working longer for free health care? is it worth it?

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Socrates
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working longer for free health care? is it worth it?

Post by Socrates »

I'm 54 and would like to ideally retire when I am 60. Work 5 FT years and in the final year I can work 1/2 time and get a full year credit towards my pension. My pension is with CAL STRS and I will get between $8400-8800 a month.

I jut learned if I log 20 FT years in the district, I will qualify for free health care until I qualify for Medicare at 65. The district wants you to use that first and will pay anything above with their health plan (which is a PPO) after medicare is exhausted. Also my spouse and dependents can buy into the health plan at group rate prices for the school district.

To qualify for this I need to work 8 more years there -so I would have to add three more FT years (can't do the half time I mentioned in year 6). I would like to retire like YESTERDAY so I can enjoy my life. My question: is it worth it to work longer to qualify for the healthcare incentives? I would retire at 62 (instead of 59-60) so I'd have free coverage until 65 and then combine with medicare.

I have no idea how much private insurance costs or how much medicare covers (i.e. is supplemental coverage needed?).

I also have a retirement account with $250,000 in it, another cash pension account of about $75,000 and will inherit approximately $750,000 through an IRA my dad left us kids (total approximately $3 million).

I know the details are sketchy and I need to check in with human resources. I just found out from a union member who retired. Its more about healthcare costs and medicare coverage which I know little about. Thank you.
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onthecusp
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Re: working longer for free health care? is it worth it?

Post by onthecusp »

Without a lot more detail on your situation I would just turn the question around.

Can you retire at 60 with enough to pay for healthcare as well as other anticipated spending? To me, working 3 more years for a benefit that only lasts another two beyond that (when Medicare takes over) seems questionable.

That said, I wanted to retire at 60 and here I am at 63. I'll probably "retire" this year but work part time for a bit.
quantAndHold
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Re: working longer for free health care? is it worth it?

Post by quantAndHold »

It depends.

To get an idea of how much pre-Medicare health coverage will cost, go coveredca.com, plug in your age and location, and see. On a high deductible plan, figure your total healthcare cost per year will be the cost of the premiums, plus the cost of the deductible.

Medicare is considerably cheaper than ACA coverage. I probably wouldn't keep working in order to keep employer based coverage after after 65.

As an early retiree, the current (and potential future) cost of healthcare is the scariest unknown I have to deal with. The ACA marketplace has stabilized, especially in CA (which is one of the cheapest states), but it's still scary. But to keep working for EIGHT years if I didn't have to otherwise? That's a hard one.
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neverpanic
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Re: working longer for free health care? is it worth it?

Post by neverpanic »

How many good quality years is the job going to take off your life?
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Re: working longer for free health care? is it worth it?

Post by tashnewbie »

I think you’re set for retirement with that pension and anticipated inheritance. I wouldn’t work 3 extra years for a benefit that would only be really meaningful for 3 years until you get Medicare, especially given your overall portfolio. I think your income is going to be very high in retirement because of the pension and the need to drawdown the inherited IRA (assuming it’s Traditional) in 10 years.
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Re: working longer for free health care? is it worth it?

Post by abuss368 »

You have to weigh the stress against more freedom. That is different for everyone.
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FI4LIFE
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Re: working longer for free health care? is it worth it?

Post by FI4LIFE »

You're set. I wouldn't wait. If it were me, I'd just plan my living expenses around my pension income and mentally attribute the retirement account and cash pension to healthcare expenses. If and when the inheritance comes in, it will be gravy.

I'm assuming you are not carrying any major debts.
John88
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Re: working longer for free health care? is it worth it?

Post by John88 »

OP, does the plan include paying any Medicare premiums? Ours is similar except they will pay for part b and the cost of a Medicare advantage plan for life. For me it's working an additional 1.5 yrs to get the benefit so that's the current plan for me.
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Re: working longer for free health care? is it worth it?

Post by Socrates »

Thank you all for your thoughtful responses. I am a professor at a community college and also run a program to ensure students with disabilities can participate in the educational process.

