How We Signed Up for Health Insurance through the Affordable Care Act

Glamour Shed: no longer must rely on the guild of glamour to provide her health insurance

Healthcare is no longer tied to your job in the United States. Anyone can get healthcare in our country and you don’t have to go through an employer to do so. This hasn’t always been the case and I, for one, rejoice in the system that makes this possible.

This is a system that goes by many names: the Affordable Care Act, the ACA, Obamacare, the Health Insurance Marketplace, a dream come true, etc. I’m going to use the acronym ACA throughout this article, but know that all those other names mean the same thing. Prior to the passage of the ACA, folks in the US were pretty much out of luck if their employer didn’t offer health insurance.

Now, folks are very much in luck if their employer doesn’t offer health insurance: they can sign-up for affordable heath care through the ACA. Hooray!!!! The ACA is/was a boon to the FIRE (financial independence/early retirement) movement as it enables many of us frugal weirdos to leave our jobs and venture out on our own: to full early retirement or part-time work or meaningful, independent ventures.

The ACA enables entrepreneurs to start their own businesses, work for themselves, or pursue creative outlets without the fear of not having health insurance. Thanks to the ACA, everyone can have health insurance. Yay!

Our Journey to the ACA

When my husband (Nate/Mr. FW/all-around nice guy) retired from his job, one of the biggest shifts was to our health insurance. Previously, we relied on the insurance his employer provided for our family. Thanks to the ACA, we knew we’d be able to find insurance for ourselves out on the market after he left his job. I continue to work for myself as a writer because I love what I do, but as a solopreneur, I do not have employer-sponsored health insurance.

Chicken coop icicles

When our employer-sponsored health insurance ceased at the end of calendar year 2021, you all clamored for a write-up on the ACA.

And so, here it is. The challenge with this write-up (and any individual account of navigating the ACA) is that signing up for the ACA varies by state. Yep. Every single state has a different website, different costs, different plans, different calculations, and different health insurance. So while I can write about our experience here in Vermont, to say that your mileage will vary is putting it rather mildly.

Your experience with the ACA will be impacted by:

  • Where you live
  • Your age
  • Your dependents
  • Your income

Given all of that, unless your situation miraculously mirrors mine here in rural Vermont, you’re not going to be able to follow my exact steps. You’re going to have to do your own research in your state for your own circumstances. But all is not lost! There’s a lot we can learn together about how the ACA operates at the federal level. So let’s go on an ACA journey together!

How To Sign Up for Health Insurance through the ACA

Step 1: Figure out your MAGI

Not to be confused with the Magi of frankincense and myrrh, MAGI stands for Modified Adjusted Gross Income (you can see why they stick with the acronym… ). Your MAGI determines how much you’re going to pay for insurance through the ACA and whether or not you’re eligible for subsidies. MAGI can be challenging to calculate because it’s predicated on the “expected household income for the year you want coverage, not last year’s income” (healthcare.gov). 

Not that kind of Magi…

If you have stable, predictable income that’s unlikely to change year to year, your MAGI is easy to figure out: it’s going to be the same number it was in the last tax year. On the other hand, if you work for yourself or in a field with variable income (that’s me!), it’s a lot harder to calculate your MAGI because what you made in the last tax year may not be anywhere close to what you’ll make in the next tax year. If you’re in that position, you’re going to have to figure out a reasonable estimate of your MAGI since you can’t be certain what you’ll earn in the next tax year.

Healthcare.gov is the government website for the ACA and they have an entire section dedicated to determining your MAGI. They also offer this yearly income calculator. Another good source is Investopedia’s overview of what MAGI is and how to calculate it.

My family’s 2022 income stems from two sources:

  1. My part-time writing work (hi! I’m doing it right now!)
  2. Our rental property (in Cambridge, MA)

Based on our income and expenses from previous years, we calculate these two sources will cover our monthly expenses. However, it’s not a problem if they don’t. In that scenario, we’ll dip into our liquid savings, after which we’ll enact a very low percentage drawdown from our taxable investments. This is standard operating procedure for funding a stable, longterm early retirement—in other words, to ensure you don’t run out of money before you die. Wondering if you’ll run out of money before you die? Check out this nifty calculator.

Did anyone note that I mentioned tracking expenses? I KNOW I DID! You all are so tired of hearing me say it, but you’ve got to know what you spend. I use and highly recommend the free expense tracker (and other money organization tools) from Personal Capital (affiliate link). But I digress…

Q: What if (after all that number crunching) I miscalculate my MAGI? 

A: It’ll all be sorted out at the next year’s tax time.

If you grossly underestimate your MAGI (as in, you end up making a lot MORE money than you anticipated), you may have to pay back any subsidies you received for your ACA insurance. And if you grossly overestimate your MAGI (as in, you end up making a lot LESS money than you anticipated), you might get money back in the form of a tax refund.

FIRE Side Note: Sculpting Income

Not that kind of fire…

For folks who are FIRE: you will want to exercise your ability to sculpt your income when determining your MAGI. To a certain extent, FIRE folks with investments (but without predicable income) can control how much income they realize in a year.

You’ll have to accurately calculate how much income you need to realize in order to have enough money to live on for the year. The basic principle still applies: the less money you spend in a year, the less income you’ll need to realize from your investments and the cheaper your health insurance will be.

