Early Retirement - what to do about healthcare?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
Artsdoctor
Posts: 4293
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Early Retirement - what to do about healthcare?

Post by Artsdoctor »

sawhorse wrote:
Artsdoctor wrote: Many people can take their employer's disability policy with them when they leave and continue coverage for decades. Not so with health insurance.
With the one employer that didn't reject me for disability (they offered it to all employees regardless of health history), I wasn't offered the option of taking it with me. I was rejected for a disability policy elsewhere.
Yes, that certainly can be the case. The employer is certainly not obligated to offer you a disability policy which is portable. But the concept is that they can. Employers can also offer medical insurance which is portable as well (some retired teachers, for example), but this is not nearly as common; when it happens, the medical plan can be changed by the employer at any time (whereas the ex-employer will have no say in your portable disability plan since you essentially "own" the plan).
User avatar
VictoriaF
Posts: 19549
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Early Retirement - what to do about healthcare?

Post by VictoriaF »

AntsOnTheMarch wrote:Prior to ACA, I would not go to doctors for a minor illness if I though it could be interpreted as pre-existing condition—because it could be used to deny me coverage later in life. For example, a bad back. I just self-treated. Sounds crazy? Welcome to being self-insured.
You are making several excellent points in your post, and I agree with most of what you wrote.

As a side comment, while I have always been fortunate to have good health insurance, I too avoid seeing doctors for issues that I expect to go away on their own. This included back pain. I know several people who have been damaged by back treatments. When I had acute back pain in 2005, I toughed it out and then bought several books about back pain. My main conclusion was to limit sitting, to increase walking, and to do some stretching exercises at the first signs of the back discomfort. This has worked for me for twelve years.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
AntsOnTheMarch
Posts: 610
Joined: Mon May 29, 2017 5:47 pm

Re: Early Retirement - what to do about healthcare?

Post by AntsOnTheMarch »

VictoriaF wrote:
AntsOnTheMarch wrote:Prior to ACA, I would not go to doctors for a minor illness if I though it could be interpreted as pre-existing condition—because it could be used to deny me coverage later in life. For example, a bad back. I just self-treated. Sounds crazy? Welcome to being self-insured.
You are making several excellent points in your post, and I agree with most of what you wrote.

As a side comment, while I have always been fortunate to have good health insurance, I too avoid seeing doctors for issues that I expect to go away on their own. This included back pain. I know several people who have been damaged by back treatments. When I had acute back pain in 2005, I toughed it out and then bought several books about back pain. My main conclusion was to limit sitting, to increase walking, and to do some stretching exercises at the first signs of the back discomfort. This has worked for me for twelve years.

Victoria
Victoria, an excellent comment. I have had several minor back issues throughout my life and my wife had a fairly serious epsisode (bed ridden for over a week) when she was quite young and healthy otherwise. We have managed with minimal medical intervention. Educating oneself on how to resolve these without medical intervention (not always possible) is worthwhile. Regardless of what level of health insurance offered to me, I would always choose to avoid medical intervention if I can help it.
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
runner540
Posts: 1355
Joined: Sun Feb 26, 2017 5:43 pm

Re: Early Retirement - what to do about healthcare?

Post by runner540 »

Bigbonds wrote:I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
Please see my earlier posts: if your insurance has lifetime or annual limits on coverage (ACA currently disallow limits on "essential health benefits", but those will be cut in the proposed bills) your assets in a 401k only protects the assets if you can get the treatment without paying upfront.
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

runner540 wrote:
Bigbonds wrote:I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
Please see my earlier posts: if your insurance has lifetime or annual limits on coverage (ACA currently disallow limits on "essential health benefits", but those will be cut in the proposed bills) your assets in a 401k only protects the assets if you can get the treatment without paying upfront.
I'm not an expert on this, I'm sure there are others here that know much more than I do on this and will probably be corrected. I'm assuming that if medical cost are the number one reason for bankruptcy then logically speaking no, I'm guessing these people probably didn't have to liquidate their assets before getting into that much debt. I'm not sure.

I do know that a 401k is not considered an asset and I think it's the same for an IRA. I personally know a guy who has over a million in his 401k and qualifies for tons of government assistance and even medicad if he doesn't do a big enough roth conversion. So you could be a millionaire and qualify for medicad the only downside is that the state would probably try to recover your assets after your death or if your married you and your wife's death. If you have no kids and are not worried about leaving a inheritance this is another strategy that will work.
runner540
Posts: 1355
Joined: Sun Feb 26, 2017 5:43 pm

Re: Early Retirement - what to do about healthcare?

