Need help deciding on health insurance. COBRA vs Private

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saver1
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Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

I am having a difficult time trying to decide between health insurance plans. Maybe some of the wiser Bogleheads can help me. My conclusion is that the health insurance situation is a mess, but I need to make a decision. I am recently unemployed and am under COBRA coverage, which is extremely expensive. Currently costs over $2300 per month for coverage on 3 of us. I started researching different options on health insurance including private insurance. I live in California. Here are some general points that I feel are important in my situation.

- I absolutely do not want Medi-cal, which I qualify for after applying on Covered CA. I have already denied the Medi-cal so it's not even an option.
- Doing 401k rollover/conversion to Roth is not something I am willing to do for this year so that is out of the question for increasing income in Covered CA. to qualify for plans outside of Medi-Cal.

As I see it, at the moment I have two options. Private insurance, which I have already obtained and is already active. It is a PPO plan. I opted for private insurance because it is much cheaper and the PPO plan is descent compared to my cobra coverage.

However, when I called to cancel my COBRA coverage I found out that the new American Rescue Plan is now providing 100% premium payment for COBRA insurance up to September of 2021. This was a surprise to me when I found out and made my decision more confusing.

So now I have private insurance and have not cancelled my COBRA coverage yet due to finding out about the COBRA assistance provided in the new law signed by the president.

Things to consider:
- The COBRA plan has a high deductible. It is a $4500 deductible. After September, I would have to pay for the remaining 3 months in the year at a premium of over $2300 per month, which will total a little over $7,000.

- I am not sure if enrollment will be open after September to switch from COBRA to private in order to get the lower premium of the private plan. I am assuming open enrollment will be closed at that point, but not sure.

- If I keep the private insurance plan and cancel the COBRA, the total premium cost for the remainder of the year will be a little cheaper than having COBRA for the rest of the year. I think it will be a total close to $6,900. This is possible because I qualify for a tax credit, which will give me 72% refund on the private plan premiums up to September.

- The private plan has co-payments instead of a high deductible for everything except for hospital inpatient stays. The hospital inpatient stay deductible is $8,000. I doubt we will need to use that deductible unless we have an unforeseen emergency event that requires being admitted to a hospital.

- The private plan has significantly higher out of pocket maximums compared to the COBRA plan. I don't think we would hit these maximums (for both private or COBRA plans) unless there was some kind of major unforeseen emergency at which point I would be more worried about the emergency than the cost.

Sorry for the long post, but I am confused and trying to make a decision.

Thank you in advance!
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quantAndHold
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

If you really don’t have enough income to qualify for Covered CA, why wouldn’t you do a Roth conversion of just enough to qualify. The ACA plan would be fully subsidized, and if your income is that low, you’re not going to owe any income tax.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

I forgot to mention that the tax credit that I qualify for with the private insurance plan is much better than any subsidy I would get from covered ca plans. So it is cheaper to go the route of the private plan with the tax credit rather than doing a Roth conversion to get a plan from covered California.
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quantAndHold
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

saver1 wrote: Sat Apr 10, 2021 3:12 pm I forgot to mention that the tax credit that I qualify for with the private insurance plan is much better than any subsidy I would get from covered ca plans. So it is cheaper to go the route of the private plan with the tax credit rather than doing a Roth conversion to get a plan from covered California.
So I’m confused then. If you qualify for Medicare, then your income is so low that you would have to make *more* money to qualify for an ACA plan at all. You should be able to get an ACA plan that is 100% subsidized, with cost sharing subsidies. Which I would think would be significantly cheaper than either of the plans you’re considering (and have much better coverage than the private plan).

Medicare is also means tested, and people living off of their investments don’t generally qualify for it. I’m guessing you need to fill out the application showing enough income to qualify for an ACA plan to find out what the cost of that actually is.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

quantAndHold wrote: Sat Apr 10, 2021 3:40 pm
saver1 wrote: Sat Apr 10, 2021 3:12 pm I forgot to mention that the tax credit that I qualify for with the private insurance plan is much better than any subsidy I would get from covered ca plans. So it is cheaper to go the route of the private plan with the tax credit rather than doing a Roth conversion to get a plan from covered California.
So I’m confused then. If you qualify for Medicare, then your income is so low that you would have to make *more* money to qualify for an ACA plan at all. You should be able to get an ACA plan that is 100% subsidized, with cost sharing subsidies. Which I would think would be significantly cheaper than either of the plans you’re considering (and have much better coverage than the private plan).

