at 702 South Bernard St Spokane WA, 99204. ObamaCareFacts.com is privately owned and is not owned or operated by the US federal or state government.” on the bottom of this page: http://obamacarefacts.com/legal.html
I’ll make a note to review it next time I have the chance.
Also note that Go Curry Cracker carries no legal weight ;)
I knew I should have registered gcc.gov!
So the government requiring you to pay “taxes” because you live in a certain geographic region and if you you don’t pay and decide to defend your property they will throw you in a cage or, even, possibly kill you isn’t like the mafia?
You need to remember that the current cost of healthcare is so high because of high regulations in the health industry. Markets that are free typically see high competition, options to have high quality or lower quality, and great innovation. You don’t see that in medicine because it is so highly regulated.
Someone isn’t allowed to build a hospital because it is too close to another hospital and it would impede on their profits. Does this sound fair? This is only one regulation of many which causes prices to explode. Just like the higher education market here in the US.
Hi Jon. I tend to have a bad memory on these things, but I have a few questions that I hope you can answer that will help me remember. I’ve been hoping for a chance to talk to an expert on healthcare regulation and innovation
I’m always skeptical, in any field, when a very simple explanation is offered that will fix all problems. “Healthcare costs are high because of regulation!” is one example, as it must be more complex than that? Every industry has regulation to a degree, although maybe the major difference is that in most of them consumers have the choice to buy a product or service or not. In healthcare, often the choice is between a product or service and death, not the most pleasant of choices.
My Questions:
Where did you develop your expertise on innovation and regulation in healthcare?
How does the level of healthcare regulation in the US compare to other developed countries? More, less?
Why do Americans pay 2x per capita for the same healthcare services as the next most developed country, with objectively lower results? Why do Americans have lower life expectancy than other developed countries?
Why do Americans pay 10x or more for prescription drugs compared to single payer countries with bulk purchase negotiation?
Why do pharmaceutical companies spend more money on finding alternatives to drugs with soon to expire patents (antidepressants and penis pills) than on solutions for major diseases?
Why do healthcare prices vary drastically between 2 hospitals in the same zipcode? (See Medicare pricing release last year for details) Don’t these hospitals have the same regulations under which they operate?
Why is it impossible to know how much a product or service will cost in advance, as is often the case in other countries?
Are there some examples of reduced innovation due to specific laws in the US that don’t exist in other countries?
If “regulation” is the answer to some of the above questions, please provide specifics, ideally with objective comparisons to other countries. If objective comparisons aren’t available, it would be ideal to view reports from opposing viewpoints, as I try to get information from multiple sources / political parties / news organizations / think tanks, etc… I find this results in a great understanding with reduced rhetoric
Ahh, politically loaded facetious questions are my favorite. I guess this would be like me asking you, “Which is your favorite Ayn Rand novel?” or “What changes have you made to your compound based on the challenges in Waco, TX?”
But yes, I believe there is a difference
Paying for insurance to a private company in which there is zero benefit to anybody (ourselves included, since we aren’t in the US) other than increasing the hooker and blow budget of one executive
vs.
Paying for insurance into a system where 80% of the money goes to pay for healthcare services for my fellow humans
Thanks Jon. All the best,
Jeremy
Yes, you are correct, it isn’t a simple, one item that causes healthcare to be so expensive and insane. I meant that regulation is one thing of many. Of course, I wasn’t writing an entirely thoughtful comment.
So, if you are really interested. I will try to answer some of your questions over the next few months. That is, if you engage civilly and I’ll try and do the same.
Nope, don’t have any. I just know of the obvious ones, like licensing of doctors, government directed boards over doctors which strict regulations, strict regulations of insurance companies to the point of telling them what they can and cannot offer, etc.
Well, it depends on the country. In other countries where it is nationalized they would have more regulation because it is nationalized. Hence the reason you get people from Canada coming to the US for treatment so they can get the treatment in a more timely fashion, especially for life threatening diseases.