Post by runner540 »

Bigbonds wrote:
runner540 wrote:
Bigbonds wrote:I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
Please see my earlier posts: if your insurance has lifetime or annual limits on coverage (ACA currently disallow limits on "essential health benefits", but those will be cut in the proposed bills) your assets in a 401k only protects the assets if you can get the treatment without paying upfront.
I'm not an expert on this, I'm sure there are others here that know much more than I do on this and will probably be corrected. I'm assuming that if medical cost are the number one reason for bankruptcy then logically speaking no, I'm guessing these people probably didn't have to liquidate their assets before getting into that much debt. I'm not sure.

I do know that a 401k is not considered an asset and I think it's the same for an IRA. I personally know a guy who has over a million in his 401k and qualifies for tons of government assistance and even medicad if he doesn't do a big enough roth conversion. So you could be a millionaire and qualify for medicad the only downside is that the state would probably try to recover your assets after your death or if your married you and your wife's death. If you have no kids and are not worried about leaving a inheritance this is another strategy that will work.
I'm thinking about what was a common situation before ACA: you (or spouse/kid) is getting treatment for cancer, or an extended stay in the neonatal intensive care unit. The costs to date have totalled $1MM, mostly paid by insurance. If the insurance has a lifetime cap on coverage of $1MM, the hospital may require up front payment from you to continue treatment, at which point you have to start liquidating assets if your emergency fund is not enough. I'm not a lawyer, but here goes: bankruptcy can clear out unpaid bills for you, but it can't get money back to you if you've already been forced by the provider to pay upfront to continue your treatment.

The large risk for anyone retiring pre-Medicare is that if their health insurance has annual or lifetime limits, they could be forced to spend down their assets very quickly to receive lifesaving care. ACA resolved that by prohibiting lifetime and annual caps on "essential health benefits" but the proposed bills would put everyone back at risk of this financial challenge.
J295
Posts: 2849
Joined: Sun Jan 01, 2012 11:40 pm

Re: Early Retirement - what to do about healthcare?

Post by J295 »

Of course, we all know the healthcare situation is fluid. I'll just share that when we decided to early retire it was then fluid also, and there were some challenges, but we decided not to delay early retirement and instead just find solutions to our situation (knowing that it might be ongoing problem solving, which is part of life anyway). It has worked out quite well. Others may be more inclined to "wait and see," but I'm not sure how long the wait may be .....
User avatar
seed4great
Posts: 38
Joined: Sat Nov 12, 2016 12:14 am
Contact:

Re: Early Retirement - what to do about healthcare?

Post by seed4great »

This is how you can go bankrupt because of medical expenses, even if you are insured and regardless of OOP limit on your insurance: there are procedures (still under research and not proven yet) which are not covered by insurance. But even if procedure is covered, deductables are already high for those plans with reasonable premiums and will get much higher.
Also, I did see some reference to Medicaid above: according to the recent developments with health care bill, Medicaid will be shrinking substantially during the next decade. My guess it will shrink even if the bill not passed, by various reasons. Medicare will get much more expensive in future.
People live longer and earn more money, and expenses will rise, no matter what. There is no way to escape from the high cost of health care, whatever you do.
As regarding moving to other country: it may be a real challenge in future. Due to FATCA, foreign banks refuse to open bank accounts for US citizens living abroad. Without account in local bank, it may not be possible to obtain residence permit. Another challenge already mentioned are taxes: US citizen must pay tax on income earned in US, both in US and in the country where he/she lives. Tax return become very complicated.
Due to all these reasons, I do not see how average US person can retire early or even retire at all.
The greatest lesson in life is to know that even fools are right sometimes.
aristotelian
Posts: 8925
Joined: Wed Jan 11, 2017 8:05 pm

Re: Early Retirement - what to do about healthcare?

Post by aristotelian »

VictoriaF wrote:
You are making several excellent points in your post, and I agree with most of what you wrote.

As a side comment, while I have always been fortunate to have good health insurance, I too avoid seeing doctors for issues that I expect to go away on their own. This included back pain. I know several people who have been damaged by back treatments. When I had acute back pain in 2005, I toughed it out and then bought several books about back pain. My main conclusion was to limit sitting, to increase walking, and to do some stretching exercises at the first signs of the back discomfort. This has worked for me for twelve years.

Victoria
I wish I had gotten that advice 10 years ago. Pretty much what I do now, but the damage has been done.
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

runner540 wrote:
Bigbonds wrote:
runner540 wrote:
Bigbonds wrote:I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
Please see my earlier posts: if your insurance has lifetime or annual limits on coverage (ACA currently disallow limits on "essential health benefits", but those will be cut in the proposed bills) your assets in a 401k only protects the assets if you can get the treatment without paying upfront.
I'm not an expert on this, I'm sure there are others here that know much more than I do on this and will probably be corrected. I'm assuming that if medical cost are the number one reason for bankruptcy then logically speaking no, I'm guessing these people probably didn't have to liquidate their assets before getting into that much debt. I'm not sure.