Medicare is also means tested, and people living off of their investments don’t generally qualify for it. I’m guessing you need to fill out the application showing enough income to qualify for an ACA plan to find out what the cost of that actually is.

I don’t qualify for Medicare. I qualified for medi-cal which as I said in my original post I DO NOT want. It is not good insurance and we would not be able to keep our existing doctors. Covered ca does not subsidize the plans at 100%. Only medi-cal is free.

For the sake of this discussion let’s leave out the covered ca plans via Roth conversions. That is not what I am asking about. I am only asking about the choice between cobra and private insurance.
Luckywon
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Re: Need help deciding on health insurance. COBRA vs Private

Post by Luckywon »

saver1 wrote: Sat Apr 10, 2021 2:26 pm

- If I keep the private insurance plan and cancel the COBRA, the total premium cost for the remainder of the year will be a little cheaper than having COBRA for the rest of the year. I think it will be a total close to $6,900. This is possible because I qualify for a tax credit, which will give me 72% refund on the private plan premiums up to September.
Would you also get a tax credit refunding COBRA payments after September? If yes, I'd think keeping the COBRA plan at least through the end of the current enrollment cycle would be better, and then reevaluating for the next enrollment cycle.
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quantAndHold
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

saver1 wrote: Sat Apr 10, 2021 4:00 pm
quantAndHold wrote: Sat Apr 10, 2021 3:40 pm
saver1 wrote: Sat Apr 10, 2021 3:12 pm I forgot to mention that the tax credit that I qualify for with the private insurance plan is much better than any subsidy I would get from covered ca plans. So it is cheaper to go the route of the private plan with the tax credit rather than doing a Roth conversion to get a plan from covered California.
So I’m confused then. If you qualify for Medicare, then your income is so low that you would have to make *more* money to qualify for an ACA plan at all. You should be able to get an ACA plan that is 100% subsidized, with cost sharing subsidies. Which I would think would be significantly cheaper than either of the plans you’re considering (and have much better coverage than the private plan).

Medicare is also means tested, and people living off of their investments don’t generally qualify for it. I’m guessing you need to fill out the application showing enough income to qualify for an ACA plan to find out what the cost of that actually is.

I don’t qualify for Medicare. I qualified for medi-cal which as I said in my original post I DO NOT want. It is not good insurance and we would not be able to keep our existing doctors. Covered ca does not subsidize the plans at 100%. Only medi-cal is free.

For the sake of this discussion let’s leave out the covered ca plans via Roth conversions. That is not what I am asking about. I am only asking about the choice between cobra and private insurance.
Sorry, I meant MediCal not Medicare. And if you actually qualify for MediCal (which I suspect you don’t), it *is* actually your best option.

You haven’t provided enough information for anyone to help you. You’ll need to show more numbers to get help, because if you really have no income and the tax credits are going away in September, it doesn’t make sense that the other plans are cheaper than a subsidized ACA marketplace plan. With the max subsidy, a silver ACA plan for 3 people is like $100/month, and you would get cost sharing on the deductible and copays.

I suspect the private plan is some sort of non-ACA compliant plan, maybe short term or something? You need to be very careful about those, because the primary point of insurance is to stave off catastrophic failure, and if you have a plan with no out of pocket max or a lifetime max, and need, for example, a bone marrow transplant, you will become very broke. With an ACA compliant plan (the COBRA plan probably fits this) would hit an out of pocket max before you broke the bank.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

