Health insurance during F.I.R.E and before age 65? ACA vs Employer Retiree Healthcare Benefits?

[Vanguard User]

Hello. I work for a Megacorp and they offer Medical, Dental, Vision and Prescription plans through Mercer Marketplace 365+.

Here is the info from my Megacorp;

If you retire at age 57 or older and have 10 or more years of continuous full-time service, you may be eligible for a Pre-65 Retiree Reimbursement Account and access to individual healthcare plans through Mercer Marketplace 365+.

If you retire at age 50 or older and have 5 or more years of continuous full-time service, you may be eligible for access to individual healthcare plans through Mercer Marketplace 365+.

If you qualify, the program can assist with post-retirement healthcare in two ways: —Individual Healthcare Plans for you and your eligible dependents. You will have access to medical, prescription, dental and vision plans through Mercer Marketplace 365+.

A Pre-65 Retiree Reimbursement Account (RRA) to help pay a portion of the after- tax cost of post-retirement healthcare premiums for you and your spouse. The RRA can be used for reimbursement of eligible healthcare premiums purchased through Mercer Marketplace 365+ or an ACA compliant plan purchased through a public healthcare exchange.

COBRA premiums are also an eligible expense towards the RRA. To check your eligibility for an RRA, please contact MM365+. Not all are eligible regardless of tenure with the company. Pre-65 Retiree Reimbursement Account (RRA): You must submit an eligible premium reimbursement claim within 90 days of your retirement date or within 90 days following the end of your subsidized COBRA. If you miss this deadline, you will permanently forfeit the RRA. You must also submit an eligible claim annually to retain your RRA. Failure to do so will permanently forfeit your RRA. Eligibility for the RRA ends once you reach age 65. Retiree Healthcare Coverage: You must elect an eligible plan either through Mercer Marketplace 365+, an ACA compliant plan purchased through a public healthcare exchange, or enroll in Megacorp COBRA, no later than 60 days after your retirement date.

Do you think going through my employer once I retire would be cheaper for me compare to ACA?

Does your employer offer such benefits?

My plan to F.I.R.E is between 55-60 so now I am really focusing on age 57. I am a 45 year old single male with no children.

Any suggestions?

[FiveK]

Do you think going through my employer once I retire would be cheaper for me compare to ACA?

There is a good chance that it would, but because...

My plan to F.I.R.E is between 55-60 so now I am really focusing on age 57. I am a 45 year old single male with no children.

...so much can happen in the next 10-15 years that probably no more effort than it takes to make a rough estimate now is worthwhile.

[nguy44]

...so much can happen in the next 10-15 years that probably no more effort than it takes to make a rough estimate now is worthwhile.

I agree. 12 years before I retired my employer froze our pension plan, which less than 20 years before I retired they changed the rules and I barely remained eligible for a pension. They also removed retiree insurance from being equivalent to employed insurance and dropped coverage after age 65.

My retiree health plan options were similar, in my case it made the premiums less than half the ACA premiums (my income was such that I did not receive any subsidy), along with lower deductibles and a greater doctor network.

But "past performance is not indicative of future results", and the whole medical insurance landscape might be different in another 10-15 years.

[Vanguard User]

Do you think going through my employer once I retire would be cheaper for me compare to ACA?

There is a good chance that it would, but because...

My plan to F.I.R.E is between 55-60 so now I am really focusing on age 57. I am a 45 year old single male with no children.

...so much can happen in the next 10-15 years that probably no more effort than it takes to make a rough estimate now is worthwhile.

I have yet to contact Mercer yet but I would have to see if it will be cheaper. For people who are on path to
F.I.R.E then this could be a game changer.

[Vanguard User]

...so much can happen in the next 10-15 years that probably no more effort than it takes to make a rough estimate now is worthwhile.

I agree. 12 years before I retired my employer froze our pension plan, which less than 20 years before I retired they changed the rules and I barely remained eligible for a pension. They also removed retiree insurance from being equivalent to employed insurance and dropped coverage after age 65.

My retiree health plan options were similar, in my case it made the premiums less than half the ACA premiums (my income was such that I did not receive any subsidy), along with lower deductibles and a greater doctor network.

But "past performance is not indicative of future results", and the whole medical insurance landscape might be different in another 10-15 years.

My company doesn’t offer Pension. After 65 you would qualify for Medicare.

So did you use your employer health benefits after you retired?

[Soaker]

I FIREd as a single male at age 45 with no children.

Whether ACA is best for you depends on what you think your AGI will be between ages 57-65.

I've been spending down my taxable accounts, so those don't generate much taxable income, nor does the equity in the house. Most of my liquid assets are in IRAs, and most of my taxable income is Roth IRA conversions. I do as much Roth IRA conversion as I can, up to the point that the annual maximum premium assistance on Form 8962 equals my annual premium, thus I pay approximately $0 per year for a high-deductible plan.

I'd suggest going to the ACA marketplace, shopping as a 57-year-old, and then doing a pro-forma tax return using your best estimate of taxable income during FIRE to see how it pencils out, with particular attention to Form 8962.

