How Do Early Retirees Pay for Medical

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Church Lady
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Re: How Do Early Retirees Pay for Medical

Post by Church Lady »

I buy retiree health insurance from my former employer. First COBRA, then retiree health insurance. I'm guessing you don't have that option as you did not mention it.

Every year the retiree health insurance covers less, and costs more. If I weren't doing Roth conversions, I'd probably go for ACA and get a generous government subsidy.
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity.
NotWhoYouThink
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Re: How Do Early Retirees Pay for Medical

Post by NotWhoYouThink »

Wife has $300,000 pension.
Per year?
ThatsMyFamJam
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Re: How Do Early Retirees Pay for Medical

Post by ThatsMyFamJam »

If the Supreme Court were to rule that ACA is unconstitutional (arguments in Oct 2020, decision likely spring/summer 2021), ACA will likely not go away overnight or even in a few months, as by some estimates, 23 million are enrolled in it. Congress will have to discuss some measure to deal with transitioning those folks (many of us here) out and/or modifying the program to allow for some insurance.

In my state (CA), almost all of the subsidies are from the feds. Probably the case with other states with ACA. So states won't be able to fund the program.

So we could possibly lose ACA, late 2021 at the earliest.
DwightFrye
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Re: How Do Early Retirees Pay for Medical

Post by DwightFrye »

I was forced into early retirement last summer at age 64. For the first 6 months I paid out of pocket about $450 per month through COBRA. It was a total rip off with a $5000 deductible which I never came close to. I would have been better off going without insurance and just paying the couple of doctor visits and prescription costs that I incurred.

My unemployment ran out in December and I had no income and was living on savings only so in January I qualified under the Covered California Plan (part of the ACA) and my health care and dental insurance dropped from around $460 per month under COBRA to about $150 a month.

In June my Medicare & SS kicks in and I will be paying by deductions from my SS and about $430 per quarter for the Part B Medicare.
littleyellowball
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Re: How Do Early Retirees Pay for Medical

Post by littleyellowball »

I retired at age 55, and retirement was possibly only because of the ACA. I currently pay $710.00/month for an ACA bronze plan, deductible $6,850.00/year. That's a lot, and I'm in a "good" ACA state. Anxious about Supreme Court case and the ACA being tossed with no meaningful replacement. I'll be 65 in 2023 so if it is tossed I will probably only have to figure out one year, but what will the options be? People with good employer provided health plans dread Medicare because it will increase their health care costs. In my case, Medicare will reduce my health care costs and increase my coverage.
littleyellowball
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Re: How Do Early Retirees Pay for Medical

Post by littleyellowball »

I would have been better off going without insurance and just paying the couple of doctor visits and prescription costs that I incurred.
Yes, but you only know that in hindsight. A catastrophic accident or illness can happen at any time and can wipe you out your entire life's savings if you don't have insurance.
TheDDC
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Re: How Do Early Retirees Pay for Medical

Post by TheDDC »

SevenBridgesRoad wrote: Thu May 07, 2020 12:07 am
WhyNotUs wrote: Wed May 06, 2020 11:15 pm
SevenBridgesRoad wrote: Wed May 06, 2020 8:33 pm Only slightly "early" at age 61. ACA, and we have a good insurance plan here unlike some states.

Planned ahead so that we are (mostly) living off cash from taxable account until age 65 (enough dividends in taxable to avoid the lower threshold, which would mean Medicaid). We manage our Modified Adjusted Gross Income (MAGI) to achieve maximum Advance Premium Tax Credit. Brings a $2,100 a month premium (married couple) down to $2/month last year and slightly more this year at $3/month. Subsidy is based on taxable income (MAGI). Working well for us.
Glad it is, since I am paying for it through my taxes I want to make sure that you are satisfied.
Totally satisfied. I understand your criticism, but if you are trying to make me feel guilty, it won't work. All tax deductions and credits are paid for by others. A large percentage of the threads and conversations on Bogleheads are about legally avoiding taxes by taking full advantage of the laws as they are written. You may have never taken a tax break for mortgage interest, or never have funded a tax-advantaged IRA or 401K or HSA, or any other legal tax strategy. If so, you may cast the first stone.
Bravo, sir. Well done.

I find most of us on BH have had some element of “tax advantage” or have benefited indirectly from tax, monetary, fiscal policy in some way to explain at least a small portion of accumulation. The same goes for how that accumulation gets spent later in life, and by how much. Personally I plan to avoid IRMAA as best as possible by following the same approach. It would be stupid not to.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex
desiderium
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Re: How Do Early Retirees Pay for Medical

Post by desiderium »

SevenBridgesRoad wrote: Thu May 07, 2020 12:07 am
WhyNotUs wrote: Wed May 06, 2020 11:15 pm
SevenBridgesRoad wrote: Wed May 06, 2020 8:33 pm Only slightly "early" at age 61. ACA, and we have a good insurance plan here unlike some states.

