How to Solve the Health Care Puzzle if You Retire Before Age 65

Category: Health Issues

September 30, 2014 Note: This is an update of an article from July, 2011. A lot has happened in the health insurance world since then, particularly with the implementation of the Affordable Care Act (aka Obamacare). This is Part 3 in our Health Care Insurance series – see links to Parts 1 and 2 in Further Reading below

Congratulations on your retirement before the age of 65. Now, what the heck are you going to do about health insurance?

Millions of baby boomers are finding themselves retired before the traditional retirement age of 65. Whether your retirement is the fulfillment of a dream or an unwanted outcome, it usually comes with a huge question – what to do about health insurance? This article will help you understand your options, particularly if you find yourself retired before Medicare takes care of most of your health care insurance issues.

If you retire at age 65 or later you will most likely have no major health care insurance issues to worry about. That’s because Medicare enrollment will cover most of your health insurance needs (see links to our Medicare articles and resources in “Further Reading” below). You could still face major out-of-pocket costs for non-reimbursed expenses, so supplemental insurance might be a good idea. But if you or your spouse have not yet reached the magic age of 65, what are your health care options?

You must have health insurance now, or face a fine. In the past you might not have had health insurance for a number of reasons. Perhaps your previous employer did not provide insurance, so you are not eligible for COBRA. Or, your COBRA might have run out, you never signed up for it, or you lapsed on your payments. Now it is the law that you have some type of health care insurance. If you are too poor to afford it, the government will provide it for you (Medicaid). If you make less than $46,000 a year for an individual or $94,200 for a family of four, you should be eligible for a tax credit to make your insurance affordable under the ACA.

The Health Insurance Options
These are the major ways to get coverage:

– Healthcare insurance provided by your previous employer. Traditionally this was the ideal situation, particularly if your employer paid all or most of the premiums after you retired. You can continue along as you were doing in your working years, with the coverage and plans you are used to. If this describes your situation, your biggest concerns should be what happens if your employer goes bankrupt, dramatically changes the plan, or cancels coverage at some point in the future. Medicare will almost always be your primary provider after age 65.

– – You are on COBRA. Government regulations require that you have the option to continue your existing health care insurance for at least 18 months after you stop working. You will, however, have to sign up for it and (normally) pay for it. With COBRA the big risk is that your coverage will run out before you reach the age of 65, leaving you without coverage and scrambling to get it. In most states and circumstances your insurance carrier can cancel your coverage after 18 months (30 months in some states). The Affordable Care Act (ACA) provides options when that happens, especially if you have a pre-existing condition.

– Get insured from your state health care exchange The easiest way to find your state health care exchange is go to the federal site, Healthcare.gov. The process is quite clear and easy. It will ask you what state you live in and a few other questions, like how old you are and if you smoke. If there is a state exchange where you live, it will refer you there. After a few questions you will start getting into the nitty-gritty of various plans, along with whether or not you are eligible for subsidized coverage.

A page will come up with various plans, types of coverages (which are much more standard now than they used to be), and costs. There are 4 levels of plans in ascending order of features and costs: Bronze, Silver, Gold, and Platinum. All plans have to cover things like doctors visits, maternity care, and preventative care.

There are multiple reasons to sign up for coverage in the next enrollment period, which begins Nov. 15, if you haven’t already. For one, you are now required to have health care coverage or face a fine. For another, everyone needs insurance – you can’t predict if and when you will get sick or injured. Rates will vary depending on where you live, number of people in your family, smoker vs. non, and how many companies are competing to provide coverage. The good news is that you have a good chance of getting equivalent coverage for less than you are paying under COBRA.

– Consider a High Deductible Health Plan (HDHP). Most insurance professionals agree that low-deductible plans are a money maker for the insurance companies and an unnecessary high cost for most consumers. Most experts recommend going with the highest deductible plan you can afford. The maximum out of pocket permitted is $6,350 for an individual and $12,700 for a couple. The money you pay out in increased deductibles will in most cases be more than made up by the lower premiums you pay. Note, you need to have a high deductible plan to take advantage of our next idea, a Health Savings Account.

– Start a Health Savings Account (HSA), if you haven’t already. If you have a high deductible health insurance plan you might be eligible to open an HSA that is paired with a high deductible plan. With an HSA you pay money into your account and get a deduction from your income tax on that amount. You can then use that money for legitimate medical expenses (including dental, vision, and prescription drugs), along with deductibles and co-pays. You will even earn tax-free interest on the balance in your account. In 2014 individuals can contribute $3300 to their HSA and couples $6550. Individuals over 55 can contribute an additional $1000. One restriction – you cannot pay your health insurance premiums or non-prescription drugs from your HSA. Once you become enrolled in Medicare you are no longer eligible for an HSA (but you can keep the money in the account). Here is a good resource for HSA FAQs
Where can you get health care insurance?
Having been used to employer-sponsored health care plans all of their lives, most baby boomers are puzzled about where to find a good health insurance company. The new health care exchanges can be confusing because there are so many plans to choose from. You can use a feature at Healthcare.gov to get local help, or call 1 800 318 2596 to get personal assistance.

How much will you have to pay?
Your premiums will vary according to your personal situation. Factors like age and smoking will have an impact. Quotes will vary by company and state as well. We ran a test for a 61 year old non-smoker in Monroe County with a household income of $45,000. The results were surprisingly low – after applying the tax credit that applied to that income level the lowest price plan for our test individual had a premium of $221 a month, with a yearly deductible of $6100 and max. out of pocket of $6350. The most expensive plan was a litle over $700/month with negligible deductibles and out of pocket costs.

What can you do if money is an issue?
Fortunately there are some options available, other than just holding your breath and hoping you don’t get sick before you get on Medicare. Here are a few:
– Are you a veteran? The Veterans Administration provides health care for veterans, a very valuable benefit. VA coverage and TRICARE coverage count – you are considered to be insured if you are in these programs. However you need to get registered into the VA system to take advantage. The quality of care and accessibility of care will vary widely by region and hospital, so be prepared – you probably won’t be able to breeze in and get instant care. You might have to wait a long time and not get every service you might want. Many veterans rely on the VA to get deeply discounted prescriptions.