I make good money, love working with students and my job is not that demanding. That said, I hate commuting, often my supervisors are awful and don't have a clue what they are doing or what is in the best interests for students and frankly, I'd rather do so many other things like garden, travel, be with my wife and family, drink wine, exercise, play tennis....well you all know.

I may end up working one day a week and perhaps that can help with health care.

So how much does medicare cover? Are there limitations? Can I get colonoscopies covered, see decent docs?
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Re: working longer for free health care? is it worth it?

Post by Katietsu »

I would spend very little time contemplating a question about healthcare that is 6 years away. In the last decade, we had passage of the ACA which was the first time that many older people could get health insurance at all. Since then we have had serious threats, legislatively and judicially, which could have ended access. Now we have high unemployment and a global pandemic which I suspect has lessened the threat to the dissolution of the ACA. Who knows what will happen in the next decade. Anything from Medicare for All to no reasonably priced private insurance for anyone over 60 is possible.
Last edited by Katietsu on Sat Jun 13, 2020 1:25 am, edited 1 time in total.
John88
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Re: working longer for free health care? is it worth it?

Post by John88 »

Socrates wrote: Fri Jun 12, 2020 8:12 pm So how much does medicare cover? Are there limitations? Can I get colonoscopies covered, see decent docs?
Current article here

https://www.cnbc.com/2020/06/11/medicar ... ement.html
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Re: working longer for free health care? is it worth it?

Post by tibbitts »

Six years away is wild speculation at this point - you shouldn't think about it. You should spend those six years making sure you really understand your options and monitoring legislative changes.
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Re: working longer for free health care? is it worth it?

Post by Elric »

quantAndHold wrote: Fri Jun 12, 2020 4:41 pm To get an idea of how much pre-Medicare health coverage will cost, go coveredca.com, plug in your age and location, and see. On a high deductible plan, figure your total healthcare cost per year will be the cost of the premiums, plus the cost of the deductible.
Medicare is considerably cheaper than ACA coverage. I probably wouldn't keep working in order to keep employer based coverage after after 65.
Good advice, and I'd just add 2 things:
1) While you'll pay 100% of the costs, depending on your health and income, COBRA may be a cheaper option than the ACA for the first 18 months.
2) When calculating, while nobody knows how much medical costs will go up, they have been going up faster than the overall rate of inflation.
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musicmom
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Re: working longer for free health care? is it worth it?

Post by musicmom »

It comes down to how much you can afford to pay for healthcare until Medicare kicks in.

My DH and I had been covered by my employer plan for many years. I retired at 62.
Fortunately, we now have retiree health coverage for $150 month.
It is primary for me. Secondary for DH who is on Medicare.
We have savings. But I would have been hesitant to pull the plug if we had to buy coverage for big $$$ premium.
stan1
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Re: working longer for free health care? is it worth it?

Post by stan1 »

Advance planning is fine, but I'd plan several courses of action until you are 59 1/2 and decide what you want to do then. It may come down to non-financial factors like who your boss is at the time or your personal health or what the individual health care insurance market looks like.

Six years out from 60 what different choices would you make today?
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Re: working longer for free health care? is it worth it?

Post by Eagle33 »

The other responses have addressed the important item of medical coverage between retiring and 65 (Medicare starts).

For a quick understanding of Medicare this link is to The Official US Government Medicare Handbook. You have a 5+ years to research future medical coverage and to get a basic understanding of Medicare before having to work the hard numbers and make a decision. Spend the next couple of years determining your expected retirement expenses (including taxes). Start with the expenses you already know and determining cost of planned new retirement experiences (travel, etc.) and finally the health care expenses, plus long term care. Will the 100-105k pension cover your retirement expenses or what portion of them? One bite at a time.

Is you father still alive or is your inheritance pending closing out his estate?
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Re: working longer for free health care? is it worth it?

Post by Sandtrap »

Beware the ACA Healthcare Subsidy Cliff.
(Search forum archives on this for mane threads)
The penalties can be brutal and it’s possible your early retirement income will push you into higher ACA premiums.