I do know that a 401k is not considered an asset and I think it's the same for an IRA. I personally know a guy who has over a million in his 401k and qualifies for tons of government assistance and even medicad if he doesn't do a big enough roth conversion. So you could be a millionaire and qualify for medicad the only downside is that the state would probably try to recover your assets after your death or if your married you and your wife's death. If you have no kids and are not worried about leaving a inheritance this is another strategy that will work.
I'm thinking about what was a common situation before ACA: you (or spouse/kid) is getting treatment for cancer, or an extended stay in the neonatal intensive care unit. The costs to date have totalled $1MM, mostly paid by insurance. If the insurance has a lifetime cap on coverage of $1MM, the hospital may require up front payment from you to continue treatment, at which point you have to start liquidating assets if your emergency fund is not enough. I'm not a lawyer, but here goes: bankruptcy can clear out unpaid bills for you, but it can't get money back to you if you've already been forced by the provider to pay upfront to continue your treatment.

The large risk for anyone retiring pre-Medicare is that if their health insurance has annual or lifetime limits, they could be forced to spend down their assets very quickly to receive lifesaving care. ACA resolved that by prohibiting lifetime and annual caps on "essential health benefits" but the proposed bills would put everyone back at risk of this financial challenge.
I understand this but for me as I am sure is the case for my other bogleheads my three biggest assets are my 401k, my ira, and my house, in that order, all three are protected and 2 the 401k and ira and not even considered and asset when doing means testing or bankruptcy. I'm a minamilist whe no fancy car or that many other assets I could even sell if forced to do so. With a paid off house and car I could easily get by on very little, enough that I would be considered poor by government standards and still live a great life. I'm definitely not saying this is a fool proof strategy but just an example of something that could work.
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

seed4great wrote:This is how you can go bankrupt because of medical expenses, even if you are insured and regardless of OOP limit on your insurance: there are procedures (still under research and not proven yet) which are not covered by insurance. But even if procedure is covered, deductables are already high for those plans with reasonable premiums and will get much higher.
Also, I did see some reference to Medicaid above: according to the recent developments with health care bill, Medicaid will be shrinking substantially during the next decade. My guess it will shrink even if the bill not passed, by various reasons. Medicare will get much more expensive in future.
People live longer and earn more money, and expenses will rise, no matter what. There is no way to escape from the high cost of health care, whatever you do.
As regarding moving to other country: it may be a real challenge in future. Due to FATCA, foreign banks refuse to open bank accounts for US citizens living abroad. Without account in local bank, it may not be possible to obtain residence permit. Another challenge already mentioned are taxes: US citizen must pay tax on income earned in US, both in US and in the country where he/she lives. Tax return become very complicated.
Due to all these reasons, I do not see how average US person can retire early or even retire at all.
Doesn't change the fact that you are still taking a risk even staying at your job that you could become sick enough to be terminated and still lose your insurance. Knowing this I don't know how you could stay after achieving fire unless you just really enjoy your work. Steve Jobs worked till the day he died, had billions in the bank too, still died way too young. You are paying a high price for a false sense of security staying at your job for health insurance.
rlw
Posts: 1
Joined: Thu Jun 29, 2017 8:46 am

Re: Early Retirement - what to do about healthcare?

Post by rlw »

Greetings everyone, this is my first post on the "investing advice" board.

I just retired a few weeks ago. I am 55. Some find that to be an early retirement. I had healthcare with my employer and will hold that until Medicare. The expense is about $5000/yr for just me and it includes dental and life. Healthcare is the BIG EXPENSE item that no one can do without.

I've read infos all over the Internet about how much is needed to retire, etc., and it comes down to about $40-50K/yr average comfort for a couple- they say. Your situation is quite unique. To have saved $2 million at age 30 is quite a feat. Now, pay off EVERYTHING you owe on and what is left? That is your real saved amount. Your life calcuation would be about 55 years to plan for funding. Social Security can let you ride out the end if you qualify with enough credits. The one thing too with S.S. is the 35 years of work calculation (they calculate on 35 years whether you worked that many or not. Each year you dont, it is averaged as a ZERO which can greatly reduce the benefit) Another consideration which I am facing is preparing for some type of long term care. All of my family members have had to get long term care the last 10 years or so of their lives. I don't like the thought of it but I will most likely be alone as an only child never married person.

Again, on health, right now (not speculating on legislation but reporting/advising) employer plans are not being changed and the second group, self-payers are not being targeted for change. I would think your preliminary health cost plan would hold as good as any other plan. Lower your expenses by paying off things- no mortgage in retirement.
Dottie57
Posts: 9718
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Early Retirement - what to do about healthcare?