– Lose your bad habits. If you are a smoker, stop now, because you will pay higher rates. Likewise if you are overweight or out of shape, shed those pounds now. Smoking is the only factor that affects your premiums, but your poor health could affect how much you are ill and the co-pays and deductibles you are on the hook for. If you drive a motorcycle or have a dangerous hobby, you might want to avoid situations that increase the chance that you could become injured.

– Still confused – talk with an insurance professional. If the quotes you are getting don’t make sense to you, talk with an insurance pro or call the government number. There is no substitute for what you can learn from a qualified expert who you think you can trust.

What if you have a serious pre-existing condition?
This is the good news with the ACA. You can not only get insurance, but you won’t have to pay extra to get it.

Bottom Line
Health insurance and Medicare are among the most complex and important topics any retiree faces. We have attempted to put together a brief overview of the issues here – but we have only scratched the surface. Before you make any important decision like this do your homework and talk to as many experts as you can find. Good luck!

More Resources:
Now That You’re 65 – 10 Things You Need to Know (Part 1 in a series – includes how to sign up for Medicare)
Part 2: Topretirements Survey Results: Our Members Love Medicare!
Healthcare.gov – Start here for answers to almost all your questions.
Is Medical Tourism in Your Future?
Medicare.gov
Affording Health Care Costs in Retirement
Consumer Reports info on Medigap Policies

What do you think – and what will you do?
We look forward to your comments and shared experiences about post-retirement healthcare. Please use the Comments section below to share!

Posted by Admin on September 30th, 2014

55 Comments »

  1. This article comes up short. There is another option, The Health Coop, in conjunction with Samaritan Ministries. It is sanctioned by the ADA and Obama care so there is no penalty if you choose a co-op. There are many coops and some that are Christan based. The monthly fees are a third of regular insurance. Most of the co-ops have been in business for 20 years or more and have up to 100,000 members each. Medi-share is another one out of Florida. I was looking for an alternative since I am a business woman and must have an affordable option. The Health co-op pays the bills of the members once they pay the first $300 per incident with a maximum of $250,000 per incident. Look into this–it is a viable option. Traditional insurance is not your only choice.

    by Jennifer — October 1, 2014

  2. i imagine the only way I’ll get an answer to this is if I actually go to a local health care navigator for the state of NY, but here goes anyway: How do these new Obamacare plans handle a transition in moving from one state to another? For example, if I sign up while I’m eligible in NY state, but then we sell the house and move to Ohio, then how does that get handled? Is there a grace period that covers me with the NY insurance in Ohio, until I can sign up for an Ohio plan? Portability seems to be a major question for this forum, as many of us are considering moving to other states. (I still have a couple years before I’ll be impacted by this, but thought I’d raise it anyway). Thanks!

    by Paula — October 1, 2014

  3. We just went through that type of transition when we moved from Pennsylvania to Florida. You need to call the Healthcare Exchange and explain the situation. You will then need to complete a new application for your new state and choose an available plan in your new state. They will then cancel the insurance in your old state and start the insurance in your new state. The insurance changeover will be effective the following month. That’s the simple process. We had a few glitches in the process, so I’d suggest you call your old insurer and new insurer a few days after the process to make sure everything’s okay. In our experience, I’ve found the Exchange people very courteous and helpful, but I question if they’ve had adequate training to do their jobs.

    by Ray — October 1, 2014

  4. Quite frankly, the High Deductible plans I looked in to are yet another fraud foisted on us by the insurance companies. They cost as much as a regular plan, but provide less coverage. But then again this may be another California anomaly, where the insurance companies can charge just about anything they want.

    by John — October 1, 2014

  5. […] further reference: Social Security Website Medicare How to Solve the Healthcare Insurance Puzzle if You Retire Before Age 65 Part 2: 10 More Checklist Items for the Retiring Baby Boomer Consumer Reports info on Medigap […]

    by » Now That You’re 65 – 10 Things You Need to Know - Topretirements — October 1, 2014

  6. I’m 59 and will be retiring next month (November 2014). I will be covered under my company plan through the end of November. I’ve looked at the Healthcare Exchange information and it says that I need to call then to get coverage for December 2014. Has anyone had experience doing this (getting coverage outside the open enrollment period)?

    Anything special I should be aware of?

    by glenns — October 1, 2014

  7. I retired in 2012 and have been going to the VA for medical care. I have one of the best doctors that I have ever had for my primary care. The co-pay is great, $15 and the scripts are $9 each. Specialist co-pays are $50.

    The VA has been very good to me as far as I am concerned. Yes, it does take time to get into
    the system, but once in, you will find quality care. All blood work, x-rays, or whatever tests you need are under the single co-pay for the doctor visit. While there, I always check to be sure that all of my shots, flu, pneumonia, zostor, etc. are up to date. Shots are also covered under the co-pay for the visit.

    It sure beats paying $400 plus per month for health insurance. In a couple of years I plan to enroll in medicare.