If you decide to draw down a lot of money from your investments in a year, you’ll pay more for your insurance. If you decide to live on less and draw down less from your investments, you’ll pay less for your insurance. Justin over at Root of Good has this oldy but goody on how he calculated his family’s MAGI post-early retirement at age 35.

This also plays in (slightly) to our decision to pay off our mortgage prior to Mr. FW’s early retirement. Without a mortgage payment, our monthly expenses are lower. If we still had our mortgage payment, we’d have to draw more income from our assets in order to cover it, which would increase our overall MAGI. We had other reasons for paying off our mortgage–all outlined in this post–but MAGI in the context of health insurance is another one to consider for folks planning to FIRE.

Step 2: Create an Account on Your State’s ACA Portal

Now that you have your MAGI in hand (or on spreadsheet), it’s time to locate your state’s ACA website portal. Every state administers their own ACA system (thank you, federalism), so you’re going to have to find your state’s specific site. Healthcare.gov has this handy rundown of links to every state’s website.

Step 3: Find and Compare Health Insurance Plans and Subsidies

It’s time to retrieve the list of health insurance plans available in your state and their corresponding subsidies.

Winter woodshed icicle close-up

Subsidies through the ACA are, for the most part, calculated as a percentage of the FPL (federal poverty level), on a sliding scale.

The oversimplified rule of thumb with the ACA is that the more money you make, the more you’ll pay for health insurance. The less money you make, the less money you’ll pay for health insurance. 

Again, remember that it’s based on the income you predict you’ll have for the year you’ll be covered by the ACA, not on your income for the previous year.

Plan comparison is probably the biggest pain in the eyeball in this whole process. Every state is different, every plan is different and they all have ridiculous acronym-riddled names that sound like sci fi characters. BUT, you can do this! You too can spend hours of time reading through plans to determine the best one for you and your family. Maybe bake yourself a cake after you’re done.

Before digging into specific plans, you’ll want to familiarize yourself with the vocab, all of which I have to google every time I interact with the health care system. Healthcare.gov knows that we are confused and so they have this helpful glossary of terms. I’ve copied and pasted the most germane items for our discussion below.

Health Insurance Glossary (copied from Healthcare.gov):

Copayment: A fixed amount ($20, for example) you pay for a covered health care service after you’ve paid your deductible.

Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest. All Marketplace health plans pay the full cost of certain preventive benefits even before you meet your deductible.

Out-of-pocket maximum: The most you have to spend for covered services in a year. After you reach this amount, the insurance company pays 100% for covered services.

Cost Sharing Reduction (CSR): A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace®, cost-sharing reductions are often called “extra savings.” If you qualify, you must enroll in a plan in the Silver category to get the extra savings.

Premium: The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance. If you have a Marketplace health plan, you may be able to lower your costs with a premium tax credit

Coinsurance: The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible. Let’s say your health insurance plan’s allowed amount for an office visit is $100 and your coinsurance is 20%. If you’ve paid your deductible: You pay 20% of $100, or $20. The insurance company pays the rest.
If you haven’t met your deductible: You pay the full allowed amount, $100.

Subsidized Coverage: Health coverage available at reduced or no cost for people with incomes below certain levels. Marketplace insurance plans with premium tax credits are sometimes known as subsidized coverage too. In states that have expanded Medicaid coverage, your household income must be below 138% of the federal poverty level (FPL) to qualify. In all states, your household income must be between 100% and 400% FPL to qualify for a premium tax credit that can lower your insurance costs.

You may notice that “400% FPL” shows up a lot in these definitions. The FPL (federal poverty level) is a metric set and utilized by the government. In this context, where your income falls on the FPL scale impacts the subsidies you receive. For example: in 2022, 400% FPL for the 48 contiguous states for a family of four is $111,000. What this means is that if you make under $111k per year, and are a family of four, you will likely be eligible for subsidies for your health coverage. The American Council on Aging has this helpful chart outlining FPL at various different percentages and family sizes.

Step 4: How Much Health Insurance Do You Need?

There are two ways to think about the type of plan you’ll need:

1) How much healthcare do you anticipate needing during the year in question?

Littlewoods: the happiest little woods snowshoer

This might sound impossible to answer and, to a large extent, it is. But there are things you can know about your situation that might help guide your selection:

    1. Do you (or anyone else on the plan) have a chronic/recurring condition that’s likely to require frequent health care?
    2. Do you (or anyone else on the plan) intend to become pregnant?
    3. Do you (or anyone else on the plan) have upcoming elective health care needs (for example a hip replacement)?

If you anticipate using a lot of health care in the coming year, you may want to select a plan with higher monthly premiums in order to reduce your out of pocket max.

2) Do you have the money in the bank to cover a high deductible plan?

If you do (and this applies largely to folks who are FIRE), selecting a high deductible plan could dramatically lower your monthly premium costs. You have to be 100% certain you can cover the deductible in cash (this is why I harp on the importance of emergency funds), but if you can, this can be a great way to save a ton of money every month on your premium.

Typically, if you select a plan with a high monthly cost (premium), your deductible will be low. Conversely, if you select a plan with a low monthly cost (premium), your deductible will be high. This is an oversimplification and there’s a lot of nuance within each plan, but this is often the basic formula for how you’ll pay.

