How did you solve the pre-medicare healthcare riddle?

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Bloodsuckingleeches
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How did you solve the pre-medicare healthcare riddle?

Post by Bloodsuckingleeches » Thu Jan 10, 2019 10:41 am

BH:

I would really like to hear some real-life examples of anyone who retired or semi-retired PRE MEDICARE and how they funded healthcare.
This assumes you do not have a healthcare agreement with a prior employer.

The most obvious solution is one of two spouses taking a job FT or PT primarily for the health benefits.

Id really like to hear who has done this and how happy they were and any lessons they could teach me as I am in likely going to be in that 10-12 year no mans land re medicare if I retire or semi retire.

WhyNotUs
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Re: How did you solve the pre-medicare healthcare riddle?

Post by WhyNotUs » Thu Jan 10, 2019 10:45 am

I live in an area that reportedly has highest health costs in US. Choices are PT job with access to buy group plan or pay $2,500 a month for plan with $6500 deduct and no vision or dental. Have to earn $50k just to pay for health insurance and deductible.

The system is broken.
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Shallowpockets
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Re: How did you solve the pre-medicare healthcare riddle?

Post by Shallowpockets » Thu Jan 10, 2019 10:53 am

If you retire before Medicare age and it is a choice, you probably already have an idea of your expenses and where they will come from. That said, you could possibly qualify for ACA by adjusting your taxable income within the limits allowing a substantial subsidy. No dental or vision, but there is no dental and vision with Medicare either without paying extra for it.
No guarantees on how long or what from ACA will be in the future, but that is essentially the same with any health insurance. You have to take it year by year.

3-20Characters
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Re: How did you solve the pre-medicare healthcare riddle?

Post by 3-20Characters » Thu Jan 10, 2019 10:55 am

Health exchange (ACA)
- High deductible, pay for everything out of pocket and you’ll never reach the deductible if healthy—and it’s a blessing to be healthy so no complaints
- Manage income to keep it below cliff

If you can get a part time job that insures you, I’d go for that. Not always easy. I don’t know where ACA will be in future but it’s here now and it’s a good option for many. Need a few more years before Medicare. 🤞🏻 ⬅️ fingers crossed :D

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lthenderson
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Re: How did you solve the pre-medicare healthcare riddle?

Post by lthenderson » Thu Jan 10, 2019 10:56 am

Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
The most obvious solution is one of two spouses taking a job FT or PT primarily for the health benefits.
This has been our solution. It helps that my spouse really doesn't want to retire and likes what she does.

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AerialWombat
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Re: How did you solve the pre-medicare healthcare riddle?

Post by AerialWombat » Thu Jan 10, 2019 10:59 am

My current solution is one of the health sharing ministries.
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Ruger
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Re: How did you solve the pre-medicare healthcare riddle?

Post by Ruger » Thu Jan 10, 2019 11:05 am

I retired at 61 and have been on the ACA since. Finally going onto Medicare this summer.
As mentioned above, you have to know your income so you know whether you qualify or not, and what the subsidy will be.

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SevenBridgesRoad
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Re: How did you solve the pre-medicare healthcare riddle?

Post by SevenBridgesRoad » Thu Jan 10, 2019 12:03 pm

Retired recently at 61 yo. Chose ACA over COBRA because it’s less expensive and we have good ACA insurance and physician network options in our area. ACA can be much less expensive depending on your income, as defined by Modified Adjusted Gross Income. It’s possible to manage this number in such a way to maximize premium subsidy. Plenty of posts on forum, do a little searching for details.
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J295
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Re: How did you solve the pre-medicare healthcare riddle?

Post by J295 » Thu Jan 10, 2019 12:10 pm

Shortly after I retired at age 53 the supreme court affirmed the constitutionality of the affordable care act. We have been on it since that time. We keep income below the cliff and the premiums ( net of the premium tax credit) are extremely low. In fact, for 2019 the premium is $0 for a bronze plan. Compare this to a $24,000 annual premium if we did not qualify for the premium tax credits. We haven’t reconciled yet for 2018, but we were paying $40 per month for a bronze plan, and I suspect any difference that occurs in reconciliation on the tax return will be modest.