Planned ahead so that we are (mostly) living off cash from taxable account until age 65 (enough dividends in taxable to avoid the lower threshold, which would mean Medicaid). We manage our Modified Adjusted Gross Income (MAGI) to achieve maximum Advance Premium Tax Credit. Brings a $2,100 a month premium (married couple) down to $2/month last year and slightly more this year at $3/month. Subsidy is based on taxable income (MAGI). Working well for us.
Glad it is, since I am paying for it through my taxes I want to make sure that you are satisfied.
Totally satisfied. I understand your criticism, but if you are trying to make me feel guilty, it won't work. All tax deductions and credits are paid for by others. A large percentage of the threads and conversations on Bogleheads are about legally avoiding taxes by taking full advantage of the laws as they are written. You may have never taken a tax break for mortgage interest, or never have funded a tax-advantaged IRA or 401K or HSA, or any other legal tax strategy. If so, you may cast the first stone.
This is an interesting debate. As a high bracket tax payer, I too get uncomfortable sometimes seeing all the efforts by those with well-funded retirements manage their income in order to qualify for ACA. On the other hand, I get that the system is designed with certain rules, and within those rules each individual naturally works to lower his or her cost. Nobody seems to be uncomfortable with ordinary tax deductions. Like with social security, current taxpayers pay for current ACA beneficiaries, so after a career paying higher income taxes taking some of the benefits in early retirement seems like part of the social contract. In health care, it is even more complicated. As someone that pays a substantial fraction of the costs for my employer-sponsored health plan, the ACA subsidies decrease the uninsured population and that decreases my premiums.
DesertMan
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Re: How Do Early Retirees Pay for Medical

Post by DesertMan »

Robert20 wrote: Thu May 07, 2020 8:05 am
Rudedog wrote: Wed May 06, 2020 5:19 pm I pay $ 1,050 per month to BCBS, $ 6,750 out of pocket limit for deductible and co-insurance. My wife pays $ 750 per month to BCBS, $ 4,700 out of pocket limit. It is by far our highest expense. I pay it myself, but we CAN itemize deductions so we get a bit of a write-off on our Federal taxes.
OMG. its so costly to retire in USA!.. For Husband and wife, it costs $2500 just for insurance in retire life?
Until you are age 65, then you get Medicare which is supposed to cover 80% of your expenses.

If you early retire before then, you can get Affordable Care Act (aka Obamacare) coverage which is similar to the system in Switzerland where you get a government subsidy to buy insurance. The amount of your subsidy depends on your annual income (more you make, less you get). However income from selling investments is only counted as income to the extent that you have a profit. Early retirees can time their sales to increase the non profit portion (cost basis) when they are still working and then the effect is that almost none of the investment sales will be considered income for ACA subsidy purposes.
DesertMan
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Re: How Do Early Retirees Pay for Medical

Post by DesertMan »

desiderium wrote: Thu May 07, 2020 10:22 am This is an interesting debate. As a high bracket tax payer, I too get uncomfortable sometimes seeing all the efforts by those with well-funded retirements manage their income in order to qualify for ACA.
You might want to consider doing the same thing. Sounds like you work for a great company but we are going through a recession and it doesn't hurt to have a backup plan in case things go south.
quantAndHold
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Re: How Do Early Retirees Pay for Medical

Post by quantAndHold »

geerhardusvos wrote: Thu May 07, 2020 1:09 am
AerialWombat wrote: Wed May 06, 2020 8:45 pm Health sharing ministry.
How much does it cost per month for a family of five?
It could be infinite if you get the wrong illness.

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delamer
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Re: How Do Early Retirees Pay for Medical

Post by delamer »

DesertMan wrote: Thu May 07, 2020 3:47 pm
Robert20 wrote: Thu May 07, 2020 8:05 am
Rudedog wrote: Wed May 06, 2020 5:19 pm I pay $ 1,050 per month to BCBS, $ 6,750 out of pocket limit for deductible and co-insurance. My wife pays $ 750 per month to BCBS, $ 4,700 out of pocket limit. It is by far our highest expense. I pay it myself, but we CAN itemize deductions so we get a bit of a write-off on our Federal taxes.
OMG. its so costly to retire in USA!.. For Husband and wife, it costs $2500 just for insurance in retire life?
Until you are age 65, then you get Medicare which is supposed to cover 80% of your expenses.

If you early retire before then, you can get Affordable Care Act (aka Obamacare) coverage which is similar to the system in Switzerland where you get a government subsidy to buy insurance. The amount of your subsidy depends on your annual income (more you make, less you get). However income from selling investments is only counted as income to the extent that you have a profit. Early retirees can time their sales to increase the non profit portion (cost basis) when they are still working and then the effect is that almost none of the investment sales will be considered income for ACA subsidy purposes.
However, if the investments that you are selling are in a tax-deferred account then the full amount withdrawn counts as income.
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Kenkat
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Re: How Do Early Retirees Pay for Medical

Post by Kenkat »

TheDDC wrote: Thu May 07, 2020 10:16 am
SevenBridgesRoad wrote: Thu May 07, 2020 12:07 am
WhyNotUs wrote: Wed May 06, 2020 11:15 pm
SevenBridgesRoad wrote: Wed May 06, 2020 8:33 pm Only slightly "early" at age 61. ACA, and we have a good insurance plan here unlike some states.

Planned ahead so that we are (mostly) living off cash from taxable account until age 65 (enough dividends in taxable to avoid the lower threshold, which would mean Medicaid). We manage our Modified Adjusted Gross Income (MAGI) to achieve maximum Advance Premium Tax Credit. Brings a $2,100 a month premium (married couple) down to $2/month last year and slightly more this year at $3/month. Subsidy is based on taxable income (MAGI). Working well for us.
Glad it is, since I am paying for it through my taxes I want to make sure that you are satisfied.
Totally satisfied. I understand your criticism, but if you are trying to make me feel guilty, it won't work. All tax deductions and credits are paid for by others. A large percentage of the threads and conversations on Bogleheads are about legally avoiding taxes by taking full advantage of the laws as they are written. You may have never taken a tax break for mortgage interest, or never have funded a tax-advantaged IRA or 401K or HSA, or any other legal tax strategy. If so, you may cast the first stone.
Bravo, sir. Well done.

