Hello, Dear Readers who did not ask for this post but are getting it anyway! In my last post, I bored you to tears regaled you with the story of how I finally got health care exchange health insurance with subsidies this year, after learning at last year’s Econome conference that the rule preventing me from doing just that in 2022 since has been all modified and such.
As I threatened hinted in that post, I’m now writing this post to go into the tedious juicy details. In fact, cuz there were so many of said details, I’m giving you, Dear Reader, not just one, but two posts so as not to break the interwebs with one criminally really long post.
Hopefully this post doesn’t put you to sleep at least some of you get something out of this.
Challenge #1 — Ruled out
As I explained in the last post, when I FIREd at the end of 2021 and then tried to get The Family heavily subsidized health insurance on the exchange, an exchange navigator put up her hand, extended her arm stiffly toward my face, and said, Soup Nazi-style, “NO SUBSIDIES FOR YOU!” I was a blubbering mess surprised and disappointed.
The rule preventing us from getting subsidies provided that subsidies for the household were off the table if one spouse in a married-filing-jointly household had access to health insurance through an employer. The rule applied whether the family’s annual premiums under such a plan were $1 or $1 billion.
In our case, we did have access to (and were covered by) a plan offered by The Missus’ employer. The cost of the annual premiums wasn’t quite $1 billion. But they were obnoxiously high.
But at last year’s Econome, I learned that the rule at issue had been modified such that we might now be subsidy-eligible. When I got home from the conference, I called a state health care insurance exchange navigator for more info.
Long story short, I was told that the modification (which I think went into effect in 2024) provided that if a household has access to health insurance through an employer but the cost of the annual premiums exceed a certain percentage (which is adjusted annually, I believe, and in 2025 was around 9% for our family of four) of the household’s modified gross adjusted income (MAGI), then the household may be subsidy-eligible. The subsidy amount is MAGI-dependent. The lower the MAGI, the higher the subsidies.
Challenge #2 — Number go up too much
The next factor making things more challenging than they might’ve been for many early retirees was our annual MAGI. Between The Missus’ full-time job income, my funemployment and gig work income, and a pot-o’-money from interest and dividends, our annual MAGI ain’t nothing. Whereas some early retirees wanting subsidies have to figure out how to generate income so as to get to a level above the exchange threshold where Medicaid is their only health insurance option, we had to address lowering our MAGI.
Complicating things more was the fact that household income is considered. Not just the income of me and The Missus. But also, Things One and Two because The Missus and I list them as dependents. As both Things One and Two have part-time jobs, that added a healthy amount more in income we had to address for purposes of the MAGI calculation.
This all said, I did some quick math on a calculator in my head and, chin jutted out, told the navigator that we met the annual-premium-as-a-percentage-of-MAGI threshold. The navigator replied that we were thus subsidy-eligible, if we chose a silver-level plan (the plan level allowing for subsidies). For reference, I believe that most, if not all, states have three “metal” levels of coverage: bronze (low premiums, high deductibles and coinsurance; gold (high premiums, low deductibles and coinsurance); and silver (think more Goldilocks levels).
“Oh, happy day!,” I shrieked with unbridled glee said.
For reasons I won’t go into, we unfortunately couldn’t then (in March) switch to an exchange plan with subsidies. Rather, we had to wait until open enrollment for 2025, which ran from November 1 – December 15. Womp womp!
Challenge #3 — No know
Subsidy-eligibility now resolved, it was time to use the exchange’s plan cost estimator to figger out what we might ultimately pay for a subsidized policy. The navigator input into the estimator the income and other financial numbers that I gave her. And voila! The results page showed . . . no subsidies and premium amounts?! What the what?! Both of us confused, we went through the exercise a few more times. The results and said confusion remain unchanged.
After the call, the navigator contacted a health insurance broker she regularly works with, explained my situation and the confusing cost estimator results, and asked for his thoughts. The broker couldn’t make heads or tails of the results either. But he confirmed that we were in fact subsidy-eligible.
Next, the navigator and I called our state’s health insurance exchange customer service line for help. We learned that to qualify for subsidies, The Missus couldn’t be on the exchange plan. The reasons are a little confusing, and I frankly can’t remember them exactly. But we accepted their accuracy. But as single-person coverage on The Missus’ employer-provided health insurance plan is pretty low, I made peace with the scenario (The Missus staying on her employer’s plan, and the rest of us going on a subsidized exchange policy), figgering that our aggregate health insurance cost would be far cheaper than the cost for all of us under The Missus’ employer’s plan.
The navigator and then I returned to the cost estimator and input information aligned with our new understanding. Et voila encore! The results made me convulsively happy pleased the eyes.
Challenge #4 — How low can you go?
Here, I have to stop and introduce two terms: (1) cost sharing reductions (CSRs), and (2) the Children’s Health Insurance Program (CHIP). The former I knew little about. The latter even less.
I learned that at a high level, while subsidies drive down the cost of premiums, CSRs (eligibility for which is based on a MAGI number different than that related to subsidy eligibility) drive down the cost of deductibles. And CHIP essentially is a Medicaid plan for kids under age 19 whose families’ income is below a certain threshold. For us, CHIP coverage would mean free coverage for Thing Two (who’s under age 19) if he qualified, and lower premiums for the plan covering me and Thing One as the exchange policy then would be covering two people instead of three.
For those keeping score at home, here’s the tl;dr on all this as far as I understood things once we got the nice results from the cost estimator and I learned the basics about CSRs and CHIP: subsidies kick in when a family’s MAGI is $X. CHIP and CSRs both kick in and are taken off the table entirely at income levels lower than that. Both CSRs and CHIP coverage could drive down our premiums, deductibles, and actual coverage expenses. So, we maybe wants them. The preciouses.
Now back to our regularly scheduled programming.
For purposes of the cost estimator exercises detailed above, I used a MAGI of $A, a number I’d settled upon that would be enough to fund our annual expenses and also get us some healthy subsidies. But not necessarily low enough to get CSRs or CHIP coverage for Thing Two.
As I became further educated, I learned that a MAGI slightly lower than $A would greatly increase the subsidies we’d qualify for and maybe get us CSRs and/or CHIP coverage for Thing Two. Using the cost estimator, I discovered that the optimal projected MAGI for us was $B (a number lower than $A), which resulted in healthier subsidies and possible CHIP coverage for Thing Two. But no CSRs.
Soon thereafter, I started getting even more educated on CSRs and CHIP coverage. The former became even more appealing to me. The latter I initially was skeptical of because I associated Medicaid with poor and/or unacceptably limited coverage/options. But I soon learned that CHIP in my location not only would drive down our expenses, but also provide good coverage for Thing Two. I started warming to CHIP coverage for Thing Two.
And in the end . . .
Dear Reader, I’m guessing that you’re thoroughly confused looking for a break from all this about now. So, imma stop this post here. Stay tuned to this bat channel for the unintelligible exciting conclusion of the story.