    The only draw back to the VA is that I have to travel about 50 miles to get there. I think that saving about 5K a year on health care is worth the trip.

    by Johnny — October 1, 2014

  8. Can we please have a discussion on the health care plans of our members under 65 who have chosen Obamacare? The article stated that it might be wise to take the high deductible plan, which I assume is the Bronze level plan. It stated that you could take the high deductible plan and also contribute to a Health Saving Account (HSA). The deductibles look high on both the Bronze plan and the Silver plan. Can some of you that are on these plans please give their opinions why they chose either Bronze or Silver. One plan I looked at in the Bronze plan was something like $107 a month for two family members (husband and wife). That seems really low priced The Silver plan that I looked at was around $470 a month for two family members. These plans are hard to understand! We have always had good insurance through employers and this is a rude awakening. If we choose the Silver plan that would be around $5640.00 a year, if we choose the Bronze plan it would run around $1284.00 a year. That is a difference of $4356.00 a year between plans! If you are on any of these plans please give us your experiences when going to doctor appointments and if you have had tests, prescriptions and hospitalizations. What was paid and what wasn’t and if you are contributing to an HSA. Thanks in advance.

    by Louise — October 2, 2014

  9. The VA is not an option if you have done any kind of saving or planning for your retirement. My husband is an honorably discharged veteran and was denied any kind of health benefits (Florida) because we have savings. It should not matter if you do or do not have money. IF YOU ARE A VETERAN, YOU SHOULD GET AT LEAST SOME BENEFITS FOR YOUR SERVICE. We are not looking for a handout, just some other options other than the high deductible health plan we are paying for.
    If there is anybody who has information that could help, it would be greatly appreciated. Contacting the VA directly isn’t an option. The frustration and raised blood pressure are not worth it! I still have a two inch high stack of papers from going back and forth with them for my Mom, who was an honorably discharged veteran herself. It took the VA over two years to deny her any kind of benefits.

    Thanks, in advance, to anyone that can advise!

    Editor’s note: This sounds terrible if it is the case. However I have never heard of any means test for Veterans Medical care. Wonder if there is some other issue that caused the denial. Anyone else have facts on this?

    by Donna D — October 2, 2014

  10. Several years ago I applied for VA medical and was denied because of my financial status – even though I was unemployed at the time. I forget details but there ARE means tests.

    by John H — October 2, 2014

  11. More… VA has a “Priority Grouping” system that determines your eligibility. Here is the one that I was in… (Visit the VA website for details)

    Priority Group 8
    Veterans with gross household income above the VA national income threshold and the geographically-adjusted income threshold for their resident location and who agrees to pay copays

    by John H — October 2, 2014

  12. I recently signed up for an ACA Medical Plan (aka Obamacare). The insurance broker did all of the online registration. I chose a gold level plan through Humana. Based on an income projection of 47M the cost will be $477.00 per month out of pocket for me and my wife. The cost would have been over $1300.00 a month without the government subsidy.

    by Jim — October 3, 2014

  13. Note to Editor:
    I know it sounds terrible but it happened. There are “priority groups” and thresholds for income levels but we can’t find any specific numbers anywhere. My point is that income should have nothing to do with a veteran getting benefits, period!
    I understand that there are some who have financial issues but they are all veterans. We saved and planned and are now being penalized for that.
    We have nothing to do with Obamacare, buying Humana insurance on our own. Individual deductible is the max, over $6,000 each per year. Monthly cost for medical, dental and eye is over $900 per month.
    We are not looking for a “handout” from the VA. My husband would just like to have a little back up through the VA in case of a major medical problem. We have heard good things about the VA medical here in our area of Florida. He just wants what he deserves for his service.

    by Donna D — October 3, 2014

  14. Thanks to everyone for raising and filling us in on this important issue. We did a little looking online and found this:

    http://www.va.gov/healthbenefits/cost/copays.asp
    “While many Veterans qualify for free healthcare services based on a VA compensable service-connected condition or other special eligibilities, most Veterans are required to complete a financial assessment or means test at the time of enrollment to determine if they qualify for free health care services. Veterans whose income exceed VA income limits as well as those who choose not to complete the financial assessment at the time of enrollment, must agree to pay required copays for health care services to become eligible for VA healthcare services.”

    (there is more under this, but it appears veterans do have a means test. Not that they will be denied care, but they will have to pay such as :
    Priority Group 8 and certain other Veterans are responsible for VA’s full inpatient copay rate.

    Inpatient Copay for the first 90 days of care during a 365-day period……………$1,184.00
    Inpatient Copay for each additional 90 days of care during a 365-day period……………$592
    Daily Charge……………$10/day
    )

    by Editor — October 3, 2014

  15. Jim,
    What state are you in? I just did a quick look up on Humana website and it says Humana is not available in Connecticut.

    Sounds like you got a good price on a Gold plan through Humana. So far in CT Silver plan seems to cost the same price but of coarse Gold is better!

    by Louise — October 3, 2014

  16. Louise,
    We are living in the Atlanta, GA area. Yes the cost was surprisingly low. I was paying more for a Silver Level Plan from Blue Cross through my previous job.

    by Jim — October 5, 2014

  17. “In order to ensure the availability of quality and timely health care to Veterans with service connected conditions, special authority based on military service, low income, and those with special health care needs, in January 2003 VA made the difficult decision to stop enrolling new Priority Group 8 (high income) Veterans whose income exceeded VA Income Thresholds.

    The new regulations went into effect on June 15, 2009 and enable the Department of Veterans Affairs (VA) to relax income restrictions on enrollment for health benefits. While this new provision does not remove consideration of income, it does increase income thresholds. You may be eligible for enrollment under this new provision.”

    by Mike — October 6, 2014

  18. We have health insurance through DHs job, but he is retiring at 61 this coming January. Since I am several years younger, and a veteran, (10% service connected), I called the VA and was told that they do means test. Because we have been saving for this time of our lives for so many years, I would not qualify for any assistance whatsoever.
    So, if we end up having to go through Obamacare, (which truly makes us cringe) what do we do with our 2 kids that are under the age of 26? Has anyone had to deal with this yet?
    Is there coverage for vision and dental?
    If DH has insurance and I don’t…..and we jointly File our income taxes…..will we still have to pay the fine?
    Thanks to anyone who may know the answers to any of this.

