Heath Insurance is free in the United States of America, or is it? The reality is that the more money you earn the more your health insurance costs because the health insurance landscape in the United States is income based.
It is estimated that over 300 million people in this country currently have health insurance. That represents over 92% of Americans having access to health insurance no matter where they are on the income scale. Approximately 68% of Americans are insured under privatized health plans, often through an employer group or individual plan. There are income strategies that can help you minimize costs and maximize the benefits of private health insurance plans.
The United States does not provide what is globally considered to be universal government health care for all individuals, Statistics show that 63% of Americans favor universal healthcare but many do not understand the income limitations and risks of universal healthcare. Because the U.S. government does not provide health benefits, someone has to pay for health services, and this is where the health insurance marketplace enters the picture. The United States government offers the federal health insurance marketplace, most often simply referred to as ‘the marketplace.’ The marketplace is a website-based service that allows consumers to examine various healthcare plans which meet the requirements of the affordable care act, also known as Obamacare. Plan offerings are based on eligibility and income standards. There are four categories of marketplace health insurance plans, Bronze, Silver, Gold, and Platinum with a wide range of costs, plans, and quality of care. Marketplace plans still have a monthly premium, out-of-pocket costs, and deductibles resulting in costs to the consumer. There are also varying plan types including HMO, PPO, POS, and EPO. So, what are some practical income-based strategies that might help you save money on your health insurance?
Whether you get your health insurance through your employer or on the marketplace there are things you can do to manage your health insurance costs and lower your health insurance premium. Sometimes your employer’s group health insurance plan prevents you from qualifying for lower premiums and additional tax credits. However, most employer-sponsored health insurance plans are pre-tax which adds up to huge savings. Total tax savings with employer-sponsored group health insurance can be over 35 and if a person is in a higher tax bracket the savings can be even larger.
- Federal Income Tax 15%
- WI State Income Tax 5%
- Medicare and Social Security Tax 7.65%
- Employer matching Medicare and Social Security Tax $7.65%
Inflation Reduction Act
Another income strategy comes with The Inflation Reduction Act which passed a three-year extension through 12/31/2025 for enhanced subsidies for people buying their health insurance coverage. Without this extension, an individual based on age would need to make less than $58,320 a year in adjusted gross income to qualify for a subsidy. With the IRA temporary three-year extension, a 64-year-old can make $120,000 and still get a $99 per month subsidy. In 2026 this government subsidy may change according to the federal poverty level (FPL) and impact your income-based health insurance strategies. If you are in your sixties and a few years short of Medicare, you might want to plan to keep your income lower or below 400% of FPL ($58,320) for 2026 to maximize savings.
Meet Jack and Diane
So, let’s look at an example. Meet Jack. He is a 35-year-old husband and father. Jack is trying to decide how to compare health insurance plans between his employer‘s plan and those offered on the marketplace.
Jack’s employer offers a group health Insurance plan that cost $600 a month. Jack and Diane found an insurance plan on the marketplace that cost $400 a month but the benefits are not quite as rich as the group health insurance plan. Is it worth the $200 a month or $2,400 a year in premium savings? Jack needs to understand the difference between pre-tax and after-tax costs.
Pre-tax on $600 a month is $162( $600 X .27%)
The net cost of the group health insurance plan is $438 $600 – $162)
In Jack’s case, there is not a huge difference between $600 pre-tax($438. net cost) and $400 after-tax in health insurance premiums. However, in some cases, there is a huge difference in cost. Consider the scenario below.
Meet Steve and Julie
Steve and Julie are 50 years old with two children ages 15 and 18.
They share a combined income of $150,000 per year. Steve works for an employer that offers rich benefits for the employee and their dependents. The employer has the employee pay $50 per month as a single or $1,200 per month for family coverage.
To see what income strategy makes the most sense, there is a test the family must do to see if they are eligible for premium tax credits on the marketplace. A family is eligible for premium tax credits on the marketplace for any members where the cost of the group health plan is more than 9.12% of the family’s income.
Steve can get insurance for $50 a month so he would need to apply for that directly with his employer. Julie can apply with the kids on the marketplace and qualify for a subsidy of about $102 a month. The lowest cost plan available to her is about $800 a month.
So, does Julie apply with the kids on the marketplace for $800, have Steve take the employer’s group plan for $50, or take the family group health insurance pre-tax for $1,200 for the month?
$150,000 x .0912 = $13,680 per year or $1,140 per month
Anything premium over the $1,140 threshold per month is considered “unaffordable” for the family members.
Steve can get insurance for $50 a month (which is less than the $1,140/month threshold for a single) so he is not considered eligible for premium tax credits on the Marketplace. He would need to apply for the group health benefits directly with his employer.
For Julie and the kids, the $1,200/month group health premium is more than the $1,140 threshold for affordability. So, Julie can apply with the kids on the marketplace and qualify for a subsidy of about $102 a month. The lowest cost plan available to her is about $800 a month.