Helpful resource: the Kaiser Family Foundation has this Health Insurance Marketplace Calculator with a robust “notes” section at the bottom.

What Plan Did We Choose?

We ended up selecting the BCBSVT Vermont Preferred Silver 87, which provides a subsidy for our monthly cost as well as our co-pays and deductibles. On this plan, we pay $52 a month for two adults. Coverage for children varies wildly by state and Vermont automatically covers all children for free if you are under 400% FPL (there’s no other option). In general, it seems that if your income is under 400% FPL, it will probably make sense to get a Silver CSR plan if you qualify. 

Step 5: Give Yourself Plenty of Time to Research

Took Mr. FW a long time to build this woodshed/took him a long time to research the ACA

Signing up for coverage through the ACA is more complicated than clicking a few buttons on a drop-down menu, so you want to give yourself plenty of time to read through the different plans offered by your state.

Mr. FW helmed this research project for us and he estimates it took him almost 3.5 weeks to fully read through, research and select a plan. But, our circumstances are particularly complicated due to our rental income from another state, our non-W2 variable income, and his early retirement. If you have a less complex financial profile, it should be much easier for you to navigate. 

While it was complicated, we hope that most of this will be a one-time complication. Now that we’re set up in the system and have figured out all the things, renewing for the next year shouldn’t be much of a hassle (theoretically… ). And while it’s a hassle, it’s an amazing thing. There was a time not too long ago when you could not get decent health insurance for any price, let alone for a good price! Hooray for the ACA!

Step 6: Keep a Log of Interactions

Mr. FW found it immensely helpful (and necessary) to take careful notes and document each interaction he had with the system. He created a spreadsheet to log calls with representatives (date, time, reference number, their name) as well as any time he input information into a website. You are dealing with a ponderous bureaucracy and it’s wise to be your own advocate and record-keeper. He found a number of instances where having a record of interactions saved both time and money.

Summary of how to sign-up for healthcare through the ACA:

  1. Figure out your MAGI for the year in which you want healthcare coverage.
  2. Find your state’s ACA portal, create an account and plug in your numbers.
  3. Read through the plans and subsidies your state offers.
  4. Consider your financial picture and healthcare outlook to determine whether you’d rather pay more monthly (in premiums) or pay more to meet a high deductible.
  5. Take careful notes and keep a log of all your interactions with the system and customer service representatives.
  6. Give yourself plenty of time to do your research.
  7. Look for a healthcare navigator if you want assistance in selecting a plan.
  8. Bake yourself a cake to celebrate successfully signing up for health insurance!

Do you use the ACA? What advice do you have for people navigating it for the first time?

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74 Responses

  1. Claire says:

    Those costs must vary a lot by state – when my husband and I were at about 200% FPL, a month of bronze level health insurance for him was almost $200! And that was with us picking the least expensive plan.

  2. Tim says:

    Hi, thanks for this really clear summary. Do you know if your Vermont insurance will cover you in other states? I’ve learned that can be an issue with some ACA plans.

    • Richard Quinn says:

      It depends on the type of plan. Any plan that uses a network of providers – most – will only cover emergency care out of network or greatly limit coverage.

    • Robert says:

      I was also curious about this, I moved to a state without a national network option for the ACA and it’s been a challenge for specialists. They’ve also conveniently said procedures that were covered in other states are “investigational” or “not medically necessary” for residents of my state.

  3. Richard Quinn says:

    Isn’t it interesting that if you compare your premiums to a senior couple living all or mostly on SS, you see a difference between $52 a month and $410 a month (Part B and D) not counting Medigap coverage typically another $400 a month for a couple.

    At 65 FIRE folk are in for a shock.

    • Ryan Gibson says:

      I think they will be ok. Given the rental property, earning potential via this blog (not to mention the actual blog income) they are in a fantastic position.

      I think you massively misunderstand the earning potential of most FIRE types. They are just choosing a different path to what you did and have far more earning potential and a lower cost of living.

    • Becky says:

      That’s not your only option, though! Medicare Advantage is often very affordable (pay only the Part B premium and get health + prescription drug coverage + dental/vision/hearing/etc., with low out-of-pocket costs). The tradeoff is network restrictions to deal with, but that’s similar to nearly any private employer or marketplace insurance.

      • Anne says:

        There is also the trade off that then you are dealing with a for-profit insurance company that will limit your coverage whenever possible…

      • Jean says:

        You need to closely check on the advantage plan, they offer a bunch of things but watch out if you fall and fracture a hip and need surgery or hip replacement and then need nursing home care, they don’t pay nearly as well as original Medicare. My mother several years ago was taken advantage of by an advantage plan insurer. They talked her into switching from original to advantage care and the coverage when she went into the hospital and nursing home for rehab was practically useless. She was 88 at the time and should never have changed her coverage. As soon as we could, the very next signup period we switched her back. Thank God, because she had 2 broken hips, cancer of the nose, needing extensive surgery, shingles requiring extensive care and nursing home care each of those times for rehab. Many of the dermatologists would not take advantage plans, some of the ortho surgeons would not take it. The case managers in the hospitals hated advantage plans because they would not cover someone going into the nursing home in many cases. They felt so bad when they had to tell a family the person had to be discharged home instead when the person could not even get up on their own. Beware!!

