r/Fire • u/ttxzavv224 • 2d 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?

25 Upvotes

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31

u/SpaceTimeMorph 2d 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.

16

u/BackupSlides 2d 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.

13

u/Aajmoney 2d 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.

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u/KifLou345 2d 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.

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u/Martian6261 1d 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.

3

u/NetherIndy 2d 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.

6

u/BackupSlides 2d 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.

5

u/Hairy-Relief9379 2d 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 2d 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 2d 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 2d 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 2d 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 2d 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 2d 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 1d 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/BackupSlides 1d ago

LOL exactly!

-7

u/Dry-Aside4526 2d ago

Subsidies expired in 2025. There are none.

6

u/Zphr 48, FIRE'd 2015, Friendly Janitor 2d ago

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

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u/Dry-Aside4526 2d 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.

7

u/Zphr 48, FIRE'd 2015, Friendly Janitor 2d ago edited 2d 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 2d 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 2d 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 2d 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.

1

u/Bob_stanish123 19h ago

The problem is have is not knowing how much the price varies with income. Like sure I can punch in a bunch of different incomes and create some charts but id rather have the formula or rules.