Navigating the ACA Health Insurance Marketplace as a Travel Therapist

Written by: Jared Casazza, PT, DPT

Update 7/24/2019:

After applying for coverage through the marketplace this year, I found out some new information that contradicts part of the original post, so I wanted to make an update.

I learned that you are not eligible for marketplace subsidies if you are currently offered health insurance through an employer. This means that even with a low income, health insurance through the marketplace will be full price as long as you have been offered an affordable coverage option through the travel company that you’re working with.

When not on contract, going with a marketplace plan would still be a very affordable option for most travelers (those taking extended periods of time off like Whitney and me), but it may not be the most affordable option while on contract without being able to take advantage of the subsidies.

Be sure get a quote to see what the cost would be in your state and situation through the marketplace in order to make the most informed decision! 

 

Original Post 11/21/2018:

As I mentioned in my last post regarding the various health insurance options for travel therapists, Whitney and I have consistently chosen to take the company sponsored health insurance over our past few years as travel physical therapists. However, this is no longer going to be a viable option for us moving forward since we took six months off in 2018 and will likely be taking nine months off in 2019. Taking the company sponsored insurance and then using COBRA once we finish our assignment would be much too costly for that long period of time between contracts, so starting in 2019 we are planning to sign up for an ACA marketplace plan.

I’ve done a lot of reading and researching about the marketplace plans as well as the subsidies offered, and I hope to shine some light on them for you based on what I’ve learned. Keep in mind that health insurance costs can vary greatly depending on location and that some states have more or less options than others. The information in this article is going to be based on my own information for my home state of Virginia. It’s possible that your own state will be different, but I imagine that much of the information will apply to some degree for every state.

Disclaimer: this is not meant to be personal advice for your individual situation, as I am not an insurance expert or financial advisor. This is information that I’ve learned from reading and researching, and that I plan to implement in my own situation. Everyone’s situation is different, and this information could change at any time. If you’re interested in doing anything similar, then do your own research or reach out to a licensed professional for help, as this post is meant for illustration purposes only!

 

Background on the Different ACA Marketplace Plans

The plans offered through the marketplace have various premiums, deductibles, and out of pocket maximums, as well as other distinguishing features. These plans are tiered into levels called Bronze, Silver, or Gold based on cost and how good the plan is in general. You can usually expect a Bronze level plan to have a lower premium cost, but a higher deductible and out of pocket maximum, while a Gold level plan will likely have a higher premium but better coverage. It’s always important to look at the plans closely to find the one that fits your needs the best since even plans in the same tier can differ significantly at times.

Another factor to consider is that as travelers, we move from state to state often, and since health insurance is purchased through your home state, coverage and providers could be limited in some places that you may travel to. It is a good idea to consider this when choosing a plan. You can check out the website of the insurer that the plan will be through to see if they cover providers in a variety of places nationwide, or just in and around your own home state. For marketplace plans, there is a section (shown below) where you can go to the website of the insurer to see where providers are located.

Depending on your situation (mostly your Modified Adjusted Gross Income), it’s possible that you will be eligible for subsidies (the ACA marketplace refers to these as premium tax credits) that can make a health insurance plan bought through the marketplace even cheaper than the company sponsored plans available to you. These subsidies are available to anyone that makes between 100% and 400% of the federal poverty level. The 400% level actually ends up being a pretty generous amount of income to still qualify and will include the majority of travel therapists. The reason that many travel therapists will qualify is because of a generally lower AGI, due to part of our income being untaxed. Oddly enough, with an income less than 100% of the federal poverty level, you wouldn’t be eligible for any of the premium tax credits since it is assumed that you would qualify for Medicaid in that scenario. Below are the income levels that would qualify you for premium tax credits (subsidies) for 2018 courtesy of ehealthinsurance.com.

An Example Scenario

For a traveler working 48 weeks per year, making a taxable income of $21/hour, he would have a Modified Adjusted Gross Income (MAGI) of approximately $21 x 40hrs x 48 weeks = $40,320. The traveler would still qualify for a partial credit at that point, which would help to make the health insurance more affordable.

Let’s assume this traveler is a single, 30 year old, at an income level of $40,320 with his tax home in VA (which would be a scenario for me if I was working 48 weeks per year). In this scenario, he would be eligible for a subsidy of $222/month as shown below in a quote from the healthcare.gov website.

With this premium tax credit accounted for, his cheapest option through the marketplace would be a Bronze level plan, for a monthly premium cost of $168.40. He could also get a Gold level plan for $283 that has a much lower deductible and out of pocket maximum. But if it were me, I’d opt for the lower cost plan since I likely wouldn’t meet the deductible either way.

$168.40 isn’t terrible, but it’s definitely more than I’d like to spend. Luckily with some smart planning, the traveler in this scenario can bring this cost down significantly! An easy way to reduce his MAGI is through 401k contributions. Not only will these contributions save him money on taxes, reduce his student loan payment (only on an income driven repayment plan), and set him up for a better financial situation in the future, they will also save him money on his health insurance premium cost by giving him a higher premium tax credit amount!