[Vanguard User]

I FIREd as a single male at age 45 with no children.

Whether ACA is best for you depends on what you think your AGI will be between ages 57-65.

I've been spending down my taxable accounts, so those don't generate much taxable income, nor does the equity in the house. Most of my liquid assets are in IRAs, and most of my taxable income is Roth IRA conversions. I do as much Roth IRA conversion as I can, up to the point that the annual maximum premium assistance on Form 8962 equals my annual premium, thus I pay approximately $0 per year for a high-deductible plan.

I'd suggest going to the ACA marketplace, shopping as a 57-year-old, and then doing a pro-forma tax return using your best estimate of taxable income during FIRE to see how it pencils out, with particular attention to Form 8962.

I don’t know what my AGI will be then. What about the employer benefit that I mentioned?

[Soaker]

I FIREd as a single male at age 45 with no children.

Whether ACA is best for you depends on what you think your AGI will be between ages 57-65.

I've been spending down my taxable accounts, so those don't generate much taxable income, nor does the equity in the house. Most of my liquid assets are in IRAs, and most of my taxable income is Roth IRA conversions. I do as much Roth IRA conversion as I can, up to the point that the annual maximum premium assistance on Form 8962 equals my annual premium, thus I pay approximately $0 per year for a high-deductible plan.

I'd suggest going to the ACA marketplace, shopping as a 57-year-old, and then doing a pro-forma tax return using your best estimate of taxable income during FIRE to see how it pencils out, with particular attention to Form 8962.

I don’t know what my AGI will be then. What about the employer benefit that I mentioned?

Your AGI determines your ACA subsidy and thus your net cost of an ACA plan. Without even being able to guess at your AGI during FIRE, it is not possible to make the comparison you are asking for.

[Vanguard User]

I FIREd as a single male at age 45 with no children.

Whether ACA is best for you depends on what you think your AGI will be between ages 57-65.

I've been spending down my taxable accounts, so those don't generate much taxable income, nor does the equity in the house. Most of my liquid assets are in IRAs, and most of my taxable income is Roth IRA conversions. I do as much Roth IRA conversion as I can, up to the point that the annual maximum premium assistance on Form 8962 equals my annual premium, thus I pay approximately $0 per year for a high-deductible plan.

I'd suggest going to the ACA marketplace, shopping as a 57-year-old, and then doing a pro-forma tax return using your best estimate of taxable income during FIRE to see how it pencils out, with particular attention to Form 8962.

I don’t know what my AGI will be then. What about the employer benefit that I mentioned?

Your AGI determines your ACA subsidy and thus your net cost of an ACA plan. Without even being able to guess at your AGI during FIRE, it is not possible to make the comparison you are asking for.

I know. What about the employer plan that I posted. That isn’t ACA.

[Longdog]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

[Soaker]

The key here is that the RRA contribution is going to be a fixed amount, while the ACA subsidy will decrease as AGI increases.

So here's the hypothetical I would run:

1. Pretend to be age 57 as of this January 1. Choose and price the insurance plan you want through the Mercer Marketplace: gross premium less the RRA contribution.

2. Window shop as a 57-year-old at your state's ACA marketplace and make sure that same plan is available there at the same premium (if not, pick the most similar plan). While there, find out your applicable SLCSP.

3. Get Form 8962 and the instructions. Plug in a number for "Modified AGI" on Line 2a. Work through the mathematics (fourth-grade level) and find out what your AGI subsidy would be. If ACA subsidy is higher than RRA contribution, then the ACA plan is the better deal given that Modified AGI; if ACA subsidy is lower, then the Mercer plan is better.

4. Now plug different Modified AGIs into 8962 Line 2a and recalculate the subsidy, until you find the Modified AGI where ACA subsidy is equal to RRA contribution. Once you understand the mathematics of Form 8962, these recalculations are simple. At the Modified AGI number where ACA subsidy = RRA contribution, you have the answer to your question. If your actual Modified AGI is lower than that, the plan purchased through the ACA marketplace is the better deal, and if actual Modified AGI is higher, you would go with the Mercer Marketplace plan.

[quantAndHold]

You cannot know what your situation will be in twelve years. At that point, the company might not offer retiree health benefits. You might not still be working for that company. You might be on disability and not working at all. You might have gotten married. Or unmarried. Or both. Twelve years is a long planning horizon. I don’t think I know anyone who’s planned retirement more than a year or two in advance, and actually retired exactly when they planned to.

Anyway, just keep saving money and stop worrying about it until you’re closer to the goal.

[Vanguard User]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

What age did you retire? So COBRA will be cheaper than going directly with ACA (not using Mercer)?

[Vanguard User]

The key here is that the RRA contribution is going to be a fixed amount, while the ACA subsidy will decrease as AGI increases.

So here's the hypothetical I would run:

1. Pretend to be age 57 as of this January 1. Choose and price the insurance plan you want through the Mercer Marketplace: gross premium less the RRA contribution.