Post by Dottie57 »

In my state, an IRA is not protected in bankruptcy. 401k is protected.
runner540
Posts: 1355
Joined: Sun Feb 26, 2017 5:43 pm

Re: Early Retirement - what to do about healthcare?

Post by runner540 »

Bigbonds wrote:
runner540 wrote:
Bigbonds wrote:
runner540 wrote:
Bigbonds wrote:I know it varies a lot from state to state but in a state such as Texas they can and do fire you for any reason or no reason at all.

If you stay at work for the health insurance even though you have achieved fire you are still taking a risk because as others have pointed out if you get sick enough you can be terminated and lose your coverage.

If you have achieved fire you are taking a risk too of course but as long as the majority of your assets are in 401k or iras you do have substantial asset protection in bankruptcy court. If I have to take risk either way, if I'm working or not, then for me personally I'm going to quit and go enjoy however many healthy years I have left doing what makes me happy for as long as possible. Is it a risk, sure. Is staying at work in a stressful, unhealthy environment for health insurance just so they can drop you if you get too sick a risk? Yes. I guess it's just up to each individual to choose.
Please see my earlier posts: if your insurance has lifetime or annual limits on coverage (ACA currently disallow limits on "essential health benefits", but those will be cut in the proposed bills) your assets in a 401k only protects the assets if you can get the treatment without paying upfront.
I'm not an expert on this, I'm sure there are others here that know much more than I do on this and will probably be corrected. I'm assuming that if medical cost are the number one reason for bankruptcy then logically speaking no, I'm guessing these people probably didn't have to liquidate their assets before getting into that much debt. I'm not sure.

I do know that a 401k is not considered an asset and I think it's the same for an IRA. I personally know a guy who has over a million in his 401k and qualifies for tons of government assistance and even medicad if he doesn't do a big enough roth conversion. So you could be a millionaire and qualify for medicad the only downside is that the state would probably try to recover your assets after your death or if your married you and your wife's death. If you have no kids and are not worried about leaving a inheritance this is another strategy that will work.
I'm thinking about what was a common situation before ACA: you (or spouse/kid) is getting treatment for cancer, or an extended stay in the neonatal intensive care unit. The costs to date have totalled $1MM, mostly paid by insurance. If the insurance has a lifetime cap on coverage of $1MM, the hospital may require up front payment from you to continue treatment, at which point you have to start liquidating assets if your emergency fund is not enough. I'm not a lawyer, but here goes: bankruptcy can clear out unpaid bills for you, but it can't get money back to you if you've already been forced by the provider to pay upfront to continue your treatment.

The large risk for anyone retiring pre-Medicare is that if their health insurance has annual or lifetime limits, they could be forced to spend down their assets very quickly to receive lifesaving care. ACA resolved that by prohibiting lifetime and annual caps on "essential health benefits" but the proposed bills would put everyone back at risk of this financial challenge.
I understand this but for me as I am sure is the case for my other bogleheads my three biggest assets are my 401k, my ira, and my house, in that order, all three are protected and 2 the 401k and ira and not even considered and asset when doing means testing or bankruptcy. I'm a minamilist whe no fancy car or that many other assets I could even sell if forced to do so. With a paid off house and car I could easily get by on very little, enough that I would be considered poor by government standards and still live a great life. I'm definitely not saying this is a fool proof strategy but just an example of something that could work.
I think I understand your points. But I may not have explained clearly. if there are annual/lifetime limits to what insurance will pay for, the hospital may tell you, pay now (they may not be willing to bill you later), or you don't get care. In that case, you could protect your assets only if you are willing to forgo the care. Bankruptcy protections are irrelavant in this case.

Now, if the hospital will agree to bill you later, you can get the care, then use bankruptcy to protect your 401k, house, etc. (Caveat: Not a lawyer)
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.

The Supreme Court recently said it's the same as a 401k no matter your state.

https://www.trustetc.com/resources/educ ... urt-ruling
Bigbonds
Posts: 94
Joined: Wed Jun 07, 2017 11:51 am

Re: Early Retirement - what to do about healthcare?

Post by Bigbonds »

rlw wrote: Again, on health, right now (not speculating on legislation but reporting/advising) employer plans are not being changed and the second group, self-payers are not being targeted for change. I would think your preliminary health cost plan would hold as good as any other plan. Lower your expenses by paying off things- no mortgage in retirement.
If annual/lifetime limits are allowed again it will effect company sponsored plans. This is a common misconception that many have.
SrGrumpy
Posts: 1292
Joined: Wed Aug 05, 2015 3:21 pm

Re: Early Retirement - what to do about healthcare?

Post by SrGrumpy »

Bigbonds wrote:
Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.

