Unbelievably Great Healthcare Insurance

Could the ACA be right for you too?

The ACA (Affordable Care Act, also known as "Obamacare"), provides us with great health insurance at an unbelievably low rate. We're sharing what we've learned about it, in case you find the info helpful.
Remember: We're just a couple of yahoos stumbling through this. We're not experts or advisors :)

HOW IT WORKS (as far as we can tell):

• Each state has an ACA marketplace (or "exchange"). In Colorado it's called "Connect for Health Colorado".
• Go to the ACA marketplace website for your state and
  -- Set up an account
  -- Fill out the application including your projected income and other info
  -- Select a health insurance plan from the listed options (there are lots in Colorado)
• Your projected income determines the value of the "Advanced Premium Tax Credits" you will receive.
  These "tax credits" are paid directly to the insurance company to cover a portion of your premium each month; you pay the remaining balance of your premium.
  ​(e.g. We qualify for $2,028.46/month in "Advanced Premium Tax Credits", and pay the remaining $111.76/month.)
• Your projected income also determines your "Cost-sharing Reduction" benefits. 
  These benefits lower what you pay when you receive healthcare by reducing deductibles and out-of-pocket costs.
  (The reductions can be drastic. e.g. Our individual deductibles are reduced from $5,000/year to $100/year.) 

Our Experience
We've found the sign-up process and "system" to be complicated, and hope that the info provided here might make it easier for you. The first year we used the ACA (2020), Jim spent ~40 hours on the phone* getting it all to work. This year we dug into the details and feel like we have a much better understanding of the hows and whys. Also, this year our rates are 25% lower than last year and lower than they've ever been. We wonder if maybe the "Infrastructure Act" has something to do with this, but don't really know. 
* In hindsight, this was the result of us asking too many questions. We should have just filled out the online forms and shut up.

INCOME Determines Monthly Premium and Some Benefits

• "Income" is defined as MAGI (Modified Adjusted Gross Income )
• The more MAGI you report on your taxes (& in the ACA tool), the lower your Adv Premium Tax Credits become (so the more you will pay toward your premium each month)
• Medicaid: A projected income below ~$29K/yr automatically applies us for Medicaid (called "Health First Colorado" in CO) instead of the ACA. Note that income thresholds vary by state and maybe even by county.
  Medicaid is not our desired outcome, and even entering "projected income" numbers that low into the online tool created huge headaches that took many hours to resolve. Note: Some people report satisfaction with Medicaid.
• We've found the joint MAGI "sweet spot" to be ~$30-35K/year to qualify for great "Advanced Premium Tax Credits" so we pay almost nothing toward our premiums each month

Non-Retirement and/or Roth IRA SAVINGS Enable You to Increase ACA Benefits
A layoff and start-up experiences led us to border on financial paranoia during our working years, so we stashed savings in non-retirement investment accounts. This enables us to postpone use of our retirement accounts and receive great ACA benefits. However ...

• It's possible that the savings we're realizing now may be more than lost in future taxes because our IRA RMDs (Required Minimum Distributions) will be higher in the future.
• Two financial experts have advised "it's hard to know" if we're hurting ourselves long-term, so they think our plan seems reasonable

Our Healthcare Insurance for 2025
Healthcare Plan: Anthem Silver Pathway 5000 $0 Select Drugs (an HMO)
Premium cost to cover both of us: $2,140.22/month
Amount we pay to be on the plan: $111.76/month
NOTE: The published individual deductible for this plan is $5,000/person, but because of our low income status, our deductible is $100/person. Max out-of-pocket expenses are also greatly reduced for us.

INCOME and BENEFITS: Another data point
We pay little because our income is low. We know of a person who is single (in Colorado) who will also be using the ACA in 2025. This person pays ~$700/month for an Anthem Gold plan comparable to a plan that would have cost ~$2,400/month via the previous employer's retirement offering. This friend's MAGI is higher than ours. Obviously, you'll need to run your numbers to figure out what value you may (or may not) be able to get from the ACA given your MAGI.

You may be wondering:

• How do we  control our income so precisely?
  We lower our income by spending non-retirement assets and raise it with Roth conversions.
• What happens if actual income doesn't match income projections?
  When this happens, you have to "true up" at tax time (and re-pay at least some "Advanced Premium Tax Credits"). One year we did have to pay back a fair amount. Thankfully, we'd set the savings aside.
• What if I have a catastrophic health event? Will the insurance hold up?
  For us, the answer has been yes. In fact, the benefits have greatly exceeded our expectations.
  
  

The benefits we receive via the ACA still feel too good to be true and the system causes us varied amounts of angst each year during the open enrollment period. Some years this angst is even significant, but the savings seem worth it. If you want more info, see the comments below, and/or feel free to contact us. We're happy to share what we've learned.

-- Kathy

P.S.  THANK YOU to the friend who casually asked, "Have you looked into the ACA?" back in 2019 when I was lamenting the high cost of healthcare insurance which we were purchasing through our previous employers' retirement offerings. The story she shared seemed unbelievable, but she was credible so we followed up, and now that we've been using it for five years, we're convinced it's real :)