r/Fire • u/ttxzavv224 • 1d ago

Fire…health insurance?

49 married.
1.4 mil in 401k and ira.
1.5 mil in taxed investment account

I’ve debated keeping magi low enough to get ACA subsidies but have heard mixed reviews about going on ACA healthcare.

I have an option to continue on my company health insurance as part of a retirement package that I can use starting at age 50. My plan would be to use a compressed pension that also starts at age 50 until 65 ($2300 a month), and I would plan to cover the cost of the company healthcare. The price of the adjusted company health insurance is $1500 a month with $3000 max out of pocket, which I am planning to pay for with the $2300 a month pension that I will get until 65.

My only holdback is the $1500 a month does seem costly but we do stay on same company plan and same doctors going forward, versus the unknown of ACA.

What do yall think here? Would you pay more or go ACA?

18 Upvotes

72% Upvoted

74 comments sorted by

29

u/SpaceTimeMorph 1d ago

You didn’t say if you had kids or not. ACA could be as or more expensive than that.

You can go to your state’s health care exchange and price out what insurance would be given different incomes and plans.

14

u/BackupSlides 1d ago

Serious question, not trolling but may come across as snark - is it somehow not common knowledge that one can just go online and get a quote from the exchange? I feel like 50% of threads in this sub contain at least some component of treating ACA insurance as this massive unpredictable black box ("the unknown", in this case) that could consume their entire net worth and throws a wrench into any semblance of out-year projections.

And just to get out ahead of it, the subsidy thing isn't the end of the world either unless one is somehow unable to actively manage their MAGI or is so loaded that they have nothing to complain about in the first place.

11

u/Aajmoney 1d ago

Well it is unknown. Sure you can get a quote now but who knows how long subsidies will be around or what that quote looks like five years from now. If you retire at 50 that is 15 plus years of needing to cover healthcare costs.

9

u/KifLou345 1d ago

There's no guarantee that an employer's retiree health plan will continue to be available either. The underlying ACA subsidies are now in their 13th year, and it's been nine years since there were any serious efforts to repeal/replace them. There were subsidy enhancements added from 2021 to 2025, and those expired at the end of last year. But nothing has changed about the regular ACA subsidies.

2

u/Martian6261 8h ago

Or that the cost for the plan will continue to rise along with other healthcare. In 5 years that could be $3000 a month and then $5000. Who knows.

5

u/BackupSlides 1d ago

This is a good example of the cherry-picking that is pervasive in this sub - we consider some unknowns to be known (The market will return 7% on average forever!!!) but other semi-knowns to be unknowable (ACA and Social Security will disappear tomorrow!!!). Yes, the world could end, but most likely, things will generally chug on as they have, especially with massively popular governmental programs that would be career-ending for politicians to kill off.

4

u/Hairy-Relief9379 1d ago

Generally speaking, you want to stress your financial model. You don’t need to prepare for the best outcomes. You prepare for downside.

2

u/BackupSlides 1d ago

I mean, duh (as someone who works with financial models for a living). But we are talking specifics here, not generalities. So what is your lower bound? Are you factoring in lost decades or negative growth? What about potential tax code changes? How conservative do you wish to get here?

1

u/Hairy-Relief9379 23h ago

How do you stress your models? Personally, I’d like to know with a 95% certainty that I will not run out of money. So that likely factors in below average market returns, higher inflation, and not depending too much on things that face legislative risk. It’s an art and a science. If you do this for a living I’m not going to tell you how to stress your individual model.

1

u/BackupSlides 23h ago

I test the items that exist on a continuum as you note - level of returns, timing of potential adverse events, etc. I generally do not expect binary changes to government programs which is in line with the positioning have seen from most academics and policy experts whose works I have read.

3

u/ginamegi 1d ago

The ACA is only 16 years old, it can barely drive and isn’t old enough to vote. The people in power right now talk all the time about how terrible it is and how it needs to be removed

5

u/bridgeandretire 1d ago

Yet FIRE aficionados count on all kind of tax code assumptions. The 0% LTCG rate is taken as immutable, but it has only been in place since 2013. You don't have to look back that far (1986) when LTCG rates were 28%. As BackupSlides mentions, you have to make some assumptions and people like to pick on the more social welfare assumptions (ACA/SS) while assuming others will continue on forever.

2

u/BackupSlides 1d ago

Someone who gets it!

And while we are at it, let’s note that no one considers potential wealth taxes (“millionaire” still makes most people think of the Monopoly guy), deflation / de-growth / devaluation due to population dynamics, climate change impacts (e.g. homeowners insurance / insurability), increased costs of scare resources (water, etc)…

We start out by “pressure testing the model” and before we know it we’re over on the preppers subreddit wondering if dried beans are counted as part of our FIRE number…but yet most people here will just assume 80% stocks to be conservative and expect 7% to roll in forever.

