Don’t get trapped in an “Affordable Health Plan”
By Steve Gaito
For many lower-income people, the Affordable Care Act (ACA) has been a welcome relief for higher healthcare costs. They provide excellent benefits and cover pre-existing conditions. What is often lost is that these plans are actually very expensive plans. They have to because of all that they cover. The way ACA plans work is that they subsidize the plans based on your income. To qualify for a subsidy your income has to fit in a range and is based on how many people are in your household. Generally, for 2020 the income level to qualify is for a single person between $12,490 to $49,960 for a family of 3 the range is between $21,330 to $85,320 according to KFF the Kaiser health foundation. If you qualify and are in the lower or middle range of these incomes I believe that you should consider these plans as they are a great value. If you are near the top of the range or you have variable income that may push you over the limit these plans can be a trap. As I mentioned earlier these are subsidized plans, which means that the government is actually in effect loaning you the money until you file your taxes and the income is verified. If you exceed the limit you no longer qualify for the subsidy and have to pay it back when you file your taxes. I have heard horror stories of people that exceeded the limit by just a few dollars and received tax bills for $15,000 to $25,000 for repayment of the subsidy. This is, in my opinion, a risk that they should not have taken, but people often do not know and sometimes it is difficult to estimate accurately income and something as innocent as a withdrawal from your retirement account for an unexpected expense can move your income up rapidly. This is why it is critical to understand how these plans work.
There are options to ACA plans and many of them provide excellent benefits. I like to use the Health Sharing Ministries. In my experience, some of these plans provide networks like health insurance. It is important to know that these plans are not insurance but provide similar benefits. When looking at these plans they can cover everything from routine physicals and lab work to major surgeries. There are also other plans that are for more catastrophic situations and provide only bare-bones coverage and payments are sent from other members to cover the cost of any procedures. This can create a problem if you do not have the money to pay upfront and wait to be reimbursed. There are also minimum essential coverage plans that while they do not provide hospital care they do provide urgent care and doctor visits for a co-pay. These plans, while not ideal are better than no coverage. A nice feature that is becoming available in most plans is telemedicine. This allows the patient to call and talk to a doctor live on the phone and some issues can be dealt with immediately. If more testing or doctors care is needed a recommendation to an in-network physician can be made. Like insurance plans, you need to read the fine print and understand how each plan works. I am available to help you evaluate the different options and make an educated decision.
If you have already signed up for an ACA plan and you feel that you may be impacted by the income limit and may have to repay the subsidy then there is good news. You can cancel your existing plan and sign up for one of these Health Sharing Plans.
I hope this helps people understand their healthcare options.
Steve is owner of Faith Based Health Care and Retirement Resource Management. He is a National Speaker on the topic of Social Security optimization, quoted in national publications like Money Magazine, US News and World Reports and Fox Business. Steve loves to educate and teach on financial topics like taxation of retirement accounts, long term care, healthcare, and efficient savings plans for small businesses. He has provided financial planning for missionaries through the International Mission Board. You can find Steve at 68 South Main St. in Marion, NC by calling 828-559-0299, email firstname.lastname@example.org or visit his website at www.faithbasedhc.com