ACA demonstrates why so much of the law is so complicated. Many people and organizations / businesses liked it just the way it was (with their employer subsidized and provided medical insurance), so, in order to get it passed, ACA had to be designed to try to minimize change for those who liked it just the way it was while making it somewhat more possible for individuals to buy medical insurance. The result was a complex add-on to existing law, just like some other medical insurance laws (e.g. Medicare part C, Medicare part D) and many provisions in income tax laws.
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Thank you for the information but since his company is doing a stock payout this year and next, income will still be too high to qualify for any subsidies so we would be paying full price for the health insurance. COBRA looks like our best option since we can keep the same doctors. We can re-evaluate again after 12 months. Even using our projected retirement income originally, the Marketplace costs with subsidies was similar to the COBRA costs.
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We were fortunate that our doctors were on most of the marketplace plans. We chose a plan through the same company we had had for years (Regence), but the coverage was MUCH better and full pay was $400/month less than our Cobra would have been.
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The current employer plan is United Healthcare but the only options for the Marketplace providers are Blue shield and Blue Cross. Our Medical group is in current negoiations for 2024, but the rumor is they are planning to drop both. Kaiser and Healthnet are the other 2 providers available on the Marketplace but that would require a complete change of Doctors and Hospitals.
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Then you had some states that didn’t embrace the ACA and that led to very little competition in those states which meant high premiums and high deductibles. Some states only had one insurer doing ACA.
Sadly there are plenty of people who are working from 60 to 65 only for insurance. It would be better all around if those people could retire and they want to.
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AARP website (don’t have to be a member) and publications (if a member) have some good resources for understanding these issues. I’ve learned a lot of things I didn’t know, especially about Medicare.
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COBRA costs can be hard to determine. They vary by the employer and their negotiated medical insurance rates (plus admin fee, about 2%) for your preferred plan. It can be hard to determine.
When starting to plan retirement, I found a way to go on their “transition” website and go down the Retiring path just far enough to see the rate grid. Probably you could also call HR.
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Some employers do tell employees what the total cost of medical insurance is (before any employer subsidy), so that employees can get an idea of what COBRA will cost.
The total cost obviously varies based on the type and amount of coverage, the costs of the in-network list of providers, and the health care usage of the employees. An employer with less healthy employees, or employees getting pregnant at high rates, will tend to have higher medical insurance costs and therefore higher COBRA costs.
Note that may larger employees self-insure, but use the insurance companies for claims management.
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Good point.
My company used to share the coverage cost, but I think it was at an employee/family average cost. (It was so high that the first time they did it years ago it was almost unbelievable. These days we are all more accustomed to the high cost of healthcare.). Perhaps some companies make it more obvious in annual benefits statements. Thinking more on it… one of the COBRA scenarios I was investigating was employee only, not the 2-person plan I had while working.
Here is a paper showing a chart of health care costs by age in 2015 for the US and some other countries:
That would suggest that unsubsidized medical care costs for a 50-64 year old person in the US would be on average over $10,000 per year.
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Ours is on our pay stub. We have a section for employer paid benefits that includes social security, Medicare, and then the health insurance premium, and their HSA contribution.
But our retirement cost is so high that nobody can afford to be on it. It’s more than many people’s pensions so I hear. Back in 2010ish when they first jacked it up it was $2500/month for employee only. They don’t want anyone on it.
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I called my Pensions Dept and got numbers for COBRA (for 2 people and for 3 - have daughter just graduating college) and also for buying healthcare through my company after I retire (don’t have any employer paid health care in retirement).
Maybe others can do that too - depending on company?
Both prices were about the same for those pre-age-65-Medicare years. Importantly (to me) - they said the coverage would be the same.
Price was $2,700 a month for 2 people and $3,100 for 3. Ugh!
But the fact that I am familiar with the plan (outstanding coverage) makes me want to go with that (when time comes) vs unknown marketplace plans…will just have to keep those numbers (or slightly higher) in the equation…
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I had “retiree insurance benefits” from my workplace. To be eligible a person had to be at least 55 and have at least 10 years working there. That allowed me to pay a modest amount (less than $400) every month for excellent coverage for me and H. It ended when we turned 65 and were Medicare eligible. So you can check and see if your/your spouse’s employer offers something like this.
