ChooseFI Podcast: Navigating Health Insurance | With Cody Garrett

Episode 588 | Released March 2, 2026

Episode Overview

This episode is a deep dive into the rapidly changing landscape of health insurance for the financially independent (FI) community, with a particular focus on the Affordable Care Act (ACA), premium tax credit rule changes, and the return of the notorious "400% federal poverty level cliff" in 2026. Host Brad and guest Cody Garrett break down how health insurance costs vary dramatically by location, the financial landmines lurking in the new ACA guidelines, and crucial tactical planning steps everyone in the FI community must know to avoid catastrophic mistakes that could cost tens of thousands of dollars. The tone is practical, detailed, and occasionally sobering—yet packed with actionable tips.

Key Discussion Points & Insights

1. The Health Insurance Option Rundown

Timestamps: 06:21 – 17:13, 44:51 – 56:40

Cody walks through all the main options for post-employment health insurance:

• COBRA (06:21)

  • Let's retirees stay on the employer’s plan for up to 18 months, paying both employer and employee premiums plus a 2% admin fee. Eye-opening for many, as the true cost is usually hidden while employed.

    “If you look at your W2... code DD, that is the combined employee plus employer premiums... That might be $10,000, $20,000, $30,000 a year.” — Cody (07:35)

• Retiree Health Coverage (10:21)

  • Becoming rare, often only available to those with pensions and sufficient years of service.

• Spousal Coverage & Part-Time/University Plans (11:00)

  • Possible if one spouse continues working, or through university enrollment, though lifestyle trade-offs apply.

• Healthcare Sharing Ministries (12:20)

  • Lower cost “informal insurance,” but NO legal guarantees, preexisting exclusions, not HSA-eligible.

    “This is not insurance... That health share company is not legally bound to pay for anything.” — Brad (12:20)
    “Healthcare Sharing ministries is something you love until you absolutely hate it.” — Cody (13:09)

• Private Individual Insurance (14:44)

  • Can be more affordable if you’re healthy and over the ACA cliff, but requires medical underwriting and may exclude key conditions.

2. The ACA & Premium Tax Credit Cliff: A Catastrophic Trap

Timestamps: 17:25 – 29:19

How the Credit Works:

• Based on household income (modified AGI), not assets.
• The advance premium tax credit can be applied directly to your premium or delayed for adjustment at tax time.

The Critical Cliff:

• Income over 400% of the federal poverty level (FPL) = Instant loss of ALL premium tax credits.
• Crossing the threshold by even $1 can trigger a tax liability of $47,000+ in some cases.

  “They just knocked themselves from 400% of the federal poverty level to 401%... income $1 over... could mean paying back $47,000.” — Cody (26:50)
  “This is potentially catastrophic.” — Brad (21:16)

Planning Implications:

• There’s no partial phase-out: you’re either under the 400% FPL and eligible, or over and get nothing.
• You can (and should) adjust your advance credit amount throughout the year as your income picture clarifies (26:16).

3. How Geographic Location Affects Premiums—Even Across the Street

Timestamps: 03:04 – 05:52, 33:14 – 35:33, 47:59 – 52:14

• Costs and plan availability vary county by county.
• Two families, literally across the street from each other (in different zip codes or counties), may face $20,000+/year premium disparities.

  “This is a county to county analysis... you can’t find this on any website as of now.” — Cody (03:04)

• Examples:
  • Charleston, WV: Second lowest cost silver plan = ~$56,000/year; cheapest plan without tax credits = $31,000/year.
  • Richmond, VA: Similar couple pays ~$22,000/year for the same plan; $17,000 for the cheapest plan.

4. Managing Your Income: Tactical Planning to Stay Below the Cliff

Timestamps: 35:41 – 43:20

Key Strategies:

• Live off cash/savings first.
• Use “specific identification” on taxable accounts to sell shares with lowest capital gains.
• Implement asset location to minimize taxable interest/dividends in brokerage accounts.
• Withdraw from HSAs and Roth IRAs (as they do not count toward income).
• Contribute to Health Savings Accounts (HSAs):
  • All bronze and catastrophic ACA plans are (now) HSA-eligible (starting 2026).
  • HSA contributions (up to the IRS limit) can be made up until April 15 the following year, retroactively reducing income and restoring lost premium tax credits in a near-miss scenario.

