Health insurance costs and your FI number

Is this the only place where a healthcare discussion lives? I expected it to be a big topic with its own category when signing up for ChooseFI community. It’s my BIGGEST worry, for sure. It will be fine once you reach Medicare age (and who knows if that age will creep up and up like SS), but before then what’s the best plan and how do you budget for it with the wide swings in support for ACA from each administration? It makes one want to go to Europe where they have nice things! ☺️

Agree this should be more of a main topic--it is buried. My wife and I have monthly health insurance premiums increasing from approximately $846 to $1,793, more than doubling in a single year. That is over $21,500 annually, representing a significant and growing share of our draws from investments. Given a surgery this year and other health care, our total spend is north of $30k. Luckily, we have cash flowing RE (our bridge to retirement age) and haven't had to tap into our nest egg in our early 50s. However, this will be the tipping point where we need to make budget or other changes.

Good point. I only realized the real cost of health insurance after checking ACA numbers myself — the jump by age was bigger than I expected. One thing I’d add from my own planning is that the subsidy side can get tricky because your projected income in early FI years isn’t always stable, so it’s easy to accidentally miscalculate and end up owing something back at tax time.

What helped me was running a couple of “worst case” scenarios without subsidies, like you said, just to see if my FI number still holds up. Not perfect, but at least it keeps the surprise factor low.

Curious how others are budgeting for the pre-Medicare gap — this part feels like one of the hardest pieces to get right.

Solid point—most W-2 folks have no clue what health insurance really costs until they’re paying the full freight.

I ran the numbers on healthcare.gov last year pretending I was 55, 60, and 64 (family of two, no subsidies). Went from ~$1,100/mo today to almost $2,200/mo right before Medicare kicks in. That single line item pushed my FI number up by close to $600k because I used a 3.5% withdrawal rate on it.

I now plan with zero subsidies in my base case. If they stick around, great—extra travel budget. If they vanish, I’m not forced back to work.

Anyone else bake in a buffer for subsidy risk, or do you just cross your fingers?

A couple of ACA updates/thoughts now that the bill has been signed:

• The ACA cliff is back in force starting in 2026
• Work requirements will be implemented as soon as 2027, but each state will implement with their own twist. Check out the program in Georgia to get a flavor of the future.
• Income estimates will now be verified (and potentially challenged) by third party sources vs "self attestation"
• HSA Qualified plans have been expanded to any Bronze level plan.
• Enrollment windows have been shortened
• Automatic enrollment is over
• Enhanced benefits/subsidies have been eliminated, expect to pay more for less starting in 2026.
• In my opinion it appears that applicants will have to jump though several extra hoops to participate

If you have the ability to control your MAGI (ie: the number that the ACA uses to determine if you are qualified and what your Premium Tax Credit (PTC) will be) via investments or other ways...... then keep in mind these additional levers:

• The new Charitable deduction of $2k (for MFJ) is Above the Line (meaning that it will reduce your MAGI). This new deduction can be taken by people that take the Standard Deduction.
• HSA contributions are also Above the Line ..... this is huge because of the expansion into all Bronze plans and the extra boost contributions you can make if you are 55+. Example: a 55+ MFJ can contribute $10,750 in 2026.
• Cap gain losses can still be taken off Ordinary Income up to $3k/year. And yes, this is also Above the Line.

There is a ton more detail, but the above is a quick read. Also, it is going to take a long time for each state to figure out how to implement and more importantly how to communicate to enrollees. I'm sure there are other changes that impact people much more than what I have described.

Would really love to hear the thoughts of others!

I have read that the extended ACA subsidies are slated to be eliminated within the budget bill currently being proposed (having passed the House). I encourage all who are using the ACA in their current life or who have banked some their FI plans based on having this access to reach out to their Senate representatives and tell them that they want to see the ACA itself and the tax subsidies continue.

https://www.cnbc.com/2025/05/23/big-beautiful-tax-bill-skipped-aca-credits.html

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As a small business owner whose business really puts the SMALL in small business, I lost the access to traditional health insurance 10 years ago when I divorced. The subsidies have been a part of my FI number budgeting and the plan to float between my early retirement and when I would qualify for Medicare. Without the subsidies, my middle of the road ACA plan for just myself would cost more monthly than my mortgage. I don't have another option for comprehensive coverage, and would need to look into catastrophic coverage in 2026 and beyond or abandon the early part of my FIRE journey.

This is probably the #1 topic for FI today as we are only about 10 months away from potentially material changes to the ACA. Concerns include Reinstating the ACA Cliff, Reducing susbsidies, eliminating coverage for pre-existing conditions, and continued increases in max OOP limits. I would expect that this topic will soon be front and center as ACA insurance companies need to start working on their 2026 plans/rates in the next couple of months.