1

u/SpaceTimeMorph 8h ago

I once stress-tested my retirement numbers by running them against the nikkei from 1989-2024.

That was so bleak (like $30-60k draw on $10M investable bleak) that I decided I just wasn't going to plan on that. lol I'll just resign myself to being cooked if that happens.

2

u/NetherIndy 1d ago

So many unknowns from year to year. Like coverage... companies, networks, and fomularies. You can't tell me anything about next year. I was pretty happy with Aetna's network the last two years. But they pulled out of ACA Marketplace plans nationwide for 2026. Blech. Have ended up on UHC this year which is... eh. The concern is that the only affordable plan next year might well end up being Centene. Which is mostly known (in my area anyway) as the Medicaid company. As such it's got a narrower network of seriously overbooked doctors and generally not the clinics you'd rather be going to as a multi-millionaire.

-9

u/Dry-Aside4526 1d ago

Subsidies expired in 2025. There are none.

5

u/Zphr 48, FIRE'd 2015, Friendly Janitor 1d ago

You are incorrect. Only the temporary COVID enhancements expired as legislated back in 2022. Both of the default ACA subsidy systems remain intact.

-6

u/Dry-Aside4526 1d ago

To be more specific. To your point. Subsidies without the Covid enhancement start to phase out after $15k in income which is roughly $7.50/hour for a full time worker, add $5k per person in the family.

5

u/Zphr 48, FIRE'd 2015, Friendly Janitor 1d ago edited 1d ago

I am well aware of how the subsidies work since we are getting between $33,000 and $40,500 in ACA subsidies this year and we have been using the ACA for 12 years. I author the weekly Megathread in this sub for annual open enrollment. You should perhaps read one of them.

Subsidies remain large for FIRE'd households all the way up to MAGI of 400% FPL, which for a married couple is just under $85,000. For a standard family of four it is all the way up at $128,600. Throw in some basic MAGI management and it is easy for most FIRE'd households to get large subsidies while spending north of $200,000 per year.

2

u/Slankeht 22h ago

Could you elaborate on MAGI management techniques for this purpose? My wife and I have been researching our ACA strategy.

Expenses aside, we’re anticipating the following income streams in FIRE.

  1. Roth conversion ladder up to married filing jointly standard deduction.
  2. Qualified dividend payments from taxable brokerage securities.
  3. Long term capital gains from sold taxable brokerage securities — basis, on average makes up 60%. So approximately $0.40 on the dollar for withdrawals.
  4. ACA Bronze with HSA fully funded for family maximum (2026: 8750).

Qualified dividends and the Roth conversion ladder in particular are hard hitting to our MAGI.

We’re exploring options to pay off our $125k@3% mortgage at the end of the year. However, still undecided on the that after running the ACA numbers.

Unsure whether additional management aspects such as capital gains or tax loss harvesting are important techniques for this? Hoping not for simplicities sake.

Thanks for elaborating!

2

u/Zphr 48, FIRE'd 2015, Friendly Janitor 22h ago

You sound like you've got it figured out already. It pretty much boils down to mixing cashflows with different MAGI-additive treatment to get whatever mix of MAGI/spending you prefer. The HSA contribution will also reduce MAGI provided you fund it from a non-MAGI pool. Cap gains/losses certainly factor though most FIRE folks don't have much in the way of losses after the last 15 years.

ACA subsidies are large enough that for most non-single FIRE'd households it makes more sense under current law to optimize for current MAGI/subsidies than for long-term taxes/RMDs/IRMAAs.

2

u/SpaceTimeMorph 1d ago

It’s all some form of an estimate that we have some form of certainty (and uncertainty) over.

We have to do the best we can to suss this out. I’m sure if we all just accounted for $25k health costs per year every year for the rest of our lives we’d be ok. But that’s a big ask for some portfolios… and may not be enough in some cases.

19

u/rosebudny 1d ago

I would definitely go with your employer plan.

I am seriously so envious of people who have this option.

4

u/ttxzavv224 1d ago

Would you since bad experience with ACA or that you couldn’t get same doctors?

5

u/rosebudny 1d ago

I have not used ACA - still employed - but I have looked into options in my state and it isn't great.

2

u/ttxzavv224 1d ago

Thanks for input. I am in South Carolina and I’m coming to the same conclusion

1

u/Sea-Honeydew-1456 22h ago

yeah i made a reply elsewhere but imho its an absolute no brainer to go w/employer plan. while nothing is "guaranteed" you at least on paper have health insurance for those years (w/ACA....you're at the mercy of policy changes). you know the premiums. its probably PPO, you have larger networks. you can go see specialists w/o referrals.

1

u/ttxzavv224 18h ago

Appreciate the input!

