Remember when worried working people said, "I'm just a pink slip away from being uninsured"? Those days are gone.
For all the back and forth about the Affordable Care Act, one clear good has emerged for those in middle life: You're no longer nailed to your job in order to get health insurance. For the first time, you're free to make life and career choices without regard to where or whether you choose to work.
The ACA requires insurance companies to sell you a policy regardless of your health. They can't cancel it or raise its price just because you get sick.
With this guarantee, you can rewrite your plans for the second chapter of your life. For example, you can now be assured of health care if you retire early, even if you don't have a retiree plan. You can leave a big company to join (or start) a small business that doesn't offer benefits. If one spouse retires early, the other one doesn't have to keep working just to maintain the family's medical coverage. You don't have to worry that a huge medical debt will wipe you out.
Thinking about quitting?
In some cases, you might decide to stick with your job even if you'd rather not. Employer group plans generally cost less than the sticker price of individual plans. But check the ACA Marketplace anyway (healthcare.gov takes you to your state's website). If you quit and buy ACA coverage, you might get a subsidy that reduces the policy's expense.
Subsidies, in the form of tax credits, go to people with modified adjusted gross incomes — including interest, dividends, capital gains and other sources — between 100 percent and 400 percent of the poverty level. This year, that means individuals whose incomes range from $11,490 to $45,960; for couples, $15,510 to $62,040. The cutoff point rises with family size.
There are four groups of plans: Bronze, Silver, Gold and Platinum. As you go up the value ladder, the plans charge higher premiums but reduce out-of-pocket costs. If you rarely see a doctor, a Bronze plan may do fine. If you have a chronic illness or see surgery ahead, you might choose Gold or Platinum. If the cheapest plan costs more than 8 percent of your income or you're a hardship case, you can buy a low-premium "catastrophic" policy. For those with especially low incomes, there's a modified Silver plan that slashes copays and coinsurance.
You can change plans once a year. This year's final deadline for signing up is March 31, unless you have a qualifying event such as getting married or having a baby. Subsidies for ACA plans are figured on a sliding scale. A buyer at the poverty level has to pay no more than 2 percent of his or her income toward the annual premium for the second-cheapest Silver plan. At the upper end of the income range, your expected payment is capped at 9.5 percent of income. You can use your premium subsidy to help buy a Gold or Platinum plan but will have to shoulder the extra cost yourself.
If your income rises above the limit, even by just $1, your premium costs will soar. You won't qualify for subsidies, but that's the least of it. You will also lose the protective cap that held your premium cost to no more than 9.5 percent of your income. Instead, you'll have to pay the full market price. Take a couple reporting $62,040 in income, which is within the subsidy range. They might be charged $5,000 for a Silver plan, says Karen Pollitz, senior fellow at the Kaiser Family Foundation, which studies health care policy. If they earn an extra dollar (an income of $62,041), they'll lose their price protection. They might have to pay as much as $15,000 for the same policy, in some states.
To hold down your cash flow, Aaron Eidelman, a tax partner at the accounting firm McGladrey in New York, has some suggestions:
- Accept slightly less work.
- Send bills for consulting projects in late December so that they will be paid in January.
- Take deductible expenses in the current year.
- Take a smaller amount out of your individual retirement account.
Even if you don't qualify for a subsidy, there's a ceiling on what the insurance companies can charge. The premiums still aren't cheap, but they're lower than they used to be. Before the ACA, people in their early 60s paid four to six times more for similar coverage than people in their early 20s did, Pollitz says. Now, you'll pay a maximum of three times more. In your early 50s, you'll pay no more than twice as much. In a few states, everyone pays the same.
If you have two homes, the right place to buy insurance is in the state where you hold your official residence.
Unless you qualify for a hardship exemption, you're generally required to have coverage or else pay a penalty. That might stick in your craw. On the other hand, if you become seriously ill, you won't be a financial burden on the medical system, the taxpayer or your family. And, you'll stay healthier up to age 65, when you can gratefully sink into the arms of Medicare.
Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW.
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