The Supreme Court recently said it's the same as a 401k no matter your state.

https://www.trustetc.com/resources/educ ... urt-ruling
Yes and no:

Interestingly enough, the court did not choose to address the topic of whether very large IRA accounts would be protected under the federal bankruptcy code. The code has a provision stating that certain assets (such as retirement plans) that are deemed to be "reasonably necessary" to support a debtor and his/her family are protected from creditors.

The uncertainty of what is "reasonably necessary" means some assets in extremely large IRAs might not be protected. Having said that, this issue will surely be brought to the court's attention in the future. However, for the time being, the vast majority of Americans will not have to worry about creditor attachment of their IRAs.
runner540
Posts: 1355
Joined: Sun Feb 26, 2017 5:43 pm

Re: Early Retirement - what to do about healthcare?

Post by runner540 »

Bigbonds wrote:
rlw wrote: Again, on health, right now (not speculating on legislation but reporting/advising) employer plans are not being changed and the second group, self-payers are not being targeted for change. I would think your preliminary health cost plan would hold as good as any other plan. Lower your expenses by paying off things- no mortgage in retirement.
If annual/lifetime limits are allowed again it will effect company sponsored plans. This is a common misconception that many have.
Bingo! rlw, not sure if this is what you meant, but the proposed legislation will allow employers and plans in the individual market to offer much skimpier coverage. Here's a Money Magazine article that explains it:

http://time.com/money/4820506/the-senat ... port-says/
sawhorse
Posts: 3600
Joined: Sun Mar 01, 2015 7:05 pm

Re: Early Retirement - what to do about healthcare?

Post by sawhorse »

Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.
IRAs are protected up to a certain amount (1 million?) federally in bankruptcy. 401ks are protected to an unlimited amount.

You may be thinking of protection in civil lawsuits. 401ks are protected everywhere, but IRA protection depends on state.
Last edited by sawhorse on Thu Jun 29, 2017 3:01 pm, edited 1 time in total.
AntsOnTheMarch
Posts: 610
Joined: Mon May 29, 2017 5:47 pm

Re: Early Retirement - what to do about healthcare?

Post by AntsOnTheMarch »

SrGrumpy wrote:
Bigbonds wrote:
Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.

The Supreme Court recently said it's the same as a 401k no matter your state.

https://www.trustetc.com/resources/educ ... urt-ruling
Yes and no:

Interestingly enough, the court did not choose to address the topic of whether very large IRA accounts would be protected under the federal bankruptcy code. The code has a provision stating that certain assets (such as retirement plans) that are deemed to be "reasonably necessary" to support a debtor and his/her family are protected from creditors.

The uncertainty of what is "reasonably necessary" means some assets in extremely large IRAs might not be protected. Having said that, this issue will surely be brought to the court's attention in the future. However, for the time being, the vast majority of Americans will not have to worry about creditor attachment of their IRAs.
There's a related thread:
viewtopic.php?f=10&t=222280
User avatar
JoMoney
Posts: 10894
Joined: Tue Jul 23, 2013 5:31 am

Re: Early Retirement - what to do about healthcare?

Post by JoMoney »

sawhorse wrote:
Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.
IRAs are protected up to a certain amount (1 million?) federally in bankruptcy. 401ks are protected to an unlimited amount.

You may be thinking of protection in civil lawsuits. 401ks are protected everywhere, but IRA protection depends on state.
I'm not a lawyer, but from what I've read the way I understand it is that in many states IRAs are exempt property
http://www.thetaxadviser.com/content/da ... achart.pdf

In states that don't have statutory exemption for IRAs, even if they don't allow for using federal bankruptcy exemptions, the 2005 BAPCPA allows a special clause to "stack" a special federal exemption for a personal (not inherited) IRA on top of your state bankruptcy exemptions up to an inflation indexed $1,000,000 in 2005 dollars
http://www.wickenslaw.com/wp-content/up ... -19-14.pdf

On top of that, money rolled over to an IRA from an ERISA protected account (like 401k) may maintain the ERISA protection/exemption in addition to the $1,000,000 IRA exemption... but you have to maintain adequate documentation to show the ERISA qualified source... most recommend keeping your rollover IRA as a separate account from your individual contribution IRA for this reason.

If you get a DUI, tax judgement, or other criminal fraud type of thing any of these protections will likely be off the table.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Dottie57
Posts: 9718
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Early Retirement - what to do about healthcare?

Post by Dottie57 »

Bigbonds wrote:
Dottie57 wrote:In my state, an IRA is not protected in bankruptcy. 401k is protected.

The Supreme Court recently said it's the same as a 401k no matter your state.

https://www.trustetc.com/resources/educ ... urt-ruling
Very good!
Dottie57
Posts: 9718
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Early Retirement - what to do about healthcare?