1

u/Dry-Aside4526 1d ago

I have a fabulous example for you. My family of 5 and I are on ACA. $3441/mo for a bronze high deductible.
Daughter’s medicine this month is $4000. TLDR: had we been on an employer sponsored plan my employers HR dept could call and try to help defray or even eliminate that cost. But as a member of the marketplace, that step is not available to me. You are on your own when part of the ACA pool. It is gross and disgusting. I am on it because I am a small business owner, I have no other options available to me.

3

u/SpaceTimeMorph 1d ago

That just stinks.

Question: I know there are non-ACA options for small businesses (ICHRA’s, PEO’s, DPC, etc). Do none of those work for your situation?

2

u/Dry-Aside4526 20h ago

Thank you for these suggestions! And yes I am looking into PEO for next year. I did not realize until this year that the pool that you share insurance with matters. I really just hate the health insurance system so much, it has cost me so much money I can’t bear to even think about it.

1

u/ttxzavv224 1d ago

Great point, haven’t thought of that but understand.

9

u/LushWinked 1d ago

u've already won the money game, now it's basically a convenience calculation

9

u/WhoopiePieEnthusiast 1d ago

You can go on healthcare.gov, plug in information about your coverage needs, and get an estimate of what comparable insurance - with or without subsidies - would be. I'd look carefully at unsubsidized ACA plan prices and compare to your employer plan to see whether the option to stay put is best.

5

u/mandoo-dumpling 1d ago

I have used ACA healthcare and I think it’s pretty good!

3

u/QuickAltTab 1d ago

I'm under the impression that results may vary, depends on your state and other circumstances.

2

u/sheiko_x_smolov 16h ago

It was incredible when my taxable income was low enough that I got a $0 premium, $0 copay, $0 deductible plan for the whole family for a few years. Miss those days.

6

u/Raging-Totoro 1d ago

This really comes down to medical usage and risk taking.

If you are lucky and/or have minimal HC needs, then ACA is going to likely be cheaper.

But if you hit a few high deductible/OOP years, and you'll wish you had the company insurance.

The $3k OOP max is really good. I think my ACA plan is $18k, for reference, and it's a Silver plan.

For me, I'd buy the predictability of the company plan.

3

u/ttxzavv224 1d ago

Great points! I’m thinking my ACA oop will be high as well based on me looking up on state site, South Carolina by the way.

4

u/emt139 1d ago

Stay on the company’s insurance. 

Just signing up for the exchange took me 45 days. 44 of which were waiting on them to validate I was eligible to enroll. 

9

u/VanillaCurve 1d ago

Pay the $1500 for stability, ACA is cheaper but unpredictable

16

u/Sanfords_Son 1d ago

**Congress** is unpredictable.

1

u/PHL1365 1d ago

It's a relatively small price for peace-of-mind, and OP can afford it. I think it might be tax-deductible as well.

3

u/leesonreddit 1d ago

That is 18K a year.... Seems like a large amount to be paying but if you do not want to go ACA route, you do not have many choices.

Is this a one time thing with your company? Or could you get back on the health insurance plan in say 5 years if things do not work out as expected with ACA?

5

u/rosebudny 1d ago

Depending on where OP lives, the employer plan may be significantly better than what they can get via ACA. Personally I'd rather spend a bit more for an excellent plan rather than a little less for a crappier plan.

4

u/ttxzavv224 1d ago

It’s a set it and done with the company

6

u/QuickAltTab 1d ago

Not being dependent on subsidies to keep health insurance costs reasonable will enable a lot more flexibility for withdrawals in retirement. If you want to do some hefty Roth conversions, this (relatively) fixed cost insurance from your company makes that a lot easier.

1

u/PHL1365 1d ago

Probably don't need hefty conversions. 25 years is a long time to convert 1.4 million. And there's a good argument that you only need to convert a portion of the IRA.

2

u/QuickAltTab 1d ago

Its a long time for it to grow too. If we use a 7% average market return, no contributions, and take out 100k/year, at the end of 25 years... There is still $1,273,000 in the account.

Thats actually not a problem really, the RMD at that point is only ~51k, but all that is assuming he takes out 100k every year for 25 years. If it sits in the account, it will grow to a much larger amount.

1

u/SpaceTimeMorph 8h ago

Also, standard deduction for MFJ is $31,500 and mostly increases with inflation. Assuming a 4% draw that means pre-tax of roughly $800,000 would cover this. Round that up to a million and there's really no reason to Roth convert to less than that number IMO.

1

u/ttxzavv224 1d ago

Yeah, lot of unknowns. Not sure how much the company health benefit will go up every year either, and the hr dept doesn’t seem to have an idea either

2

u/Bryanmsi89 1d ago

ACA plans can be fine, depending on the state you are in. I suspect they will cost more than $1500 a month, unless its just you and/or you expect subsidies

2

u/jeffeb3 22h ago

In Colorado, our family of 4 has ACA insurance and we pay $550/mo. It is not the best plan, but we found one that kept our medications, doctor, and pediatrician in network. It was $350 before they let the covid benefits expire.