Luckywon wrote: Sat Apr 10, 2021 4:38 pm
saver1 wrote: Sat Apr 10, 2021 2:26 pm

- If I keep the private insurance plan and cancel the COBRA, the total premium cost for the remainder of the year will be a little cheaper than having COBRA for the rest of the year. I think it will be a total close to $6,900. This is possible because I qualify for a tax credit, which will give me 72% refund on the private plan premiums up to September.
Would you also get a tax credit refunding COBRA payments after September? If yes, I'd think keeping the COBRA plan at least through the end of the current enrollment cycle would be better, and then reevaluating for the next enrollment cycle.
No, the tax credit refund ends in September so I would pay the full premium for COBRA after September.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

quantAndHold wrote: Sat Apr 10, 2021 4:40 pm
saver1 wrote: Sat Apr 10, 2021 4:00 pm
quantAndHold wrote: Sat Apr 10, 2021 3:40 pm
saver1 wrote: Sat Apr 10, 2021 3:12 pm I forgot to mention that the tax credit that I qualify for with the private insurance plan is much better than any subsidy I would get from covered ca plans. So it is cheaper to go the route of the private plan with the tax credit rather than doing a Roth conversion to get a plan from covered California.
So I’m confused then. If you qualify for Medicare, then your income is so low that you would have to make *more* money to qualify for an ACA plan at all. You should be able to get an ACA plan that is 100% subsidized, with cost sharing subsidies. Which I would think would be significantly cheaper than either of the plans you’re considering (and have much better coverage than the private plan).

Medicare is also means tested, and people living off of their investments don’t generally qualify for it. I’m guessing you need to fill out the application showing enough income to qualify for an ACA plan to find out what the cost of that actually is.

I don’t qualify for Medicare. I qualified for medi-cal which as I said in my original post I DO NOT want. It is not good insurance and we would not be able to keep our existing doctors. Covered ca does not subsidize the plans at 100%. Only medi-cal is free.

For the sake of this discussion let’s leave out the covered ca plans via Roth conversions. That is not what I am asking about. I am only asking about the choice between cobra and private insurance.
Sorry, I meant MediCal not Medicare. And if you actually qualify for MediCal (which I suspect you don’t), it *is* actually your best option.

You haven’t provided enough information for anyone to help you. You’ll need to show more numbers to get help, because if you really have no income and the tax credits are going away in September, it doesn’t make sense that the other plans are cheaper than a subsidized ACA marketplace plan. With the max subsidy, a silver ACA plan for 3 people is like $100/month, and you would get cost sharing on the deductible and copays.

I suspect the private plan is some sort of non-ACA compliant plan, maybe short term or something? You need to be very careful about those, because the primary point of insurance is to stave off catastrophic failure, and if you have a plan with no out of pocket max or a lifetime max, and need, for example, a bone marrow transplant, you will become very broke. With an ACA compliant plan (the COBRA plan probably fits this) would hit an out of pocket max before you broke the bank.
I do qualify for MediCal based on the unemployment income I am currently getting. However, I declined it because I do not want it. It might be the best option financially, but it is most definitely not the best option in terms of the quality of health insurance it provides. It is bottom of the barrel insurance and we would end up losing all of our existing doctors, which we are not willing to do. I have heard bad stories about MediCal from people who were on that insurance and the level of care they received.

What more specific numbers would you like? The income I am getting now is from unemployment. Using your example of a Silver plan on Covered CA. would require me to do a 401k rollover to Roth conversion. Then that would place me and my wife in the Silver 94 plan and my child in MediCal (again I do not want any of us in MediCal). The cost of that would be $330 per month. Now to get my child out of MediCal I would have to purchase private insurance for that child. That would cost me $244.36 to get my child on a separate private plan. Add another $123 per month for all of us to have dental and that would put us at a total of $697.36 (330 + 244.36 + 123) per month. That is more expensive than having private insurance for all three of us with the tax credit I can get until September. The private insurance with the tax credit would cost me about $418 per month for all three of us and that includes dental.