    by Caps — October 7, 2014

  19. I am not positive about the fine but I am throwing my 2 cents in anyway. I do believe every American has to be insured whether privately though an employer program, VA or other. I do believe you will have to pay a fine. To avoid the fine, why don’t you consider one of the cheapest Bronze level plans. I saw one plan for 2 family members with an income of $62k, the credit towards buying insurance was close to $1k a month and insurance cost was something like $67 a month. It is the basic no frills plan that pays nothing till you reach an out of pocket minimum of something like $6300 per person or $12,700 per household. Most of the plans have the same OOP but some have copays and they pay the difference. This lowest Bronze level plan may offer an Health Savings Account where you could put tax deductible money to pay for copays, prescriptions and other medical things. I have been looking high and low to find something for my husband and myself and nothing makes me happy with this. Walmart and Costco are also offering some kind of insurance through them. I don’t know much about it though. What I have read about Obama care is that Bronze pays 60%, Silver pays 70%, Gold pays 80% and Platinum pays 90%. As always, you get what you pay for. My husband will need to be on Obama care for 2 years then he will go to Medicare. I will have to be on Obama care for 3 1/2 years before Medicare kicks in. Don’t forget too, if you make $1.00 more than $62,040 Adjusted Gross Income you will NOT, NOT, NOT be eligible for the insurance credits and for us that is close to $1k a month. If we choose the Silver plan at $470 a month it will escalate to $1,470 a month with no credit! With Social Security, one small pension and one inherited IRA which requires annual distribution our income will be close to $62k. The $62k is figured on Adjust Gross Income (AGI). So, please be aware if your income exceeds $62k you are screwed out of credits! I asked our tax preparer if we should exceed the $62k could we open an IRA to offset the AGI and she said yes. Do what you have to do but $1.00 can throw you over the cliff! This is really a smack in the face because my husband and I have always worked for well known corporations that offered excellent benefit packages with all the bells and whistles including excellent insurance coverage. Obama care doesn’t provide Dental to adults, for children up to 18 only and I don’t believe vision care either. So whatever you buy for insurance, you have to find a dental plan somewhere and a vision plan too. Ugh, I am glad there is an option for buying insurance for those who have preexisting conditions and the price is good if you get the credits, but this is a whole new world to me! Can’t imagine what the next 20 years will bring!

    Caps, I am sure you can sign up your children under the plan up to age 26. On the website, you put your income in, the ages of each person in the family and it will come up with the credit your family is allowed and will bring up plans in your state that you qualify for. It seems the less your income is, the more your credit is. I am not an expert but I have been trolling through this stuff for a few weeks.

    by Louise — October 8, 2014

  20. Thanks Louise. I feel your pain. Sounds like we’re treading the same water.
    Do you know if we have to add the income of our grown adult children under 26, to ours? We put them through college and they both have pretty good jobs. No health care insurance,however.
    I receive tenant income and that varies from year to year as well. (LLC). Having to worry about their $62k threshold,seems really stressful.

    by Caps — October 8, 2014

  21. Good information on household income:
    http://www.nolo.com/legal-encyclopedia/determining-your-household-income-obamacare-credits.html

    by Louise — October 8, 2014

  22. Caps,
    I think this article will answer your question on your children’s income. If you claim them as dependents and they work it looks as if their income has to be included as household income unless I interpreted it incorrectly.

    https://ttlc.intuit.com/health-care/1913382-how-is-family-size-and-household-income-determined-for-subsidy-purposes-for-2014-obamacare

    In your case you are a family of 4 if you are claiming your children as dependents so your income allowance is somewhere around $94k for a family of 4. I am a family of 2 and the limit is $62,040 to get the insurance credit.

    Here is a good website to determine the size of your family and income limits: http://obamacarefacts.com/obamacare-subsidies.php

    Yes, it is stressful to have to hold your income down when you could pull out more from retirement funds to enjoy or just to ‘live’. I am determined to stick to $62,040 somehow because I do not want to shell out $12,000 a year additional money for health insurance! There is also a question on my part on Stock dividends if they are reinvested to buy more stock are they considered income if you don’t receive actual money?

    Caps, this just came to mind, why aren’t your children on your husbands employer’s health insurance plan if they are under 26 years old? I thought that was a law now that kids could stay on the families health insurance till their 26th birthday. Or are you saying that your children’s employer’s do not offer health insurance?

    My biggest fear is that some income might come out of the woodwork to throw the upper limit out of whack. If you were to take a part time job, that would screw things up. If you won $500 in the lottery you’d have to add that to your income! Or maybe just donate it to charity so that doesn’t screw up your income! What if you buy a new household ac unit and the power company gives you a $1,000 rebate, would that be considered income? Ugh, so many unknowns! I did receive a $1,000 rebate this year for installing an ac unit, not sure if I have to add that to my income but I am hoping NOT!

    I personally do not know which way to go on insurance, Bronze or Silver. Go cheap on Bronze and get an Health Saving Account (which is tax deductible like an IRA) and put in $300-$400 a month there. Bronze with HSA costs like $67 a month with a $1,000 credit or Silver plan with no HSA would cost around $470 and has ‘some’ copays. Ugh, hate this stuff!

    by Louise — October 8, 2014

  23. Caps, just curious — if your kids have college degrees and “pretty good jobs,” then they could get their own health insurance out on the health exchanges of Obamacare. And probably for pretty cheap. Unless they are still considered your dependents, I guess.

    by Paula — October 9, 2014

  24. Thanks for including the link, Louise. I didn’t,however find any info about kids under 26. They no longer live with us, and yet gov. Says they can stay on our policy. So….does anyone know if that includes policies through Obamacare as well? I know they can’t be included if we are on Medicare.

    by Caps — October 9, 2014

  25. Just fyi — This is a great website, and they also have a toll free number that you can call and speak to someone: http://www.ehealthinsurance.com.

    by Nova — October 13, 2014

  26. Please read this article from Forbes regarding electing Cobra when leaving your employer and how it can have a negative impact with the affordable health care act.

    http://www.forbes.com/sites/deborahljacobs/2014/04/21/the-latest-problem-with-obamacare-could-cost-you/

    by Karen — October 26, 2014

  27. After spending several hours shopping for a healthcare plan for my under-65 wife, I called our her current insurance company where she has an individual plan. A startling fact was revealed to me. He said that they offer about 10 different plans for our are in Indiana. Not one plan covers medical issues out of state unless it is an emergency. He said none of the new Obamacare compliant plans are good for non-emergency care outside of Indiana!