I find most of us on BH have had some element of “tax advantage” or have benefited indirectly from tax, monetary, fiscal policy in some way to explain at least a small portion of accumulation. The same goes for how that accumulation gets spent later in life, and by how much. Personally I plan to avoid IRMAA as best as possible by following the same approach. It would be stupid not to.

-TheDDC
To paraphrase - we are all living in glass houses so everybody put down the rocks...
marcopolo
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Re: How Do Early Retirees Pay for Medical

Post by marcopolo »

visualguy wrote: Wed May 06, 2020 7:30 pm
LilyFleur wrote: Wed May 06, 2020 7:18 pm The Supreme is slated to hear a case that will determine the future of Obamacare, in October 2020.
The risk that it will be eliminated then or some other time in the future makes planning for early retirement very problematic, unfortunately.
Yup, living is risky. That has not deterred many from doing all sorts of things that carry some risk. What guarantee do you have that you will have a job next year, or your health? Yet, you plan to live your life anyway, right?
Once in a while you get shown the light, in the strangest of places if you look at it right.
visualguy
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Re: How Do Early Retirees Pay for Medical

Post by visualguy »

marcopolo wrote: Thu May 07, 2020 7:33 pm
visualguy wrote: Wed May 06, 2020 7:30 pm
LilyFleur wrote: Wed May 06, 2020 7:18 pm The Supreme is slated to hear a case that will determine the future of Obamacare, in October 2020.
The risk that it will be eliminated then or some other time in the future makes planning for early retirement very problematic, unfortunately.
Yup, living is risky. That has not deterred many from doing all sorts of things that carry some risk. What guarantee do you have that you will have a job next year, or your health? Yet, you plan to live your life anyway, right?
Planning for losing your job is much easier than planning for losing health insurance. You can assess the financial impact of losing X years of employment. With health care, who knows - the sky is the limit in the US for the financial damage you may sustain if you are unable to get proper insurance, unfortunately, so the ACA is critical for many early retirees and their families.

Serious medical problems in your 40s/50s/early 60s aren't all that rare. For example, half of women who develop breast cancer are 62 or younger, and 1 in 16 women get it at those ages. That's just one disease. The survival of the ACA is a big consideration when evaluating pulling the trigger voluntarily on early retirement.
JonnyB
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Re: How Do Early Retirees Pay for Medical

Post by JonnyB »

Tool-Time wrote: Wed May 06, 2020 5:08 pm Looks like about $1000/month. Wow!
Pull out your most recent 2019 W-2 Form and look at Box 12, Code DD.

Come back here and tell us what you number you have. That's the total cost of the employer plan you are trying to replace. You might be surprised.

Note that an employer plan is typically lower cost than the equivalent individual plan because your cost is averaged with a bunch of people much younger than you.
FireHorse
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Re: How Do Early Retirees Pay for Medical

Post by FireHorse »

We use ACA.
marcopolo
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Re: How Do Early Retirees Pay for Medical

Post by marcopolo »

visualguy wrote: Thu May 07, 2020 8:15 pm
marcopolo wrote: Thu May 07, 2020 7:33 pm
visualguy wrote: Wed May 06, 2020 7:30 pm
LilyFleur wrote: Wed May 06, 2020 7:18 pm The Supreme is slated to hear a case that will determine the future of Obamacare, in October 2020.
The risk that it will be eliminated then or some other time in the future makes planning for early retirement very problematic, unfortunately.
Yup, living is risky. That has not deterred many from doing all sorts of things that carry some risk. What guarantee do you have that you will have a job next year, or your health? Yet, you plan to live your life anyway, right?
Planning for losing your job is much easier than planning for losing health insurance. You can assess the financial impact of losing X years of employment. With health care, who knows - the sky is the limit in the US for the financial damage you may sustain if you are unable to get proper insurance, unfortunately, so the ACA is critical for many early retirees and their families.

Serious medical problems in your 40s/50s/early 60s aren't all that rare. For example, half of women who develop breast cancer are 62 or younger, and 1 in 16 women get it at those ages. That's just one disease. The survival of the ACA is a big consideration when evaluating pulling the trigger voluntarily on early retirement.
Just like in your working years one might need to adapt. ACA may go away. That would require one to find alternate health insurance. There are various ways to do that, including getting another job, just like you would have to do if you lost your current job (i acknowledge it can be harder after a gap).

Alternatively, you could retire in or move to a state (Just like you might have to move if you lost your job) that has more friendly view of supporting broad access to health insurance. MA had Romney Care, I believe NJ and NY had guarantee issue, HI recently passed regulation largely mimicking ACA protections, etc.

One may end up paying more for health insurance if ACA goes away (we have budgeted a healthy sum for that), just like you might end up with a lower income if you lose your job.

So, yes there is risk, you do need to have alternate plans, but i see no reason to be a deer in the headlights over it.