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Those prices are pretty good. That is about what my husband and I pay total for the two of us each month. I’m sure your plan offers better coverage. I’ve got a $1750 deductible and I think my husband’s is $5000.00. For us it’s just what we have to do. Our business is just a few employees so no group coverage.
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This has been a big issue for us. We live in a state that has not embraced Obamacare and our pickings are slim. We are also spoiled from years of generous PPOs. Things we have tried:
- I went back to school. Students can buy health insurance at low rates and sometimes insure their families. The specifics will depend on your state and college.
- I got a part time job and work enough I can buy health insurance. Not cheap, but not terribly expensive and a good PPO.
- There is a new reimbursement model out called Sidecar. You pay premiums, pay for services with a special credit card, get reimbursed up to a certain amount depending on what the Sidecar schedule says. You are incentivized to shop around. Want to go to that top, expensive ortho guy? Sure! But you will be indemnified only up to $xxx. Need that patent prescription drug? Buy it! But only get reimbursed for the generic. I used it as a bridge until i got a job. And then never needed it so I do not know how well it would have worked for me.
- Buy private insurance away from the government market. This was an unexpected bust. I am super healthy, take no medications, have good numbers, and was rejected. All I can think of is that I am 61, so at an age when things start to go wrong.
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They don’t use current income, they use your projected income. If the income you mentioned in your post is received in 2023 (and for 2024 your income will be much lower) then you are eligible for ACA subsidies in 2024. You mentioned also in another reply that you live in CA. Send in the “attestation of income” form on the coveredCA site to estimate your 2024 income instead of sending in your tax return. The state doesn’t risk anything by accepting this because when you file your Federal return for tax year 2024 you will be filling out a form to reconcile the ACA benefits you received against what you should have received based on your actual income. If your subsidy was too high you pay it back (if too low then you get a refund 
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However as many people have found their current doctor(s) may not be in-plan for ACA. COBRA is an alternative, but check carefully to see if it can be extended for a total of 36mos as you wrote above. Often the answer is no in CA because you can’t extend it past 18mos if you are covered by a “self-funded” plan. Almost every larger employer and some medium ones are because it saves them money. At these companies when you think you have Aetna insurance what you really have is insurance administered by Aetna. They handle the provider payments, who is in-network, etc. but then each month they send an invoice to the employer who supplies the money Aetna pays out to providers.
Your husband should check if there is a retiree medical plan offered. At megaCorps where I worked eligibility was based on an index number that added your age and years of employment. These plans can function like COBRA but will remain in force as long as you wish.
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Thank you for the detailed and very helpful information.
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Projected income for 2024 will be high since the company stock payout will happen in 2023 and 2024.
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I will check regarding extending my husband’s COBRA policy. When I took early retirement my Aetna COBRA was paid for (18 months) as part of my early retirement package. After the 18 months, I was given the option to extend it for another 18 months but switched to my husband’s company plan.
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As of now, to keep the current doctors more for my husband vs. myself, we will apply for the COBRA which has a reasonable premium. I will continue to research our options if the COBRA does not allow renewal after the 18 months. I really only need 20 months coverage until I am eligible for Medicare while my husband will need an additional year. Even going on to private insurance through our Medical group can be an option if the ACA plans do not work for us.
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I will have my husband inquire about a retiree medical plan also.
Thank you again.
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It’s so messed up in this country. I have a friend who moved back to the US after spending 20+ years in Canada. She could work part time there and do art and not have to worry about insurance. (She’s an artist and has worked in museums and galleries.) She came back to the states since her parents are getting older, but I don’t know how long she will stay here. She was just in a car wreck and thankfully not badly hurt, but she has pain in her back that she needs to get seen and the PT her dr referred her to can’t see her until mid Dec. In Canada she could just go the next day and see someone and not worry about which insurance company was going to pay for it.
It’s just such a sh** show here. In Canada if you want to try out a new job or new direction or retire early insurance is just not a worry at all.
My husband would like to retire early, too, but he has a pension that he can get part of next year or he can get the full pension if he can hold out for 5 more years. If he retires early we would also have to figure out insurance for me.
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Physical therapists are in great demand. Your friend may wish to ask the MD if there’s a PT who can see her sooner. The MDs often have no idea what the PT’s schedules are like.
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I suggested a different PT to her. The one her physician recommended was one she has been to before so she is an established patient there and likes them, but they still said mid Dec was the earliest they could work her in. Not that way in Canada, or so she tells me.