Early Retirees Beware: ACA Healthcare Shake-Up

Your Retirement Guide Podcast with George Jameson, CFP® and founder of Capital Wealth Group in Columbia, SC. 

In this episode, we dive into the critical changes coming to ACA healthcare subsidies, set to expire in 2025, and their impact on early retirees under 65. George shares practical tips to manage costs, adjust income, and keep your retirement plans on track.

 Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.

Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.

This is for education only.It is not tax, legal, or investment advice. Before  acting on any information consult your tax, legal, or investment advisor.

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Capital Wealth Group is a Fee-Only Advisory Firm located in Columbia, SC , serving clients locally in South Carolina and North Carolina and virtually nationwide.

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Transcript

George Jameson: 0:18

Hi, and welcome to my podcast. I'm George Jameson, certified financial planner and founder of Capital Wealth Group. Today we're diving into a critical topic for anyone planning to retire before age 65. I'm talking about health insurance and healthcare cost. Right off the bat, there's some big news you need to know. The enhanced Affordable Care Act healthcare subsidies are set to expire at the end of 2025 and are unlikely to be extended by Congress according to NPR and Investors Business Daily. These subsidies have significantly lowered premiums for many Americans, but without an extension premium costs for subsidized a CA plans are expected to skyrocket even potentially doubling or more in some states. This is a game changer, especially for retirees or future retirees retiring before age 65 and self-employed folks who depend on these subsidies to keep healthcare affordable. Let's break it down and figure out what this means for you. Right now in 2025, the enhanced a CA subsidies help people earning above 400% of the poverty level, think 58,320 for a single person, 78,880 for a family of two 99,440 for a family of 3 and roughly 120,000 for a family of four. These are the 400% of poverty level figures. However, if nothing changes, starting in 2026, any amount above these figures, and the subsidies vanish. So anyone over these income thresholds loses all financial help. So you'll be paying full price and those prices are climbing fast. According to KFF.org org's latest analysis, most a CA insurers are proposing premium increases between 10 and 20% for 2026. kff.org states that this could mean out-of-pocket monthly premiums jumping by more than 75% on average. For example, a family of three earning 110,000 a year, which is over the 400% poverty level, and if they're enrolled in a silver, ACA Plan, they may see their monthly cost leap from$780 this year to$1600 per month next year. That's more than double what they're paying now. And for a 60-year-old couple who retired early. The national average full price without a subsidy for a silver plan. Under the ACA program is about 1300 per person on average, so that would total 2,600 per month without any subsidies. Keep in mind these figures fluctuate depending on what state you live in, so what can you do if you're in this squeeze? Some might stick with their plans and pay the higher premiums. It's tough, but doable for those with room in their budget. Others could switch to an even higher deductible plan, which may have lower monthly costs, but will make you pay a lot more out of pocket before insurance kicks in. It's a trade off you save now, but then you risk more later if you need serious care. Either way, it's a financial stretch for a lot of people. So what are the unique challenges for early retirees? We've already spoke on some, but for those who retired before age 65 or considering early retirement, this subsidy expiration is particularly concerning since Medicare doesn't start until age 65. A CA plans are often the only viable option for many people. The potential doubling the premiums could derail retirement plans for some or even force retirees back into the workforce to afford coverage. If you're in this boat, it's crucial to reassess your healthcare budget now. You might need to allocate more savings to cover these increased costs or even work part-time just to pay for the premiums. Additionally, managing your income distributions until you reach age 65 to stay under that 400% poverty level could help you qualify for financial help. But really that's not feasible for everyone, especially if most of your savings are in pre-tax retirement accounts and you need to take withdrawals to live on. So this isn't just about individual bills. It's really a seismic shift for the A CA itself. Letting these additional subsidies expire amounts to what is effectively a partial repeal of the a CA program. Erasing a lot of its gains in health coverage. Millions could drop coverage if costs get too high. Undoing years of progress in getting people insured. It can be a ripple effect. Higher uninsured rates mean more delayed care, worse health outcomes, and bigger costs down the road. So what's next? For now? The clock is ticking. If you're own an ACA plan with a subsidy, especially above that 400% poverty line, start planning today. Could you adjust your income to stay under the cutoff until you hit age 65. Maybe save some extra to BRACE for 2026 and beyond, especially for those who haven't already retired. It doesn't sound like Congress will step in. I hope I'm wrong, but without action, these increases are coming. I'll keep you posted as this unfolds, but for now it's about staying informed and getting ready for some change. That's it for today. Thank you for tuning in. If this resonated with you or know someone who may need this, please share if you need retirement planning help. Please let me know. Until next time, be safe and have a great day.