FIRE and health insurance

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Determined
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FIRE and health insurance

Post by Determined » Sat Apr 21, 2018 10:57 pm

How do you handle health insurance when you retire early? What about your dependents? I am a single parent, with almost no involment from the father. The oldest two are in college and under 26, but my youngest is 12. When he graduates HS I will have 30 years of teaching in STRS (Ohio). The pension is only half at that point, but I am not sure I want to teach until 60 for full benefits. My parents have sadly passed which leaves me a minimum of $32,000 yearly investment and pass through income in addition to my $70,000 salary.

I had never considered early retirement. I figured I would teach until 60 when my youngest would likely be out of college. If I understood how you do this with kids, I might look at the numbers more closely.

Quick numbers
Teaching salary $70,000
Church salary $6,000
Investment income (RMD, farm rent) $20,000
Pass-through income-$12,000 minimum (inherited small business)
Net Worth $1.4 million
Tax deferred $300,000
Taxable $450,000
Farmland $500,000
Mortgage balance $61,000 @3.15%
No other personal debts
Pension in 6 years=$34000; 12 years=$69,000

The business has significant liabilities that my brother and I agressively working to reduce. I did not count the business in my net worth.

So my big question is if I forgo the significant pension payout by teaching until I am 60, how do I insure my youngest who will be 18 if I retired at 54?

delamer
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Re: FIRE and health insurance

Post by delamer » Sat Apr 21, 2018 11:05 pm

Have you talked to your human resources staff or reviewed any online benefit information about retiree health insurance available through the school district?

If so, what are your options for coverage after retirement with 30 years of service? Will the school district provide you with insurance but not dependents? Can you get insurance for your dependents, but it is cost prohibitive?

Katietsu
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Re: FIRE and health insurance

Post by Katietsu » Sat Apr 21, 2018 11:12 pm

One other possibility, look for a college that offers quality health insurance and make that one of the enrollment criteria.

Determined
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Re: FIRE and health insurance

Post by Determined » Sat Apr 21, 2018 11:15 pm

Good question. I would have coverage through STRS, not the district. There is dependent coverage, but it is unsubsidized. I don't know exact numbers since I have never considered early retirement before. I would need to call.I do know that a lot retired teachers around here switch at 65 to Medicare.

delamer
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Re: FIRE and health insurance

Post by delamer » Sat Apr 21, 2018 11:36 pm

Determined wrote:
Sat Apr 21, 2018 11:15 pm
Good question. I would have coverage through STRS, not the district. There is dependent coverage, but it is unsubsidized. I don't know exact numbers since I have never considered early retirement before. I would need to call.I do know that a lot retired teachers around here switch at 65 to Medicare.
Frequently, that information is available online. Check the website where you get current salary/benefit information; there is probably a retirement section too.

Even without a subsidy, your best option for dependent coverage might be through STRS. At least you’ll have a number to work with.

Will you eventually get Social Security in addition to the pension?

With your guaranteed income and assets, I imagine that the dependent insurance cost, while a bit painful, will be affordable. It should only be for a few years, after all.

The bigger question is your general financial condition if you forgo the larger pension. It really is a time versus money question.

Also, it isn’t as if your only options are 6 years or 12 years more of work. You could always work until you son is part way through or or finished college if the numbers don’t work for 6 years.

Determined
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Re: FIRE and health insurance

Post by Determined » Sun Apr 22, 2018 6:24 am

I would have to call STRS about actual insurance costs. My personal statement does not list it, and my plan information only says that dependent insurance is available, but it is not subsidized. I know when my mother rretired 15 years ago, it cost $ 600 a month to keep my father on it.

There is no SS in addition to the pension. We are under the Windfall Eliimation Provision regarding SS benefits. I will get very little SS from my side job.

Correct. My pension will increase significantly between years 6 and 12. There is also the real possibility of more changes as well as buy iuts from individual districts. The new system is going to put a big financial strain on local school as more teachers are at the top of pay scale for 15 years.

I will likely teach to full retirement, but the idea of doing otherwise is intriguing.

guyesmith
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Re: FIRE and health insurance

Post by guyesmith » Mon Apr 23, 2018 5:37 am

I see you have church income.

