New COVID Support Fee Reduces Obama Care Health Insurance Premium - Good News for Early Retirement

The us The Redemption Act 2012 is a comprehensive law signed into law on 11 March. The most effective provision of this law is the third stage of economic stimulus. If you have not already received it, each eligible American will receive 4,400 for economic relief in the midst of the COVID-19 pandemic.

Significant changes have also been made in the law on health insurance premiums and subsidies for market plans. It got less pressure. This can have a major impact on many people who need to reduce the gap from employer-provided health insurance to Medicare.

Overview of changes in Affordable Care Act

Under the Market Affordable Care Act (ACA), almost every person who buys health insurance in the US of 2021 Changes made as part of the Recovery Plan Act will benefit from it. In summary:

Early retirees with incomes ranging from 100% to 150% in the federal poverty line (FPL), who have already paid a small amount for health insurance premiums, will now pay $ 0 premiums for silver level plans.

Those who earn between 150% and 400% FPL will see a significant reduction in health insurance premium costs.

Those earning more than 400% FPL will no longer be subject to the ACA "subsidy cliff". Expenses on health insurance premiums are available at 8.5% of income.

Older retirees approaching Medicare age will benefit the most as their costs increase as they age.

This is good news for early retirees as they have to purchase medical insurance through market transactions to reduce the difference from the Medicare coverage provided by the employer. We will look at the details and discuss the implications of early retirement planning.

The us Low ACA premium under recovery plan

Part 7 of the Act reduces the percentage of income to the maximum amount, and according to the adjusted gross income (MAGI) technique, individuals or families will pay for health insurance premiums.

Original ACA and U.S. The change in the maximum percentage of household income paid for the silver health plan insurance premium under the Recovery Plan Act is summarized here:

In a previous post, I explored how the ACA tax debt leads to the purchase of affordable health insurance in early retirement. It would be helpful to review the conditions that I had run under the original ACA. I will compare the circumstances under the new law.

Before and after premiums for low income retirees (under 150% of FPL)

In my previous article, I shared how early retirees can control tax returns through Maggie's life and / or earn a magnum opus income. They can purchase quality health insurance at a favorable price through ACA transactions. This is accomplished by obtaining large premium tax credits due to low income. Premium tax receipts equal the total amount of premiums deducted from personal or household essential contributions.

I have shown that a family with 138% FPL income should pay only 3.42% of their income for health insurance premiums. In that case, the family can pay a premium of $ 82 per month (2,982 per year). They will receive $ 1,320 per month (8,15,836 per year) in premium grants.

Under the new law, things are getting better for people in this situation. They now pay $ 0 in health insurance premiums. The grant covers 100% of the cost.

For retirees with 150% to 400% FPL before and after premium

When I wrote the previous article in November 2018, I entered my home environment. Two adults, a young child and an MA 60,000 rated MAGI in our early 40s. FPL's income for three families in 2018 is 289%. We will pay 9.52% of our household income for medical insurance premiums under the original ACA.

By 2021, unsupported health insurance premiums will cost our three families, 14,358. To increase slightly more adjusted household income in 2021 FPL,, 7 to 42, 50, which gives us 2PL equal to 4% FPL. Under the old law, we would pay 8 498 (per year, 95,974) premiums per month. We qualify for the subsidy to cover the remaining amount, which is 6 696 (per year, 8,384) per month.

I ran our show under the new law with the Kaiser Health Insurance Calculator. For the Apple-to-Apple comparison, I maintain a slightly higher 2021 FPL value of 289% of revenue.

Under the new law, we will pay a premium of 5.56% of our income. The cost of our premium is 1 291 per month (48,489 per year) and to cover the balance we get a subsidy of 6 906 per month (8 10,869 per year).

This change will save 7 207 per month (48 2,485 per year). We will pay 40% less for health insurance premiums under the new law.

150% to 400% FPL before and after premium for 60-year-olds who retire early

One of the many factors affecting premium costs in ACA plans is age.Compared to our family, I made a scene of an early retired couple in the 60s.

Non-deductible health insurance premiums for 60-year-old couples (assuming that children have grown up and are not covered by parental insurance) will cost 9,22,975 by 2021. For both families, the same 289% FPL 503,344. This income number is lower than the position above because the FPL is adjusted based on the size of the house.

Out of 289% of FPL, they will pay 9.52% return under the previous law. Their share of the premium is 9,399 per month (7,493 per year). Their subsidy is 5,515 per month (18,182 per year).

Under the new law they will pay 5.56% of their income. Under the new law, their share of the premium would be reduced to $ 233 per month (7,799 per year) and their subsidy would be 68,681 per month (20,176 per year).

Changes in the American recovery plan in the early 60s could have saved the pair 6,166 months (99,994 per year). They pay about 40% less for health insurance premiums than they did under the original ACA.

ACA grant plateau removal

The second, and most important, change made by the ACA by the American Redemption Act of 2021 is the abolition of "grants". Under the Basic Law, if you exceed 400% of your MAGI FPL, you will completely lose the premium grant.

Earning one dollar additional income at the 400% -FPL threshold can pay thousands of dollars in additional health insurance premiums. Your grant will be void.

When the new law changes, the maximum salary for health insurance premiums will be 8.5% of their income. If your income is more than 400% of the FPL, you will not lose thousands of dollars in premium grants. Instead, you pay an additional premium of $ 50 8.50 per year for every $ 100 of additional income.

Eventually, the higher earner will have to lose the subsidy completely and pay the full cost. However, it is a gradual sliding measure for zero grants.

The numbers highlight the impact this new law has on early retirees, whose income exceeds the FPL limit of 400%. Let's dive ...

Grant Valley premium for early retirement

In my previous post on the ACA grant, I showed you how the $ 100 difference in annual income on the 400% -FPL limit affects us. In that scenario, the additional $ 100 premium grant would fall from $ 683 per month ($ 8,194 per year) to $ 0 in "intervals".

At this income level, our premiums are valued at 13 613 (per year, 7,352) per month. Our grant is 2 652 per month (8 7,825 per year). The grant accounts for more than half of our total $ 15,177 premium expenses.

Under the original ACA, we would have paid 9.83% return on our premium. The new law saves about $ 1,000 in this environment.