Post by Dottie57 »

Thanks to all who responded!
rjbraun
Posts: 1758
Joined: Sun Sep 09, 2012 8:22 pm

Re: Early Retirement - what to do about healthcare?

Post by rjbraun »

AntsOnTheMarch wrote:
VictoriaF wrote:
AntsOnTheMarch wrote:Prior to ACA, I would not go to doctors for a minor illness if I though it could be interpreted as pre-existing condition—because it could be used to deny me coverage later in life. For example, a bad back. I just self-treated. Sounds crazy? Welcome to being self-insured.
You are making several excellent points in your post, and I agree with most of what you wrote.

As a side comment, while I have always been fortunate to have good health insurance, I too avoid seeing doctors for issues that I expect to go away on their own. This included back pain. I know several people who have been damaged by back treatments. When I had acute back pain in 2005, I toughed it out and then bought several books about back pain. My main conclusion was to limit sitting, to increase walking, and to do some stretching exercises at the first signs of the back discomfort. This has worked for me for twelve years.

Victoria
Victoria, an excellent comment. I have had several minor back issues throughout my life and my wife had a fairly serious epsisode (bed ridden for over a week) when she was quite young and healthy otherwise. We have managed with minimal medical intervention. Educating oneself on how to resolve these without medical intervention (not always possible) is worthwhile. Regardless of what level of health insurance offered to me, I would always choose to avoid medical intervention if I can help it.
Is the issue back pain specifically or visiting a doctor as a general matter?

About a year ago I found an in-network family doctor who specializes in treating "active people". I like him and have seen him probably at least 4-5 times in less than 12 months. This, on top of several acupuncture treatments by him and another 10 or so physical therapy sessions with the office's PT practice (primarily, ankle, knee and shoulder pain, at various points in time).

I perhaps vaguely recall back pain having a "bad rap" and indicative of stress / "psychological" issues and whatnot. Of course, back pain can also result from sports and other fitness activity. Anyway, my question is, is seeing a doctor for any kind of physical pain, especially due to overuse / sports-type injuries, perceived as problematic or is it more back pain in particular?

Just as background, I am in excellent health and would think that I am in general an *attractive* prospect for my demographic group from an insurer's standpoint (longevity in my family, no history of heart disease, cancer, etc.).

To keep things on point with the OP question: does one potentially compromise their ability to get healthcare in early retirement by somewhat frequent visits to the doctor for sports-related or similar injuries?

Note: Rereading prior post, not clear to me whether "medical intervention" simply means visiting a doctor or if it means "popping pills", getting various injections and so forth. In my case, I have taken no meds or injections, so far. I consider PT and exercise (done properly) the first line of defense and will be disappointed if by, basically, just seeking to lead a healthy lifestyle one is penalized by insurers.
AntsOnTheMarch
Posts: 610
Joined: Mon May 29, 2017 5:47 pm

Re: Early Retirement - what to do about healthcare?

Post by AntsOnTheMarch »

rlw wrote: I just retired a few weeks ago. I am 55. Some find that to be an early retirement. I had healthcare with my employer and will hold that until Medicare. The expense is about $5000/yr for just me and it includes dental and life. Healthcare is the BIG EXPENSE item that no one can do without.
Congrats! I consider that a gold-plated plan. I'd sign up for that every day of the week and twice on Sundays if I were offered it. Even being healthy and avoiding docs, dental bills can take a big bite (pun intended) out of a tight budget.
User avatar
VictoriaF
Posts: 19549
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Early Retirement - what to do about healthcare?

Post by VictoriaF »

AntsOnTheMarch wrote:Even being healthy and avoiding docs, dental bills can take a big bite (pun intended)
Yes, some fees are jaw-dropping. But you know the drill.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
WhiteMaxima
Posts: 2282
Joined: Thu May 19, 2016 5:04 pm

Re: Early Retirement - what to do about healthcare?

Post by WhiteMaxima »

Health care expense is the No 1 cause of bankrupt in the US. Even if you have saved millions, you can still end up poor if you gave a major health problem.
AntsOnTheMarch
Posts: 610
Joined: Mon May 29, 2017 5:47 pm

Re: Early Retirement - what to do about healthcare?

Post by AntsOnTheMarch »

VictoriaF wrote:
AntsOnTheMarch wrote:Even being healthy and avoiding docs, dental bills can take a big bite (pun intended)
Yes, some fees are jaw-dropping. But you know the drill.

Victoria
:D :thumbsup
UnLearnYourself
Posts: 399
Joined: Tue Feb 01, 2011 9:19 pm

Re: Early Retirement - what to do about healthcare?