    We go to Florida for at least 3 months in the winter. So she is not covered for anything short of a broken limb! We have two more winters to get through before she is on medicare and get nationwide coverage.

    If you have coverage under Obamacare, be aware of this……

    by Bill — November 18, 2014

  28. Hi Bill:

    Look into a Health Care Coop for your wife. They are much cheaper than traditional insurance and are ACA approved. The members of the Coop pay each others bills from a common pool. One I investigated has over 100,000 Members and has been in business for over 20 years. Medishare is one and the other is the The Health Coop both are Christian based and administered through Samaritan Ministries. Medishare has a yearly deductible of $1200 and is administered more like health insurance –only it is a co-op. My monthly bill is $345.00. The Coop will negotiate rates with your doctors before you see them. Just another option your wife can consider until Medicare kicks in.

    by Jennifer — November 19, 2014

  29. Louise If you live in a stat that did not expand Medicaid the 62,040 doesn’t matter.

    by easilyamused — November 19, 2014

  30. […] how to sign up for Medicare) Part 2: Topretirements Survey Results: Our Members Love Medicare! Part 3: How to Solve the Health Care Puzzle If You’re Not 65 Yet Why Obamacare Open Enrollment Matters to Boomers (MarketWatch) Beware of Shifting Medicare Options […]

    by » Open Enrollment Season Means It’s Time to Nail Down Your Health Insurance - Topretirements — November 24, 2014

  31. I am still investigating Obamacare and have been doing so since October. Still unsure of what plan to go with and all of them leave a bitter taste in my mouth and make my pocketbook cringe. I have also recently discovered that there is a ‘marriage penalty’ that is a real eye opener. We will apply for Obamacare in February.
    Okay, so we plan to keep our income at the Premium Subsidy Threshold of 400% of Federal Poverty Guideline for a 2 person household and that is $62,920 (maximum income) for 2015 to receive a ‘credit’ of $985 a month to apply towards the cost of Obamacare. I have found several Silver level plans starting at $471 monthly after using the credit of $985. So not getting into the pro’s and con’s of Bronze of Silver plan at this point, I would like to tell you about the ‘marriage penalty’. Now fast forward down the road when Hub goes on to Medicare in two years. Hub is no longer part of the 2 person household for Obamacare purposes. However, our entire household income of $62,920 becomes entirely my income when applying for the credit to apply to the cost of Obamacare. Under the Premium Subsidy Threshold of 400% of Federal Poverty Guideline of a 1 person household to receive a credit I cannot exceed $46,680 (maximum). I cannot lower our income any further to qualify for the subsidy (can’t stop Social Security, pensions, required minimum distribution (RMD) withdrawals from an inherited IRA). However, If we were not married but living together and each made $46,680 as single persons, that would be a household income of $93,360. Each person would qualify for a subsidy to apply to Obamacare! I am outraged that we get penalized for being married! So in two years when Hub goes off to Medicare land and leaves me behind, with no credit I will be paying $775 approx. for a Silver plan and in the $500 range for a Bronze plan which is just one step better than having nothing. This marriage penalty is outrageous! If they took my income which will only be Social Security, RMD IRA and a little being pulled out of my IRA it would be way below the $46,680 as a 1 person household. I hope some of my ranting makes sense to you because many of us will be faced with this situation. Just thought I’d share what I have learned.

    by Louise — January 30, 2015

  32. Okay, I am going to admit I made a bit of a mistake on the marriage penalty. I spoke with an Anthem Insurance agent today and he set me straight. He said we would get a credit with an income level insuring one person. However, it still is a bit unfair. As a couple we would get almost $1,000 credit, as a one person household with the same income I would get $178 credit.

    I will give you an example. You have to go to http://www.kff.org and use the subsidy calculator. When I plugged in the numbers of our income at $62K with a two person household but only one person being insured this is what it said:

    Results
    You are likely eligible for financial help

    Based on the information you provided, your income is equal to 388% of the poverty level. This means you are likely eligible for financial help through the Health Insurance Marketplace. An estimate of your cost for coverage and amount of financial help in 2015 are provided below. To find out your actual amount of financial help and to get coverage, you must go to Healthcare.gov or your state’s Health Insurance Marketplace.

    Estimated financial help: $178 per month ($2,141 per year)
    as a premium tax credit. This covers 27% of the monthly costs. Your cost for a silver plan: $486 per month ($5,832 per year)
    in premiums (which equals 9.56% of your household income). The most you have to pay for a silver plan: 9.56% of income for the second-lowest cost silver plan Without financial help, your silver plan would cost: $664 per month ($7,973 per year)
    Other Levels of Coverage

    The costs above are for a silver plan in your area. Silver plans are one of four levels of coverage that you can buy with financial help. These levels – bronze, silver, gold, and platinum – tell you about how much financial protection the plan will offer you if you get sick. Bronze plans have the lowest monthly costs, but when you need medical care, you will pay more for your care. Gold and platinum plans offer more financial protection if you get sick, but these plans have higher monthly costs. You can receive financial help to purchase any of these levels of coverage.

    For example, you could enroll in a bronze plan for about $296 per month ($3,554 per year), which is 5.83% of your household income, after taking into account $2,141 in subsidies). For most people, the Bronze plan represents the minimum level of coverage required under health reform. Although you would pay less in premiums by enrolling in a Bronze plan, you will face higher out-of-pocket costs than if you enrolled in a silver plan.

    Out of Pocket Costs

    Although your insurance company may cover most of the cost of your medical care, you generally have to pay something when you go to the doctor or have a hospital stay. These costs – which are in addition to the amount you pay each month – are called your “out-of-pocket” costs. The health reform law sets limits on the amount you have to pay out-of-pocket each year. Your out-of-pocket limit for a silver plan can be no more than $6,600 in 2015. Whether you reach this maximum level will depend on the amount of health care services you use. Keep in mind that this only protects you when you go to doctors and hospitals that are in your insurer’s network. If you go to a doctor or hospital that is not in the network, you could end up paying much more.