If/when healthcare changes, we will adjust. We were committed in 2013 to the retirement/transition and not letting the insurance premium tail wag the dog.

Good luck!

Morgan Dollar 1921
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Re: How did you solve the pre-medicare healthcare riddle?

Post by Morgan Dollar 1921 » Thu Jan 10, 2019 12:14 pm

Retired mid-year, 2016, created an open enrollment situation with ACA.

First year (six months actually) premium was almost as much as my group, bought a secondary policy to cover the gap & deductable, (turned out to be a mistake, but only for five months).

The second year premium was around a 33% of group, third year super cheap, 10% of first year.

The next few months, prior to my 65th, embarrassingly affordable. I am in an unusual situation, I did not however manage income to lower ACA premiums.

Silver plan with the extra reduction I think they call it.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by nisiprius » Thu Jan 10, 2019 12:18 pm

We had to bridge a three-or-four-year gap. We used COBRA for the first eighteen months. At the time when it was important I was living in a state with guaranteed-issue, age-and-community-rated insurance options. Therefore, before committing I was able to get accurate quotations at the time, and was able to budget for bridging the two-year gap. (Since we weren't going to be enrolling for eighteen months there was of course eighteen months-worth of uncertainty about how much premiums might rise and whether insurance laws might change, but at least we had some kind of real number to go on). Like many people my age, I had pre-existing conditions, nothing terrible, but enough to create uncertainty; I don't think I'd have retired if I'd been in a state that didn't have guaranteed issue, age-and-community-rated health insurance.
Last edited by nisiprius on Thu Jan 10, 2019 6:57 pm, edited 1 time in total.
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David Jay
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Re: How did you solve the pre-medicare healthcare riddle?

Post by David Jay » Thu Jan 10, 2019 12:21 pm

I am retiring this month. I don't qualify for ACA subsidy in 2019 due to a large retirement payout.

I have selected a short term policy for 2019, with the primary intent of being "in-network" to reduce out of pocket costs. It is a $2M, 80/20 policy.

In the event of a major, long term medical condition, my state (Michigan) implemented the Medicaid expansion, so by living out of our Roth accounts we can qualify for that within 60 days. Again, this is just a "worst case" backup plan.

I intend to go with a ACA Bronze (high deductable) subsidized plan for 2020 and 2021 by keeping my MAGI under $64,000.
Last edited by David Jay on Thu Jan 10, 2019 1:47 pm, edited 1 time in total.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by goaties » Thu Jan 10, 2019 12:49 pm

I retired young and have been buying my own health insurance for 20 years, so I've been riding this dragon for a while. It is never easy, the insurance companies are always trying to maximize their profits, and you must strategize anew each year. Currently, the best play is to manage my income carefully so that I qualify for a large ACA subsidy. This, however, has put a real dent into my plans to do Roth conversions. In general, the answer to your question is to read about health insurance (kff.org is a great place to start), know what's available, and how to play whatever game is currently in place. And it seems like there always is one.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by scrabbler1 » Thu Jan 10, 2019 1:38 pm

I retired at 45 in late 2008 and bought an individual HI policy to start in 2009. This was before the ACA. Premiums rose quickly, by 20% for 2010 and 25% more for 2011, putting a strain on my budget. by then, the ACA had been passed but the exchanges would not begin until 2014.

I dumped the HI policy in mid-2011 and switched to a bare-bones, hospital-only policy to get through the rest of 2011, all of 2012, and all of 2013. I gladly bought a new, broader individual HI policy for 2014 and it cost me less than I was paying in 2009.

I had some health issues in 2015 so the decent policy I bought in 2014 kept my health problems from turning into a financial problem. I switched to a new IC in 2016 and my rate dropped a little.

