PRIVATE HEALTH INSURANCE FOR HIGH INCOME EARNERS
Just because you’re doing well doesn’t mean that you want to overpay for health insurance.
We’d be worried if you did.
The new ACA law is really geared towards low income.
In fact, the whole thing is predicated on tax credits based on…wait for it.
In fact, high income earners get hit especially hard not having ACA qualified health insurance since the penalty is a percentage of…
There are some specific plans that work well in the health insurance market for high earners.
Let’s take a look at how to approach this market.
Lay Of The Health Insurance Land For High Income Earners
Let’s first distinguish between the two segments of private insurance.
Small Business for High Earners
Small business is available from 1 to 100 employees but there’s a caveat for small family businesses (which generally fall into the high earner category).
You have to have one non owner/spouse on payroll.
They may also need to enroll..
It’s a weird rule stemming from the ACA law.
The benefit of the Small Group market is that we have access to the full doctor networks.
On average, the Small Business full networks are about 1/3rd bigger than Individual/Family private plans.
Otherwise, the benefits are pretty similar.
The plans are all standardized now by the ACA law be it Small Group or Individual/Family.
Small Business plans are generally more expensive than individual/family but that may not be the case for much longer as Individual/family rates keep jumping.
One other note…the Formulary or list of drugs is generally bigger on Small Group plans.
Doctor networks and drug lists. That’s the benefit of Small Group and many high earners want access to the best doctors (or just their doctors!) and medications.
Okay, so let’s say you don’t have an employee on payroll or don’t want to offer coverage to employees or you’re W2!
You can quickly run your Small Business health quote here or call us at 800-320-6269 with any questions. Our services are free to you!
Individual and Family for High Earners
The Individual Family (We’ll call it IFP) private insurance market for high earners has completely changed since 2014.
We now have standardized plans (Bronze, Silver, Gold, and Platinum).
There are tax credits available through Covered Ca but they’re based on income so high earners will not be able to take advantage of these.
Here are the income levels for the tax credit:
If you’re reading this article, you don’t probably are not able to take advantage of this.
We can still get the same plans but at full cost.
Before we get into specific plan considerations for high income earners, let’s detail some key points on the IFP market:
Coverage is guaranteed issue – can’t be declined based on health
We need to enroll during Open Enrollment or with big life changes outside of that period
There are four main benefit levels to choose from
There is no waiting period for pre-existing conditions
The doctor list and drug formulary are smaller than they used to be
Okay…you can get more detail at our Comparing health plans page, but let’s jump into options for high earners.
You can quickly run your individual/family quote here or call 800-320-6269.
Best Health Plans For High Earners
First, we want to consider age!
Age is the single biggest driver of health insurance cost.
If you’re over age 40-45, you’ll notice something interesting.
The rate difference as you go up the scale from Bronze through Platinum gets pretty close to offseting the premium difference.
This means look at the Bronze or Silver first!
Quick point… the Max out of Pocket is about the same for the Bronze, Silver, and Gold plans!
This means they all treat the really big bill about the same.
Here’s a another tip.
You’ll notice that the benefit difference is about $2000 with each step (Bronze to Silver is higher).
If your premium difference is about $150/month, that almost offsets the premium difference.
Keep in mind that you can change plans at the end of each year regardless of health.
For high earners, what does this mean?
Look at the Bronze or Silver.
Here’s the big difference between those two.
Bronze – $4500-6000 deductible, no or few copays, approx $6500 max out of pocket
Silver – approx $2250 deductible, copays for office and rx; approx $6500 max
Really, the benefit of the Silver is dropping deductible (although still high) and getting copays right away for office visits, rx, lab, and x-ray.
The question is…
How much are you paying for this added benefit?
High income earners have a unique situation.
They can afford to handle the smaller bills if the premium savings offsets the exposure.
High earners should focus more on Catastrophic health insurance!
When does this not make sense?
If a person has lots of ongoing health care costs AND the premium difference does not offset the benefit difference…
then maybe look at Gold or Platinum.
Since the plans are now guaranteed issue, rarely does it make sense for high earners to go up the scale unless…
They are YOUNG and have LARGE health care costs.
Otherwise, look at Bronze or Silver.
Insure the small bills and get health insurance for the big What-If!
We can quickly size up the best plans for high earners at 800-320-6269 or run your quote here:
Our services are 100% free to you!
We’ll save you a ton of time and hopefully, quite a bit of money.
Unless you like giving it to the health carrier (sarc).
Are there other tricks for high income earners?
Yes. Enter the HSA!
The Health Savings Account For High Income Earners
The HSA plan is making a come-back!
There was a time when half of our enrollment was HSA.
Especially for high income individuals!
It waned a bit but came back with a vengeance when health plan costs doubled since 2014.
High income individuals get none of the tax credit benefit from the ACA law so they’re left holding a very heavy and expensive bag (especially if between age 45 and 65).
Enter the HSA plans!
The HSA plan is available for both Small Group and Individual/Family.
So what is it and how does it help high earners?
The HSA is really composed of two parts.
A qualified HSA health plans
The underlying health plan is pretty straight forward.
It’s usually in the Bronze category.
Here are the key attributes:
Approx $4500 deductible per person; up to two in a family
Preventative covered at 100%
Everything else is subject to main deductible
Network is usually PPO
You get discounted PPO rates with in-network providers (usually 30-60% discount)
Depending on carrier, deductible can be cumulative (for family)
That’s it. It’s generally a straight-forward high deductible plans.
So what’s so special about an HSA plan?
It allows you to get a Health Savings Account.
This is like a savings account that you can fund each year up to a maximum amount.
Your annual funding (whether you use the funds or not) is tax-deductible.
It’s right on the 1040…line.
Why is this important to high income earners?
Because taxes are generally a killer!
Let’s look at an example…
Let’s say you are considering the Bronze HSA plan at $200/month.
The Silver plan is $350/month.
That’s not unheard of.
So that’s $150/month or $1800 per year.
Now let’s say you fund $3K in the HSA account.
Let’s assume a tax bracket of 30% (you wish). That’s another $900 is after tax money.
Real money that’s now in your pocket instead of the IRS’s.
Now we’re saving $2700/annually.
The difference in deductible is $2250!
We’re actually saving more than the deductible difference whether we use the plan or not.
They both treat the really big bill the same.
THAT…is the magic of the HSA plans for self-employed.
Self-employment is not requirement for the HSA tax savings. Anyone can take advantage of this.
Each person’s situation is difference so we’re happy to walk through your particulars to see what’s works best for you.
Call us at 800-320-6269 or run your HSA quote here:
High Earner Wrap-Up
First and foremost, we want to cover the catastrophic bill.
You don’t want to end up owing a hospital network $100K. Maybe even $250K the way health care costs are going.
Protect from this bill. If you’re self-employed, the health insurance premium will likely be 100% deductible anyway.
At your tax bracket, you just cut the cost of health insurance almost in half.
Set up the HSA account and save another $900-1800 (single versus family) in real after-tax dollars depending on your tax bracket.
Furthermore, avoid the 2.5% of income tax penalty for not having health insurance.
You add up the tax savings, tax penalty avoidance, and deductibility against self-employed income, and potential for 100’s of $1000’s in health care costs…and it’s pretty hard to argue against health insurance for high earners.
We can help you quickly size up the options at 800-320-6269 or you can run your own instant quote here