    You are guaranteed access to a silver plan with an actuarial value of 70% . This means that for all enrollees in a typical population, the plan will pay for 70% of expenses in total for covered benefits, with enrollees responsible for the rest. If you choose to enroll in a bronze plan, the actuarial value will be 60%, meaning your out-of-pocket costs when you use services will likely be higher. Regardless of which level of coverage you choose, deductibles and copayments will vary from plan to plan, and out-of-pocket costs will depend on your health care expenses. Preventive services will be covered with no cost sharing required.

    by Louise — January 30, 2015

  33. There seems to be a huge amount of misinformation here. It’s easy to call healthcare.gov or use their website to get accurate information. There are healthcare.gov facilitators everywhere to help you.

    by easilyamused — January 31, 2015

  34. My husband was laid off from his job August 2014. We are just finished with severance pay and start getting unemployment and soon Social Security. We are both 64 and will get Medicare in August.

    I struggled with healthcare insurance as our work insurance will be done the end of February. I was finally referred to a local insurance person who helped me immensely. He was someone that was referred to me, I did not call the person who covers our home and our cars.

    I discovered your local people know a good deal about what needs to be done. My husband and I are both 64 and we have a daughter who is 21 and in college. Income levels for assistance in Iowa are up around $75,000 and we qualify for over $1,000 in assistance each month.

    On the bronze plan, which was the lowest, nothing was paid until $12,500 in deductions were met. And the cost if something horrible should happen they will only pay 50%. Just so you are aware, as the website is not clear on that point. For the 3 of us we have a silver plan which costs $427 per month, that is with our assistance. The silver plan starts paying after a $2500 per person (for instance if I had met $2500 out of pocket, the insurance would start for me) and then the insurance pays 70% plus office etc.

    What I am also led to understand is that each state has different plans and prices. If I went onto the website and put in the same information but a different state I would likely get a totally different picture. I think here in Iowa there are maybe 2 companies to choose from on healthcare.gov. In a more populated state you may have many more.

    So, if you have a local person that you trust, I would call them first.

    Vicki

    by Vicki — February 1, 2015

  35. My husband who is 59 would like to retire in 2 yrs,I am 58 and would stop working when he does. At 60 he will start collecting a small pension from the Navy he was in the reserves, and stay at his regular job until 62. Since he will be retired from the military we both can be covered under Tricare health insurance. Has anyone used this insurance and how is it? Thanks for any info!

    by Barbara — February 2, 2015

  36. Hi Barbara:

    The medical practice where I am working as a nurse does not like Tricare–at all. They pay very poorly and in Washington, DC where I am most primary care doctors in private practice want nothing to do with Tricare. Check out all your options and see if there are doctors who will accept it. Our patients pay their fees out of pocket It would be best to see if your coverage offers out of network benefits.

    by Jennifer — February 2, 2015

  37. I am retired military and I have had Tricare for over 25 years. It has worked great for me and i know that lots of personnel in California use it with no problems. In fact my wife is on Medicare with Tricare for life as the secondary insurance. In the last three years other than the premiums we have only paid 145 dollars out of pocket and she has lots of medical issues. My co-pay is usually very small and I have had great doctors. I think where you are depends on the quality and type of tricare you can use. Call a Tricare counselor and they will explain it all to you. Good Luck with your retirement.

    by Jimmie — February 3, 2015

  38. Barbara – I am 20+ retired from Submarines Service. My wife (58) and I (64) use Tricare. We had Tricare Prime until Oct.. 2013 when we were switched to Tricare Standard because we live over 100 miles from a military facility. I got my wife a Tricare Standard Supplement policy and it has a 6 month preexisting condition clause and a $250 deductible but it only costs about $50 per month. It has been difficult here in SW Florida to find doctors who take Tricare but if you find a good GP he/she can be very helpful. Good luck on your husbands retirement and thank him for his service. – STSC(SS) Ret.

    by Jeffrey Gilfoy — February 4, 2015

  39. This is an update on the Affordable Care Act (Obamacare). Finally picked a plan in April to go into effect May 1, 2015. My premium for two people, Silver Plan, is $495.30 per month and we get a $1011.00 credit per month. Without credit price for two would be $1,506.30. I started inquiring about the insurance through Access Health in CT in January. I started getting 3 letters each time I called. Each time the letters would have a date required documents were supposed to be submitted. I called probably 4 different times and did give them our income information over the phone but kept telling them we didn’t need insurance until May. The letters kept coming and the dates kept changing to submit the documents. So finally I pay the premium in late April and get the acceptance letter with a new date of July 01, 2015 to submit docs. I started gathering the paperwork and had to get a letter from my Hub’s pension company. He’s been receiving it for 8 years. They said they needed to have the statement declaring his monthly income. So that was time consuming for whatever reason they were slow sending the documentation. It was about May 9th and had only been on the ACA insurance 9 days when we got another letter saying we lost our credit! They based the original letter on the final date of submission! So my journey to hell then began. The Market Place people just couldn’t get it that the last letter I received said July 1, 2015. I must have spoken to 20 different people through the Market Place and no one could straighten it out. They kept saying April 15th was the date. I called Anthem and they arranged a 3 way conversation with no resolution. I finally found a number to call to set up a hearing. Weeks went by with no letter on the hearing and finally it came in the mail. The hearing was scheduled at the end of July. In June I had to pay the extra $1011.00 on top of the $495.30 to keep the insurance. Out of the blue last week a woman who works for Access Health called and went through all the paperwork I did send on or about May 11th and she was able to straighten the whole thing out. The hearing is cancelled but I am still waiting to get my $1011.00 credit back. Have called Anthem 3 times and finally got ahold of a woman who seemed to understand what was going on and asked me to wait 72 hours and she would call me back so that should be next Monday. So, please, if you get onto ACA pay attention to these dates. They mean business! However, it was a big mistake on their part to use that first date because I never even signed up for the insurance until April 23rd. My Husband and I were sick to our stomach’s to have to pay that money and the way things were going at a turtle’s pace, I wasn’t sure if we’d ever fix this problem. The Market Place people have tunnel vision and if one thing is ‘different’ they don’t know how to deal with it. We were able to get onto ACA because my Hub retired April 1 and could carry his company’s insurance till the end of the month. Then we needed it May 1st. I was ready to lose my mind with the phone calls and no resolution. They would put me on hold and I would ask if they had my phone number in case we were disconnected and they said they can’t make outgoing phone calls! Are you kidding me? I did get letters from Access Health that we are reinstated and let me tell you, I was so happy! Hub bought us a bottle of champagne to celebrate.