But rate increases have been pretty big for 2018 and 2019 (~15%), after a few years of smaller ones. I am paying now about halfway between what I was paying in 2010 and 2011. Under current law, I still have another 10 years on the ACA before I can move to Medicare. HI is once again my #1 expense, surpassing housing.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by 2015 » Thu Jan 10, 2019 1:49 pm

Wish I had never used COBRA as I could have saved big time by using the ACA. First year using ACA, I manipulated my MAGI to amount to only $23K a year qualifying me for PTC's/subsidies using the Silver 87 plan. As a result, my healthcare plummeted to about $1K/year. For 2018 I will have to repay all PTC's as a result of LTCG's from a real estate sale, but this was a deliberate change in strategy. This year (2019), I am back to using roth conversions to manipulate income to approx $23K and my healthcare is back down to about $1K. Same for next year up until Medicare eligibility.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by wolf359 » Thu Jan 10, 2019 1:53 pm

scrabbler1 wrote:
Thu Jan 10, 2019 1:38 pm
I retired at 45 in late 2008 and bought an individual HI policy to start in 2009. This was before the ACA. Premiums rose quickly, by 20% for 2010 and 25% more for 2011, putting a strain on my budget. by then, the ACA had been passed but the exchanges would not begin until 2014.

I dumped the HI policy in mid-2011 and switched to a bare-bones, hospital-only policy to get through the rest of 2011, all of 2012, and all of 2013. I gladly bought a new, broader individual HI policy for 2014 and it cost me less than I was paying in 2009.

I had some health issues in 2015 so the decent policy I bought in 2014 kept my health problems from turning into a financial problem. I switched to a new IC in 2016 and my rate dropped a little.

But rate increases have been pretty big for 2018 and 2019 (~15%), after a few years of smaller ones. I am paying now about halfway between what I was paying in 2010 and 2011. Under current law, I still have another 10 years on the ACA before I can move to Medicare. HI is once again my #1 expense, surpassing housing.
Given your experiences, how much would you recommend a pre-medicare retiree budget for health insurance?

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Re: How did you solve the pre-medicare healthcare riddle?

Post by scrabbler1 » Thu Jan 10, 2019 2:22 pm

wolf359 wrote:
Thu Jan 10, 2019 1:53 pm
scrabbler1 wrote:
Thu Jan 10, 2019 1:38 pm
I retired at 45 in late 2008 and bought an individual HI policy to start in 2009. This was before the ACA. Premiums rose quickly, by 20% for 2010 and 25% more for 2011, putting a strain on my budget. by then, the ACA had been passed but the exchanges would not begin until 2014.

I dumped the HI policy in mid-2011 and switched to a bare-bones, hospital-only policy to get through the rest of 2011, all of 2012, and all of 2013. I gladly bought a new, broader individual HI policy for 2014 and it cost me less than I was paying in 2009.

I had some health issues in 2015 so the decent policy I bought in 2014 kept my health problems from turning into a financial problem. I switched to a new IC in 2016 and my rate dropped a little.

But rate increases have been pretty big for 2018 and 2019 (~15%), after a few years of smaller ones. I am paying now about halfway between what I was paying in 2010 and 2011. Under current law, I still have another 10 years on the ACA before I can move to Medicare. HI is once again my #1 expense, surpassing housing.
Given your experiences, how much would you recommend a pre-medicare retiree budget for health insurance?
Tough to answer. It depends on how old you are, how good your health is now (and if you have any expectations about your health), where you live, and what your income (MAGI) is. I have seen HI premiums range from under $100 a month to over $1,000 a month (one person).

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Re: How did you solve the pre-medicare healthcare riddle?

Post by Toons » Thu Jan 10, 2019 2:31 pm

Fortunately my spouse had retiree healthcare coverage,
I was able to participate in the plan until reaching the age of Medicare.
Spouse is able to participate in retiree plan until age of Medicare eligibility.
My supplemental Mutual of Omaha Plan G is 128 .00 monthly
Retiree plan is 465.00 monthly.
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telemark
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Re: How did you solve the pre-medicare healthcare riddle?