    • Aaron says:

      I agree. I always hear people saying they need to wait to retire until they can get Medicare for cheaper HI. My HI costs will go way up when I am forced to go onto Medicare. I wish we had the option to stay with ACA subsidies forever if we wanted to.

    • Jean says:

      One thing we as Medicare recipients do not have though is the very large yearly deductible. Our deductible is a couple of hundred a year and if you take a better medigap plan it will cover that deductible. FIRE individuals definitely need to plan for these costs though, they are expensive. My husband and I spend a lot on insurance (home insurance with hurricane coverage, flood insurance, medicare insurance, medigap insurance, dental insurance, vision insurance, car insurance, boat insurance, pet insurance). All total approaching nearly 2000 a month in cost. Our home insurance alone has risen from 700 a year in 1999 to 3100 in 2022. This does not include flood of 2000 a year. And I must say this is for an 1100 square foot home. I honestly think in years to come no one living near the coast will be able to get insurance. You will need to self insure, in other words have a few hundred thousand set aside just for weather related damage. Just something to think about.

  4. Rebecca says:

    I’m interested to follow your experience with ACA insurance. We were insured though a plan in 2016 when my husband’s work overseas came to an end and we found ourselves back in the US without employment for a few months. There was one practice that would take our insurance and it was quite a distance from us. All options for care were severely limited. It was quite challenging but we made it through. That experience has led us to conclude we need a different plan should we wish to retire before qualifying for Medicare. Currently that is living abroad. We’ve got quite a bit of experience in other places and seen more than one functional medical system so we feel it’s a reasonable option.

  5. Beast says:

    This is the biggest hindrance to fire for me. We are a fairly middle class household in new York state and family of 4 coverage is $1,300-$2,500/month for the reasonable ones. Even working mainly part time, as I don’t want to burn all my career bridges yet, my income will still be TOO high to get anything better than APPX $1,000/month for coverage 🙁

    • Rebecca says:

      We are in NM, and similar experience. Family of 4, lower end of middle class – around $1,500 per month with a $15K deductible. I was shocked.

    • Alys says:

      Yes, your income has to be pretty low for the ACA to make sense; the sweet spot seems to be around $55K/year, at least for a single adult with 2 kids. Anything above, it’s probably cheaper to go with insurance through an LLC that you set up, assuming you are making money. Also, I’m surprised they didn’t keep the mortgage as a write off against the rental income and also to minimize the tax consequences when they sell. Maybe they plan to leave it to their kids.

  6. Kay says:

    Amazingly helpful, Mrs. FW! I’m sure many readers will be grateful for your detailed discussion of the intricacies of the ACA and its effect on FIRE people. Even though my husband & I are retired & living mostly on Social Security & pensions income, I still found your explanation (as usual) clear and interesting. Keep up the great work!

  7. Cindy in the South says:

    Some of the Southern Sates refused the fed money in the beginning, and therefore the lowest income folks, who are still working, but don’t qualify for SSI or SSD or food stamps, have to PAY for their premiums. Which makes zero sense. I think the minimum. income is around $15,000 to qualify for the complete subsidies that are available in those states, varying according to state. So if someone attends college on a scholarship at age 28 and is not working, but too old to be on their parents health plan (which cuts off at age 26), then they have to pay about $300 a month, unless they have a min. income of approx $15,000. Income for ACA does not income a full scholarship. .Even with the new Biden extension, it is still difficult for lower income folks in these states who did not ratify the plan so that the states would not eventually have to pay the state matching funds..

  8. Julia says:

    Some anecdotal information on the downsides of ACA healthcare as it currently exists: many states do not offer plans that have nationwide coverage. My husband and I are FIREd and travel full time in an RV. There are no nationwide PPOs offered from our state of domicile, so we are out of network all of the time. We are healthy, active 30-somethings but my husband needed a hernia surgery this year that cost $12k and didn’t even reach the out of network deductible. Eek.

    • AW says:

      Do most insurance plans offer nationwide coverage? We are in CA and have Kaiser Permanente through my employer. Anything outside of a Kaiser facility is out of network and Kaiser is regional, not national. We have luckily never needed to get any care while not near our local Kaiser so I’m not sure how it would work. But I assume it would be similar to your ACA plan and not covered unless it was a true emergency.

  9. Cindi says:

    We’ve been on ACA for years — since it became available. We pay about $400 a month for a plan with a $6000 per person deductible. In rural Colorado. We went to a local broker who was a big help in figuring out all of the options. The broker is paid by the ACA, so the cost to us was zero for her services.

    • Perfectly Cromulent Name says:

      This is good to know! I’m also in Colorado (Denver)and every time I’ve un the calculator it’s always given me terrifyingly expensive plans! If we do ACA I’ll have to get a broker. Thanks for the tip.

  10. Miranda says:

    As a social worker I’ve helped many people enroll in ACA plans.

    A simple way for many to minimize which plans to consider, and an important consideration for many, is if there are any hospitals or providers you want covered. Probably not an option/issue in rural areas, but in metros no plan covers all hospitals.