    by Louise — July 11, 2015

  40. Wow, what a hassle, Louise. So happy yours had a good resolution!

    by ella — July 12, 2015

  41. Ella, thank you and believe me I didn’t even cover all of my story! If I did, it would have been a book. This is a good example of government red tape. Two plus months of hell. When it was resolved so easily, in the end, I was totally astonished! The woman who resolved it never even mentioned a due date for the paperwork! OMG!

    by Louise — July 12, 2015

  42. I signed up for the ACA online. They can access your income via IRS. Once I chose a plan it took about fifteen minutes. Sorry you had so much trouble Louise.

    by easilyamused — July 13, 2015

  43. Easilyamused, I had no trouble either to sign up, it was the fact that I started inquiring in January on prices and did not sign up till April that screwed everything up. If I had signed up immediately, I am assuming there would have been no glitches. However, Hub didn’t retire till April 1st so for whatever reason the clock started ticking for us when I picked up the phone regardless of not even picking an insurance plan till late April. UGH, makes no sense! Glad you had no problems because it is not easy to get them resolved. Another thing is that initially I did go through the online process but had no intention to sign up for anything. The program will not let you back out or cancel out. You are on a one way journey on the website. That’s when I started receiving letters to finish my application which I had no plans till months later. You should be able to go on the website to check out prices without being obligated to buy NOW!

    by Louise — July 13, 2015

  44. I have never gotten any letters from them. There are facilitators in every state to help you with problems like these.

    by easilyamused — July 13, 2015

  45. easilyamused, if you have a telephone number for a facilitator in CT please let me know. I have dealt with Access Health and they seem to be the only one you can deal with in CT. They never offered any other telephone numbers. The supervisor I spoke with couldn’t do anything for me either. I am still waiting for my tax credit ($1011.00) to be returned to me from Anthem. I called them again today and I got the run around. The woman whom I have spoken with has no direct line and I have to do through a generic line and push 3 for other billing issues. I then have to answer a dozen questions as in my ID number, name, address, phone, DOB and on and on before they will TRY to connect me with this person. Then the person wasn’t available so they left a message for the person to call me! The person said they would call me within 72 hours and now it is 5 days later. Not sure why you didn’t get any letters but I have at least 15 letters, if not more from them. Maybe due to my delay in signing up for the insurance caused that, I don’t know. Maybe it is Connecticut Access Health. I think if you sign up immediately you would have no problems. I inquired in January and I didn’t need the insurance till May 1st and their computer system seemed to have a mind of its own and decided I didn’t send the paperwork in time. However, I was NOT in the wrong after all since they reinstated me finally. Still no call from the Anthem person…

    by Louise — July 14, 2015

  46. I’m wondering how it works for the first year if they get your income information from the IRS. Can’t you estimate your income based on your prospective retirement income and then have a true-up at the end of the year, or do they determine you’re not eligible for a credit because you had income the prior year when you were working?

    I have seen warnings, by the way, that you shouldn’t immediately sign up for COBRA if you get laid off while you’re trying to figure out the Obamacare benefits since that would make you ineligible for Obamacare.

    I tried checking my possible rate for a Gold plan in SC (single, 60s, nonsmoking). The government site kept telling me my password was invalid (I changed passwords 3X and asked a friend who is a Director of IT for a Fortune 500 to help me out with it, and neither one of us could get it to work). Finally I just checked some insurance sites directly, and came up with an average estimated cost of $1450/mo without a credit. Ouch.

    by Kate — July 15, 2015

  47. Louise, if your state navigators can’t help you, I am at a loss. Kate, I am in SC.

    by easilyamused — July 15, 2015

  48. Kate, we are in our first year of Obama Care. My husband worked 3 months this year before retiring so after he was done and he got his last paycheck we knew what his final income was. Then my husband gets a small pension from a former employer and I have to take a mandatory withdrawal from an inherited IRA. We have one stock that pays around $400 in dividends a year which has to be declared as income. I reported all this income to The Market Place (Access Health) by phone. They didn’t contact IRS as far as I know. We also had to report my husbands SS income that he would start receiving as of May 2015. These streams of income seemed to confuse them and they had to put the information onto different screens on their computer. Once they added up all the income they came up with the credit we were entitled to which is $1,011.00 per month. We pay $495.30. To achieve this, our income has to remain under the threshold of $63,720 for two adults. See chart: http://obamacarefacts.com/federal-poverty-level/

    I did not want to confuse them by using my IRS information from the previous year. My husband worked 3 months this year and last year 12. Incomes change from year to year. I was afraid we would be ineligible for the credit if they saw our IRS information from last year. I have had enough problems with them!

    Kate as a single person, if you make no more than $47,080 as seen in the chart, you should be able to get a credit. If you can’t get on the computer, call them. They can figure out the cost for you.

    We are on a Silver plan.

    I understand your frustration with the password issues, I have had so many problems with Access Health. GRRRR!

    That price you gave of $1450 is not a surprise. I ran into a guy who is on Medicare but his wife is still on insurance from the company he retired from. They are paying $1,200+ a month for her alone. She only has a few months more before she gets on Medicare but that is a LOT of money per month!