Now, if one has no desire to retire (early or otherwise), and thinks the only meaningful and fulfilling thing anyone can do their life is to keep working, then one can come up with all sorts of scary reasons to not retire.
Once in a while you get shown the light, in the strangest of places if you look at it right.
1130Super
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Re: How Do Early Retirees Pay for Medical

Post by 1130Super »

My mom retired at 57 and is now using ACA, you can qualify if you can keep your income low by withdrawing Roth contributions and sell taxable lots with low capital gains
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Re: How Do Early Retirees Pay for Medical

Post by 1130Super »

DesertMan wrote: Thu May 07, 2020 3:54 pm
desiderium wrote: Thu May 07, 2020 10:22 am This is an interesting debate. As a high bracket tax payer, I too get uncomfortable sometimes seeing all the efforts by those with well-funded retirements manage their income in order to qualify for ACA.
You might want to consider doing the same thing. Sounds like you work for a great company but we are going through a recession and it doesn't hurt to have a backup plan in case things go south.

And it can debatable to tax gain harvest every year in your taxable to make sure when you retire early most of what you take out isn’t income, I seen another thread how a couple was able to withdraw over 200k a year and qualify for ACA
Last edited by 1130Super on Thu May 07, 2020 9:59 pm, edited 1 time in total.
AK62
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Re: How Do Early Retirees Pay for Medical

Post by AK62 »

I am 58 this year and retiring at 60. My employer provides a retirement benefit to carry my insurance (blue cross blue shield) up to age 65 when Medicare kicks in. I plan to retire in two years and utilize that benefit.
marcopolo
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Re: How Do Early Retirees Pay for Medical

Post by marcopolo »

1130Super wrote: Thu May 07, 2020 9:50 pm My mom retired at 57 and is now using ACA, you can qualify if you can keep your income low by withdrawing Roth contributions and sell taxable lots with low capital gains
You do NOT need to keep your income low to qualify for ACA insurance.
You only need to have income below some threshold to get subsidies to help pay for some of the insurance costs.
Once in a while you get shown the light, in the strangest of places if you look at it right.
BajaBowl
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Re: How Do Early Retirees Pay for Medical

Post by BajaBowl »

We've been on ACA since it started. I keep our income around $53K & we pay about $100/mo. for $6350 deductible bronze plan. Changes & is adjusted every year as your income changes. As far as 'taking advantage', the ACA website coaches you on keeping your income low for the express purpose of getting a subsidy. I worked for 33 years, retired/forced out at 54 (Jan2009) & paid $1,000/mo for several years for family of four health insurance. I've been fortunate enough to have never taken a dime of unemployment & I take offense at ANYONE giving me shit about getting a subsidy.
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Re: How Do Early Retirees Pay for Medical

Post by 6miths »

O Canada!
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kmurp
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Re: How Do Early Retirees Pay for Medical

Post by kmurp »

I have postponed my retirement at the end of this year due to the ACA court case. I’m less worried about cost than I am about us not being able to purchase Heath insurance at all due to pre-existing conditions. Living in New York State, I wonder if the guaranteed insurability in New York would continue due to New York law?
randomguy
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Re: How Do Early Retirees Pay for Medical

Post by randomguy »

BajaBowl wrote: Thu May 07, 2020 10:30 pm I've been fortunate enough to have never taken a dime of unemployment & I take offense at ANYONE giving me shit about getting a subsidy.
The question is do you (more of a general you than a specific you) give people a hard time about their subsidies from the government? It is easy to justify your own (i.e. how many people with employer provided health care complain about the thousands of dollars of subsidies they are getting from the federal government? As a top 5% or so earner, I got about 5k last year between the feds and state. I didn't complain) but other peoples bothers some people. It is real easy to get into the mindset of yours is earned (I paid taxes for years) while their's isn't (freeloaders, they can afford to pay,...). It is basic human nature.

At a high level I worry more about subsidies going away than I do about policies not being issued. Now without subsidies the policies could become pretty unaffordable (i.e. 1500/month for 1 person today. Imagine what 20 years of 3% real growth does). If ACA goes away, your situation will become really state specific. Massachusetts might be my retirement location for a couple of years....
Rich Mountain
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Re: How Do Early Retirees Pay for Medical

Post by Rich Mountain »

The ACA subsidy requires you to earn a minimum to qualify. So... say the minimum income for a 2020 subsidy was $17k. Your estimated income from a combination of a side business (self-employed), a part-time job, and investment income had qualified you, putting you in that minimum range for a subsidy, and you received a subsidy and got your policy in place. But then COVID-19 hits, and those estimated income numbers fall, putting you below the minimum. What then happens to your subsidy for 2020? How does the ACA and IRS treat this scenario, which will be common this year? Insights?
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Re: How Do Early Retirees Pay for Medical

Post by LadyGeek »

COBRA for the next 17 months.* As noted in: Re: How Is Your Job Being Impacted By The Current Crisis?
Employer premiums are based on the average age of the workforce. As an "older person", it will be cheaper to use the employer's insurance because the premiums will be lower than the marketplace. He sent me a rate sheet which breaks everything down by age. Comparing my age to someone at 35, I'd be paying double (I'm not twice the age... that's the premium cost difference :) ). COBRA costs will be my cost share + employer's cost share + 2% administrative fee.
I'm paying about 60% of the going rate for medical. COBRA includes all medical benefits supplied by your employer, so I'm actually paying for medical, dental, and vision.

Retiree insurance is priced appropriately for your age group.