2. Window shop as a 57-year-old at your state's ACA marketplace and make sure that same plan is available there at the same premium (if not, pick the most similar plan). While there, find out your applicable SLCSP.

3. Get Form 8962 and the instructions. Plug in a number for "Modified AGI" on Line 2a. Work through the mathematics (fourth-grade level) and find out what your AGI subsidy would be. If ACA subsidy is higher than RRA contribution, then the ACA plan is the better deal given that Modified AGI; if ACA subsidy is lower, then the Mercer plan is better.

4. Now plug different Modified AGIs into 8962 Line 2a and recalculate the subsidy, until you find the Modified AGI where ACA subsidy is equal to RRA contribution. Once you understand the mathematics of Form 8962, these recalculations are simple. At the Modified AGI number where ACA subsidy = RRA contribution, you have the answer to your question. If your actual Modified AGI is lower than that, the plan purchased through the ACA marketplace is the better deal, and if actual Modified AGI is higher, you would go with the Mercer Marketplace plan.

Seems complicated so I will need to do the hands on approach first. What do you think will be cheaper?

How do people keep AGI low to get low ACA rates?

[Vanguard User]

You cannot know what your situation will be in twelve years. At that point, the company might not offer retiree health benefits. You might not still be working for that company. You might be on disability and not working at all. You might have gotten married. Or unmarried. Or both. Twelve years is a long planning horizon. I don’t think I know anyone who’s planned retirement more than a year or two in advance, and actually retired exactly when they planned to.

Anyway, just keep saving money and stop worrying about it until you’re closer to the goal.

I do plan to retire with this company. I thought we plan for retirement many decades in advance?

[FiveK]

I thought we plan for retirement many decades in advance?

Doing things like Prioritizing investments over many decades, yes.

Making overly precise estimates about things not known with good accuracy, not so much.

[quantAndHold]

You cannot know what your situation will be in twelve years. At that point, the company might not offer retiree health benefits. You might not still be working for that company. You might be on disability and not working at all. You might have gotten married. Or unmarried. Or both. Twelve years is a long planning horizon. I don’t think I know anyone who’s planned retirement more than a year or two in advance, and actually retired exactly when they planned to.

Anyway, just keep saving money and stop worrying about it until you’re closer to the goal.

I do plan to retire with this company. I thought we plan for retirement many decades in advance?

You plan to retire with this company, but does this company plan to retire with you? And does this company plan to offer the same retirement health benefits 12 years from now as they do now? That cannot be known.

Yes, we plan to retire decades in advance. We save money. We have some expectation about the date and conditions of our retirement, but we can’t know what our health or our family members’ health will be like, what will be happening to our company, or whether the markets will cooperate. So we save money, and the decisions become clear in the fullness of time.

There is no way on earth that I could have looked at things 12 years ago and known where I would be and what I would be doing today.

[Vanguard User]

I thought we plan for retirement many decades in advance?

Doing things like Prioritizing investments over many decades, yes.

Making overly precise estimates about things not known with good accuracy, not so much.

I thought health costs were a major part of retirement?

[Vanguard User]

You cannot know what your situation will be in twelve years. At that point, the company might not offer retiree health benefits. You might not still be working for that company. You might be on disability and not working at all. You might have gotten married. Or unmarried. Or both. Twelve years is a long planning horizon. I don’t think I know anyone who’s planned retirement more than a year or two in advance, and actually retired exactly when they planned to.

Anyway, just keep saving money and stop worrying about it until you’re closer to the goal.

I do plan to retire with this company. I thought we plan for retirement many decades in advance?

You plan to retire with this company, but does this company plan to retire with you? And does this company plan to offer the same retirement health benefits 12 years from now as they do now? That cannot be known.

Yes, we plan to retire decades in advance. We save money. We have some expectation about the date and conditions of our retirement, but we can’t know what our health or our family members’ health will be like, what will be happening to our company, or whether the markets will cooperate. So we save money, and the decisions become clear in the fullness of time.

There is no way on earth that I could have looked at things 12 years ago and known where I would be and what I would be doing today.

So far it looks like company will retire with me but things can change like layoffs, etc.

We have to assume this health plan stays.

[Longdog]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

What age did you retire? So COBRA will be cheaper than going directly with ACA (not using Mercer)?

I was 57. You likely will be able to find slightly less expensive policies than COBRA, but for the price, COBRA will be a better deal because it will have lower copays, lower deductible, lower out of pocket, and will probably be a PPO. It would probably be comparable to a gold plan in coverage, but the premium will be more like a bronze plan. The reason is because of the huge employee population that skews younger in age. It’s only for 18 months though - so more of a transition into retirement than a long term solution. I rely on Mercer as the administrator of the RRA.

Also, you should confirm that you'd even be eligible for the RRA. If it's the company I think it is, that benefit may not be available if you were recently hired because they grandfathered the benefit but newer employers are not eligible.

