California has set up the state Healthcare Exchange and they've just unveiled a website with the benefits, copays, deductibles, costs and subsidies.
http://www.coveredca.com/resources/calc ... -the-cost/
Those thinking about early retirement will likely be affected by the insurance mandate and ACA.
New Health Insurance (Obamacare) Cost Calculator for California
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ICouldBeTheWalrus
- Posts: 130
- Joined: Tue May 31, 2011 3:00 am
Looks like it might cost me more ($424/month), but I don't actually mind much, the ACA (while kind of half-assed [1]) makes early-retirement a lot more practical than where we were going. I recently quit my job for an indeterminate period of time and got $6000-deductible insurance for $139/month -- but I'm young and healthy.
[1]. I think it's just going to require another bill in 5 years to actually address healthcare costs.
[1]. I think it's just going to require another bill in 5 years to actually address healthcare costs.
Either this system is jacked or I am missing something...
If I earn, say, $75K per year as an individual, my monthly insurance premium will be $424/month.
If hubby and I earn $75K as a couple, our monthly premium will be $1,149. (Why is it more than double???)
The calculator also shows that if hubby and I were to earn $65K per year, our monthly insurance premium would be $1,149, or $13,788 annually. In other words, after paying for insurance our income would be $51,212.
However, if we earned $60K per year, our premium would be reduced to $475/month (with a $674 tax credit)or $5,700 per year. After paying for insurance, our income would be $54,300.
Correct me if I'm wrong, but based on these estimates it looks like the system creates incentives for being single and earning less.
If I earn, say, $75K per year as an individual, my monthly insurance premium will be $424/month.
If hubby and I earn $75K as a couple, our monthly premium will be $1,149. (Why is it more than double???)
The calculator also shows that if hubby and I were to earn $65K per year, our monthly insurance premium would be $1,149, or $13,788 annually. In other words, after paying for insurance our income would be $51,212.
However, if we earned $60K per year, our premium would be reduced to $475/month (with a $674 tax credit)or $5,700 per year. After paying for insurance, our income would be $54,300.
Correct me if I'm wrong, but based on these estimates it looks like the system creates incentives for being single and earning less.
I got similar (crazy) results. llorona I hope it's the calculator and not the actual system. If it's the system this is going to cause serious problems.
Loss aversion causes people to do really stupid things. I know a guy who went on a spending spree with a $100K inheritance because, he said, he had to get the money out of his account or he would lose his $200 a month housing subsidy. He is almost 70 years old.
If this is right we've just created a similar crazy loss-aversion disincentive for most of the population. How many people are going to avoid earning because they don't want to be the only dummy not receiving a tax-subsidy?
Loss aversion causes people to do really stupid things. I know a guy who went on a spending spree with a $100K inheritance because, he said, he had to get the money out of his account or he would lose his $200 a month housing subsidy. He is almost 70 years old.
If this is right we've just created a similar crazy loss-aversion disincentive for most of the population. How many people are going to avoid earning because they don't want to be the only dummy not receiving a tax-subsidy?
@Ilorona
You are missing something, though it is possible in some instances for you to be better off single than married for ACA purposes (as is sometimes the case with tax filing generally).
Subsidies go away at 400% poverty line (which gets higher as more people are added to the family). I believe subsidies go away at approximately the following levels:
1 person - 45k MAGI (modified adjusted gross income)
2 people - 61k MAGI
3 people - 76k MAGI
4 people - 92k MAGI
The subsidies then cap cost at a % of income which depends on what % of poverty line you are.
The costs you are comparing in your first couple examples are unsubsidized costs which is CAs guess at how much it would cost to buy a single vs family plan on the open market. That amount is an estimate it can vary a lot from what they say today. However once you qualify for subsidies the cost is capped at a percentage of income so actual open market insurance costs are irrelevant for premiums.
Basically, if you are under the 400% poverty line for two people (about 61k), if you have one income- you will always have same or lower premiums as married. If you have two incomes, it might depend on the exact circumstances.
Edit: Just realized that if premiums for single on the open market are greater than capped premiums for 2 people at <400% FPL at the same income, it could be better for one to get medicaid (no premiums) and one to get open market, rather than married if only one person has income or if one person has income <133% poverty line. Not sure how likely this case is though, but it's interesting. In addition, medicaid may have negatives that a private plan with subsidies do not have in terms of selection of providers.
You are missing something, though it is possible in some instances for you to be better off single than married for ACA purposes (as is sometimes the case with tax filing generally).