* COBRA coverage is 18 months, but I'm in my 2nd month of coverage.
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White Coat Investor
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Re: How Do Early Retirees Pay for Medical

Post by White Coat Investor »

Tool-Time wrote: Wed May 06, 2020 4:56 pm 62 and ready to retire due to minor health reasons. Wife (61)will still work for a year. $2M in 401k, stocks and IRA. Wife has $300,000 pension. No kids. How do early retirees pay for their medical?
I did a recent blog post about this. Lots of variation-ACA, just buy it from a broker, employer provided as part of pension, health sharing ministries etc.
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Barkingsparrow
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Re: How Do Early Retirees Pay for Medical

Post by Barkingsparrow »

kmurp wrote: Fri May 08, 2020 7:34 am I have postponed my retirement at the end of this year due to the ACA court case. I’m less worried about cost than I am about us not being able to purchase Heath insurance at all due to pre-existing conditions. Living in New York State, I wonder if the guaranteed insurability in New York would continue due to New York law?
I'm in the same boat. I was hoping to retire this year at 62, but with the uncertainty around health care, I probably will stick it out. It's frustrating to see retirement on the horizon and having to delay it due to the healthcare quandary.
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vitaflo
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Re: How Do Early Retirees Pay for Medical

Post by vitaflo »

JonnyB wrote: Thu May 07, 2020 8:17 pm
Tool-Time wrote: Wed May 06, 2020 5:08 pm Looks like about $1000/month. Wow!
Pull out your most recent 2019 W-2 Form and look at Box 12, Code DD.

Come back here and tell us what you number you have. That's the total cost of the employer plan you are trying to replace. You might be surprised.

Note that an employer plan is typically lower cost than the equivalent individual plan because your cost is averaged with a bunch of people much younger than you.
To add to this, you're paying for that number whether you know it or not. Someone may only be paying $100 in premiums out of their paycheck, but their employer is picking up the other $900. That's $900 you're not getting in your salary. The cost of benefits comes from somewhere and comes in the form of reduced pay. It's why contractors tend to get paid more per hour because they do not receive benefits.
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Re: How Do Early Retirees Pay for Medical

Post by JonnyB »

Biggest risk, and one that cannot be ignored is the possibility of the ACA being eliminated this year or next. The Justice Department is not defending the law. It is arguing on the side of the plaintiffs for elimination of the ACA. There is no way of knowing how this will turn out.

I doubt a lot of people have experience with the individual insurance market pre-ACA. It wasn't pretty. In fact, it was down right ugly. You could find yourself uninsurable because of pre-existing conditions. You could have your insurance cancelled if you incurred an expensive illness. You could find yourself in an extremely expensive high-risk pool. You could be personally liable for hundreds of thousands or a million dollars in health care debt. Or you would simply have to do without care if you couldn't afford expensive treatments out of pocket.

If you are considering retiring this year, you might delay until the court case is decided unless you have some other reliable backup insurance plan until Medicare at age 65.
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Re: How Do Early Retirees Pay for Medical

Post by BajaBowl »

randomguy wrote: Fri May 08, 2020 8:24 am The question is do you (more of a general you than a specific you) give people a hard time about their subsidies from the government? It is easy to justify your own (i.e. how many people with employer provided health care complain about the thousands of dollars of subsidies they are getting from the federal government? As a top 5% or so earner, I got about 5k last year between the feds and state. I didn't complain) but other peoples bothers some people. It is real easy to get into the mindset of yours is earned (I paid taxes for years) while their's isn't (freeloaders, they can afford to pay,...). It is basic human nature.
[ quote fixed by admin LadyGeek]

[Language and personal comment removed by Mod Misenplace] I never made more than $82K/yr. What needs to be addressed is.....how the heck do people making $30K or whatever come up with $1400/mo premiums & still live with a $6350 deductible? The INTENT is to make ins 'affordable'. It's still not, but it's better than the other available options. I certainly didn't LOBBY my case. Wow.
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MP123
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Re: How Do Early Retirees Pay for Medical

Post by MP123 »

JonnyB wrote: Fri May 08, 2020 10:50 am
I doubt a lot of people have experience with the individual insurance market pre-ACA. It wasn't pretty. In fact, it was down right ugly. You could find yourself uninsurable because of pre-existing conditions. You could have your insurance cancelled if you incurred an expensive illness. You could find yourself in an extremely expensive high-risk pool. You could be personally liable for hundreds of thousands or a million dollars in health care debt. Or you would simply have to do without care if you couldn't afford expensive treatments out of pocket.
Yes, those were the bad old days of individual health insurance for sure.

If you came down with an expensive diagnosis the insurance company could say that you didn't disclose it (or anything that might lead to it, or indicate you had it) in your application, and deny coverage retroactively. There were companies whose whole line of business was doing this for insurers on an outsourced basis, getting a cut of whatever they could find reason to reject.