So, does Julie apply with the kids on the marketplace for $800 or take the group health insurance pre-tax that costs about $1,150 ($1,200 – $50) a month for her and the kids? Let’s do the math.
$1,150 X 27% tax savings = $310
$1,150 cost of dependent’s group health insurance plan – $310 tax savings = $840 net cost for Julie & kids on the group health plan.
Steve and Julie should compare the $840 after-tax cost of the group health insurance with the $800 cost of the plan on the marketplace to determine if minor savings are worth the possibility of poorer benefits and higher out-of-pocket expenses. These are the discussions you can have with a health insurance strategist to make sure that you are maximizing benefits and minimizing costs.
Understanding the vast landscape of health insurance and income strategies can be daunting, but the experts at MIB Health Insurance are educated, equipped, and standing by to help you make sense of it all. Your health insurance partners at MIB are committed to helping you understand your options saving you time and money.
Our Safe Customized Health Insurance Strategy Tool
If you have ever searched the internet for health insurance, you know it can be dangerous and put your privacy at risk. MIB Health Insurance offers you a safe, easy, and effective tool to help you access our customized quote engine. It does not require a name, email, or phone number and will help you assess costs and subsidy options.
MIB Health Insurance is a family-owned health insurance brokerage with a team of caring health insurance professionals in the Fox Cities who want to understand your unique healthcare story. Call a MIB Health Insurance partner at 920-731-2100 to see what income strategies for health insurance may look like for you.
MIB established what they call the four steps to peace of mind. Peace of mind is at the core of everything they offer you. Starting with the first point of contact on their website, or the first phone call to a team member, the team at MIB believes client accessibility is key to excellent customer service. They don’t offer 24/7 phone support, but what they do provide you is a caring person who knows you and understands you and your unique health insurance needs.
Mike, the owner of MIB for over 35 years, puts his personal cell number on his business card. Helping clients in their time of need is who he is. He says the best part of his job is helping his clients sleep at night. He tells of one heart surgery client who had an overdue bill of $60k. This client could not get the medical bills resolved for months. Spending hours on hold, speaking to rep after rep, being declined, and ending up scared and frustrated, they reached out to MIB. Within a few days, and a three-way call with the hospital, the claim was reprocessed and the $60k bill went away. That is peace of mind.
Perfect plan matching
Whether you need an individual health insurance plan, a subsidized plan on the marketplace, a group insurance plan for your business, or a seamless transition to the complexities of Medicare, MIB takes the extra time upfront to make sure the insurance products you are buying are a good fit. Health Insurance and healthcare are complicated, and one size does not fit all when it comes to health insurance plans.
Your agent needs to understand your unique health situation by asking the right questions, understanding what insurance platforms are available, and the pros and cons of each plan. Years of industry expertise, a commitment to problem-solving, and an understanding of risks and benefits in each unique situation are what MIB does with perfect plan matching. They believe that if the plan is perfectly matched up front, there will be fewer problems when it matters most. Finding out you are not covered, or your deductible and premiums are higher than expected leads to unhappy clients. MIB can confidently say they have a 99% client satisfaction rate because they value client satisfaction in everything they do.
Perfect plan matching assures insurance products match specific needs, proper coverage is provided, budgets are maximized, and benefits are explained. That is peace of mind.
Many clients are lost when they reach out to MIB Health Insurance. They are unsure of their options and don’t know if there might be alternatives to better meet their needs. Easy enrollment can often happen in less than 30 minutes once you have a perfect plan match. The team at MIB explains options to help you make informed choices about your health insurance. Many clients have had insurance benefits through an employer for years. HR always took care of the health insurance, and a confused client may not know what to do.
Health insurance choices can be overwhelming. MIB makes it easy.
Some clients prefer to do everything on their own because they mistrust the insurance system. MIB understands and offers easy enrollment on the website, via email, or over the phone in an easy personal step-by-step process. MIB believes health insurance does not have to be confusing. Connecting personally to understand a client’s unique needs, finding a perfect plan match, and offering an easy enrollment process provide peace of mind.
Live phone support
MIB strives to follow this easy formula to give you the best-localized customer service possible.
Live phone support is what allows them to give you what you need when you need it. Health insurance is not something you want to think about…until you absolutely must. Live phone support you can trust will help you when you need it most. If you have a problem with your insurance plan, questions about benefits, processing bills, or transitioning to Medicare, the last thing you want to do is be placed on hold or caught in an endless loop of automated phone responses. MIB will take your call whenever possible and if they can’t speak with you at that specific moment, they strive to contact you by the end of the business day by your preferred method of contact. Sometimes, having a real-life human on the other end of the line is all you need for peace of mind.
MIB Health Insurance is a family-owned company with a team of caring health insurance professionals in the Fox Cities who want to understand your unique health insurance story. Together you can find the right health Insurance solutions for you and your family. The Health Insurance experts at MIB are committed to providing peace of mind when protecting you and your family. Call a MIB Health Insurance Expert at 920-731-2100 to see what the four steps to peace of mind may look like for you.