Post by telemark » Thu Jan 10, 2019 2:47 pm

Retired at 58 last April with a heart condition, did COBRA until the end of the year, now on a subsidized bronze ACA plan. I'm living on my taxable investments while doing yearly Roth conversions to keep my modified AGI in range. At some point I will run out of taxable money and start doing straight withdrawals from my traditional IRA. Self insured on vision and dental.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by Northern Flicker » Thu Jan 10, 2019 2:48 pm

Presently, you cannot be denied coverage under ACA. In at least some if not most states, bronze HSA plans are the most cost effective for most people, but it must be analyzed individually. Silver plans can be more cost effective if you qualify for cost-sharing reductions on top of a premium tax credit.
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quantAndHold
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Re: How did you solve the pre-medicare healthcare riddle?

Post by quantAndHold » Thu Jan 10, 2019 2:54 pm

WhyNotUs wrote:
Thu Jan 10, 2019 10:45 am
I live in an area that reportedly has highest health costs in US. Choices are PT job with access to buy group plan or pay $2,500 a month for plan with $6500 deduct and no vision or dental. Have to earn $50k just to pay for health insurance and deductible.

The system is broken.
I assume you make too much money to get a subsidized ACA plan? Situations like that are exactly what the subsidy is for.

Anyway, for me, 18 months of COBRA, then so far, a lightly subsidized ACA plan. I am fortunate to live in a state that has a functional health care exchange, so as my income approaches the cliff, the amount of my subsidy also approaches zero. Which means, so far, I don’t really worry too much about keeping my income under the cliff. But I can if I need to in the future, with careful tax placement of assets and withdrawals. Currently I’m going on faith that if the ACA falls apart, my state (CA) will step in to shore up the insurance market.

Cash is King
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Re: How did you solve the pre-medicare healthcare riddle?

Post by Cash is King » Thu Jan 10, 2019 3:11 pm

I retired at the end of February 2018 just a couple of months shy of turing 58. I choose to go on Cobra because I didn't qualify for ACA subsidy in 2018 and it was cheaper. My monthly COBRA last year was $400/mo for a HDP with MOOP of $2600 individual. It went up $16/mo for 2019.

The plan when COBRA ends later this year is to try and continue with an individual policy with my current insurance. There is no guarantee I will be successful but I'm lucky to be healthy and take no medication. If this plan does not work, I will go with a ACA plan if I can tweak my MAGI to under $64,000.

The plus is my wife was eligible to go on medicare last year so I just need to figure out something for myself.

Best,

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Re: How did you solve the pre-medicare healthcare riddle?

Post by DetroitRick » Thu Jan 10, 2019 3:35 pm

Retired at 50 and started with COBRA coverage from my employer (for those first 2 years). That employer insurance was comparatively mediocre, and we paid 50% of full premium cost while employed anyway. So our COBRA costs were basically double (+2%) what we had been used to (and very easy to plan for, I suppose).

The Blues in our state always offered mandatory-issue individual policies (for those not eligible for employer or COBRA coverage), so that was the next step in my original plan. At that point, our premium cost became slightly lower than under COBRA with similar, mediocre coverage. Next, we went with an ACA policy when that went into law. Better coverage, slightly higher cost before subsidy. It has required, and will continue to require, us to manage income in order to keep it affordable. Still, all-in-all it is working out well for us. Better than we planned for. But we are extremely lucky to be in a competitive local health insurance market where there are lots of companies to choose from and provider networks are not very limiting (we're now in an HMO). I'm well aware that many geographic areas do NOT reflect our relatively positive experience.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Thu Jan 10, 2019 3:52 pm

Retired early last year at age 51. On company paid COBRA through the end of 2018.
Now on ACA plan. Living off taxable accounts. With normal spending, income will be well below ACA cliff.
Still evaluating trade-off between doing Roth Conversions (which generates taxable income that is not needed for expenses) and doing nothing, which keeps income below ACA cliff to get subsidies.

Retirement plan includes 30k/yr for healthcare expenses increasing at higher rate than overall inflation. Even unsubsidized ACA plan will be a bit below that. If i opt for subsidy, it will be significantly below. Will "bank" the remainder as a contingency should ACA meet an early demise. Other hedges are to live in state(s) that are likely to, or already have, enacted ACA-like protections for access to health insurance in the event the federal program is rolled back. Some people advocate health sharing ministries. I am not a fan, but maybe that works for others.