[lazynovice]

Aside from the time horizon, the other reasons no one can answer your question are that we don’t know how big this RRA is, what the COBRA premiums will be or what the exchange pricing in your area will be.

I just retired and we found that the unsubsidized ACA premiums are lower than my COBRA premiums. We took COBRA for the rest of the year since we have met the deductible. Then we are switching to ACA.

If you would have asked me last year what my MAGI would be for 2024, I would have estimated based on 1-2% interest rates on cash and CDs. Now they are closer to 5% and our MAGI (combined with stable dividends) will put us out of premium subsidy range.

Premium subsidies without a cliff are a relatively new phenomenon and twelve years ago, the entire insurance exchange was not up and running.

[Soaker]

blah blah blah

Seems complicated so I will need to do the hands on approach first. What do you think will be cheaper?

How do people keep AGI low to get low ACA rates?

It's not complicated. You have to do the legwork to get the numbers from the Mercer Marketplace, including estimated RRA, and the ACA marketplace, and then have the patience to work through the various scenarios for the ACA subsidy on Form 8962.

Lower AGI will make the ACA plan cheaper, higher AGI makes the Mercer plan cheaper. There's some dividing line and I outlined above how to calculate that. That would be a calculation for 2024, and you're talking about retiring around 2036, so it's understanding the methodology that is useful here, not some precise result.

Keep AGI during FIRE low by accumulating as much as you can in tax-deferred and tax-free retirement plans now. Max out that contribution to Megacorp's 401(k) plan. If you have a mortgage, pay that down so more of your taxable assets are in non-income generating home equity. Tell your parents they need to stay alive until you are at least 65 so you don't have some big pool of inheritance money dumped into your taxable accounts before then.

[quantAndHold]

We have to assume this health plan stays.

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

[pizzy]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

[Soaker]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

I have an HMO HDHP. Gross premium is about $14,000 per year. I pay zero of that, or very close to zero pending filing my 2023 tax return. Deductible is $3550 for in-network services, out-of-pocket maximum $7100 for in-network, no cap on out-of-network services.

[lazynovice]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

Not really. Under current law, your premium is capped at 8.5% of your MAGI. But I believe that is for a silver plan. The out of pocket max is not regulated, especially out of network.

We opted for a gold plan which had a lower premium, lower deductible and better or as good of a network as our COBRA plan. The main downside was lack of out of network out of pocket max but we are relying on the No Surprises Act emergency protections and network adequacy laws in our state.

[pizzy]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

Not really. Under current law, your premium is capped at 8.5% of your MAGI. But I believe that is for a silver plan. The out of pocket max is not regulated, especially out of network.

We opted for a gold plan which had a lower premium, lower deductible and better or as good of a network as our COBRA plan. The main downside was lack of out of network out of pocket max but we are relying on the No Surprises Act emergency protections and network adequacy laws in our state.

I found this googling: https://www.healthcare.gov/glossary/out ... mum-limit/

Thoughts? Or is this something different?

[lazynovice]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

Not really. Under current law, your premium is capped at 8.5% of your MAGI. But I believe that is for a silver plan. The out of pocket max is not regulated, especially out of network.

We opted for a gold plan which had a lower premium, lower deductible and better or as good of a network as our COBRA plan. The main downside was lack of out of network out of pocket max but we are relying on the No Surprises Act emergency protections and network adequacy laws in our state.

I found this googling: https://www.healthcare.gov/glossary/out ... mum-limit/

Thoughts? Or is this something different?

Out of network is excluded from that.

[FiveK]

Making overly precise estimates about things not known with good accuracy, not so much.

I thought health costs were a major part of retirement?

Both statements can be simultaneously correct.

[mkc]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

Not really. Under current law, your premium is capped at 8.5% of your MAGI. But I believe that is for a silver plan. The out of pocket max is not regulated, especially out of network.

The current Premium Tax Credit is based on paying no more than 8.5% of your MAGI for the second lowest cost silver plan (SLCSP) and is set to expire in 2025, so that cap goes away unless Congress extends it. Then the cliff returns for those earning more than 400% of the federal poverty level.

Since the OP is looking 10-15 years down the road, there is no telling what caps will be then.

We have been on our own insurance for 17 years now and much has changed over those years. I would not attempt to model (or predict) health insurance costs or what options might exist 10-15 years from now. Prior to the current Premium Tax Credit, our monthly ACA insurance for 2 people in their late 50's for a bronze HSA-compliant plan was in the $1500-1800 range (and would be $2200 right now if it weren't for the tax credit).

[twh]

Hello. I work for a Megacorp and they offer Medical, Dental, Vision and Prescription plans through Mercer Marketplace 365+.

Here is the info from my Megacorp;

If you retire at age 57 or older and have 10 or more years of continuous full-time service, you may be eligible for a Pre-65 Retiree Reimbursement Account and access to individual healthcare plans through Mercer Marketplace 365+.

If you retire at age 50 or older and have 5 or more years of continuous full-time service, you may be eligible for access to individual healthcare plans through Mercer Marketplace 365+.