The private plan is basically the exact Silver 70 plan that is on the exchange except that it is sold off the exchange privately. It is not short term insurance. It is a PPO plan. There is a out of pocket max, but it is higher than the COBRA plan.
Luckywon
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Re: Need help deciding on health insurance. COBRA vs Private

Post by Luckywon »

saver1 wrote: Sat Apr 10, 2021 2:26 pm
- The private plan has co-payments instead of a high deductible for everything except for hospital inpatient stays. The hospital inpatient stay deductible is $8,000. I doubt we will need to use that deductible unless we have an unforeseen emergency event that requires being admitted to a hospital.
If it may affect your decision, check whether your deductible applies to:

Emergency room visits
Testing including laboratory and other tests
Imaging (xray, ultrasound, MRI)
Physical therapy

Which plan is a better value for you is very difficult to say (I am assuming from your last post the private plan is ACA compliant). As a very general rule, the younger you are, the more likely it is that purchasing an ACA compliant plan will be cost effective over COBRA. The subsidies and credits, though, are confounding wild cards.
Last edited by Luckywon on Sat Apr 10, 2021 5:18 pm, edited 2 times in total.
Topic Author
saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

Luckywon wrote: Sat Apr 10, 2021 5:12 pm
saver1 wrote: Sat Apr 10, 2021 2:26 pm
- The private plan has co-payments instead of a high deductible for everything except for hospital inpatient stays. The hospital inpatient stay deductible is $8,000. I doubt we will need to use that deductible unless we have an unforeseen emergency event that requires being admitted to a hospital.
If it may affect your decision, check whether your deductible applies to:

Emergency room visits
Testing including laboratory and other tests
Imaging (xray, ultrasound, MRI)
Physical therapy
For the private plan, the deductible only applies for hospital inpatient care where you would be admitted into the hospital for more than one day. The deductible does not apply for the items you have listed.

For the COBRA plan, the deductible applies for everything. So I would need to pay the first $4500 out of my pocket before the insurance kicks in.
gtg970g
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Re: Need help deciding on health insurance. COBRA vs Private

Post by gtg970g »

Could you go into medical and pay cash at your current drs? Where we live most pediatric physicians accept medicaid.
Last edited by gtg970g on Sat Apr 10, 2021 7:38 pm, edited 1 time in total.
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quantAndHold
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

So what happens after September? It sounds like you're optimizing for between now and September, but most of your cost is actually going to happen during Q4.

Between now and September, from what I can tell, I don't think the two plans you're comparing are substantially different.

Have you actually checked to see if your kid's doctor takes MediCal?
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

quantAndHold wrote: Sat Apr 10, 2021 6:29 pm So what happens after September? It sounds like you're optimizing for between now and September, but most of your cost is actually going to happen during Q4.

Between now and September, from what I can tell, I don't think the two plans you're comparing are substantially different.

Have you actually checked to see if your kid's doctor takes MediCal?
Yes, I have verified with my kid's doctor and they do not accept MediCal. Only PPO.

I am actually trying to decide between COBRA and Private between now and the end of year. Sorry, maybe I didn't state that.

Total COBRA cost until end of year is $7,050.
Total Private cost until end of year is $6,106.

The thing that is tripping me up is that the COBRA will be free until September and has a 4500 deductible. While the private plan has the tax credit, a 8,000 deductible that only applies to hospital stays and higher out of pocket maximums.

I suppose they are both similar and it doesn't really matter, which one I choose. Maybe it is over analysis, I have been reading through the details for a long time and it has me more confused.
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

Yeah, I think they’re different, but unless you know how your health is going to be in the future, you’re pretty much stuck flipping a coin.

So basically, what I’m getting is if you need only “normal” healthcare, the private plan is better, but if you need a lot of health care (I.e. hospitalization), the COBRA plan is better. So you’re really playing an odds game. I would look at your spending in the past year, and make an assumption that the coming year will be similar, and pick whichever one would be better with that assumption. If you’ve basically been healthy this past year, the most likely thing is that that will continue, and vice versa.

And hen if you get it wrong...meh. You did your best.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

quantAndHold wrote: Sat Apr 10, 2021 7:33 pm Yeah, I think they’re different, but unless you know how your health is going to be in the future, you’re pretty much stuck flipping a coin.