Its all way too complicated. I wish we had a better system
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by btownguy » Thu Jan 10, 2019 4:31 pm

marcopolo wrote:
Thu Jan 10, 2019 3:52 pm
Retirement plan includes 30k/yr for healthcare expenses increasing at higher rate than overall inflation.
SMH

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Re: How did you solve the pre-medicare healthcare riddle?

Post by visualguy » Thu Jan 10, 2019 4:56 pm

Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by btownguy » Thu Jan 10, 2019 4:59 pm

visualguy wrote:
Thu Jan 10, 2019 4:56 pm
Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.
1.3M in taxable generates about $26K in dividends. With a $24K standard deduction, you're only looking at $2K in income...so far. You can then do some Roth conversions or Tax Gain Harvesting to fill up to the subsidy cliff which could be as high as 4x Federal Poverty Limit or $100,400.
Last edited by btownguy on Thu Jan 10, 2019 5:01 pm, edited 1 time in total.


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Re: How did you solve the pre-medicare healthcare riddle?

Post by dcabler » Thu Jan 10, 2019 5:07 pm

I know of at least one person taking the minimum required classes at the local community college to get the health insurance available to students. Even with the cost of tuition and a recent rate increase, it was a good deal for him and his family. Plus there's always room to learn something new.
Last edited by dcabler on Thu Jan 10, 2019 5:08 pm, edited 1 time in total.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Thu Jan 10, 2019 5:08 pm

visualguy wrote:
Thu Jan 10, 2019 4:56 pm
Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.
Check your math? How are you getting 1.3m putting you over cliff for a couple?

1.3m in taxable even yielding 3% (TSM yield is lower) is only 39k. The cliff for a couple is around 65k. That still leaves some of room to raise additional funds via selling in taxable and staying below cliff, and in 0% LTCG range.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Thu Jan 10, 2019 5:10 pm

btownguy wrote:
Thu Jan 10, 2019 4:59 pm
visualguy wrote:
Thu Jan 10, 2019 4:56 pm
Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.
1.3M in taxable generates about $26K in dividends. With a $24K standard deduction, you're only looking at $2K in income...so far. You can then do some Roth conversions or Tax Gain Harvesting to fill up to the subsidy cliff which could be as high as 4x Federal Poverty Limit or $100,400.
Your general idea is right. But, you can't subtract the $24k standard deduction when figuring amount for ACA cliff.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by Broken Man 1999 » Thu Jan 10, 2019 5:12 pm

My brother took a part-time job at Walmart. Worked out fine, except the store kept increasing his hours, so he had to threaten to quit a few times, they always rolled his hours back. Of course invariably the hours would creep up again.

He quit Wal-Mart when he became eligible for Medicare.

I would think a lot of seniors are just working for insurance benefits.

Not sure if Wal-Mart provides health insurance since ACA for part-timers or not today.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

btownguy
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Re: How did you solve the pre-medicare healthcare riddle?

Post by btownguy » Thu Jan 10, 2019 5:19 pm

marcopolo wrote:
Thu Jan 10, 2019 5:10 pm
Your general idea is right. But, you can't subtract the $24k standard deduction when figuring amount for ACA cliff.
Well you just ruined my day. :-).

Seriously, I was not aware of this. Bummer. This significantly reduces the amount of Roth conversions I was thinking I'd be able to do when the time came.

visualguy
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Re: How did you solve the pre-medicare healthcare riddle?

Post by visualguy » Thu Jan 10, 2019 5:28 pm

marcopolo wrote:
Thu Jan 10, 2019 5:08 pm
visualguy wrote:
Thu Jan 10, 2019 4:56 pm
Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.
Check your math? How are you getting 1.3m putting you over cliff for a couple?