  “By making an HSA contribution by April 15... they now brought their income back down... and now they don’t have to pay back the $47,000.” — Cody (43:20)

  • Small HSA contribution (e.g. $401) could erase massive tax liability.

  “If they’d just made a $401 HSA contribution, $47,000 in tax liability goes poof.” — Brad (43:52)

5. The Numbers: Concrete Examples & Tools

Timestamps: 30:17 – 34:21, 47:59 – 52:14

• 400% FPL for 2026 (sample numbers):
  • Single: $62,600
  • Couple: $84,600
  • Family of 3: $106,600
    (More on measuretwicemoney.com/choosefi)
• The premium tax credit ensures the second lowest cost silver plan premium won’t exceed ~10% of income (up to the 400% FPL mark).
• “Geo-arbitrage” applies: Considering moving even within the US could save $10k+/year.

6. Out-of-Pocket Maximums and Insurance Realities

Timestamps: 50:45 – 54:57

• Even with maximum tax credits, families may still face up to $21,200 in annual out-of-pocket costs.
• “Health insurance” for many high-deductible/bronze plans is effectively just catastrophic coverage.

  "It’s not just the health insurance premiums, then there are healthcare costs you need to factor into your FI. These are distinct." — Brad (53:14)

Notable Quotes & Memorable Moments

• On the ACA Cliff:

  “By their income actually going over, literally by $1 over $84,600... their premium tax credit eligibility went from $3,900 a month to zero... tax liability of $47,000, even though income was $85,000.” — Cody (26:50)

• On Planning Tactically:

  “Just by taking a little out of an HSA or Roth IRA... you could be potentially saving yourself $10,000, $20,000 in health insurance premiums this year.” — Cody (40:45) “That’s when people talk about having asset diversity, because you can use this very tactically when it actually matters.” — Brad (40:04)

• On the craziness of the system:

  “Across the street from each other on similar plans... one paying $20,000 a year more than another family.” — Cody (03:04)
  “It’s the worst of all worlds: the cost is hidden from employees... The employers get little credit, and yet we continue on with this system.” — Brad (08:01)

Actionable Takeaways & Warnings

• Track your modified AGI meticulously and plan withdrawals/sales with the ACA cliff in mind.
• Adjust advance premium tax credits throughout the year as income projections change.
• Consider learning county-level ACA plan differences and, if possible, use geo-arbitrage.
• Explore (carefully) private insurance and health care sharing ministries if you lose access to credits, but know the risks.
• Prioritize asset location, Roth/HSAs, and contribution/withdrawal timing to manage taxable income.
• Remember: catastrophic plans do NOT qualify for premium tax credits, just for HSA contributions.
• ALWAYS reconcile ACA forms on your tax return (Forms 1095-A & 8962) and seek pro help if uncertain.

Additional Resources

• measuretwicemoney.com/choosefi — reference chart for 2026 FPL
• Episode 517: “Capital Gains Maximizing & Harvesting”
• Cody Garrett & Sean Mullaney’s book: Tax Planning To and Through Early Retirement (see especially Chapter 13)

Final Thoughts & Community Engagement

The episode ends with a strong call to the FI community to internalize these ACA changes, remain vigilant, and share their questions in the ChooseFI forums. Both host and guest underscore that for those planning early or flexible retirement, health insurance is now—without a doubt—a major permanent line item and a risk factor that must be actively managed, not assumed away.

“If you’ve made it this far, this might be worth a re-listen. This is critical—and a material difference.” — Brad (58:12)

For more discussion or to ask Cody questions, visit the ChooseFI platform after this episode is posted.

Summary prepared in the original informative, helpful style of ChooseFI. All timestamps in MM:SS format.