    The ER is always covered in an emergency, but if you are admitted from the ER it might not be. Do you want the closest hospital in network? A teaching hospital? One that excels in your/a specific condition? (Like the regional heart or cancer center.) Same with providers. Do you live in a metro that covers more than one state, where the “best” hospital in a specialty is across state lines? Etc….

    If you answer yes to any of those then you can quickly eliminate certain plans.

    Also, some providers don’t accept bronze level plans. Do you want a PPO, or are you okay with an HMO? Do you fully understand the difference between them?

    All things to take into consideration. It’s usually easier to determine first what you need and want in terms of costs and networks, and then pick that plan that best meets that. Otherwise it can become overwhelming trying to compare plans.

    Also, the ACA requires every state to have trained, certified navigators available at no cost to help people with every step of the process. Healthcare.gov can guide you to one. Some are private insurance agents who are supposed to be nonbiased in what plans they suggest (although they might get kickbacks). Others are local service or non-profit agencies. I’ve also found the call center staff at healthcare.gov to be very helpful and knowledgeable, once you get one on the line.

    • Miranda says:

      Also, depending on your income you might qualify for subsidies for your deductible and copays also, but not all plans offer that. So if you qualify make sure you pick a plan that includes those subsidies.

      And remember, ERs are always covered if the insurance company determines it was an emergency, but out of network admissions and surgeries usually are not, even if medically necessary.

      (An easy way to get an ER visit covered out of network if you can safely wait a few minutes before going is to call your doctor’s after hours number to have a doctor paged. If the on call doc tells you to go to an ER your insurance will cover it, based on all my years of experience. I’ve even had multiple insurance companies confirm this.)

      And as someone else said, nationwide plans are rare, so be mindful of you travel. You might want to look into a non-ACA catastrophic plan if you do to help cover emergencies.

    • Leslie says:

      Agree on this. We first made sure for my adult daughter, who has Crohn’s disease, that the plan included her gastro and hospitals where he practices. We didn’t consider the bronze plans, of course, because she needs too much care. So there were not really that many plans available in Missouri for what we hoped to pay.
      She had worked as a server before covid and so then paid about 90 bucks a month for ACA. It did a good job covering hospitalizations. But when doctor wanted to put her on Remicade or Humira it absolutely refused to pay. That was a stressful thing. We applied to drug company and got it for free because she wasn’t working during pandemic.

    • Kevin says:

      I would be curious to know how Frugalwoods handled this as Dartmouth Hospital is across state lines in New Hampshire. There really isnt any good hospitals anywhere near where they live expect for Dartmouth.

  11. Eileen says:

    Thank you for this write-up! Did Mr Frugalwoods do this research before he decided to retire, or was it done between the time he retired and when the current coverage ended?

  12. Josh says:

    I’ve been on the ACA since quitting my job in June 2021 for a sabbatical/mini-retirement. I’m working on filing my taxes now and am due to repay some of the premium subsidies I received during August-December 2021. I’m still trying to figure out how much I owe because the tax software seems to be taxing my LTCGs as ordinary income, but it should be 0%, resulting in a lower tax obligation and a lower ACA subsidy payback amount.

  13. Alison in NH says:

    Wow. I’ve been waiting for you to write this article. And, as always, it’s exactly what I hoped for! I never knew where to start. Even all the comments and the higher prices referenced are STILL better than the worst case scenario I always imagined. My husband has always worked for himself and I hope to leave my job at 50 (in 2 years!) or sooner. BUT, in a miraculous twist of fate, my husband unexpectedly took a FT job that he loves… that offers many benefits. But once I get closer to knowing what our income will be, I will follow all those steps above to prep for when he does leave his job… or takes many leaves of absences so we can still travel when we want to.

  14. Steveark says:

    I found it much easier to just work about eight hours a week doing some consulting I enjoyed that also provided mental exercise and social interaction. That way more than paid for the $16,000 health insurance premium. Interestingly I thought that cost would go away when we reached Medicare age. Only half of it did, Medicare plus the supplemental and prescription plans still costs $8,000 a year for the two of us. A lot more than I expected.