Hi Jon
I can always promise to be civil, but I can’t promise to commit the time to a detailed and extended conversation. I’m interested in the topic, but it is one of many interests that compete for time
As an aside, I don’t believe that your comment about people coming from Canada to the US for healthcare is based in fact / statistics (although it is commonly stated to be the case.) Not statistically relevant, but friends of mine working in healthcare in Canada often make jokes about this (again, because the statistics don’t support the claim.)
We are probably now part of the statistics of people leaving the US for healthcare abroad, although that was a side benefit not the main goal
All the best
Jeremy
Jeremy,
The exemption for not needing coverage is if you don’t need to file a Federal tax return at all because your income is so low – it’s not just having no income (through low capital gains/deductions/etc).
From everything I’ve read on the topic, in your situation you are required to have ACA coverage, unless you are outside the US for more than 330 days in a 365 day period (i.e. you can be in the U.S. for a month over a rolling one-year period without needing coverage, if you go for more than 35 days to the U.S., you’ll need coverage).
With that in mind, I’d love a follow up post, or even just a short paragraph in another post, on your new health care plan (i.e. go without and pay the penalty of 2k-ish?, get a bronze or silver plan? What is that cost for your state of residence?, etc.).
Hi Joe
This year, it seems we will be in the US less than 35 days.
Were penalties to apply, based on our 2013 taxes and a 2014 penalty max of 1%, we would be looking at a penalty of about $715
However the majority of our income was optional, for ROTH IRA Conversions and Capital Gain Harvesting. If I chose not to do either of those in 2014, the minimum amount of $190 would apply.
Were we in the US, I would choose to have health insurance coverage, penalty or no. With the high and unpredictable prices for even basic care in the US, it seems the reasonable thing to do. In Washington State, the cheapest Bronze plan (no HSA option) costs $48.23 per month after subsidy, or $162.50 for the the cheapest Silver plan (no HSA option.) These numbers assume ~$312 in monthly subsidy, based on ~$30k in annual income. I would have to decide at that time if ROTH IRA Conversions and Tax Gain Harvesting had acceptable ROI
The statement in the original post text: “If you pay no federal income tax, then you are not required to pay the penalty” is in question. I seem to recall reading that the penalty applied, but the way the IRS collected the payment was by deducting it from taxes paid, and by having $0 tax this method couldn’t be used resulting in zero penalty. I still have not had the time to re-investigate
Cheers
Jeremy
It will be interesting to see what you decide and hear the math breakdown when the penalty hits its max in a few years and you are within the US for more than 35 days (say, two months) – getting health care for the whole year versus paying a penalty. Appreciate the response.
We will cross that bridge if we come to it. I would want some kind of coverage in the US in any case, but haven’t had to think about it yet
Fortunately we are the masters of our schedule
And tax return. ;)
From https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/
In the FAQ at the bottom:
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.
Also, I looked through the the actual ACA law (http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf) to see if I could any specific methodology mentioned in the law about how the penalty tax was to be collected, but all I found was that the penalty would be treated as an assessable penalty under Title 26 › Subtitle F › Chapter 68 › Subchapter B. Looking through that it appears that the penalty, if not paid, would be subject to doubling. So, your $190 would become $380 and keep on doubling year over year, I think. Of course, I still don’t know how it would be collected. and no lien or criminal penalty could be leveraged in accordance with the law.
http://www.forbes.com/sites/kellyphillipserb/2015/02/26/opting-out-of-the-obamacare-tax/
I did just read on this site (https://www.legalzoom.com/articles/what-are-the-penalties-for-not-filing-taxes) that:
If the IRS finds that you owe them money, they will send you a bill called a Notice of Tax Due and Demand for Payment. This bill includes the taxes you owe, plus interest and penalties. Because interest and penalties continue to accrue, you are encouraged to pay your tax bill as soon as possible. The IRS accepts payment by credit card, electronic funds transfer, check, money order or cash.