Guaranteed issue with no pre-existing exclusion is a vast improvement for those in the individual market, even without subsidies.
Spirit Rider
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Re: How Do Early Retirees Pay for Medical

Post by Spirit Rider »

Rich Mountain wrote: Fri May 08, 2020 8:28 am The ACA subsidy requires you to earn a minimum to qualify. So... say the minimum income for a 2020 subsidy was $17k. Your estimated income from a combination of a side business (self-employed), a part-time job, and investment income had qualified you, putting you in that minimum range for a subsidy, and you received a subsidy and got your policy in place. But then COVID-19 hits, and those estimated income numbers fall, putting you below the minimum. What then happens to your subsidy for 2020? How does the ACA and IRS treat this scenario, which will be common this year? Insights?
If you fall below the minimum ACA MAGI, which is 100%/138% of the ACA FPL depending on the No/Yes of Medicaid expansion in your state. Then you will have to pay back 100% of any premium subsidy, but not any cost sharing subsidy you received

However, you can increase your ACA MAGI with any combination of increased; capital gains, distributions from tax deferred vehicles (retirement accounts, Savings Bonds, insurance products, etc...), Roth conversions, etc...

Just like you can decrease your ACA MAGI by tax-free qualified distributions from Roth IRA accounts, HSA accounts and capital gains offset from capital loss carryover from TLH.
SevenBridgesRoad
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Re: How Do Early Retirees Pay for Medical

Post by SevenBridgesRoad »

White Coat Investor wrote: Fri May 08, 2020 9:27 am
Tool-Time wrote: Wed May 06, 2020 4:56 pm 62 and ready to retire due to minor health reasons. Wife (61)will still work for a year. $2M in 401k, stocks and IRA. Wife has $300,000 pension. No kids. How do early retirees pay for their medical?
I did a recent blog post about this. Lots of variation-ACA, just buy it from a broker, employer provided as part of pension, health sharing ministries etc.
Yes, excellent comprehensive blog post at WCI. Well done.

https://www.whitecoatinvestor.com/healt ... etirement/
Spirit Rider
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Re: How Do Early Retirees Pay for Medical

Post by Spirit Rider »

I think discussions of a future unknown SCOTUS decision and the unknown future health insurance landscape are skirting close to forum rules. Nobody knows the results.
michaeljc70
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Re: How Do Early Retirees Pay for Medical

Post by michaeljc70 »

AerialWombat wrote: Thu May 07, 2020 8:08 am
willthrill81 wrote: Thu May 07, 2020 12:09 am
AerialWombat wrote: Wed May 06, 2020 8:45 pm Health sharing ministry.
That's the route we would very likely take. It's extremely important for those considering this option to be aware of the limitations and exclusions, but it can be far more cost effective.
Yes, this is very true. Even other members often fail to take the time to really learn what it is and how to use it. But I think people with real health insurance have the same challenge sometimes.

I view it as a major medical plan only. Broken leg coverage, as I call it. It’s great for me because I’ve already made certain decisions about end of life care and how I will address terminal illness.

It would not be appropriate coverage for folks that might face seven figure cancer treatment, for example.
How do you determine that you won't get cancer, have a heart attack or something else very costly?
Last edited by michaeljc70 on Fri May 08, 2020 11:39 am, edited 1 time in total.
randomguy
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Re: How Do Early Retirees Pay for Medical

Post by randomguy »

BajaBowl wrote: Fri May 08, 2020 11:01 am
randomguy wrote: Fri May 08, 2020 8:24 am The question is do you (more of a general you than a specific you) give people a hard time about their subsidies from the government? It is easy to justify your own (i.e. how many people with employer provided health care complain about the thousands of dollars of subsidies they are getting from the federal government? As a top 5% or so earner, I got about 5k last year between the feds and state. I didn't complain) but other peoples bothers some people. It is real easy to get into the mindset of yours is earned (I paid taxes for years) while their's isn't (freeloaders, they can afford to pay,...). It is basic human nature.
[ quote fixed by admin LadyGeek]

[Language and personal comment removed by Mod Misenplace] I never made more than $82K/yr. What needs to be addressed is.....how the heck do people making $30K or whatever come up with $1400/mo premiums & still live with a $6350 deductible? The INTENT is to make ins 'affordable'. It's still not, but it's better than the other available options. I certainly didn't LOBBY my case. Wow.
[ quote fixed by admin LadyGeek]

I can assure you that I didn't lobby to make health insurance deductible (i.e. a couple decades before I was born) or for the ACA. As I said I am betting few of the people criticizing the people who work to qualify for ACA subsidies are passing up the government healthcare subsidies they qualify for. It is always mine subsidies are good/earned and yours are bad/unearned attitude. Want to argue subsidizing high earners health care is stupid? I am not going to argue. But it is the system we have had for like 80 years now.
michaeljc70
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Re: How Do Early Retirees Pay for Medical

Post by michaeljc70 »

ACA. We are in our 40s and the plan (which is mediocre, $7200 deductible each) is $730/mo in MCOL area so I don't think $1000 for people in their 60s is crazy. We did qualify for a subsidy one year so far. Other years we didn't.
randomguy
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Re: How Do Early Retirees Pay for Medical

Post by randomguy »

michaeljc70 wrote: Fri May 08, 2020 11:38 am
AerialWombat wrote: Thu May 07, 2020 8:08 am
willthrill81 wrote: Thu May 07, 2020 12:09 am
AerialWombat wrote: Wed May 06, 2020 8:45 pm Health sharing ministry.
That's the route we would very likely take. It's extremely important for those considering this option to be aware of the limitations and exclusions, but it can be far more cost effective.
Yes, this is very true. Even other members often fail to take the time to really learn what it is and how to use it. But I think people with real health insurance have the same challenge sometimes.

I view it as a major medical plan only. Broken leg coverage, as I call it. It’s great for me because I’ve already made certain decisions about end of life care and how I will address terminal illness.