  15. Beth says:

    ACA and medicaid have been a nightmare for my sister’s family. Their income is on the border. So every time she gets pregnant or the laws get shifted (Covid) she gets shoved back and forth between the two. And they don’t necessarily tell her she’s lost coverage. And the deductibles, etc shift every time. They live in a more rural area and there aren’t as many doctors that will even take whatever coverage she has.
    When we moved back to the States we knew we would be self employed with borderline income and we said no thank you to that mess. We joined a health share community. The members agree to follow the rules of the program and share the costs of each other’s bills. You pay for your bill as “self pay” and get reimbursed for most of it through the program. And monthly you send money to someone else to help pay for their bills. There’s no network: the expectation is that you try to find a cheaper place (especially for stuff that doesn’t matter like where you get an MRI) but it’s not required. You can go to whatever provider you like.
    Cost wise it’s probably more than medicaid but it’s less than what a lot of families our size are paying through their ACA or employer.
    When my husband got a job with a church they offered health insurance. After running the numbers we figured out it would be cheaper for them and us to stick with the health share program.
    I know a lot of people love the idea of the ACA but our entire health care system is one huge expensive mess. I’m not sure that the ACA is actually helping in the long run. I worked in healthcare as a nurse. It was amazing how much time we had to spend (waste) documenting every little thing just to make sure insurance and the government would pay for the care (and to cover the hospital’s butt from a lawsuit). I think we need to focus on how to make the actual healthcare more affordable not just insurance premiums more affordable.
    I lived in China and had a baby there. Healthcare is subsidized but not free. You pay at point of service so you know exactly what your bill will be upfront. You can go to a cheaper public hospital without the bells and whistles (literally – bring your own toilet paper, towels, soap, and food) or you can pay more for a private hospital with more amenities. I experienced both and while the private option was definitely a nicer experience I didn’t die at the public hospital and received (mostly) adequate care.
    Coming back to the States makes me somewhat frustrated. We don’t just want healthcare for everyone. We want a five star hotel experience for everyone. And the ability to sue at the drop of a hat. And we’ve added all the paperwork and red tape of insurance (and the government stuff is some of the biggest headache-just ask the providers who refuse to take Medicaid patients).
    I’m not against the goals behind the ACA (availability of healthcare for everyone) but I think we went about it backwards and healthcare costs continue to jump and ACA coverage isn’t actually that affordable for everyone.
    Sorry for the venting. I’ve spent a lot of time inside the US system as a healthcare worker and a patient. And five years in a different system. While I’m definitely not saying that system was hands down better it definitely helped me understand how spoiled we are by our five star experience here. And how that experience is expensive.

    • Hana says:

      Thanks for the vent – it is really interesting to hear your experiences and the fact that you can compare with China’s situation is even better as many people don’t know systems other than their own.

    • David Ho says:

      Hey Hey! I’m in China right now actually. You make an interesting point about the “five-star” experience. I do think that’s part of the issue but there are a lot of systemic issues that contribute to the outrageous cost factor (I’m sure you’re well aware having worked inside the system).

      One simple example (just kidding they’re all complicated xD) is as a self-paying individual walking through the door you pay the list price (often difficult to get before you “purchase” – i.e. receive your care.. a whole ‘nother issue). Let’s say you end up paying the $1000 list price for procedure A. An insurance provider might only pay the hospital a percentage of that “list price” cost – they represent more “customers” and therefore can negotiate better rates. So say they end up paying 60% for that procedure per patient -$600 bucks.

      Lots of dimensions here but one simple one is this creates incentives for the hospitals to increase their rates (they know they’re not going to get their asking price from the insurance companies so why not mark it up more!). Let’s charge $50 for a bandaid says the hospital – we’ll pay you half says the insurance company.. and the individual is stuck with a $50 bandaid out-of-pocket expense.

      Price shop beforehand you might say? Good idea unless your foot is hanging off of your leg – it’s hard to call up hospitals and discuss rates on foot reattachment whilst your in agony. Even when your foot is in it’s proper place managing to get firm pricing out of a hospital is a feat in and of itself.

      Anywho – if you’ve never heard of it I always highly recommend listening to the arm and a leg podcast. I originally found it through NPR and have been a supporter of theirs for almost 2 years now. Really good content on the topic, helps build an understanding of all the different issues surrounding cost and has some really good actionable tips.

      Thanks for your vent!!

  16. NancyG says:

    Loved reading about your experience signing up in Vermont. We went on Covered California (the California ACA) this year. It took me nearly 2 months to get it set up correctly. I was planning to take out of investments once a year, but learned I had to show a monthly income (not annual). By paying off our mortgage and having a large sum of money in the bank we are able to get free healthcare.

  17. Alison in NH says:

    Jessie, I see your point, but eligibility could include an asset threshold, and it doesn’t. If they chose to add that as an eligibility requirement, it would change who qualifies. Another perspective is that they have freed up 2 jobs for others to take! I know that stats show unemployment is low, but higher paying jobs are ALWAYS in demand.

  18. Matt says:

    It’s worth noting that your MAGI can be reduced through 401k contributions (but not traditional IRA). If you’re self-employed, you could funnel a bunch of money into a solo 401k to reduce your MAGI, get a better insurance price, and load up for retirement.

  19. 8little_paws says:

    Geez when I looked in Illinois it was wildly higher than this. that was private insurance though not open enrollment. But it was like $450 a month for my husband and 2 year old. Which is basically what I pay at my job. Which gives me nowhere near the money to FIRE. That’s the US for you though.

  20. CP says:

    Does anyone have resources that compare ACA benefits, costs, and quirks by state? This would be helpful for folks who have yet to decide where to settle down after leaving jobs with included healthcare. Kids being free in VT if under 400% FPL is a big deal!

  21. Cindy says:

    I used ACA after my divorce in 2013 and it was a life saver. Literally. It reduced my premium significantly and I was able to use an HSA so I could have reserved savings to pay for healthcare. I maxxxed out the contribution as quickly as I could. Good on Vermont for covering kids if families are under 400% FPL! I keep hoping MD will get it’s ish together given how crazy our taxes are here. One of these days!

  22. Emily DeLuca says:

    Vermont ACA sounds like a great deal. You picked the right state! I know that costs are much higher in Massachusetts where I live for ACA and insurance in general. Regardless, it is great to have a coverage option which is NOT tied to employment. I agree with other posters that it’s not perfect. I have also administered the ACA as a benefits professional and it’s a nightmare. Medicare for all would be preferable, in my opinion.