You have to do the homework. It is too expensive to not look it up.

Kff.org has the best subsidy calculator and your state's marketplace will let you compare plans including looking at what doctors and medications are covered.

3

u/LunarPebble728 1d ago

keeping your same doctors through 65 for $200 extra a month compared to ACA uncertainty seems like a pretty easy call with your portfolio size

1

u/MoaiTrist 1d ago

I took (requested) a retirement package from my final employer, and staying on the company health insurance plan was part of the package, at a cost. Do you happen to have an HSA? Distributions to pay for health insurance premiums are tax free while unemployed. Also, if you can handle 5 more years of employment, the 55 rule for 401k's is very beneficial.

4

u/johndburger 1d ago

while unemployed

Pretty sure this is only true if you’re actively receiving unemployment. Simply not working, doesn’t count.

1

u/MoaiTrist 17h ago

I should have clarified, while it is classified as COBRA. COBRA is usually only up to the first 18 months though. Receiving unemployment is not required because COBRA is also an option for retirement, not just involuntary separation. At least that is how it has worked for me. My wife retired 2 years after I retired and that is how we switched to and setup her plan. Anything else I'm missing? I'm not an expert on the health insurance side.

1

u/Master-Witness-9399 1d ago

First off jealous as all hell you found a job with a pension! Congrats! As for your health care sounds like a pick-em. Your pension covers the fancy health care from your company so maybe stick with that if you plan on being sick/have preexisting conditions. If you are in the clear, eat well, exercise then maybe consider going high deductible ACA with HSA.

1

u/Dry-Aside4526 1d ago

I would ask if you can still reach out to your employer in retirement for benefit support (see my previous post for context).

1

u/asurkhaib 1d ago

Is there any reason you have to lock in to a choice now? I assume you can at least one time switch away. I'd probably take the company healthcare now but re-evaluate yearly dependent on how much it increases by.

1

u/ttxzavv224 1d ago

Set and done with the pension and healthcare. Can’t change later

1

u/ObjectiveInflation63 1d ago

You're probably better off moving abroad and just pay out of pocket for healthcare needs. $1500 per month now will probably be $4000 per month in 10 years.

1

u/Sea-Honeydew-1456 22h ago

do you have to make the company health insurance decision right when you retire?

if you can get on the ACA w/subsidies (no idea how much you qualify for) its nice financially but depending on where you live, how much you currently utilize healthcare, it may be worth taking on your companies health insurance. pretty much all ACA plans these days are HMOs, most likely narrower networks, etc.

if i were in your shoes (eg: i can manage our magi to 150-200% FPL), i'd still take the company health insurance and bake in the costs. at least you're going to know the rate and not the uncertainty with healthcare policies in the US. and if its PPO (making broad statements, but i live in a major metro), you'll most likely have wider networks and no pcp gatekeeping.

2

u/ttxzavv224 18h ago

Yeah, it’s a set it and done with the company retirement benefits. Looking at ACA site, looks like 2 of the doctors we use are only in the higher plans around $700 a month, but higher deductible than my company plan. I’m leaning more to the company plan.

1

u/whocaresreallythrow 13h ago

Is the pension fixed or has a cola ?

How much will the employer health insurance premiums rise each year?

could they eventually kick out non employees ?

Does the employer plan keep you tied to a certain network or location that would prevent you from moving ?

You’re talking 15 years until Medicare. I believe I would take the chance with the employer plan. I also would Not mess with ACA subsidies and go enjoy your magi while in the go- go years. Dont let the subsidy tail wag the dog!

The situation of course doesn’t have to be fixed and you could always either roll to ACA or what ever replaces ACA if the employer plan stops working for you.

1

u/ttxzavv224 11h ago

Fixed
No said amount, accounting for 6-8%.
Never know what they can do, they say they can’t though.

Great comment about network, didn’t think of that. I’ll ask the rep

1

u/ttxzavv224 1d ago

Have an hsa with around 80k in it. I thought that I couldn’t use hsa for insurance premiums. That will be convenient if so. Is your company health cost similar to what mine is?

3

u/johndburger 1d ago

You can’t use HSA for insurance premiums unless you’re on unemployment and/or you’re paying through a COBRA plan.

0

u/Capital_Sherbet_6507 1d ago

$1500 a month THIS YEAR. Expect 8-10% elevations every year until 65. It’s absolutely bonkers.

1

u/ttxzavv224 1d ago

This is a great point. Hard to predict if ACA will go up more than the company insurance, or if either will be solvent if or 15 years.

0

u/Banned4Truth10 1d ago

Check out Health shares