Another Scenario – With 401k Contributions

Let’s consider the same situation as above with the traveler that is working 48 weeks per year, but now let’s assume that he maxes out his 401k, which is $19,000 for the 2019 tax year. That would bring his MAGI down from $40,320 to $21,320. Now we can see what he would be eligible for with a MAGI of that level.

With the same variables as above (30 y/o male in VA) the lower MAGI now makes him eligible for a premium tax credit of $458/month!

With a premium tax credit of that amount, a Bronze level plan would be $0/month (even HSA eligible!), and a very good Silver level plan would only be $48! Both of these options are shown below.

Basically, by contributing $19,000 to a 401k, the traveler in this example would save $168.40/month ($2,020/year) in health insurance premiums, while also saving about $4,000 in taxes (between VA state and federal taxes). That’s a pretty awesome return on that investment.

It should also be noted that the reason the deductible and out of pocket maximum on the Silver tier plan in the above scenario are significantly lower, in addition to it being in a higher tier than the Bronze plan, is due to Cost-Sharing subsidies. These are an additional layer of subsidies on top of the premium tax credit that are put in place to specifically reduce the deductible, co-pays and out of pocket maximum for low income individuals/families. These cost-sharing subsidies only apply to the Silver level plans and aren’t available for the Bronze and Gold plans at all. The closer an individual is to the 100% of poverty level (without going below that level as noted above due to Medicaid territory), the lower not only the monthly premium gets for the Silver level plans, but also the lower the deductible, co-pays, and out of pocket maximum gets as well.

Drawing Some Conclusions From These Scenarios

At an income level of $12,500, one would be able to qualify for a Silver level plan with a $3/month premium, a $250 deductible, and a $700 out of pocket maximum! Healthcare plans don’t get any better than that these days.

Even with this being the case, I don’t think it’s worth it to go below the $19,000 MAGI level, at least in my case, since I don’t use my health insurance often anyway and would rather have a plan that is eligible for an HSA. None of the Silver tier plans that I have seen qualify for an HSA.

Another downside of a MAGI near the poverty level would be limited benefit from the Saver’s Credit since it’s nonrefundable (more on that in this article). On the other hand, for someone with higher medical costs each year, having a much lower deductible and out of pocket maximum could be worth much more than the value of having an HSA and the Saver’s credit so this is definitely something to consider depending on each individual situation.

If contributing $19,000 to a 401k is too much for you, don’t worry there’s still hope. Even at an MAGI of $27,000, which would be a 401k contribution of about $13,000, the monthly premium for a Bronze level plan would still only be $2.60/month. The premium steadily increases from that point as MAGI continues to increase.

Even though I don’t need any extra incentive to max out my 401k each year, I’m happy to accept a reduction in health insurance premiums for doing so! In this case, the more you contribute to your future retirement the more you save on health insurance now. So, even if you can’t contribute a large amount, it’s definitely to your benefit to contribute as much as possible. It’s also important to point out here that even though traditional IRA contributions reduce your AGI, they don’t reduce your MAGI since they are added back in to calculate your MAGI. For this reason, the only real meaningful ways to reduce your MAGI would be with a 401k or health savings account.

Our Plan for 2019

For Whitney and I, we plan to contribute enough to our 401k and HSA to get our MAGI down to around $18,809. At that level, not only will we have the option of a free Bronze level health insurance plan through the marketplace, but we will also pay $0 in federal taxes and have a $0 income driven student loan payment! How can you beat that?

Running Your Own Scenarios

If you’re interested in getting quick quotes for your own situation and don’t want to enter your information on the healthcare.gov website, I’ve found that this subsidy calculator works well and is really quick and easy to use. The downside is that, at least for my state, it doesn’t show the actual cost of the plans available, just the amount of subsidy that I would receive. The healthcare.gov website is definitely the most comprehensive way to compare different scenarios, and I encourage you to familiarize yourself with the site and see what you’d be eligible for based on your situation.

Take-Home Points

• For a travel therapist that wishes to take significant amounts of time off between contracts or switch between different travel companies often (especially those that often meet their health insurance deductible), travel company sponsored health insurance probably doesn’t make sense. Luckily as travel therapists, most of us will qualify for premium tax credits for health insurance plans through the ACA marketplace.
• With some planning ahead and saving for the future, it’s possible to actually get a Bronze level plan for free, provided that you reduce your MAGI enough through 401k and health savings account contributions. The amount required to achieve this for you will vary, but for me as a 30 year old male living in VA, anything below a MAGI of $26,500 will mean a free Bronze level plan due to the subsidies offered at that income level.
• Contributing to your 401k is already a great idea, but the premium tax credits make it that much sweeter! If you’re a big saver like me and planning to transition to less travel assignments each year or part time work in the future, the combination of tax savings and health insurance premium savings from investing in your future with 401k contributions can be massive! If you aren’t currently a big saver, then maybe the savings on your health insurance premiums will encourage you to start!

What do you do for your health insurance as a travel therapist? Let us know in the comments below. If you have any questions about this or anything else travel therapy related, feel free to reach out to us. But do keep in mind that I’m not an expert in this area, and all of this information is based on reading and researching for my own situation.

If you are new to travel therapy and would like help getting started or  recruiter/travel company recommendations, then we can help with that as well! Thanks for reading!