PERACare vs. ACA Marketplace: 2027 Edition

I’ve written previously comparing our options for health insurance in retirement (2024, 2025, 2026). While in 2024 and 2025 it was an easy choice (ACA all the way because of the subsidies), 2026 was a closer decision because of the expiration of the enhanced ACA subsidies (we no longer qualified for any subsidies). This will also be true for 2027 as we will continue to not qualify for any ACA subsidies.

For 2027, on the PERACare side there is a large increase (20%) in premiums for the plan we would choose (there is an increase, but much smaller (5.3%), on the other plan – which also switched carriers). On the ACA side, there is also a healthy increase in premiums (10.1%).

For reference, here are the tables for the ACA subsidy caps and the federal poverty levels.

As can you see from the chart, the previous subsidies were significantly higher with the enhanced subsidies and, crucially for us, are eliminated completely for modified adjusted gross income (MAGI) greater than 400% of federal poverty level (FPL). Under the previous enhanced subsidies, premiums for those making over 400% of FPL were capped at 8.5% of your MAGI. (Note that if your income is really high this ends up as no subsidy, because the unsubsidized premiums are lower than 8.5% of a very high income.) In addition, the unsubsidized premiums themselves are increasing again this year due to increases in health care costs, other policy changes, and insurance companies leaving the marketplace in certain states (making it more expensive for those who remain). For my wife and I our ACA marketplace premiums (for the same plan) are increasing by 10.1% ($2,260 more for the year, we will be paying $24,740 in health insurance premiums through the marketplace if we choose the same plan).

Note that we also have dental and vision coverage through PERACare at about $110/month, so another $1,320 a year for those.

So here’s a comparison for 2027 of the Kaiser Deductible HMO plan through PERACare and the current Kaiser HDHP Bronze Plan we have through the ACA Marketplace. The bolded items indicate the better plan on each metric.

At first glance, there is no clear winner here. The PERACare plan has potentially lower out-of-pocket costs for many services that are not subject to the deductible under the ACA plan. But the ACA plan has the lower premium and also a lower out-of-pocket maximum (we actually hit the out-of-pocket max for my wife in 2026 because she had her appendix removed).

But there are four additional considerations to take into account.

1. Possibility of ACA Subsidies Changing: While very unlikely, it’s always possible that Congress will modify the ACA subsidies (in either direction) for 2027.
   
2. Higher Out-of-Pocket Maximum: While it’s unlikely this would come into play, the main purpose of insurance is to protect against catastrophe (in this case, the catastrophe of a truly horrible – and expensive – health care year). Because the Marketplace plan has a much lower out-of-pocket maximum ($3,500 less for each of us, $7,000 for both of us), it would end up being less expensive in a truly horrible year. As I mentioned, this did actually come into play in 2026 for my wife due to her appendicitis, so being on the ACA plan meant we had $4,500 (the out-of-pocket max was $1,000 less last year) less in expenses than we would have had under the PERACare plan.
   
3. The Health Savings Account (HSA) Factor: The PERACare plan is not HSA-qualified, the ACA Marketplace plan is. Because my wife and I are both over 55, we can each contribute up to $5,500 to our HSAs in 2027 ($11,000 total). Since we are in the 22% marginal federal tax bracket, and Colorado has a 4.4% flat tax, that saves us $2,904 in taxes (or $242/month). And since we are still investing our HSA instead of reimbursing ourselves, the $11,000 has the potential to grow to even more tax free. But ignoring the possible growth, the tax savings from the HSA contributions effectively makes the Marketplace plan $330/month less expensive (in terms of premiums) as compared to the PERACare plan ($88 monthly premium difference plus $242 tax savings from HSA contributions).
   
   
   
   
4. The Credit Card Rewards Factor: If we choose PERACare the premiums automatically get deducted from our pension checks. While this is convenient it also means that we can’t use a credit card to pay them. With the marketplace plan we can use a credit card (with no surcharge). This means at a minimum we will get 2% cash back on our premiums (and possibly more if we use the premiums with new credit cards to get signup bonuses). Here’s a comparison of the two plans when you factor in both the tax savings from the HSA and the 2% cash back from paying with a credit card.
   
   
   As you can see, this makes the Marketplace plan less expensive still (and conceivably even more savings if we can leverage our premium payments for credit card signup bonuses).

But this is still not a fair comparison because the PERACare plan could have somewhat lower out-of-pocket costs due to certain items not being subject to the deductible (primary care, specialist, urgent care, diagnostic lab, vision care, chiropractic care), and the coinsurance being a lower percentage once the deductible is met. So I looked at our out-of-pocket expenses for 2024 and 2025 (ignoring the outlier 2026 where we maxed out of pocket for my wife) and averaged them. (This does not including prescriptions since those would’ve been the same under both plans because our prescriptions are very inexpensive.)

It’s important to understand that this is not the ultimate difference, as we would still have had some out-of-pocket costs under the PERACare plan, they just would’ve been somewhat lower (due to the copays). My estimate is that instead of $1,050 it would’ve been more like $350, so a net $700 savings ($58/month). So here’s the comparison with that additional $58/month estimate of increased out-of-pocket costs factored in.

So how do we choose given that we don’t know what our health needs will be next year? There are three main scenarios to consider.

1. Good (normal) health care year: The Marketplace Plan is the better choice as it will be on the order of $3,756 cheaper (plus possible upside from HSA investments and possible credit card signup bonuses).
   
2. A bad health care year: The PERACare plan could be better due to the copays for some services and the lower coinsurance amounts after the (slightly lower) deductible.
   
   (Note that it depends on exactly what services we need; there are many scenarios where the Marketplace plan would still come out ahead due to the “head start” of the HSA tax and credit card reward savings.)
   
3. A really bad (catastrophic) year: The Marketplace plan would be better due to the lower out-of-pocket maximum (as well as the HSA tax and credit card rewards savings).

So which are we going to choose? We are going to go with the ACA Marketplace plan as it is going to end up being the less expensive option in most (but not all) scenarios. It is important to acknowledge that PERACare is still a good choice (and we’re glad to have the option).

Unfortunately this still means we will be paying almost $25,000 in premiums alone. We are fortunate that we can handle this (we would prefer not to, of course), but there are millions of families who cannot, so I hope that Congress does come through with some relief (and a better long-term solution to healthcare in this country).

As a nice side benefit, since we will not be utilizing PERACare and our small ($460/month between the two of us) subsidies, it will have a (very, very, very) small positive benefit for PERA. In reality it’s immaterial to a pension fund with almost $80 billion in assets, but it still feels good.