Have you looked into any of the Christian health care sharing ministries? The three big ones are Medi-share, Samaritan Ministries, and Christian Health Share.

We are members of Samaritan Ministries. It’s very inexpensive. Your grown kids would have to have their own memberships. Pennies compared to traditional insurance.

These are based on Christians bearing each other’s burdens.

www.samaritanministries.com

alfaspider
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Re: FIRE and health insurance

Post by alfaspider » Mon Apr 23, 2018 2:34 pm

guyesmith wrote:
Mon Apr 23, 2018 5:37 am
I see you have church income.

Have you looked into any of the Christian health care sharing ministries? The three big ones are Medi-share, Samaritan Ministries, and Christian Health Share.

We are members of Samaritan Ministries. It’s very inexpensive. Your grown kids would have to have their own memberships. Pennies compared to traditional insurance.

These are based on Christians bearing eachj other’s burdens.

www.samaritanministries.com
These can be a good option for some, but be aware that these groups can deny claims that a traditional insurer would be required to pay (and not just due to a religious objection). It’s not quite the same thing as traditional health insurance.

adamthesmythe
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Re: FIRE and health insurance

Post by adamthesmythe » Mon Apr 23, 2018 3:25 pm

> How do you handle health insurance when you retire early?

Simple. You're not financially independent until you have a plan to afford health care.

guyesmith
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Re: FIRE and health insurance

Post by guyesmith » Tue Apr 24, 2018 9:44 pm

alfaspider wrote:
Mon Apr 23, 2018 2:34 pm
guyesmith wrote:
Mon Apr 23, 2018 5:37 am
I see you have church income.

Have you looked into any of the Christian health care sharing ministries? The three big ones are Medi-share, Samaritan Ministries, and Christian Health Share.

We are members of Samaritan Ministries. It’s very inexpensive. Your grown kids would have to have their own memberships. Pennies compared to traditional insurance.

These are based on Christians bearing eachj other’s burdens.

www.samaritanministries.com
These can be a good option for some, but be aware that these groups can deny claims that a traditional insurer would be required to pay (and not just due to a religious objection). It’s not quite the same thing as traditional health insurance.
This is true. It’s not a legally agreement to cover medical expenses. When guidelines are met though they always pay.

Nyc10036
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Re: FIRE and health insurance

Post by Nyc10036 » Tue Apr 24, 2018 9:56 pm

The $500,000 for farmland. Is that part of the business?

mnnice
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Re: FIRE and health insurance

Post by mnnice » Wed Apr 25, 2018 9:09 am

adamthesmythe wrote:
Mon Apr 23, 2018 3:25 pm
> How do you handle health insurance when you retire early?

Simple. You're not financially independent until you have a plan to afford health care.
I think the OP gets that. He or she is trying to figure out a rough estimate of what it will take to have insurance.

I think if you retired right now you would have an income in the sweet spot for ACA subsidies. My question would be expenses not related to health care?

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Pajamas
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Re: FIRE and health insurance

Post by Pajamas » Wed Apr 25, 2018 9:38 am

guyesmith wrote:
Mon Apr 23, 2018 5:37 am

Pennies compared to traditional insurance.
For very good reasons!

The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage and I'm disturbed to see them recommended on Bogleheads as a replacement or alternative to insurance without at least mentioning some of the many negatives.

HoosierJim
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Re: FIRE and health insurance

Post by HoosierJim » Wed Apr 25, 2018 10:13 am

Are you saying when youngest graduates you salary could turn into a pension at 50%

So:

Code: Select all

Teaching salary $70,000
Church salary $6,000
Investment income (RMD, farm rent) $20,000
Pass-through income-$12,000 minimum (inherited small business)
turns into

Code: Select all

Teaching salary --------------->$35,000
Church salary $6,000
Investment income (RMD, farm rent) $20,000
Pass-through income-$12,000 minimum (inherited small business)


If so your income would be $73,000 ?????????