  23. Hana says:

    I so enjoyed reading this write up! As someone from New Zealand (with mostly socialised healthcare – with the pros and cons that that brings!) I haven’t ever got my head around the ACA, but now I know a lot more. Does the US have financial navigators who help people with these things (especially people with low incomes)? It seems like such a minefield and very complicated. This is coming from New Zealand where we only have 5 million people, and only a single government (so states) so things are A LOT simpler. Great you are sharing all this info in such an accessible way.

  24. Norm says:

    I’m sure this will be helpful to us when I finally quit. Marge’s #1 worry about early retirement is “But how do we get health insurance?? We won’t be able to afford it!” I’ll have to point her here the next time it comes up. 🙂 I expect to pay something in the low hundreds ($100-300) to have something equivalent to what I have through work now.

  25. Mel says:

    If it is included on their tax return it will count in their income.
    And I am guessing they paid enough in federal taxes over the years to more than cover the subsidy they are getting for many, many, many years!

    • NancyG says:

      Thanks for understanding Mel. We get our healthcare through the ACA now but for 35+ years we paid a very large amount of taxes. I never once thought others should not get the same government benefits because they paid significantly less taxes. Now that we no longer work and get tax credits to pay for healthcare through the ACA it baffles me that some think we don’t deserve it.

  26. K says:

    Hmmm…maybe I’m missing something but you seemed to have removed a comment by someone who was challenging your choice to use the ACA. While I don’t necessarily agree with the motivation or thinking of this particular comment. I think it’s important to include and discuss this viewpoint. What they said was not offensive or inappropriate, but can add to the discussion about health insurance, ACA etc.
    Maybe I am incorrect in seeing that the comment has been removed?

    Including differences is huge in clearing up misconceptions, wrong information, lies etc.
    This from a social worker in Massachusetts who knows a few things….
    ?

  27. K says:

    And I think their comment has been remove?

    Total disservice to the discussion of health care, health insurance, affordable healthcare etc.

  28. Gretchen says:

    I’m scared to go the ACA route….my accountant freaked out with horror stories about it at tax time when you find out what your income actually was….I’m working fulltime, just above minimum wage in MD my insurance for 3 adults is about 600 a month, including dental. I put my son on my insurance cause his sucked so bad! So I’m spending over 1/2 my pay on pretty decent health insurance….low deductible, high copay. My husband early retired last Sept, We could fire…but the ACA stuff totally freaks me out. I think I do live in a good state for it

  29. Perfectly Cromulent Name says:

    I’m so excited to hear how this goes for you! Health insurance is the one thing in our FIRE calculation that we have not figured out, and we both have manageable but chronic conditions that require healthcare to keep under control. I hope you post a few updates.

  30. Mrs. Bug says:

    Thank you so much for this great post! It is very helpful. We are looking to FIRE in the next year or so and are planning to use ACA. It’s nice to read your personal experience. I used the link you provided and ran and estimate for our state (GA). Silly question, but the amount shown is that for household or per person? I couldn’t find anything to confirm the amount.

  31. Liz says:

    OMG – reading articles like this makes me so happy to be Canadian. Granted we do pay higher taxes, but man, the stress an actual illness is enough without having to worry about coverage for this specialist and that specialist. I am dealing with a very serious diagnosis at the moment and my biggest expenses are the parking fees at the hospital appointments.

  32. JD says:

    I never had ACA, which would have cost my spouse and me over $500 a month. I had only insurance through work, until I reached 65, when my work’s insurance was almost $1200 a month to cover just me and not my spouse – age banded insurance is scary, folks. So I switched to Medicare part A (which is free to me, but I believe is not free to high earners and is extremely narrow in coverage) and part B, which last year cost me $148 a month. However, Medicare leaves a surprising amount to be paid out of pocket, so I also purchased a supplemental plan, which is another $179 a month. No prescription plan is included in Medicare A or B by law, so I had to purchase a prescription plan, going with the cheapest at $7.50 a month. So, as Richard Quinn commented, Medicare costs can be quite a surprise for folks, and it is limited in what it pays, especially for a long hospitalization or stint doing in-patient physical therapy. This is my second year on it, and I’ve already seen a price increase.

    I take an expensive prescription these days and got the manufacturer’s help with that (so that I had only a $5 co-pay) before Medicare started, but guess what? The manufacturers are prevented by law from assisting anyone on Medicare. I had to apply to some patient foundations and jump through hoops to get payment assistance through one of them. The best my prescription plan will do is pay 25% per dose of a drug on this tier. I take six doses a year of this drug, and the best price I could find (with GoodRX at Costco) would have been $23,000 – PER DOSE. I would have had to pay $17,250 per dose or give it up, if I had not fought to get help with an assistance foundation. So, heads up, frugal friends. When you reach 65, it’s a whole new ball game. Plan now, don’t get surprised like I did.

    • NancyG says:

      I have been looking at Medicare Advantage plans for my husband. They seem to cover more and the premiums are lower. Have you researched advantage plans? Luckily the healthcare organization I retired from seems to have the best advantage plan in our area. However, I was surprised how expensive Medicare is if you have a decent income in retirement.one RMDs kick in it will be the most we have ever paid for healthcare insurance.

