One dollar too much, and your health insurance subsidy is gone

In the statute it reads unremarkably. A 2022 law amended two provisions of the tax code, each time inserting the words: for tax years beginning after December 31, 2020, and before January 1, 2026.

The first provision lowered the share of the premium a household has to pay itself. The second removed the income ceiling above which there is no subsidy at all.

Both had an expiry date, and both lapsed at the turn of the year. No new law or vote was needed. All it took was for Congress to do nothing.

Two effects, and the second is the harsher one.

First, the share everyone eligible pays goes up. If you used to pay a certain percentage of your income toward the premium, you now pay more. That hits millions of households across every income level in the subsidy range.

Second, above the limit the subsidy disappears entirely. This is the part that matters for European expats, because many of us land exactly here: too well off for support, too young for the government's retirement health coverage, and without an employer offering group insurance.

A couple in their mid-fifties without employer coverage can easily pay between $1,500 and $2,500 a month on the market, depending on the state and the plan. With a subsidy, that was an unpleasant number. Without one, it is for many the single biggest item in the household budget, bigger than the rent.

If I could name one number that decides whether a move to the United States succeeds, it would not be the tax rate and not the rent. It would be the health insurance premium.

The reason is structural. Across most of Europe, healthcare is a contribution tied to income. In the United States it is a product priced by age, location and plan. Earning little does not mean paying less; at most you may get a subsidy. If that goes, you pay full price.

That is why health insurance in America is never a side issue. It is the issue that sinks relocation plans, usually in the second year, when reality has caught up with the spreadsheet.

Employees of an American company. You are best off. Employer coverage is the norm for skilled jobs in the United States, the employer typically pays the larger share of the premium, and the marketplace and its subsidies play no role for you.

The self-employed and owners of small companies. You are the group that gets hit. If you are insured through the marketplace and your income is above the limit, you pay the full amount from this year on.

Retirees under 65. The toughest situation. Government coverage only starts at 65. If you emigrate at 58, you have seven years to fund in full, in exactly the stage of life when premiums are highest.

If you are over 65, check your eligibility. American retirement health coverage requires contribution periods that an immigrant arriving late in life often cannot reach.

Budget for the premium, not the subsidy. Any plan built on a subsidy depends on a political decision. We have just seen exactly that.

Look into group insurance through your own company. If you own an American corporation and are employed by it, you may be able to take out group coverage priced differently from the individual market. This is one of the few places where your choice of entity directly affects your cost of living.

Understand the terms before you sign. Deductible, coinsurance, out-of-pocket maximum, network. A plan with a low premium and a $15,000 deductible is not insurance in the European sense; it is catastrophe cover. We have broken this down in deductible, coinsurance and HMO, PPO, POS and EPO.

And plan your income for the year deliberately. It is the most uncomfortable advice, but the most honest. Where a hard income cliff exists, tax planning helps decide which side you land on. For the self-employed with flexible income, that is not a trick, it is ordinary prudence.

The fight over exactly these subsidies was one of the triggers of the government shutdown in the fall. The expiry has not ended it; it has just pushed it into a new year.

Nobody knows whether a retroactive extension will come. What you do know: for the current year, the law is what it is. If you base your coverage on a possible future change in the law, you are insuring yourself with politicians instead of an insurer.

The only reliable way is through the official state marketplaces, using real data: your age, your partner's age, your children's ages, the ZIP code of where you plan to live and your estimated household income for the coming year.

Two things almost always surprise Europeans. First, the premium depends heavily on age. Between a 45-year-old and a 60-year-old on the same plan there is often a factor of two to three. Second, it depends on location. The same household pays considerably more in one state than in another, and regions within a state differ too.

In other words, where you live in America is also a healthcare cost question. If you are flexible, compare premiums side by side for your shortlist of places before you decide. The difference can be bigger than the difference in rent.

Travel insurance as a permanent solution. International expat health plans are attractively priced as long as you are young and healthy. But as a rule they do not meet American requirements, and they cancel or get more expensive when things get serious. For a temporary stay they can be right. For a move, they almost never are.

Skipping preventive care to avoid the deductible. This is the quietest and most expensive trap. With a high-deductible plan, people postpone checkups because each one costs money. Diagnoses come later and treatment gets more expensive. That is why American plans usually cover preventive services without a deductible. You just need to know which ones they are, and use them.

Take a couple, 54 and 52, two children, self-employed, moving to a mid-sized city in Texas. A solid family plan on the market easily runs $1,800 to $2,200 a month, plus a family deductible in the mid four figures and an annual out-of-pocket maximum that reaches five figures depending on the plan.

Calculated realistically, that means around $25,000 for an uneventful year. In a year with a serious illness, more like $35,000. That is the number that belongs in an honest relocation plan, and it does not depend on how well business is going.

The numbers only work out if you write down both sides. Compare only the tax rate and you get the wrong answer, systematically in America's favor.

In the United States, health is not a social right but a contract. Contracts can be negotiated, compared and optimized, but you have to sign them, read them and pay for them.

Accept that, and this country gives you access to medicine that will amaze you when it really counts. Hope that it will all somehow be taken care of, as it is at home, and you will meet the harshest disappointment this country has to offer.

You can consider this system cruel. Many Americans do too, and the debate over it is one of the most bitter in this country.

But you should know the other side too. Medical care in the United States, if you have access to it, is exceptional. Short waiting times, state-of-the-art equipment, specialists without a chain of referrals, and treatments that only reach Europe years later.

So the deal this country offers is not bad medicine in exchange for low taxes. It is excellent medicine in exchange for a financial risk you carry yourself. If you price that risk in, you can live very well here. If you ignore it, you are taking a gamble that can become existential when something goes wrong.

If you want to run the numbers on your coverage before you move, talk to Mount Bonnell Advisors in Austin, Texas. For an overview of the system, see US healthcare and health insurance; for the costs, see Health insurance and healthcare.

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