Seems like you are opting for no insurance. Which is still a bit of a free rider since in the even you do develop something serious you would take advantage of the no pre-existing condition clause and sign up. Which is essentially a guarantee cost for the insurance company that would then be put upon the other premium payers. Imagine if you could get auto insurance only after you crashed.
I dont know how you can call your simple high deductible plan extortion. It was doing exactly as promised until the ACA decided it knew better.
Tongue in cheek, George. Tongue in cheek
What would you advise we do? I could buy insurance in the US now, with the knowledge that we won’t ever use it. We would spend a few hundred a month for that, no big deal. But I don’t like the part where we would get a subsidy for about $3,000 per year from tax payers
I’m open to suggestions
Thank you for your insights. In our path towards financial independence and early retirement, we’re examining our expenses. The employer based medical insurance we have for our family is 10% of our annual income. Ouch! Sure would be nice to pay less, especially since we barely use it!
Insurance question –
are you saying that by paying only $2,796 per year, you are limiting your liability to a maximum of $17,500 per year?
If so that’s awesome, I am just wondering what happened to all those people who went bankrupt because of cancer?
Just trying to understand what I am missing here?
Some people don’t have insurance. Others may come up against a lifetime maximum on their policy
But most people just don’t have $17,500 plus cost of living expenses
Thank you so much.
What type of insurance policy do you have that allow you to pay $2,796 premium that limit your liability to a maximum of $17,500 per year.
Any plan on the Health Exchange would suffice. This is the very definition of insurance
Another interesting advantage of ACA, If you are overseas 330 days you don’t pay a penalty etc as discussed before for not having a qualifying insurance policy. Now if you were to become seriously ill and wanted US healthcare, you are eligible for a special enrollment period (SEP) and can buy insurance on the exchange effective the day you arrive back in US, The special event that permits this is the “permanent move” rule which permits buying insurance any time of year if you move to another state or move back from outside US. Moving back to US does indeed qualify as a QE (qualifying event) and you can use the SEP (special enrollment period). Seems too good to be true. I carefully verified that moving back to US is a QE entitling you to SEP. The govt CMS office which regulates all this ACA positively confirms this in their rules which you can find with some effort online, So there is another benefit of not buying insurance on the exchange but if you need it simply return home permanently and you can pick the policy you need even before arriving back in US. Just be sure you were out of US 330 days. You can even qualify for subsidy and cost sharing by keeping income in the 100% to 250% FPL range. Its a perfectly legitimate consequence of the ACA.
This would also work for any US resident that got very ill and wasn’t happy with their current plan. For example if you were diagnosed with a very rare illness and the world’s leading specialist happened to be in a different State. Under most plans, care in a different State is considered out of network and would have different maximums, deductibles, and co-pays, perhaps even unlimited. Or you could just permanently move to the State where the specialist resided and get new coverage. Divorce would also be a qualifying event.
It’s a bit inefficient how each State has completely different exchanges and coverage. Hopefully this improves in the future.
I underestimated the importance of subsidies this year, I thought I’d have to be much poorer. And I wasn’t even sure what my income would be this year (I am new at retirement) so I chose to get the credit with filing. Now I realize that since I plan on being below the 15% bracket that puts me at about 315% of FPL and I’d get about a 35% subsidy, which given the premium increase I could probably pay less next year (of course with the subsidy). But regarding the “hacks”: I am not worried about an expensive illness (I’d go to South America for long term care), what would you do in case of an accident (say a car accident?). You can’t move to another state to get surgery… Still debating the options.
Regarding my earlier comment and question to an earlier post, I learned that you have to be outside of the US for at least 330 days a year to escape the mandate, so I can’t escape it…
PS Below 138% of FPL you get Medicaid not Medicare. The link to the WA St page is broken.
If we were in the US, we would have insurance on an exchange. Who knows if that accident will cost you $10k or $10 million? There is no hacking the lack of price transparency or cost control in the US.
Later, you’ll come across two posts:
A more detailed review of Obamacare subsidies:
Analysis of the Outside the US Exemption
Thanks, I fixed the link and the typo.