Subsidies go away at 400% poverty line (which gets higher as more people are added to the family). I believe subsidies go away at approximately the following levels:
1 person - 45k MAGI (modified adjusted gross income)
2 people - 61k MAGI
3 people - 76k MAGI
4 people - 92k MAGI
The subsidies then cap cost at a % of income which depends on what % of poverty line you are.
The costs you are comparing in your first couple examples are unsubsidized costs which is CAs guess at how much it would cost to buy a single vs family plan on the open market. That amount is an estimate it can vary a lot from what they say today. However once you qualify for subsidies the cost is capped at a percentage of income so actual open market insurance costs are irrelevant for premiums.
Basically, if you are under the 400% poverty line for two people (about 61k), if you have one income- you will always have same or lower premiums as married. If you have two incomes, it might depend on the exact circumstances.
Edit: Just realized that if premiums for single on the open market are greater than capped premiums for 2 people at <400% FPL at the same income, it could be better for one to get medicaid (no premiums) and one to get open market, rather than married if only one person has income or if one person has income <133% poverty line. Not sure how likely this case is though, but it's interesting. In addition, medicaid may have negatives that a private plan with subsidies do not have in terms of selection of providers.
@ noob, it's age dependent, but it maxes out at a middling AGI.
Using 33 as the youngest adult the max/mo is $318, whether you make $100,000 or $1,000,000. Now, change insured to 2 people, and you get $861/mo for $100k or $1mil. (Which as mentioned before makes absolutely no sense)
Compared to the costs of catastrophic care insurance on the open market these prices are crazy for a relatively healthy FI type. One of the many reasons these programs are going to cost so much more than projections.
Using 33 as the youngest adult the max/mo is $318, whether you make $100,000 or $1,000,000. Now, change insured to 2 people, and you get $861/mo for $100k or $1mil. (Which as mentioned before makes absolutely no sense)
Compared to the costs of catastrophic care insurance on the open market these prices are crazy for a relatively healthy FI type. One of the many reasons these programs are going to cost so much more than projections.
A guy who contributes on another forum appears to work in the health insurance industry and has been participating in industry efforts to roll the ACA exchanges. He basically said to ignore the calculators right now, as there's a 100% chance that the government will be forced to revise the law by the end of the year anyway. Financial reality and political horse trading is in full force right now.
That said, it should come as no surprise that a massive government healthcare program can all too easily become more about wealth transfer (from young to old and wealthy to poor) than health.
From an ERE perspective, at least we can stand to benefit from the perverse incentives even if some of us find them intellectually ill-conceived. Those with few material needs and a good nest egg can live happily with income near poverty levels even with investment returns (with careful capital gains management) and benefit from the subsidies in early retirement. Unless there's something buried in the law to prevent that, of course.
That said, it should come as no surprise that a massive government healthcare program can all too easily become more about wealth transfer (from young to old and wealthy to poor) than health.
From an ERE perspective, at least we can stand to benefit from the perverse incentives even if some of us find them intellectually ill-conceived. Those with few material needs and a good nest egg can live happily with income near poverty levels even with investment returns (with careful capital gains management) and benefit from the subsidies in early retirement. Unless there's something buried in the law to prevent that, of course.
Interesting interview with David Goldhill here
https://www.youtube.com/watch?v=q92SQFZpjf4
A few points mentioned...
- The current system (that Obamacare perpetuates) was designed back when the average person did not visit a doctor for a birth or death.
- He makes an interesting parallel between healthcare and the government intervention in the housing market with fanny, freddie and tax incentives for home ownership. The more the government intervenes, the higher prices go, the closer the system comes to collapse.
- Medicare-for-all was the goal for many liberals. He points out that the average medicare recipient pays a higher % of their income toward healthcare today then they did in 1964, the year before medicare existed. Again, government intervention removes market forces and raises costs.
This is interesting because he is a rather prominent democrat.
He wrote this article in the Atlantic and has a new book, "Catastrophic Care" .
https://www.youtube.com/watch?v=q92SQFZpjf4
A few points mentioned...
- The current system (that Obamacare perpetuates) was designed back when the average person did not visit a doctor for a birth or death.
- He makes an interesting parallel between healthcare and the government intervention in the housing market with fanny, freddie and tax incentives for home ownership. The more the government intervenes, the higher prices go, the closer the system comes to collapse.
- Medicare-for-all was the goal for many liberals. He points out that the average medicare recipient pays a higher % of their income toward healthcare today then they did in 1964, the year before medicare existed. Again, government intervention removes market forces and raises costs.
This is interesting because he is a rather prominent democrat.
He wrote this article in the Atlantic and has a new book, "Catastrophic Care" .