If you qualify, the program can assist with post-retirement healthcare in two ways: —Individual Healthcare Plans for you and your eligible dependents. You will have access to medical, prescription, dental and vision plans through Mercer Marketplace 365+.

A Pre-65 Retiree Reimbursement Account (RRA) to help pay a portion of the after- tax cost of post-retirement healthcare premiums for you and your spouse. The RRA can be used for reimbursement of eligible healthcare premiums purchased through Mercer Marketplace 365+ or an ACA compliant plan purchased through a public healthcare exchange.

COBRA premiums are also an eligible expense towards the RRA. To check your eligibility for an RRA, please contact MM365+. Not all are eligible regardless of tenure with the company. Pre-65 Retiree Reimbursement Account (RRA): You must submit an eligible premium reimbursement claim within 90 days of your retirement date or within 90 days following the end of your subsidized COBRA. If you miss this deadline, you will permanently forfeit the RRA. You must also submit an eligible claim annually to retain your RRA. Failure to do so will permanently forfeit your RRA. Eligibility for the RRA ends once you reach age 65. Retiree Healthcare Coverage: You must elect an eligible plan either through Mercer Marketplace 365+, an ACA compliant plan purchased through a public healthcare exchange, or enroll in Megacorp COBRA, no later than 60 days after your retirement date.

Do you think going through my employer once I retire would be cheaper for me compare to ACA?

Does your employer offer such benefits?

My plan to F.I.R.E is between 55-60 so now I am really focusing on age 57. I am a 45 year old single male with no children.

Any suggestions?

My company also has such a program...50 years old and 5 years of service. Also a big company. Their medical plans are self-insured, but administered by the big health insurance companies -- I think this is pretty typical. Basically what the retiree plan amounted to was COBRA for as long as you wanted to stay in the plan. It wasn't technically COBRA past the Federal COBRA timelines, but it works the same. You basically pay full price for the coverage. But, being a big company, the plan was great and very rarely did I have any issue.

This retiree coverage will likely be better than anything you can get on the ACA. If you company also subsidies the plan some, all the better.

You are years away and things change. For now, I'd figure on going with the retiree plan.

And, when you do hit 65, a Medicare Supplement plan is probably financially a better deal. Now, if your company has a post-65 Medicare Advantage type plan, that may be a good deal also. Some megacorps have that.

Another thing the company I worked for has in the retiree plan is Vision and Dental. As long as you have at least one of the insurances in the retiree plan you can come back to any of the plans you dropped.

[Vanguard User]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

What age did you retire? So COBRA will be cheaper than going directly with ACA (not using Mercer)?

I was 57. You likely will be able to find slightly less expensive policies than COBRA, but for the price, COBRA will be a better deal because it will have lower copays, lower deductible, lower out of pocket, and will probably be a PPO. It would probably be comparable to a gold plan in coverage, but the premium will be more like a bronze plan. The reason is because of the huge employee population that skews younger in age. It’s only for 18 months though - so more of a transition into retirement than a long term solution. I rely on Mercer as the administrator of the RRA.

Also, you should confirm that you'd even be eligible for the RRA. If it's the company I think it is, that benefit may not be available if you were recently hired because they grandfathered the benefit but newer employers are not eligible.

So how much am I looking at for COBRA on monthly? How much for co-pays and deductibles? This can only last 1.5 years?

[Vanguard User]

Aside from the time horizon, the other reasons no one can answer your question are that we don’t know how big this RRA is, what the COBRA premiums will be or what the exchange pricing in your area will be.

I just retired and we found that the unsubsidized ACA premiums are lower than my COBRA premiums. We took COBRA for the rest of the year since we have met the deductible. Then we are switching to ACA.

If you would have asked me last year what my MAGI would be for 2024, I would have estimated based on 1-2% interest rates on cash and CDs. Now they are closer to 5% and our MAGI (combined with stable dividends) will put us out of premium subsidy range.

Premium subsidies without a cliff are a relatively new phenomenon and twelve years ago, the entire insurance exchange was not up and running.

I don’t know how much RRA is. Is your company offering anything other than COBRA?

[Vanguard User]

blah blah blah

Seems complicated so I will need to do the hands on approach first. What do you think will be cheaper?

How do people keep AGI low to get low ACA rates?

It's not complicated. You have to do the legwork to get the numbers from the Mercer Marketplace, including estimated RRA, and the ACA marketplace, and then have the patience to work through the various scenarios for the ACA subsidy on Form 8962.

Lower AGI will make the ACA plan cheaper, higher AGI makes the Mercer plan cheaper. There's some dividing line and I outlined above how to calculate that. That would be a calculation for 2024, and you're talking about retiring around 2036, so it's understanding the methodology that is useful here, not some precise result.

Keep AGI during FIRE low by accumulating as much as you can in tax-deferred and tax-free retirement plans now. Max out that contribution to Megacorp's 401(k) plan. If you have a mortgage, pay that down so more of your taxable assets are in non-income generating home equity. Tell your parents they need to stay alive until you are at least 65 so you don't have some big pool of inheritance money dumped into your taxable accounts before then.