1.3m in taxable even yielding 3% (TSM yield is lower) is only 39k. The cliff for a couple is around 65k. That still leaves some of room to raise additional funds via selling in taxable and staying below cliff, and in 0% LTCG range.
You're right - my math was wrong. It's more in the ballpark of $1.6M in taxable for a single, and $2.2M for a couple to lose subsidies completely based on interest/dividends. Still a problem if you have the kind of savings you need to be able to retire early, definitely in an HCOL area.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by quantAndHold » Thu Jan 10, 2019 5:33 pm

Even for a single person, 400% FPL is $48k. If you have anything less than about $2M in taxable, you should be able to stay under $48k if you’re careful with how it’s invested. Also, most people have a mix of taxable, 401k/tIRA, and Roth, and can choose where to place investments, and which account to draw income from.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by scrabbler1 » Thu Jan 10, 2019 5:40 pm

quantAndHold wrote:
Thu Jan 10, 2019 5:33 pm
Even for a single person, 400% FPL is $48k. If you have anything less than about $2M in taxable, you should be able to stay under $48k if you’re careful with how it’s invested. Also, most people have a mix of taxable, 401k/tIRA, and Roth, and can choose where to place investments, and which account to draw income from.
I have about $850k in taxable, but due to some unusually large cap gain distributions the last 2 years, I was pushed over the ACA subsidy cliff. I had room for about $13k in cap gains which was fine before 2017, but I blew passed that in 2017 and 2018, costing me a subsidy of about $500 in 2017 and twice that in 2018.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by arcticpineapplecorp. » Thu Jan 10, 2019 5:45 pm

AerialWombat wrote:
Thu Jan 10, 2019 10:59 am
My current solution is one of the health sharing ministries.
My friend also did this last year until she turned 65 towards the end of the year. It was a stop gap that worked for her. She found the ACA plans (even bronze) unaffordable (I know it's supposed to be capped at a certain percentage of her income, but she still felt it was too much). She is self employed.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Thu Jan 10, 2019 6:00 pm

visualguy wrote:
Thu Jan 10, 2019 5:28 pm
marcopolo wrote:
Thu Jan 10, 2019 5:08 pm
visualguy wrote:
Thu Jan 10, 2019 4:56 pm
Is there a description somewhere of these income management techniques that people keep talking about?

Roughly speaking, if you're single and have $1M+ in taxable, or married with $1.3M+ in taxable, you already exceed the max income just with dividends/interest. Are we talking about people who are borderline, and move some of the money to a cash account that doesn't pay interest or some such thing? I guess there's also IRA and HSA contributions that can be used to reduce the income somewhat. Again, seems to be relevant only if you don't exceed the cliff by much.

Early retirees who rely on savings need a lot more than these numbers for expenses at a 3.33% or so withdrawal rate. For example, you need $2.1M just to get $70K/year, which isn't actually enough in HCOL areas, and doesn't include savings for big-ticket items like LTC, home renovations, etc.
Check your math? How are you getting 1.3m putting you over cliff for a couple?

1.3m in taxable even yielding 3% (TSM yield is lower) is only 39k. The cliff for a couple is around 65k. That still leaves some of room to raise additional funds via selling in taxable and staying below cliff, and in 0% LTCG range.
You're right - my math was wrong. It's more in the ballpark of $1.6M in taxable for a single, and $2.2M for a couple to lose subsidies completely based on interest/dividends. Still a problem if you have the kind of savings you need to be able to retire early, definitely in an HCOL area.
We are around those numbers for a married couple, and it does not seem like it will be too difficult, but i guess is depends on your spending. In our case, we would have to go out of our way to generate income (Roth Conversions or Tax Gain Harvesting) to go over the cliff.

Having a paid off house can make a huge difference. It also helps a little to have a kid or two on the dole. Withdrawals from 529 plans don't count towards ACA MAGI (another fortuitous advantage of 529 plans). But, the extra dependent increases the cliff substantially. Investing in low yielding stock funds in taxable, and keeping fixed income funds in tax deferred is both tax efficient and keeps a lif on MAGI. Some money in Roths via backdoor and mega-backdoor contributions also go a long way.
Also helps to live in Hawaii or Alaska. :happy

We would have to do Roth conversions to even approach the cliff. Not sure it is worth while even below the ACA cliff, as the marginal rate on the conversions are about 22% (12% income tax, and 10% linear loss of subsidy below the cliff).
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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Thu Jan 10, 2019 6:04 pm

btownguy wrote:
Thu Jan 10, 2019 5:19 pm
marcopolo wrote:
Thu Jan 10, 2019 5:10 pm
Your general idea is right. But, you can't subtract the $24k standard deduction when figuring amount for ACA cliff.
Well you just ruined my day. :-).