    I will go on SS next January and even with the other streams of income it is not enough so I have to tap savings till we are both eligible for Medicare. We have to stay under the radar screen to keep getting the credit so tapping savings, not IRA’s is the only way to do it. Wish I had invested in Roth IRA’s years ago but never thought much about it.

    Good luck and let us know how you make out!

    by Louise — July 15, 2015

  49. Louise – Thank you so much! You’ve provided very helpful information. I’ll have to pay close attention to that cut-off point! I’m trying to do all the research now, in case I get laid off before I turn 65 (a probability at my company thanks to not-so-hidden age discrimination). If I get laid off, I am planning to use $40K from savings and $20K from widow SS benefits until 66, when I’ll will claim SS benefits on my own record and start to pull money from my 401K. I’ll have to watch the break point carefully. I’ve heard our COBRA for laid off employees is so high that people have done much better buying their own policies through the government site.

    by Kate — July 16, 2015

  50. Kate, you are welcome! One thing I would think over in regard to your Widow SS benefits is that you are entitled to collect them till age 70 and let your SS grow. Find out what your benefit would be on your own record at age 70. My Mom collected Widow SS and at 65 switched over to hers because it was more but she may have been able to grow hers by delaying collecting it. We didn’t know she could collect till age 70 on my Dads. Of coarse, it might be wise to call SS and talk to them about it. Here is an article you might be interested in: http://time.com/money/3638427/social-security-survivors-benefits-details/

    As far as your 401k, if it is from your current employer, I would seek out a Financial Advisor and move your money into maybe an annuity. We just did that with my Husbands 401k and our FA moved the money into a Prudential annuity product. It has a pretty good growth rate. I am not pushing an annuity or Prudential and suggest you find a good FA, if you don’t already have one, to help you with your particular needs.

    by Louise — July 17, 2015

  51. Thanks again – yes, planning on weighing taking widows benefits as long as possible. I’ve checked the amount by calling Social Security, and it’s pretty much my own benefit anyway. I was planning on deferring taking benefits on my own record until 70 if the rules still let me do that (I’ll be lucky enough to qualify for the maximum benefit at 66).

    I’m not a fan of annuities, since I remember when insurers selling annuities crashed and were liquidated back in the late 70s/early 80s when insurers couldn’t meet annuity commitments as a result of soaring interest rates and inflation. It was a bleak time in this country’s history. Even though there has been insurance reform since then, the state guarantee associations still only backstop annuity contracts to a limited value such as $100,000 or $250,000 (think of it like FDIC insurance, but for annuities). You can learn more about the state insurance for your annuity contract at the website of the National Organization of Life & Health Insurance Guaranty Associations (NOLHGA), which links to each state’s guaranty association. They may be appropriate in a balanced portfolio, but they’re definitely not for me. Of course, everyone’s risk tolerance, portfolio balancing and estate planning will vary widely. I have two FAs and an estates/trust lawyer, and they don’t agree on anything either :-).

    by Kate — July 17, 2015

  52. […] Bottom line Medicare is a great plan and a comfort to millions of Americans over 65. But if you don’t insure you get enrolled on time, or take it for granted down the road, you could jeopardize that piece of mind. (adsbygoogle = window.adsbygoogle ||[]).push({}); For further reading FAQ feature at Medicare.gov So You’re Turning 65: Your Medicare 101 Guide Topretirements Survey Report: We Like Medicare, Please Keep it Working!“, reports on the results of our recent member survey on Medicare. What to Do About Health Insurance If You Retire Before Age 65“. […]

    by » Don’t Make These 5 Medicare Mistakes - Topretirements — July 28, 2015

  53. These were various comments made about this topic on another, unrelated Blog post. So we are moving them here to keep the conversation going:

    From Louise: Just a comment on the Affordable Care Act. You can get insurance anytime during the year if you have a qualified life changing event such as retirement. I was unemployed and Hub was working at his job until April 1st and then retired. His insurance covered us till the end of April. We filed for insurance through ACA and our first month was May 2015 to be covered.

    From Journey 15: Thanks Louise but our income for 2015 was too much for the ACA. We went with Cobra, which is not too bad and is for 18 months if we desire, for right now. I know once we go to the ACA health insurance we can’t go back to Cobra so we will be looking very carefully at the ACA before making our decision. We will be eligible for the ACA, income wise, in 2016.


    and from Bonnie: Your income does NOT matter to get an insurance policy through the ACA website. You may not qualify for the SUBSIDIES they offer to those with lower income, but you CAN purchase insurance. I am a dentist who, being self-employed, must insure myself. I purchased a policy with BCBS that is also offered on the ACA website. But, of course, I do not qualify for the subsidies and pay the full ACA premium. I feel that there is still a lot of misunderstanding out there about health insurance and the ACA…

    by Admin — October 21, 2015

  54. Thanks to all who corrected me. This was my bad as I neglected to include that we were NOT eligible for the Subsidy for 2015. I know this but I failed to say it.

    by Journey15 — October 22, 2015

  55. Journey 15, Now is the time to figure your budget for 2016 and if you can jiggle your income you may qualify for the subsidy. I think you can sign up for ACA now for next year. Not sure what the cut off date for enrollment is. Be sure to check it out.

    I came into an inheritance and am drawing some income from that (as little as I can) and no taxes get applied to that and is not considered income. This coming year I will start Social Security, Hub is already on it and gets a pension. Those are our 3 main incomes. Then we will withdraw money from an annuity. The rest will come out of the inheritance. We also have some stock and get a small dividend from that which needs to be added to our income.

    We have to stay below the radar screen of $63,720 (ACA limit) to get the subsidy in CT for a married couple. That’s where I have to figure out all income BEFORE we withdraw money from the annuity. I do not try to get too close to the $63,720 and make sure there is wiggle room.

    It is worth jiggling your income if you can. Our subsidy is $1,011 a month or $12,132 a year that I am not having to take out of savings. Without subsidy it would be $18,076.00 a year for affordable health care insurance! $5,944 a year with subsidy.

    by Louise — October 22, 2015

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