So basically, what I’m getting is if you need only “normal” healthcare, the private plan is better, but if you need a lot of health care (I.e. hospitalization), the COBRA plan is better. So you’re really playing an odds game. I would look at your spending in the past year, and make an assumption that the coming year will be similar, and pick whichever one would be better with that assumption. If you’ve basically been healthy this past year, the most likely thing is that that will continue, and vice versa.

And hen if you get it wrong...meh. You did your best.
Yes, what you described is what I am trying to decide between. We are generally very healthy and have only gone to the doctor for yearly checkups the last few years. We have not had any need for hospitalization or treatment for any ongoing issues. I would assume that would continue for the remainder of the year unless some kind of emergency comes up. However, being that we are still in the middle of the covid pandemic I feel like the chances of needing a hospital are slightly elevated. We are usually very careful, but you never know. I suppose you are correct in saying that it is just an odds game. I am leaning more towards keeping the private plan.
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Re: Need help deciding on health insurance. COBRA vs Private

Post by quantAndHold »

saver1 wrote: Sat Apr 10, 2021 8:13 pm
quantAndHold wrote: Sat Apr 10, 2021 7:33 pm Yeah, I think they’re different, but unless you know how your health is going to be in the future, you’re pretty much stuck flipping a coin.

So basically, what I’m getting is if you need only “normal” healthcare, the private plan is better, but if you need a lot of health care (I.e. hospitalization), the COBRA plan is better. So you’re really playing an odds game. I would look at your spending in the past year, and make an assumption that the coming year will be similar, and pick whichever one would be better with that assumption. If you’ve basically been healthy this past year, the most likely thing is that that will continue, and vice versa.

And hen if you get it wrong...meh. You did your best.
Yes, what you described is what I am trying to decide between. We are generally very healthy and have only gone to the doctor for yearly checkups the last few years. We have not had any need for hospitalization or treatment for any ongoing issues. I would assume that would continue for the remainder of the year unless some kind of emergency comes up. However, being that we are still in the middle of the covid pandemic I feel like the chances of needing a hospital are slightly elevated. We are usually very careful, but you never know. I suppose you are correct in saying that it is just an odds game. I am leaning more towards keeping the private plan.
I think that’s reasonable.

We also have the interesting thing that we delayed a lot of routine care last year because of the pandemic, now we’re making up for that, and it’s getting expensive. I would have been better off with a silver or gold plan this year, instead of the bronze plan that I got. I’m healthy and not likely to hit the out of pocket max, but $100 for this and $200 for that is adding up.
SuzBanyan
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Re: Need help deciding on health insurance. COBRA vs Private

Post by SuzBanyan »

OP: You wrote: “The private insurance with the tax credit would cost me about $418 per month for all three of us and that includes dental.”

This makes it sound like you have a ACA plan that you purchased from an insurance company or from an independent insurance agent who is a Certified Agent for Covered California. I don’t think that if you are on a truly “private plan”, you can receive any tax subsidies.

If so, you may have an issue with keeping your child off Medi-cal because of your receipt of unemployment compensation. This receipt automatically sets your FPL to 138.1% under the American Rescue Plan. This keeps the adults off Medi-Cal but not necessarily those under 19. Guidance will be forthcoming on whether those under 19 will automatically go onto Medi-cal if either parent received any unemployment compensation in 2021.

Check with you company/agent to verify whether your plan might be impacted by this deemed FPL. If so, then you would want to stay on COBRA to avoid this outcome.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

SuzBanyan wrote: Sat Apr 10, 2021 9:04 pm OP: You wrote: “The private insurance with the tax credit would cost me about $418 per month for all three of us and that includes dental.”

This makes it sound like you have a ACA plan that you purchased from an insurance company or from an independent insurance agent who is a Certified Agent for Covered California. I don’t think that if you are on a truly “private plan”, you can receive any tax subsidies.

If so, you may have an issue with keeping your child off Medi-cal because of your receipt of unemployment compensation. This receipt automatically sets your FPL to 138.1% under the American Rescue Plan. This keeps the adults off Medi-Cal but not necessarily those under 19. Guidance will be forthcoming on whether those under 19 will automatically go onto Medi-cal if either parent received any unemployment compensation in 2021.