I don’t have RE. No plans on it. Renting all the way.

I max out t401k and Roth IRA then taxable account. However, my company offers up to $10k after tax contributions on 401k which can be converted to Roth IRA. I haven’t used that feature. Should I?

Father is deceased. Mother is 81. She has no assets so I am not getting any inheritance. Maybe, from my older brothers but I am not sure.

[Vanguard User]

We have to assume this health plan stays.

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

What if it does stay?

[Longdog]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

What age did you retire? So COBRA will be cheaper than going directly with ACA (not using Mercer)?

I was 57. You likely will be able to find slightly less expensive policies than COBRA, but for the price, COBRA will be a better deal because it will have lower copays, lower deductible, lower out of pocket, and will probably be a PPO. It would probably be comparable to a gold plan in coverage, but the premium will be more like a bronze plan. The reason is because of the huge employee population that skews younger in age. It’s only for 18 months though - so more of a transition into retirement than a long term solution. I rely on Mercer as the administrator of the RRA.

Also, you should confirm that you'd even be eligible for the RRA. If it's the company I think it is, that benefit may not be available if you were recently hired because they grandfathered the benefit but newer employers are not eligible.

So how much am I looking at for COBRA on monthly? How much for co-pays and deductibles? This can only last 1.5 years?

In 12 years? Nobody could possibly know. You need to do your own research on either your state exchange or the federal exchange. Nobody can do that for you.

[Vanguard User]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

It depends on the plan I get?

[Vanguard User]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

I have an HMO HDHP. Gross premium is about $14,000 per year. I pay zero of that, or very close to zero pending filing my 2023 tax return. Deductible is $3550 for in-network services, out-of-pocket maximum $7100 for in-network, no cap on out-of-network services.

$0 premium monthly? If you are fairly healthy you are probably not spending anywhere close to $3,550.

[Longdog]

I max out t401k and Roth IRA then taxable account. However, my company offers up to $10k after tax contributions on 401k which can be converted to Roth IRA. I haven’t used that feature. Should I?

Yes.

[Vanguard User]

Making overly precise estimates about things not known with good accuracy, not so much.

I thought health costs were a major part of retirement?

Both statements can be simultaneously correct.

Yes.

[Vanguard User]

Is there a maximum total cost for an ACA plan each year? Both premium cap and out of pocket maximum cap?

Not really. Under current law, your premium is capped at 8.5% of your MAGI. But I believe that is for a silver plan. The out of pocket max is not regulated, especially out of network.

The current Premium Tax Credit is based on paying no more than 8.5% of your MAGI for the second lowest cost silver plan (SLCSP) and is set to expire in 2025, so that cap goes away unless Congress extends it. Then the cliff returns for those earning more than 400% of the federal poverty level.

Since the OP is looking 10-15 years down the road, there is no telling what caps will be then.

We have been on our own insurance for 17 years now and much has changed over those years. I would not attempt to model (or predict) health insurance costs or what options might exist 10-15 years from now.

What about running the #’s today and pretend I am 57?

[Vanguard User]

Hello. I work for a Megacorp and they offer Medical, Dental, Vision and Prescription plans through Mercer Marketplace 365+.

Here is the info from my Megacorp;

If you retire at age 57 or older and have 10 or more years of continuous full-time service, you may be eligible for a Pre-65 Retiree Reimbursement Account and access to individual healthcare plans through Mercer Marketplace 365+.

If you retire at age 50 or older and have 5 or more years of continuous full-time service, you may be eligible for access to individual healthcare plans through Mercer Marketplace 365+.

If you qualify, the program can assist with post-retirement healthcare in two ways: —Individual Healthcare Plans for you and your eligible dependents. You will have access to medical, prescription, dental and vision plans through Mercer Marketplace 365+.

A Pre-65 Retiree Reimbursement Account (RRA) to help pay a portion of the after- tax cost of post-retirement healthcare premiums for you and your spouse. The RRA can be used for reimbursement of eligible healthcare premiums purchased through Mercer Marketplace 365+ or an ACA compliant plan purchased through a public healthcare exchange.

COBRA premiums are also an eligible expense towards the RRA. To check your eligibility for an RRA, please contact MM365+. Not all are eligible regardless of tenure with the company. Pre-65 Retiree Reimbursement Account (RRA): You must submit an eligible premium reimbursement claim within 90 days of your retirement date or within 90 days following the end of your subsidized COBRA. If you miss this deadline, you will permanently forfeit the RRA. You must also submit an eligible claim annually to retain your RRA. Failure to do so will permanently forfeit your RRA. Eligibility for the RRA ends once you reach age 65. Retiree Healthcare Coverage: You must elect an eligible plan either through Mercer Marketplace 365+, an ACA compliant plan purchased through a public healthcare exchange, or enroll in Megacorp COBRA, no later than 60 days after your retirement date.

Do you think going through my employer once I retire would be cheaper for me compare to ACA?