Seriously, I was not aware of this. Bummer. This significantly reduces the amount of Roth conversions I was thinking I'd be able to do when the time came.
Have you done the math to see if Roth conversions make sense, even if going over the cliff is not an issue?
By my calculations, the conversions would be taxed at around 22% (12% fed rate, plus ~10% due to reduction of subsidy). Normally, converting at 12% would be an easy decision. I am still agonizing over whether it makes sense to do any at the effective 22% rate.
I hope i did not ruin your day even more :happy
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by MikeG62 » Thu Jan 10, 2019 6:28 pm

Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
BH:

I would really like to hear some real-life examples of anyone who retired or semi-retired PRE MEDICARE and how they funded healthcare.
This assumes you do not have a healthcare agreement with a prior employer.

The most obvious solution is one of two spouses taking a job FT or PT primarily for the health benefits.

Id really like to hear who has done this and how happy they were and any lessons they could teach me as I am in likely going to be in that 10-12 year no mans land re medicare if I retire or semi retire.
I provided a detailed response to your question in this thread:

viewtopic.php?f=2&t=261987&p=4177249&hi ... h#p4177249

Short answer is to build the cost into your budget, the same as any other expense line item (i.e., pay for it like any other expense). It should not necessarily require one spouse to work any more than covering any of your other expenses.
Real Knowledge Comes Only From Experience

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Re: How did you solve the pre-medicare healthcare riddle?

Post by Watty » Thu Jan 10, 2019 6:54 pm

I know a retired person that was 63 that has a preexisting condition and they were worried about their health insurance lasting until they turned 65 and could get on Medicare. He ended up getting a job that had health insurance for a few months until he was 63.5 then quit and will be on COBRA for 18 months until he is 65. Apparently there is a not time limit to qualify for COBRA so it sounds like if you can get on employer health insurance for one day you can get on COBRA, if your employer is under COBRA.

I have an ACA subsidy so I have to manage my income to keep the subsidy. I have a home equity line of credit that I used in the fall to keep well below the income cliff. I just paid it off and will use it again next fall if I need to. This will take some juggling since I will need to use a bigger loan each year but I should be able to get to 65 if the ACA does not change too much.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by hicabob » Thu Jan 10, 2019 7:09 pm

I've been paying the unsubsidized ACA rate for bronze HSA compatible - Kaiser , now $780/mo in California for 62yo. High deductible and expensive but lets me use an HSA so there's that.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by cashmoney » Thu Jan 10, 2019 7:24 pm

AerialWombat wrote:
Thu Jan 10, 2019 10:59 am
My current solution is one of the health sharing ministries.

Until you need to use it....

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Re: How did you solve the pre-medicare healthcare riddle?

Post by rnitz » Thu Jan 10, 2019 9:33 pm

We've been on private insurance purchased on the open market for over 20 years now. I worked at a small company that didn't provide insurance so we priced available plans and bought (at the time) a high deductible plan with a $2,500 deductible (Anthem blue cross). Pricing was on the range of $2K to $3K per year for a family (2 kids) but didn't have a lot of "extras". Luckily when the ACA came in we were grandfathered and they didn't cancel us. It has since doubled to $6K per year but this is much cheaper than the equivalent ACA plan (California) of about $16K per year so we're keeping it. I'm 61 (wife's on Medicare, kids still on the plan) so I'm just hoping we don't get canceled in the next four years.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by Duckie » Thu Jan 10, 2019 9:55 pm

Bloodsuckingleeches wrote:I would really like to hear some real-life examples of anyone who retired or semi-retired PRE MEDICARE and how they funded healthcare.
I retired at 50 over 12 years ago. I'm in California and have a standard Kaiser plan. My ex-employer currently subsidizes 10% which helps a little.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by AerialWombat » Thu Jan 10, 2019 11:36 pm

cashmoney wrote:
Thu Jan 10, 2019 7:24 pm
AerialWombat wrote:
Thu Jan 10, 2019 10:59 am
My current solution is one of the health sharing ministries.