It would not be appropriate coverage for folks that might face seven figure cancer treatment, for example.
How do you determine that you won't get cancer, have a heart attack, etc?
Well with cancer, you generate a qualifying event and get real health insurance. Same thing if you develop some life long disease and they refuse to cover your 100k/year drug. I will let you decide if this is a moral approach or not. And figuring out the risk that you 50k health sharing bill will not be covered (i.e. it is a very lightly regulated industry) is also impossible to say. I
michaeljc70
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Re: How Do Early Retirees Pay for Medical

Post by michaeljc70 »

randomguy wrote: Fri May 08, 2020 11:52 am
michaeljc70 wrote: Fri May 08, 2020 11:38 am
AerialWombat wrote: Thu May 07, 2020 8:08 am
willthrill81 wrote: Thu May 07, 2020 12:09 am
AerialWombat wrote: Wed May 06, 2020 8:45 pm Health sharing ministry.
That's the route we would very likely take. It's extremely important for those considering this option to be aware of the limitations and exclusions, but it can be far more cost effective.
Yes, this is very true. Even other members often fail to take the time to really learn what it is and how to use it. But I think people with real health insurance have the same challenge sometimes.

I view it as a major medical plan only. Broken leg coverage, as I call it. It’s great for me because I’ve already made certain decisions about end of life care and how I will address terminal illness.

It would not be appropriate coverage for folks that might face seven figure cancer treatment, for example.
How do you determine that you won't get cancer, have a heart attack, etc?
Well with cancer, you generate a qualifying event and get real health insurance. Same thing if you develop some life long disease and they refuse to cover your 100k/year drug. I will let you decide if this is a moral approach or not. And figuring out the risk that you 50k health sharing bill will not be covered (i.e. it is a very lightly regulated industry) is also impossible to say. I
That might be workable in some situations, but it is hard to generate a qualifying event from the back of an ambulance.

There have been numerous articles and lawsuits regarding sharing ministries not paying. $50k....okay...but what about $500k? I have had family members have hospital bills that high (and they lived to tell about it). If you know the risks and are willing to take them, then that is fine.
Bir48die
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Re: How Do Early Retirees Pay for Medical

Post by Bir48die »

Did Cobra for the 18 months following retirement. Awesome coverage at $550/mth.

Then did Kaiser for two months after that ran out $690/mth
Two months later in Jan did Kaiser at $840/mth
Year following dropped down in coverage to keep around $870/mth
This year until I hit Medicare in August I'm at $969/mth
These are with $3,500 per year deductibles

I'm not of the gang that can go ACA. No subsidy. I am drooling now at two more months then will save about $10k per year.
Rich Mountain
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Re: How Do Early Retirees Pay for Medical

Post by Rich Mountain »

Spirit Rider wrote: Fri May 08, 2020 11:28 am
Rich Mountain wrote: Fri May 08, 2020 8:28 am The ACA subsidy requires you to earn a minimum to qualify. So... say the minimum income for a 2020 subsidy was $17k. Your estimated income from a combination of a side business (self-employed), a part-time job, and investment income had qualified you, putting you in that minimum range for a subsidy, and you received a subsidy and got your policy in place. But then COVID-19 hits, and those estimated income numbers fall, putting you below the minimum. What then happens to your subsidy for 2020? How does the ACA and IRS treat this scenario, which will be common this year? Insights?
If you fall below the minimum ACA MAGI, which is 100%/138% of the ACA FPL depending on the No/Yes of Medicaid expansion in your state. Then you will have to pay back 100% of any premium subsidy, but not any cost sharing subsidy you received

However, you can increase your ACA MAGI with any combination of increased; capital gains, distributions from tax deferred vehicles (retirement accounts, Savings Bonds, insurance products, etc...), Roth conversions, etc...

Just like you can decrease your ACA MAGI by tax-free qualified distributions from Roth IRA accounts, HSA accounts and capital gains offset from capital loss carryover from TLH.
Gven the objective of the ACA, and given the lasting economic impact of COVID-19 on small business disruption, employment/unemployment, investment income, etc , you would "think" our governing bodies would remedy any such penalty of not being able to meet the minimum income for subsidies. Penalizing a low-income taxpayer does not seem consistent with the ACA's purpose. Had not as yet seen where this is being addressed yet via any relief legislation. Anyone?
Silk McCue
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Re: How Do Early Retirees Pay for Medical

Post by Silk McCue »

willthrill81 wrote: Thu May 07, 2020 12:09 am
That's the route we would very likely take. It's extremely important for those considering this option to be aware of the limitations and exclusions, but it can be far more cost effective.
I have a great deal of respect for you based upon your postings on various topics here at Bogleheads and I'm keenly interested in your feedback regarding the following:

I have had CHM Gold with Brothers Keeper for the past 8 years and my wife has fully paid traditional health insurance through her workplace but will be retiring at the end of the year. We will be close to 60/62 at that time (neither of us health issues of any consequence). The cost to continue her insurance would be about $9k per year with a $3k deductible. To add me would double that so really not an option we are interested in.

Back in December I began getting serious about figuring out health "coverage" in retirement. Up to that point I had simply planned on my wife getting a CHM Gold plan prior to retiring and running with that until we respectively reach 65 but began to question the approach due to "what if's" such as sickness/diagnosis with very high prescription costs. BTW - regardless of the naysayers here I have full confidence in CHM to meet their commitments.

