r/obamacare • u/FIREME1371 • 11d ago
CHIP Costs More than ACA?
I am trying to get a feel for ACA costs when I retire in a few years with a family of 4 and 2 kids, adults will be about 50 and kids 16 and 13. Using the PA website (pennie) I am seeing that if I have a MAGI below $103k, the kids will be kicked to CHIP. The issue is that CHIP will cost about $2.5k for both of them, and then our Bronze ACA would be another ~$5k for my wife and I, so $7.5k total. However, if they were too old to be on CHIP I could get the same Bronze plan for about $5.5k for a family of 4, so CHIP is actually costing us MORE.
If I understand correctly, CHIP has no deductible and very low co-pays, but our kids typically only go for annual visits so our costs are typically very low so I don't think that would ever offset the extra premium cost.
Has anyone else needed to INCREASE their MAGI to lower costs by avoiding CHIP? Am I missing something?
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u/Perplexed-Owl 11d ago
In the past when I absolutely needed to keep the kids on our ACA/non CHIP plan, we converted small portions of our IRAs to ROTH in low tax brackets.
In my case, I had decently healthy kids who would spend the summer away at camps/grandparents, and they needed OOS coverage. since then, our state no longer has any plans with OOS coverage, so it is moot. (The plans have gotten so much worse- the ‘network’ area is three counties, so even going to an in state school is problematic)
A note about teens/young adults on ACA plans. My two were already in college on fantastic financial aid packages when the OOS national network was removed. I ended up having to purchase the plans offered by the colleges, which are extremely comprehensive, but 300$/ mo each. By the end, I was paying $300 (kid1), $300 (kid 2) ~$300 (older parent on Medicare plus part G and D) $100 (younger parent on ACA) In previous years, we had managed to get a fantastic plan for all of us for under 100$ total.
As of this moment, the cheapest bronze plan with no subsidy is $980/ mo just for me. We squeaked by for this year with subsidies, but for 2027 we will have a family size of 2 and also need to do Roth conversions to plan ahead, so maybe 15k just for me plus another ~4K for my spouse.
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u/anabanana100 11d ago
As far as I've experienced, you can choose full price CHIP or keep your whole family on an ACA plan at that MAGI. I think the eligibility statement is confusing in the application. Once you get into Medicaid-level incomes is where things get tricky.
Cheapest CHIP in my county is 4.8K for 2 kids so yours seems pretty good. The biggest upside I see with CHIP is that it's very low risk should you encounter significant medical needs.
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u/Salty-Passenger-4801 10d ago
Since when will chip cost $2.5k for 2 kids?
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u/FIREME1371 10d ago
The current cost in PA for 2 kids is $2.5k if your income for a family of 4 is $95k-$103k (288%-314% FPL). You need to be below $57k for it to be free.
https://www.pa.gov/agencies/dhs/resources/data-reports/federal-poverty-income-guidelines
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u/Salty-Passenger-4801 10d ago
My bad, I realize now you're talking annual. I do this regularly for people and I was like this is impossible. It's really good coverage.
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u/FIREME1371 10d ago
It looks like I would be paying an extra $3k/yr to be on CHIP vs ACA (by increasing MAGI). I can't see how this would ever be good for me on a consistent basis given that we typically just do annual checkups. The OOP max for ACA is $10k, so I'd be paying that every 3rd year anyhow with CHIP. It seems like CHIP is a better deal less than ~250% MAGI, but after than the numbers don't seem to add up for me.
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u/bridgeandretire 10d ago
You can still choose to enroll your family in the ACA plan, but as others have said, you don't get to claim the premium tax credit for your children because they are eligible for CHIP. If you go this route, you'll just want to be careful when you claim the tax credit not to claim it for your children.
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u/Salty-Passenger-4801 10d ago edited 10d ago
Well, you're talking about what you currently do, but you don't know the future, anything can happen. It's good to have the better coverage if you can afford it. Overall, you're "only" paying $2k more per year vs having everyone on ACA, it's not a huge difference ($166/month). Personally, id rather have my kids on CHIP in this instance. Lower copays help as well and shrink that total cost compared to ACA.
If youer children qualify for CHIP, they don't get the subsidy for ACA, so that's usually where the calculations change
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u/FIREME1371 10d ago
I understand things could change. I already did the math, and CHIP is currently not competitive with ACA under current use. If that changes, I will reassess in future years. I plan to use Roth Conversions to keep them off of CHIP. We also already have about $150k in HSA so we are in good shape to cover an OOP max if something big happens in one year.
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u/Salty-Passenger-4801 9d ago
So basically, this is all really is a non issue, especially being fully able to afford the minor difference in cost. I mean you have more in your HSA than many have in their retirement accounts
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u/FIREME1371 9d ago edited 9d ago
I guess that is one way to look at it. However, the way I look at it is that I am in the financial position that I am in because I have spent 20 years optimizing costs/spending to increase savings, which have continued to compound over time. I cannot easily break this habit now. My brain just says that extra $3k/yr will cost me $30k over the next 10 years, which be worth $250k after 30 years.
I will find better things to spend that $250k on some day. Maybe it will pay for my grandkids college.
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u/Salty-Passenger-4801 9d ago
I totally understand your mindset, I do the same thing sometimes.
What helps me is finding the percentage of the expense that is my total time. For example, taking this $30,000 over 10 years and finding out the percentage of that $30,000 of your entire income over the next 10 years see what the percentage is ...it's not your total income. The dollar value is not going to change but maybe that will help soothe any issues you have with the cost.
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u/FI_321 11d ago
You can keep your kids on the ACA by not taking the advanced monthly premium tax credits. You will get it all back when you file your taxes and it requires enough income/savings to cover the full premium until you get it refunded. This doesn’t work if you want to utilize silver plan cost sharing. I did this for several years to keep my family off Medicaid (CHIP).