Does your employer offer such benefits?

My plan to F.I.R.E is between 55-60 so now I am really focusing on age 57. I am a 45 year old single male with no children.

Any suggestions?

My company also has such a program...50 years old and 5 years of service. Also a big company. Their medical plans are self-insured, but administered by the big health insurance companies -- I think this is pretty typical. Basically what the retiree plan amounted to was COBRA for as long as you wanted to stay in the plan. It wasn't technically COBRA past the Federal COBRA timelines, but it works the same. You basically pay full price for the coverage. But, being a big company, the plan was great and very rarely did I have any issue.

This retiree coverage will likely be better than anything you can get on the ACA. If you company also subsidies the plan some, all the better.

You are years away and things change. For now, I'd figure on going with the retiree plan.

And, when you do hit 65, a Medicare Supplement plan is probably financially a better deal. Now, if your company has a post-65 Medicare Advantage type plan, that may be a good deal also. Some megacorps have that.

Another thing the company I worked for has in the retiree plan is Vision and Dental. As long as you have at least one of the insurances in the retiree plan you can come back to any of the plans you dropped.

COBRA will be cheaper? What about the 57 and over plan with Mercer 365+?

Not sure if my company has a 65+ plan.

[Vanguard User]

From your description, I retired last year from what is probably the same Megacorp. Once Cobra expires (and I encourage you to take Cobra, since it will be better than any other plan), the plans offered through Mercer Marketplace are identical in every way to the ones available through the exchange or purchasing directly from the insurance company. They literally are the same plans from the same insurers for the same price with the same coverage. In fact, in my state of Pennsylvania, Mercer points you to the state’s marketplace website to sign up. Be aware that you can either take the RRA reimbursement or the ACA premium tax credit (PRC) for health insurance, but not both. If your PTC is greater than your RRA subsidy, then you can use the RRA for dental or vision plans instead. Some of my friends (former colleagues) are doing that.

What age did you retire? So COBRA will be cheaper than going directly with ACA (not using Mercer)?

I was 57. You likely will be able to find slightly less expensive policies than COBRA, but for the price, COBRA will be a better deal because it will have lower copays, lower deductible, lower out of pocket, and will probably be a PPO. It would probably be comparable to a gold plan in coverage, but the premium will be more like a bronze plan. The reason is because of the huge employee population that skews younger in age. It’s only for 18 months though - so more of a transition into retirement than a long term solution. I rely on Mercer as the administrator of the RRA.

Also, you should confirm that you'd even be eligible for the RRA. If it's the company I think it is, that benefit may not be available if you were recently hired because they grandfathered the benefit but newer employers are not eligible.

So how much am I looking at for COBRA on monthly? How much for co-pays and deductibles? This can only last 1.5 years?

In 12 years? Nobody could possibly know. You need to do your own research on either your state exchange or the federal exchange. Nobody can do that for you.

Difference between Federal and State exchange?

[Vanguard User]

I max out t401k and Roth IRA then taxable account. However, my company offers up to $10k after tax contributions on 401k which can be converted to Roth IRA. I haven’t used that feature. Should I?

Yes.

I did post a topic on that. Did you see it?

[quantAndHold]

We have to assume this health plan stays.

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

What if it does stay?

It still doesn’t matter. For one thing, you don’t have any numbers attached to anything. In the big picture, the numbers are likely to not be that large. I mean, I pay $12k/year for my healthcare. A Bronze ACA plan with $400/month (subsidized) premiums and a $7k out of pocket max. Even if the RRA picks up half of that, which is unlikely, you’re talking $6k/year for 8 years, or about $50k all in. In the big scheme of things, over the course of a 40 year retirement, that’s nothing. There are a dozen things that will make a bigger difference than that, even before you hit 57. If you’re retiring on a tight budget and you don’t get the RRA at 57, or the RRA isn’t all that, you might have to work an extra six months to pay for healthcare. That’s pretty much the whole consequence of this.

Man plans. God laughs.

[Vanguard User]

We have to assume this health plan stays.

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

What if it does stay?

It still doesn’t matter. For one thing, you don’t have any numbers attached to anything. In the big picture, the numbers are likely to not be that large. I mean, I pay $12k/year for my healthcare. A Bronze ACA plan with $400/month (subsidized) premiums and a $7k out of pocket max. Even if the RRA picks up half of that, which is unlikely, you’re talking $6k/year for 8 years, or about $50k all in. In the big scheme of things, over the course of a 40 year retirement, that’s nothing. There are a dozen things that will make a bigger difference than that, even before you hit 57. If you’re retiring on a tight budget and you don’t get the RRA at 57, or the RRA isn’t all that, you might have to work an extra six months to pay for healthcare. That’s pretty much the whole consequence of this.

Man plans. God laughs.

$1k a month for medical? That’s a lot. I was expecting no more than $500 a month.

You mean you got to $400 a month with subsidized?

[lazynovice]

We have to assume this health plan stays.

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

What if it does stay?