Lookup the insurance cost for you and your dependent(s) on your state health care exchange?

edit- it would be nice if you could defer the pension payment but not continue working - you would then qualify for a nice subsidy.
Last edited by HoosierJim on Wed Apr 25, 2018 11:56 am, edited 1 time in total.

guyesmith
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Re: FIRE and health insurance

Post by guyesmith » Wed Apr 25, 2018 10:36 am

Pajamas wrote:
Wed Apr 25, 2018 9:38 am
guyesmith wrote:
Mon Apr 23, 2018 5:37 am

Pennies compared to traditional insurance.
For very good reasons!

The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage and I'm disturbed to see them recommended on Bogleheads as a replacement or alternative to insurance without at least mentioning some of the many negatives.
This is a discussion forum. So, discuss. I've offered an opinion. No harm no foul. Please don't attack me for sharing. The OP will research before buying or ask questions for more information if they are interested in my contribution.

It is a substitute for health insurance for Christians. Other faiths have these as well.

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Pajamas
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Re: FIRE and health insurance

Post by Pajamas » Wed Apr 25, 2018 10:47 am

guyesmith wrote:
Wed Apr 25, 2018 10:36 am

It is a substitute for health insurance for Christians. Other faiths have these as well.
The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage!

ThatGuy
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Re: FIRE and health insurance

Post by ThatGuy » Wed Apr 25, 2018 11:30 am

Determined wrote:
Sat Apr 21, 2018 10:57 pm
So my big question is if I forgo the significant pension payout by teaching until I am 60, how do I insure my youngest who will be 18 if I retired at 54?
If I read this correctly, you are NOT worried about health insurance for yourself, only for your youngest child?

If it is correct that your health insurance is not an issue, then you can ensure that the child is enrolled in a college which offers health insurance. Even community colleges have these plans. College plans are usually not gold-plated, but at least catastrophic issues are covered.
Work is the curse of the drinking class - Oscar Wilde

guyesmith
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Re: FIRE and health insurance

Post by guyesmith » Wed Apr 25, 2018 11:45 am

Pajamas wrote:
Wed Apr 25, 2018 10:47 am
guyesmith wrote:
Wed Apr 25, 2018 10:36 am

It is a substitute for health insurance for Christians. Other faiths have these as well.
The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage!
It is not insurance, but it IS an option for families looking beyond traditional health insurance.

From Samaritan's website: Is Samaritan Ministries’ health care sharing some kind of Christian health insurance? No. Insurance is a contract where one party agrees to be legally responsible for and accept another party’s risk of loss, in exchange for a payment called a premium. Health care sharing is an arrangement where members share one another’s medical expenses through voluntary giving, not because of legal obligation.

It is on good faith that other members will share the weight of the burden. It's biblical. Amish communities do this all the time. These ministries have brought it into a modern and nationwide form.

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LadyGeek
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Re: FIRE and health insurance

Post by LadyGeek » Wed Apr 25, 2018 4:34 pm

As a reminder, religion is a highly contentious topic - much more so than politics. Please refrain from discussing details of any specific religion. See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
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michaeljc70
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Re: FIRE and health insurance

Post by michaeljc70 » Wed Apr 25, 2018 5:37 pm

guyesmith wrote:
Wed Apr 25, 2018 11:45 am
Pajamas wrote:
Wed Apr 25, 2018 10:47 am
guyesmith wrote:
Wed Apr 25, 2018 10:36 am

It is a substitute for health insurance for Christians. Other faiths have these as well.
The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage!
It is not insurance, but it IS an option for families looking beyond traditional health insurance.

From Samaritan's website: Is Samaritan Ministries’ health care sharing some kind of Christian health insurance? No. Insurance is a contract where one party agrees to be legally responsible for and accept another party’s risk of loss, in exchange for a payment called a premium. Health care sharing is an arrangement where members share one another’s medical expenses through voluntary giving, not because of legal obligation.

It is on good faith that other members will share the weight of the burden. It's biblical. Amish communities do this all the time. These ministries have brought it into a modern and nationwide form.
When I explored healthcare cost sharing instead of insurance, that is what alarmed me. There is no guarantee your claims will be paid. If a larger number of members than expected were to get very sick at once, the money might not be there. Insurance companies are required to have reserves for that by law. Too risky for me.

