How the Wealthy Get Free Healthcare for Their Kids—While You’re Stuck Paying $900/Month

July 30, 2025

Let’s get honest about something uncomfortable:

You're a federal employee. You spent decades earning your FEHB coverage.

Now you’re about to pay $900 or more per month to keep your family protected.

Meanwhile, your high-income neighbor (who retired early from a tech job) is paying nothing for his adult kids’ healthcare.

No, he’s not breaking the law.

No, he’s not uninsured.

And no, he didn’t win the lottery.

He just understood the system better than most, and made a few bold moves at the right time.

Let’s talk about how the wealthy do this — and how federal retirees can do it, too.

💡 Strategy 1: ACA Income Hacking—The Roth Reversal

The Affordable Care Act provides premium subsidies for families earning under specific income thresholds.

Wealthy retirees take advantage by deliberately reducing their reportable income:

  • They front-load Roth conversions in their 50s and early 60s

  • They avoid drawing from pre-tax TSPs during subsidy-eligible years

  • They live off after-tax assets to stay within the ACA “sweet spot”

Result? They or their dependents qualify for low-premium or zero-premium ACA plans, legally.

💡 Strategy 2: HSAs as Stealth Wealth

High earners max out their Health Savings Accounts during their working years—not just to spend, but to invest.

Here’s what they do differently:

  • Avoid spending HSA funds now

  • Invest aggressively inside the HSA

  • Let it grow into a tax-free healthcare fund for retirement

When needed, they use it to cover medical expenses—including for dependents—without touching their FEHB or TSP.

💡 Strategy 3: Adult Children, Cheap Coverage

You can keep your kids on FEHB until 26.

But the moment they age out, most federal families just let them go find coverage on their own.

Here’s what the wealthy do instead:

  • Help their kids qualify for subsidized ACA plans

  • Guide them through income optimization (gig income, education deductions, etc.)

  • Often reduce costs to under $100/month, even for quality coverage

It's not about being rich. It’s about being deliberate.

💡 Strategy 4: Business Loopholes & Medical Trusts

Here’s where it gets advanced:

Wealthy families who own small businesses sometimes structure their finances to include:

  • Health Reimbursement Arrangements (HRAs) for family employees

  • Medical expense trusts tied to long-term planning

  • S-Corp structures that offset medical premiums and costs pre-tax

This isn’t feasible for everyone—but elements of these strategies are accessible to many federal retirees with side income or small business activity.

You earned your benefits.

You followed the rules.

Now it’s time to make sure you maximize your rewards.

—FWR