Learn why you may be able to retire earlier than you think.
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The Three Cs Of Health Care Planning

If you knew you could purchase affordable health insurance through the Affordable Care Act (ACA) Marketplace, would you consider retiring early?

The Affordable Care Act has opened a bevy of options for individuals who have been diligent savers throughout their working years and are entertaining the possibility of retiring prior to turning age 65, at which point they would be eligible for Medicare.

If you are considering retiring early and are looking at health care options prior to Medicare, there are a few things we believe you should consider: Cost, Convenience, and Consistency.


Due to the rising costs of health care, this one is a big concern we hear about. One of the things that may significantly impact health care costs when using the Marketplace is the premium tax credit.

How does the premium tax credit work?

According to healthcare.gov, “When you apply for coverage in the Health Insurance Marketplace, you’ll find out if you qualify for a ‘premium tax credit’ that lowers your premium – the amount you pay each month to your insurance plan. The amount of your premium tax credit depends on the estimated annual household income you put on your Marketplace application.”

When you apply, you will have to provide an estimate of your modified adjusted gross income (MAGI) on your Marketplace application to see if you are eligible for the premium tax credit. Here are some examples of income you may need to include:

  • federal taxable wages
  • Social Security benefits
  • tax-exempt interest
  • self-employment income
  • tips
  • pensions
  • alimony
  • child support
  • capital gains
  • certain investment income
  • expected dividends
  • rental income

How you structure your taxable income matters

After running many different scenarios through the healthcare.gov website, I have discovered that adjusting a person’s MAGI by as little as $1 may drastically affect the amount of premium tax credits available. It may result in significant premium tax credits if you are attentive to how you are structuring your taxable income when using the Marketplace to purchase your health insurance.


If you currently have health care through an employer, signing up for your health care benefits is often facilitated by someone in the Human Resources (HR) department. You might receive an email letting you know that you need to review your options and select your coverage for the upcoming year. There may not be a lot of effort required on your part.

When signing up for health insurance through the Marketplace, you may find there are additional steps needed. First, please refer to the previous section on Cost. You will need to estimate your income (modified adjusted gross income = MAGI) for the upcoming tax year, as this is going to be required to complete the application.

You will also need to decide if you will apply online, by phone call, by mail, or through an agent. If you apply on your own, you are responsible for making sure the correct information has been submitted and fixing any errors that may occur. This has the potential to become a huge inconvenience.

Using an agent to help apply for benefits

Having an agent assist you may be beneficial because they generally handle the enrollment and any follow-up, which may include filling out the application, completing your enrollment, making changes, handling renewals and answering any questions you may have. This is typically at no extra cost to you as they are compensated directly from the insurance company. Now that’s convenient!


If you really like your primary physician and health care network available through your employer’s health insurance, you may want to take that into consideration when choosing to insure through the Marketplace, as it may mean you will have to switch carriers or pay additional out-of-pocket costs to maintain your current health care relationships.

“Most people don’t really care about their insurance carrier. They care about the doctors they have,” says Hector De La Torre, executive director of the Transamerica Center for Health Studies.

However, if you are more interested in exploring the freedom of retirement than maintaining your health care relationships, then using the Marketplace may be the option for you.

Cost, convenience and consistency of health care are all factors that we believe should be considered when deciding whether or not to retire prior to age 65. If you have questions about how we can help you with health care planning, please contact us.

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Bernicke Wealth Management, Ltd. (Bernicke) is an independent, multi-disciplinary firm with 25 employees located outside Eau Claire, in Altoona, Wisconsin. Our financial advisers provide wealth management services for individual investors, businesses, foundations, and nonprofits, including investment planning, retirement planning, estate planning, and tax planning.

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Learn why you may be able to retire earlier than you think.
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