Until you need to use it....
I have had to use it recently, and had no issues getting bills paid.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by White Coat Investor » Thu Jan 10, 2019 11:41 pm

Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
BH:

I would really like to hear some real-life examples of anyone who retired or semi-retired PRE MEDICARE and how they funded healthcare.
This assumes you do not have a healthcare agreement with a prior employer.

The most obvious solution is one of two spouses taking a job FT or PT primarily for the health benefits.

Id really like to hear who has done this and how happy they were and any lessons they could teach me as I am in likely going to be in that 10-12 year no mans land re medicare if I retire or semi retire.
Why is this such a mystery to people? I was told by my employer this week that since I'm not working enough hours, I'm not allowed to pay the full premium for the plan offered by the partnership. So I've got to go buy my own health insurance on the open market. So I'll call up my health insurance broker and buy a policy. Why wouldn't an early retiree do the same? Yes, it's expensive stuff, but so is food and travel and other stuff that pre-retirees buy. Yes, it tends to rise at a rate higher than the overall rate of inflation (especially for 4 years after PPACA passed), but so does other stuff like college tuition. You just plan for it like anything else. If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by AerialWombat » Thu Jan 10, 2019 11:45 pm

White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
+1.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by marcopolo » Fri Jan 11, 2019 12:28 am

White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
BH:

I would really like to hear some real-life examples of anyone who retired or semi-retired PRE MEDICARE and how they funded healthcare.
This assumes you do not have a healthcare agreement with a prior employer.

The most obvious solution is one of two spouses taking a job FT or PT primarily for the health benefits.

Id really like to hear who has done this and how happy they were and any lessons they could teach me as I am in likely going to be in that 10-12 year no mans land re medicare if I retire or semi retire.
Why is this such a mystery to people? I was told by my employer this week that since I'm not working enough hours, I'm not allowed to pay the full premium for the plan offered by the partnership. So I've got to go buy my own health insurance on the open market. So I'll call up my health insurance broker and buy a policy. Why wouldn't an early retiree do the same? Yes, it's expensive stuff, but so is food and travel and other stuff that pre-retirees buy. Yes, it tends to rise at a rate higher than the overall rate of inflation (especially for 4 years after PPACA passed), but so does other stuff like college tuition. You just plan for it like anything else. If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
As a physician, you surely know the answer to the question you asked.
Buying health insurance and/or healthcare is nothing like buying a commodity like food or travel.

I know pretty well what i am going to spend on food the next few years, and I can make different choices to control my costs.
How would i even venture a guess at what my health insurance might cost in a few years?

It is one thing to plan for the large expense, and high inflation as well. It is quite another to contemplate how to handle the scenario where we return to pre-ACA health insurance environment, in one's 50s, with pre-existing conditions. How does one plan for that? I guess i could try to just budget for paying for heath care directly. But, then if i followed your advice and called up a hospital/surgeon to find out how much a procedure would cost, what are the chances I could get a straight answer? Pretending like buying health insurance and/or healthcare is anything like buying other commodities like food and travel is pretty simplistic. If there was more transparency (in both pricing and outcomes) and a real competitive market, prices might come down some, at a minimum, consumers could make somewhat more informed decisions.

So, as i said up thread, I budget a big chunk of dollars, assume higher than inflation growth in that budget, stay flexible with my plans, and hope for the best from a public policy perspective. I try not to let the healthcare tail wag the living life dog.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How did you solve the pre-medicare healthcare riddle?

Post by visualguy » Fri Jan 11, 2019 5:05 am

Voluntary early retirement basically means voluntarily rolling the dice on health care expenses, unless you are truly wealthy. You can't really plan safely for something which is so uncertain and can change so radically, which is what we're dealing with in the US, unfortunately. You just decide to take the chance at some point because the alternative (continuing to work) is just not something you want to do anymore.

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