Post by UnLearnYourself »

Saving$ wrote: Wed Mar 15, 2017 6:32 pm One of the most underrated benefits is retiree healthcare. I know of two who have taken advantage of this:
- Friend and spouse who worked for fed gov for 30+ years. Retired in his late 50's. Gets to purchase group healthcare at group rates from retirement until retiree is 65. Retired fed worker is younger than spouse, so spouse will go on Medicare, and fed worker stays on fed policy until 65.
- Family member who retired from a county job after 30+ years. He gets free health insurance until he is 65, then the county pays for a Medicare Supplemental plan for the rest of his life. Along with this, he gets 80% of his pre-retirement income for life. Once he turns 70.5 his income will be more than it was while he was working...

So if you have a job with generous retiree health insurance, or even one that allows you to buy into the group policy after retirement, it is quite possible.
I just found out my company, if you hit 55 and have worked for them 10 consecutive years, or have a cumulative total of 20 years over your lifetime, they offer the following:

As a retiree under the age of 65 who is not eligible for Medicare, benefit advisors at Via Benefits will help you select the best option for you and your family.

Plus, when you enroll in medical coverage through Via Benefits, COMPANY will make annual contributions on your behalf into a Health Reimbursement Arrangement (HRA), which you can use to pay for these plans and other qualified health care expenses.

You will receive a subsidy for each eligible family member that can be used to pay for plan premiums and other eligible health care expenses:

Retirees and spouses under the age of 65 will each receive $6,500 per year, and all enrolled child dependents will receive a total of $6,500 per year (up to a maximum of $19,500 per year for family coverage).


As many have stated the state of health care in this country is in flux so being 38 years old now I'm not banking on what things will look like when I'm 55+. But this policy is very encouraging for me as I kick tires on the concept of retiring early myself. Not so sure how far $13k/yr will go for my wife and I or $19.5k/yr for our family of 4 if I were to cover my 2 girls at that point in time, but definitely helps make me feel an early retirement could be more doable if I stick it out with this employer over the long haul.
datadatum
Posts: 25
Joined: Sat Sep 29, 2018 7:16 pm

Re: Early Retirement - what to do about healthcare?

Post by datadatum »

Wow - still a relevant thread, just surprising to see a three year bump...

To the last poster: many big companies offer early retirees company health care benefits to bridge them to medicare. My company offers similar benefits as described above, and currently subsidize 90% of plan costs (which would continue at 55 y/o retirement as long as an employee has at least 10 years of experience).
musicmom
Posts: 185
Joined: Sat Apr 11, 2015 4:48 pm

Re: Early Retirement - what to do about healthcare?

Post by musicmom »

Retiree health coverage can be a game changer.
We pay $160/month for the two of us. It provides almost identical coverage as active employee coverage until age 65, then becomes secondary to Medicare.

My megacorp no longer offers it to new employees but grandfathered existing employes after age 55 with 30 yrs of service.
ncbill
Posts: 988
Joined: Sun Jul 06, 2008 4:03 pm
Location: Western NC

Re: Early Retirement - what to do about healthcare?

Post by ncbill »

musicmom wrote: Tue Jun 23, 2020 9:27 pm Retiree health coverage can be a game changer.
We pay $160/month for the two of us. It provides almost identical coverage as active employee coverage until age 65, then becomes secondary to Medicare.

My megacorp no longer offers it to new employees but grandfathered existing employes after age 55 with 30 yrs of service.
My F-I-L retired 25+ years ago around age 50 with no premium or co-pay retiree healthcare until Medicare...he complained when he had to start paying Part B premiums at 65, but his retiree health plan then morphed into a premium-free, very generous Medigap supplement.
Maverick3320
Posts: 680
Joined: Tue May 12, 2015 2:59 pm

Re: Early Retirement - what to do about healthcare?

Post by Maverick3320 »

sox2017 wrote: Wed Mar 15, 2017 6:35 pm
adamthesmythe wrote:> it's very difficult to accurately predict future health care expenses

I would go further and say that it is impossible to predict, especially in the individual market over a multi-decade time frame.

Health care is a far bigger concern for early retirees than sequence of return risk.

Now at regular retirement age...you will be part of a very large cadre of people in the same situation with the same concerns and significant political and economic power.
Completely agree about predicting future costs, but even before that, I really don't understand how anyone in this country will be able to early retire unless you're saved a ton of money. And by a ton, I mean 3-4m+.

If families have to pay $20k+ privately, that is $500k of extra savings at 4% withdrawal. Such a huge issue. I know this isn't new, but the numbers are so significant today that I'm just curious how people are actually dealing with this.
What percentage of people are seriously considering retiring in their 30s? Retiring "early" to most people means a few years before 65. Retiring in the early 50s is considered an outlier. In those cases, a few years needed to be bridged before medicare eligibility. Where are you getting 3-4 million dollars from?
oktwindad
Posts: 4
Joined: Wed Jun 24, 2020 10:29 am

Re: Early Retirement - what to do about healthcare?

