ACA Plans Versus Other Options

The other day, a person who had taken early retirement at age 60 asked me what the best way to get health insurance was. I told him what I tell most people. It really depends on your situation. But it made me think that there are some common factors that you should look at. So I am going to use this as an example of the possible choices for real numbers.

First, there is, of course, the so-called affordable care market. At age 60 and earning over $60,000 per year, the least expensive ACA policy was $752 per month and had a fairly small provider network. If he were to go outside the network, he would be subject to balance billing. If he had serious medical problems, this would have been his best choice to not have to worry about pre-existing conditions, but he would have faced $10,000 out of pocket before being covered at 100%. To get a plan with a $50 doctor visit copay, the premium goes up to around $950. One good thing about these plans is that they do qualify for Health Savings Accounts. That means he can take advantage of funding a tax-deductible HSA with $5,400 to help pay pretax for any medical expenses.

In this example, I also have an option that takes advantage of this person becoming eligible for a plan at the company where he works just a few hours a year, giving him access to their group benefit program. He was required to answer medical questions, but his controlled high blood pressure and a few extra pounds of weight did not keep him from getting coverage. His cost was only $559 for an $8,300 deductible HSA-eligible plan or $601 for a $5,000 deductible plan. Both plans have a $10,000 out-of-pocket maximum but have large doctor networks.

His final choice was a short-term plan with a $5,000 deductible and a $15,000 out-of-pocket maximum. His cost would be only $392, but he would lose the ability to use the HSA, and he would still be subject to preexisting condition limitations. The other thing about this plan is that it pays doctors on what is known as reference-based pricing. Simply put, reference-based pricing is when the plan pays the provider at rates that are multiples of what Medicare would pay. Most of the time, this payment of 150% to 200% of Medicare is accepted by 95% of providers. However, I have recently noticed that some privately owned hospitals and clinics are balance billing for services.

We also considered a medical cost-sharing plan, which costs around $350 per month. The main downside of this plan is that it is not insurance. Rather, it is a plan in which people voluntarily share the costs of a group that agrees to help pay for the medical expenses of their fellow members.

The bottom line is that each person's medical protection plan must be tailored to their specific needs.