I took time to look at ACA plans and reworked our retirement planning Excel sheets to accommodate managing our taxable income to qualify for ACA subsidies. This included some modest drawdowns from our Roth accounts in those first few years and that approach is certainly manageable. Premiums based on rates at that time provide us with HSA Bronze level plan with $6k deductibles for about $200 or $400 per month combined depending on how we manage Taxable income. She will have a solid COLA'd pension of about $42k year 1 (joint and survivor). The premium is certainly manageable but the out of pocket expense looks a little rough although we would certainly be able to pay it if need be. Note: If my wife has true insurance in retirement she will receive a flat $150 per month taxable income added to her pension payments. Were she not to have true insurance she would get the subsidy once on Medicare.

I'm looking at three alternatives: 1) CHM Gold only as originally planned, 2) Discontinue CHM and get a Bronze HSA plan and deal with the deductible if that becomes an issue 3) Get a Bronze HSA plan and backstop the high risk with CHM Gold. The $150 per month subsidy would apply to options 2 and 3.

I'm interested to know what your considered thoughts about using CHM are and what concerns if any that you have regarding relying on CHM or similar market provider under various bad news medical situations and how you plan to deal with/mitigate them should you go that route. I'm very interested in any and all feedback you want to give me on what I have shared regarding where my thinking is.

Thank you for your time.

Cheers
Last edited by Silk McCue on Fri May 08, 2020 3:06 pm, edited 3 times in total.
Random Poster
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Re: How Do Early Retirees Pay for Medical

Post by Random Poster »

marcopolo wrote: Thu May 07, 2020 9:19 pm Alternatively, you could retire in or move to a state (Just like you might have to move if you lost your job) that has more friendly view of supporting broad access to health insurance. MA had Romney Care, I believe NJ and NY had guarantee issue, HI recently passed regulation largely mimicking ACA protections, etc.

One may end up paying more for health insurance if ACA goes away (we have budgeted a healthy sum for that), just like you might end up with a lower income if you lose your job.

So, yes there is risk, you do need to have alternate plans, but i see no reason to be a deer in the headlights over it.

Now, if one has no desire to retire (early or otherwise), and thinks the only meaningful and fulfilling thing anyone can do their life is to keep working, then one can come up with all sorts of scary reasons to not retire.
I think that all of this is much easier said than done.

As it is now, just figuring out what health insurance costs under the ACA is difficult for someone evaluating possible housing locations, as the premiums are based, at least in part, on one’s zip code. And those premiums change each year. So what may be inexpensive in one area compared to another area today may be comparatively expensive next year.

And then, when things change negatively, you suggest to just move? As if that doesn’t have its own (potentially large) transaction costs, and then what guarantee is there that the state to which you move won’t end up changing things negatively later on either?

Quite frankly, the whole system is a complete mess for most people and there is no amount of alternative planning that one can really do to reasonably protect or insulate oneself from the potential changes that may be made. Unless your alternative plan is to just die when the costs become too unaffordable, which I suspect is what some people think that the solution should be.
sycamore
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Re: How Do Early Retirees Pay for Medical

Post by sycamore »

Tool-Time wrote: Wed May 06, 2020 4:56 pm 62 and ready to retire due to minor health reasons. Wife (61)will still work for a year. $2M in 401k, stocks and IRA. Wife has $300,000 pension. No kids. How do early retirees pay for their medical?
Tool-Time,

Lots of good information already posted above. I also found this to be a good round-up of various options: https://www.caniretireyet.com/early-ret ... e-options/ It has links to more web pages with more details.
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Re: How Do Early Retirees Pay for Medical

Post by AerialWombat »

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Last edited by AerialWombat on Sun May 17, 2020 2:48 pm, edited 1 time in total.
michaeljc70
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Re: How Do Early Retirees Pay for Medical

Post by michaeljc70 »

AerialWombat wrote: Fri May 08, 2020 3:15 pm
michaeljc70 wrote: Fri May 08, 2020 11:38 am
AerialWombat wrote: Thu May 07, 2020 8:08 am
willthrill81 wrote: Thu May 07, 2020 12:09 am
AerialWombat wrote: Wed May 06, 2020 8:45 pm Health sharing ministry.
That's the route we would very likely take. It's extremely important for those considering this option to be aware of the limitations and exclusions, but it can be far more cost effective.
Yes, this is very true. Even other members often fail to take the time to really learn what it is and how to use it. But I think people with real health insurance have the same challenge sometimes.

I view it as a major medical plan only. Broken leg coverage, as I call it. It’s great for me because I’ve already made certain decisions about end of life care and how I will address terminal illness.

It would not be appropriate coverage for folks that might face seven figure cancer treatment, for example.
How do you determine that you won't get cancer, have a heart attack or something else very costly?
I have already made certain decisions regarding what level of medical care I am willing to seek. I will never incur the expense of cancer treatment or any number of expensive surgeries. Thus, I do not need any sort of coverage to pay for them.
I think it is easier to say I am not going to get a $200k surgery and will just die when you aren't in that position. You could also not be conscious and unable to make that decision. Of course we all hope we don't need expensive treatments or surgeries.
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AerialWombat
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Re: How Do Early Retirees Pay for Medical

Post by AerialWombat »

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Last edited by AerialWombat on Sun May 17, 2020 2:49 pm, edited 1 time in total.
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