Post by oktwindad »

Maverick3320 wrote: Wed Jun 24, 2020 11:47 am
sox2017 wrote: Wed Mar 15, 2017 6:35 pm
adamthesmythe wrote:> it's very difficult to accurately predict future health care expenses

I would go further and say that it is impossible to predict, especially in the individual market over a multi-decade time frame.

Health care is a far bigger concern for early retirees than sequence of return risk.

Now at regular retirement age...you will be part of a very large cadre of people in the same situation with the same concerns and significant political and economic power.
Completely agree about predicting future costs, but even before that, I really don't understand how anyone in this country will be able to early retire unless you're saved a ton of money. And by a ton, I mean 3-4m+.

If families have to pay $20k+ privately, that is $500k of extra savings at 4% withdrawal. Such a huge issue. I know this isn't new, but the numbers are so significant today that I'm just curious how people are actually dealing with this.
What percentage of people are seriously considering retiring in their 30s? Retiring "early" to most people means a few years before 65. Retiring in the early 50s is considered an outlier. In those cases, a few years needed to be bridged before medicare eligibility. Where are you getting 3-4 million dollars from?
I fully anticipate to retire at age 52. We’ve saved 50% of our income from age 23-37 (52K-250K) should have roughly 5 million. We also get 100% match on 401k up to 15% of salary. Also live in a very low cost of living area with amazing school system.
rjbraun
Posts: 1758
Joined: Sun Sep 09, 2012 8:22 pm

Re: Early Retirement - what to do about healthcare?

Post by rjbraun »

oktwindad wrote: Wed Jun 24, 2020 1:44 pm I fully anticipate to retire at age 52. We’ve saved 50% of our income from age 23-37 (52K-250K) should have roughly 5 million. We also get 100% match on 401k up to 15% of salary. Also live in a very low cost of living area with amazing school system.
How do you plan to address health insurance (which is the topic of this thread)? Assuming you have kids (just an assumption, given reference to amazing school system), I guess they may already be independent adults when you reach age 52.

But, presumably that still leaves you and perhaps your partner.
marcopolo
Posts: 4031
Joined: Sat Dec 03, 2016 10:22 am

Re: Early Retirement - what to do about healthcare?

Post by marcopolo »

rjbraun wrote: Wed Jun 24, 2020 3:51 pm
oktwindad wrote: Wed Jun 24, 2020 1:44 pm I fully anticipate to retire at age 52. We’ve saved 50% of our income from age 23-37 (52K-250K) should have roughly 5 million. We also get 100% match on 401k up to 15% of salary. Also live in a very low cost of living area with amazing school system.
How do you plan to address health insurance (which is the topic of this thread)? Assuming you have kids (just an assumption, given reference to amazing school system), I guess they may already be independent adults when you reach age 52.

But, presumably that still leaves you and perhaps your partner.
Not who you were asking, but we are in very similar situation. Retired a few years ago at age 51, assets inbthe same ballpark. One child in college other in HS at the time. Since then, one is now independent, the other is in college.

College is covered by over-funded 529 plan

Health care is budgeted at 30k/year with CPI+2 inflation rate until Medicare age.

We currently manage income to stay just under ACA cliff to get roughly $24k in tax credits. We mentally "bank" those dollars in anticipation of ACA going away, or tax credits being curtailed, or any host of other things that could happen.

We view health care like any other expense that needs to be dealt with. Although, admittedly large, and tough to accurately predict. But, so is much of life. All sorts of other risks could just as easily manifest themselves, we will adapt. We do not let the healthcare tail way the living life dog.
Once in a while you get shown the light, in the strangest of places if you look at it right.
oktwindad
Posts: 4
Joined: Wed Jun 24, 2020 10:29 am

Re: Early Retirement - what to do about healthcare?

Post by oktwindad »

rjbraun wrote: Wed Jun 24, 2020 3:51 pm
oktwindad wrote: Wed Jun 24, 2020 1:44 pm I fully anticipate to retire at age 52. We’ve saved 50% of our income from age 23-37 (52K-250K) should have roughly 5 million. We also get 100% match on 401k up to 15% of salary. Also live in a very low cost of living area with amazing school system.
How do you plan to address health insurance (which is the topic of this thread)? Assuming you have kids (just an assumption, given reference to amazing school system), I guess they may already be independent adults when you reach age 52.

But, presumably that still leaves you and perhaps your partner.
We’ll price out a family plan vs kids having university insurance.

I’m not banking on it, but I fully expect for the US to have universal healthcare at that point. I'm not advocating or hoping for, it’s just the trajectory of the current political climate.
Post Reply