We strive to deliver peace of mind to our clients, not just about investments and taxes but about everything that touches their financial lives. One subject that continually comes up is healthcare. How will I be able to afford healthcare? Should I work until age 65 so that I qualify for Medicare? To help answer this question, we partner with outside experts to help our clients evaluate different healthcare options. We spoke to Ed Steffens at Propel and asked about health insurance through the Exchange versus COBRA.
How do you help your clients?
I help clients navigate their options with individual healthcare, Medicare, life insurance, and long-term care insurance.
COBRA vs Affordable Care Act (ACA)
Since the rate increases in the individual market back in 2017, COBRA is usually the better option, depending on the tax credits (subsidies) available to you. If you have to pay full price on the ACA exchanges, COBRA plans tend to be better. The network of doctors with the COBRA plan option has fewer limitations and is generally available throughout the US. These networks offer coverage in and of network, with higher costs using an out of network doctor.
ACA plans, on the other hand, use more restrictive networks of doctors. Generally, your available network is your home area and surrounding areas. There is no coverage out of network, with exception to true emergencies. In this case, ER and ambulance are covered anywhere in the country.
Before you choose a COBRA or ACA plan, spend time with a professional and/or on the healthcare website: https://www.healthcare.gov/glossary/exchange/ and www.wahealthplanfinder.org. Subsidies are estimated based on the current year of total estimated MAGI. When determining MAGI, your income includes unemployment benefits and your spouse’s income. If the tax credits are deep enough, ACA may end up being a better option than COBRA.
When should people reach out to you?
The sooner the better. Separation from service, marriage, death, permanent move, and the birth of a child are all qualifying events. It might just be a 10-minute call. If tax credits are an option, however, a longer conversation will be necessary. For Medicare, please reach out three months before your 65th birthday.
How are you compensated?
I am compensated by salary and not by enrollments. This allows me to work in the best interest of my clients.
What kind of clients do you most enjoy working with?
I enjoy helping everyone. People who are in their fifties and sixties are the most common clients I work with, as they are more likely to experience the above-mentioned qualifying events—including those who are contemplating retirement. I am unable to help people with Medicaid though Such cases are redirected back to the state.
What would you tell someone who does not think they should retire because of the cost of healthcare?
People should analyze their situation and explore the options. They are often pleasantly surprised. It should really be explored on a case-by-case basis, regarding both the coverage available and the cost of coverage. This analysis should be taken into account along with the individual’s entire financial picture in order to make this life transition.
What are common misconceptions about healthcare on the open market?
It goes both ways. Some people think they should get tax credits but don’t. Other people think they won’t get credits and do. The amount of tax credits you may receive is unrelated to the level of health coverage (labeled as Gold, Silver, or Bronze, depending on what coverage you purchase). In general, the three tiers of health coverage look like this:
Silver level plans: “Reasonable” cost, deductibles and cost sharing.
Gold level plans: Highest cost, highest level of coverage, lowest deductibles and cost sharing.
Tell me about the recent changes in the stimulus package.
The new administration opened new enrollments through May 15, and then extended it to August 15t. They raised income limits on tax credits. Everyone has an opportunity to make changes now through August 15th. The government is trying to make insurance as accessible as possible. You can use a subsidy calculator for an estimate.
Disclosure: Edward Steffens is a licensed insurance agent/broker for Propel Insurance. All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the article. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any particular individual. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax or legal or accounting advice, and nothing contained in these materials should be taken as such.
During my senior year in high school, I was invited to go backpacking in Yosemite with the Yosemite Institute. I had been backpacking many times before with my father all over California. We even climbed the tallest mountain in the continental United States (Mount Whitney) when I was 14. I loved the adventure and challenge of backpacking. In those early years, I didn’t realize the importance of being in nature. It wasn’t until the Yosemite trip that our guides taught us about the history of the national parks in the delicate balance between the visitors and the surroundings. They also taught us the importance of taking care of our planet. When my classmates and I stopped in a McDonald’s on the way home from Yosemite, I remember taking the Big Mac out of the Styrofoam container and asking them to reuse it. Back in the 80s, I don’t think climate change was on many people’s radars. Today, the science of climate change makes me want to do everything possible to care for the planet for the generations to come. I’ve always done my part but drew the line when it came to investing sustainably. My thought has always been to maximize returns in my investment portfolio and give charitably to causes that fight climate change.
I just didn’t believe that I’d be able to diversify enough (too risky). I believed that returns would be lower in part due to higher expenses. I also got confused about the differences between being socially responsible and sustainable investing. There are also a lot of acronyms and terminology to understand, such as SRI (Socially Responsible Investing) and ESG (environmental, social, and governance).
The history of Socially Responsible Investing (SRI) goes back as early as Moses in 1500 BC. In more modern times, the 1950s saw the first mutual fund, the Boston-based Pioneer Fund, to avoid “sin” stocks: companies that dealt in alcohol, tobacco, or gambling.
While I don’t love to support alcohol, tobacco, and gambling, my values aim to focus on investments that help the planet. My values seek to focus on the “E” in ESG: the environment. Doing well while doing good.
Sustainability investing is a choice and investors decide whether aligning their investment decisions with their environmental values is right for them. At Merriman, we believe that, all else being equal, a sustainability investing strategy should generally reward companies for acting in more environmentally responsible ways than their industry counterparts. This belief is in contrast to many other sustainability investing approaches that exclude entire industries regarded as the worst offenders. Sustainability strategies place greater emphasis on companies considered to be acting in more environmentally responsible ways while also emphasizing higher expected return securities. This approach enables investors to pursue their environmental goals within a highly diversified and efficient investment strategy.
It feels like we have both been on the same journey to the top of the mountain to build a portfolio that focuses on the environment without sacrificing risk-adjusted returns. Merriman recently announced major changes to our values-based portfolio, and I have moved all of my investments into our new portfolio. When I combine a sustainable portfolio with charitable giving, it is one small way to do my part in “leaving no trace behind.” If you would like to learn even more about our approach, you can read “Incorporating Environment and Social Values into Your Merriman Portfolio”.
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