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samsoes
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Re: FIRE and health insurance

Post by samsoes » Wed Apr 25, 2018 6:29 pm

Pajamas wrote:
Wed Apr 25, 2018 9:38 am
guyesmith wrote:
Mon Apr 23, 2018 5:37 am

Pennies compared to traditional insurance.
For very good reasons!

The Christian healthcare sharing ministries are NOT a substitute for health insurance coverage and I'm disturbed to see them recommended on Bogleheads as a replacement or alternative to insurance without at least mentioning some of the many negatives.
Please mention the many of them. This is an option I'm exploring as well.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren at Little Round Top @ Gettysburg National Military Park.)

guyesmith
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Re: FIRE and health insurance

Post by guyesmith » Wed Apr 25, 2018 11:10 pm

LadyGeek wrote:
Wed Apr 25, 2018 4:34 pm
As a reminder, religion is a highly contentious topic - much more so than politics. Please refrain from discussing details of any specific religion. See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Fair enough. My intentions were not to hijack this discussion and discuss religion. Please note the OP asked for health insurance advice and I proposed a healthcare alternative.

Determined
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Re: FIRE and health insurance

Post by Determined » Fri Apr 27, 2018 4:06 pm

Nyc10036 wrote:
Tue Apr 24, 2018 9:56 pm
The $500,000 for farmland. Is that part of the business?
No. It was part of a generation skipping trust with my brother and myself as the beneficiaries.

Determined
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Re: FIRE and health insurance

Post by Determined » Fri Apr 27, 2018 4:11 pm

HoosierJim wrote:
Wed Apr 25, 2018 10:13 am
Are you saying when youngest graduates you salary could turn into a pension at 50%

So:

Code: Select all

Teaching salary $70,000
Church salary $6,000
Investment income (RMD, farm rent) $20,000
Pass-through income-$12,000 minimum (inherited small business)
turns into

Code: Select all

Teaching salary --------------->$35,000
Church salary $6,000
Investment income (RMD, farm rent) $20,000
Pass-through income-$12,000 minimum (inherited small business)


If so your income would be $73,000 ?????????

Lookup the insurance cost for you and your dependent(s) on your state health care exchange?

edit- it would be nice if you could defer the pension payment but not continue working - you would then qualify for a nice subsidy.

Yes. Maybe a little less. These numbers are based on my projected salary at 30 and 36 years. I have no idea about deferring pensions.

Determined
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Re: FIRE and health insurance

Post by Determined » Fri Apr 27, 2018 4:13 pm

ThatGuy wrote:
Wed Apr 25, 2018 11:30 am
Determined wrote:
Sat Apr 21, 2018 10:57 pm
So my big question is if I forgo the significant pension payout by teaching until I am 60, how do I insure my youngest who will be 18 if I retired at 54?
If I read this correctly, you are NOT worried about health insurance for yourself, only for your youngest child?

If it is correct that your health insurance is not an issue, then you can ensure that the child is enrolled in a college which offers health insurance. Even community colleges have these plans. College plans are usually not gold-plated, but at least catastrophic issues are covered.
Yes. I would have my personal retirement coverage, although my mother switched from STRS to Medicare once she was eligible.

Determined
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Re: FIRE and health insurance

Post by Determined » Sat Apr 28, 2018 7:01 pm

Interesting information I heard just today. Not surprising at all, and I will definitely have to schedule a meeting with an STRS rep. Within 10 years, it is possible that full benefits upon retirement will be reduced from 79% Final average salary to 42%. They already increased the full retirement age to 60 AND 35 years a few years ago. STRS will let employees know when a plan is in place, who gets grandfathered, etc..., and there will be lots of teachers calculating to see if they should get out early. It has happened before. But obviously the information is out there if you ask the right person.

I did find by looking at my account that based on 2018 health care costs, the monthly amount for myself and son would be around $650.

So retiring with 39.4% of FAS at age 54 and 30 years suddenly became even more intriguing.

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