It still doesn’t matter. For one thing, you don’t have any numbers attached to anything. In the big picture, the numbers are likely to not be that large. I mean, I pay $12k/year for my healthcare. A Bronze ACA plan with $400/month (subsidized) premiums and a $7k out of pocket max. Even if the RRA picks up half of that, which is unlikely, you’re talking $6k/year for 8 years, or about $50k all in. In the big scheme of things, over the course of a 40 year retirement, that’s nothing. There are a dozen things that will make a bigger difference than that, even before you hit 57. If you’re retiring on a tight budget and you don’t get the RRA at 57, or the RRA isn’t all that, you might have to work an extra six months to pay for healthcare. That’s pretty much the whole consequence of this.

Man plans. God laughs.

$1k a month for medical? That’s a lot. I was expecting no more than $500 a month.

You mean you got to $400 a month with subsidized?

I used a random SugarLand, TX zip code and assumed you have a spouse. Unsubsidized plans in your area are running $1,500 for bronze, $2,000 for silver and $1,840 for Gold.

https://www.healthcare.gov/see-plans/#/plan/results

You can play around with it by changing AGI to get an idea of today’s subsidies.

[Vanguard User]

Why? It may not stay. And why does it matter? We’re only talking about the choice between two plans for the 8 years of healthcare before you turn 65. The difference, over the whole eight years, will be five figures, at most. There are many things that will happen between now and twelve years from now that will have a much larger impact on your ability to retire than your health plan choices.

Just keep saving, and revisit the issue 1-2 years out.

What if it does stay?

It still doesn’t matter. For one thing, you don’t have any numbers attached to anything. In the big picture, the numbers are likely to not be that large. I mean, I pay $12k/year for my healthcare. A Bronze ACA plan with $400/month (subsidized) premiums and a $7k out of pocket max. Even if the RRA picks up half of that, which is unlikely, you’re talking $6k/year for 8 years, or about $50k all in. In the big scheme of things, over the course of a 40 year retirement, that’s nothing. There are a dozen things that will make a bigger difference than that, even before you hit 57. If you’re retiring on a tight budget and you don’t get the RRA at 57, or the RRA isn’t all that, you might have to work an extra six months to pay for healthcare. That’s pretty much the whole consequence of this.

Man plans. God laughs.

$1k a month for medical? That’s a lot. I was expecting no more than $500 a month.

You mean you got to $400 a month with subsidized?

I used a random SugarLand, TX zip code and assumed you have a spouse. Unsubsidized plans in your area are running $1,500 for bronze, $2,000 for silver and $1,840 for Gold.

https://www.healthcare.gov/see-plans/#/plan/results

You can play around with it by changing AGI to get an idea of today’s subsidies.

I am single. What will I get with subsidies?

[lazynovice]

Aside from the time horizon, the other reasons no one can answer your question are that we don’t know how big this RRA is, what the COBRA premiums will be or what the exchange pricing in your area will be.

I just retired and we found that the unsubsidized ACA premiums are lower than my COBRA premiums. We took COBRA for the rest of the year since we have met the deductible. Then we are switching to ACA.

If you would have asked me last year what my MAGI would be for 2024, I would have estimated based on 1-2% interest rates on cash and CDs. Now they are closer to 5% and our MAGI (combined with stable dividends) will put us out of premium subsidy range.

Premium subsidies without a cliff are a relatively new phenomenon and twelve years ago, the entire insurance exchange was not up and running.

I don’t know how much RRA is. Is your company offering anything other than COBRA?

Nothing except COBRA. That plan is about $300 a month more than the Gold Plan we chose. It has a higher deductible and the network is no better than the gold plan we chose. The main difference is the lack of OOP max for out of network services.

[lazynovice]

What if it does stay?

It still doesn’t matter. For one thing, you don’t have any numbers attached to anything. In the big picture, the numbers are likely to not be that large. I mean, I pay $12k/year for my healthcare. A Bronze ACA plan with $400/month (subsidized) premiums and a $7k out of pocket max. Even if the RRA picks up half of that, which is unlikely, you’re talking $6k/year for 8 years, or about $50k all in. In the big scheme of things, over the course of a 40 year retirement, that’s nothing. There are a dozen things that will make a bigger difference than that, even before you hit 57. If you’re retiring on a tight budget and you don’t get the RRA at 57, or the RRA isn’t all that, you might have to work an extra six months to pay for healthcare. That’s pretty much the whole consequence of this.

Man plans. God laughs.

$1k a month for medical? That’s a lot. I was expecting no more than $500 a month.

You mean you got to $400 a month with subsidized?

I used a random SugarLand, TX zip code and assumed you have a spouse. Unsubsidized plans in your area are running $1,500 for bronze, $2,000 for silver and $1,840 for Gold.

https://www.healthcare.gov/see-plans/#/plan/results

You can play around with it by changing AGI to get an idea of today’s subsidies.

I am single. What will I get with subsidies?

If you cannot estimate your MAGI in 12 years, then I can’t estimate your MAGI in 12 years.