      • JD says:

        My spouse has a Medicare Advantage plan, but an independent agent and I decided it was not the best option for me and went with the supplemental plan for me. Another surprise was that my husband’s age allowed him to apply for a plan that is no longer offered ( I believe it was plan F) which paid basically everything and so was highly desirable, but he was turned down for having had too many hospitalizations in the previous year. I think the limit for hospitalizations was only one or two for the entire physical year. We had no idea that he could be turned down for that reason.

        Yes, Medicare can be quite a sticker shock!

  33. Akron A says:

    The ACA marketplace is just that, a place to compare various plans and get a idea if your plan will be subsidized by the government as most are. My husband (63) switched jobs 5 years to a small company with no benefits. The ACA marketplace is where he gets his insurance: high deductible bronze level, HSA eligible, income too high for subsidies. 2022 premium is $849/mo up from $669/mo. Obviously, the older you get the more you will pay. I hadn’t had insurance since 2013 and when I hit 65 last year, I got on medicare. It is much cheaper than what my husband pays. Part A is free, $224/mo (672/qtr) for Part B (this includes the surcharge for a higher income), $22.70 Part D and $114/mo for a medigap plan.
    Beware of using health insurance brokers, we got scammed by one. Best to check out the governments website healthcare.govfirst

  34. eMIly says:

    Thank you for this post! And I totally agree with Mr. FW re: keeping detailed notes with agent names/notes/ID numbers. I used this same strategy in my quest through the PSLF (Public Service Loan Forgiveness) program, and that loooooong and detailed Google Doc was critical to me successfully navigating that process. My loans were 100% forgiven in fall of 2020!

  35. Frugal Portland Gal says:

    It is worth emphasizing that it is very important not to go over the 400% federal poverty number with your income. The subsidy when you are over the number drops to ZERO. It is sort of a sliding scale as long as you are under the 400%. People who have income of $30K annually get more subsidy than those who make $60K annually, for example.

    • Kara says:

      This was changed recently. There is no longer a ‘cliff’ at 400%. The subsidies go down after 400% but they do not stop.

  36. Winifred says:

    This is all great advice and something we will have to do at some point. We currently get health coverage through my full time day job but I am hoping to drop to half time within a year so I can focus on my dog training business.

    When my husband was laid off during the pandemic we scrambled to find coverage on the ACA here in Massachusetts. At our ages (58 and 60) even the “cheapest” plan was too expensive. We ended up getting the least expensive plan (in terms of premiums we pay out of pocket) through my employer. We still pay more than $1200 out of pocket each month in premiums. My employer pays $7500/year towards the premiums which is pitifully low but I work for a church so am thankful they pay anything!

    So our annual health insurance in Mass. costs about $20,000/year and our deductible is $13,000. Our income is such that we are not eligible for any ACA subsidies. $33,000/year for two people to have health insurance. Thankfully, we are fairly healthy. There is something seriously wrong with this country’s priorities.

  37. Winifred says:

    Just came back to add: my sweet mother, who is 84, spends the majority of her time negotiating payments and reimbursements between their cobbled together supplementary coverage, small amount of private medical insurance, and Medicare. No one should need to spend their time doing this (and yes, she takes copious notes a la Mr Frugalwoods).

  38. Mike says:

    I am so conflicted on ACA for FIRE folks. I don’t believe the intention of the system was for millionaires to game their income in order to get free healthcare. However I DO believe that EVERYONE’s healthcare should be subsidized by the govt. My family premiums are over 40000 now. It is simply not sustainable. There has to be a better way.

    • LaReesa says:

      I’m with you Mike. For some reason this doesn’t sit right. I think it’s fine that the Frugalwoods can access this kind of decent healthcare at a good price but I just wish it were available to everyone.

  39. Debbie Bryan says:

    Bake yourself a cake! Ha ha! I like that sentence. I used the ACA and it was much cheaper than COBRA. It got me through until I got another job. My suggestion is that if your state gives you the option to use an insurance broker, do it. I had a much better experience using a professional broker vs. going through the state representative. No extra charge to use a broker, either.

  40. David Ho says:

    Heyyyy!

    Long time reader. Love love love love uuuuuuuuu. I didn’t see this noted in the comments (did a quick search of the page) but I wanted to give a shout out to the arm and a leg podcast that is all about the cost of healthcare and chock full of practical tips when it comes to dealing with our.. dare I say broken? healthcare system (in terms of cost). https://armandalegshow.com/

    I’ve been a supporter of the show for a long time. Not to get political but I do pretty strongly feel that healthcare is a basic human right and it’s a bit nuts that for many of us – in a first world country – when we have a concern about our health the first thought we have is “o god – what’s this going to cost me.” Won’t even get into my thoughts on the senselessness of people dying because they have to ration out insulin due to it’s unreasonable cost.. and occasionally dying.

    Sorry to digress from your main topic a bit (it’s related though!) Obviously a very complex set of issues.. just thought it might be of interest to you if you haven’t already encountered that podcast. I believe they’re also associated with the Kaiser Foundation (Not Kaiser Permanente)

  41. Peter says:

    Thanks for providing such a detailed explanation of your experience! It is something I’ve considered for my family, but am still unsure what coverage would be for us so more individual digging for us to consider it will be needed.

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