Check with you company/agent to verify whether your plan might be impacted by this deemed FPL. If so, then you would want to stay on COBRA to avoid this outcome.
No, I don’t have an ACA plan and I did not purchase it from an agent. It’s not a subsidy. It’s a tax refund. Look it up for yourself. Just google HCTC IRS.
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saver1
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Re: Need help deciding on health insurance. COBRA vs Private

Post by saver1 »

quantAndHold wrote: Sat Apr 10, 2021 8:26 pm
saver1 wrote: Sat Apr 10, 2021 8:13 pm
quantAndHold wrote: Sat Apr 10, 2021 7:33 pm Yeah, I think they’re different, but unless you know how your health is going to be in the future, you’re pretty much stuck flipping a coin.

So basically, what I’m getting is if you need only “normal” healthcare, the private plan is better, but if you need a lot of health care (I.e. hospitalization), the COBRA plan is better. So you’re really playing an odds game. I would look at your spending in the past year, and make an assumption that the coming year will be similar, and pick whichever one would be better with that assumption. If you’ve basically been healthy this past year, the most likely thing is that that will continue, and vice versa.

And hen if you get it wrong...meh. You did your best.
Yes, what you described is what I am trying to decide between. We are generally very healthy and have only gone to the doctor for yearly checkups the last few years. We have not had any need for hospitalization or treatment for any ongoing issues. I would assume that would continue for the remainder of the year unless some kind of emergency comes up. However, being that we are still in the middle of the covid pandemic I feel like the chances of needing a hospital are slightly elevated. We are usually very careful, but you never know. I suppose you are correct in saying that it is just an odds game. I am leaning more towards keeping the private plan.
I think that’s reasonable.

We also have the interesting thing that we delayed a lot of routine care last year because of the pandemic, now we’re making up for that, and it’s getting expensive. I would have been better off with a silver or gold plan this year, instead of the bronze plan that I got. I’m healthy and not likely to hit the out of pocket max, but $100 for this and $200 for that is adding up.
I hear you. This health insurance business is so convoluted. I wish it was more straight forward. Thank you for your help!
SuzBanyan
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Re: Need help deciding on health insurance. COBRA vs Private

Post by SuzBanyan »

saver1 wrote: Sat Apr 10, 2021 10:38 pm
SuzBanyan wrote: Sat Apr 10, 2021 9:04 pm OP: You wrote: “The private insurance with the tax credit would cost me about $418 per month for all three of us and that includes dental.”

This makes it sound like you have a ACA plan that you purchased from an insurance company or from an independent insurance agent who is a Certified Agent for Covered California. I don’t think that if you are on a truly “private plan”, you can receive any tax subsidies.

If so, you may have an issue with keeping your child off Medi-cal because of your receipt of unemployment compensation. This receipt automatically sets your FPL to 138.1% under the American Rescue Plan. This keeps the adults off Medi-Cal but not necessarily those under 19. Guidance will be forthcoming on whether those under 19 will automatically go onto Medi-cal if either parent received any unemployment compensation in 2021.

Check with you company/agent to verify whether your plan might be impacted by this deemed FPL. If so, then you would want to stay on COBRA to avoid this outcome.
No, I don’t have an ACA plan and I did not purchase it from an agent. It’s not a subsidy. It’s a tax refund. Look it up for yourself. Just google HCTC IRS.
I was not familiar with the HCTC program. For those like me, according to the IRS:

“Eligibility for the HCTC is restricted to the following groups of individuals:

Individuals eligible for Trade Adjustment Assistance (TAA) PDF allowances because of a qualifying job loss.

Individuals between 55 and 64 years old whose defined-benefit pension plans were taken over by the Pension Benefit Guaranty Corporation (PBGC).”

If you have funds in an HSA, there may be one more possible factor to weigh the HCTC insurance v. COBRA choice. Generally, health insurance premiums cannot be paid from an HSA. Exceptions are granted if if you are collecting federal or state unemployment benefits, or you have COBRA continuation coverage through a former employer.
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