There is another advantage to the free healthcare for working a bit longer in that you will be adding to your retirement portfolio.

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Re: working longer for free health care? is it worth it?

Post by celia »

Socrates wrote: Fri Jun 12, 2020 4:23 pm I'm 54 and would like to ideally retire when I am 60. Work 5 FT years and in the final year I can work 1/2 time and get a full year credit towards my pension. My pension is with CAL STRS and I will get between $8400-8800 a month.
Is the $8400-8800 in 6 years or now? Have you considered taking the reduced pension so that if you die first, your wife can continue it at the same amount for the rest of her life?
I also have a retirement account with $250,000 in it, another cash pension account of about $75,000 and will inherit approximately $750,000 through an IRA my dad left us kids (total approximately $3 million).
Has your dad died or are you projecting this for after age 60?

Your posts make it sound to some responders here that you already eligible for these amounts now, whereas I read this a bit differently. I suggest you and your wife go to a CalStrs presentation on preparing for retirement, then get your exact numbers.

There are also more choices for health care than just the ACA. Try calling a couple of medical insurance companies to get quotes for individual (unsubsidised) family coverage.
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Re: working longer for free health care? is it worth it?

Post by hudson »

Socrates,
I don't count my chickens before they hatch.
I was always very cautious approaching my retirement at full retirement age (FRA) 7 years ago in that I attempted to keep all of my options open for continuing to work or returning to work. I worked in a manufacturing plant. Only the highest paid folks left before Medicare. None of the production workers left early. One gentleman that I knew well complained about paying for health insurance for he and his wife after retiring early; he came back to work part time.
Maybe have several plans lined up after doing detailed math for all plans. Maybe a plan to make it until paid for health insurance, a plan to make it to 65, and a plan to make it until FRA. Maybe even line up part time work after retirement in case it is needed.

You are probably debt free with a plan to stay that way?
capran
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Re: working longer for free health care? is it worth it?

Post by capran »

We quit work at 62(Me) and 59.5 (her). She had 30 years with the district and so got her pension right away. I had to wait until 65, but neither pension was even close to yours, (1666 and 1750) so Medical Insurance was our greatest concern and expenditure by far. As retirees we were eligible for the state run PEBB insurance. It required co-pays but had most anyone we might want to see covered, but it cost us 1250 to cover both of us, including dental. Now we are both on Medicare, PEBB currently offers a subsidized plan F ($120) and plan G ($98), plus the cost of the Medicare premium (144.50), plus a dental and a plan D. But at a total of about 430 a month it's considerably cheaper being on Medicare. That said, I agree there's no use getting too preoccupied with planning since things could change. The whole ACA may be thrown out when the Supreme Court has already agreed to review but Barr has asked they wait until after the election. Also on your radar should be the IRMAA issue. If you inherit a large IRA and have to take a large RMD it may put you into the penalty. Work and attitudes about it, as well as your health and ability to have an active retired lifestyle can change, so gather info and enjoy.
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Re: working longer for free health care? is it worth it?

Post by LilyFleur »

It would be a good idea to check with your district to see if, even if you have to pay for it out of pocket, you would have access to your employer's group health insurance as a retiree. This was the case for a friend of mine who was a STRS employee at an elementary school. She is continuing to buy her benefits at the cost her district had been paying, but because it is a group plan, it is much lower than what people pay on the open market. I had COBRA after a divorce at about $800/month; now I have to buy it on the open market (I am not eligible for subsidies because my pension pushes me barely over the edge of the "ACA cliff"). Anyway, because of various health conditions, I pay about $1650/month in platinum plan premiums and sometimes close to $2,000/month including my co-pays. Five more years--it's a chunk of change!!
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Re: working longer for free health care? is it worth it?

Post by Sandtrap »

LilyFleur wrote: Sun Jun 14, 2020 7:50 pm It would be a good idea to check with your district to see if, even if you have to pay for it out of pocket, you would have access to your employer's group health insurance as a retiree. This was the case for a friend of mine who was a STRS employee at an elementary school. She is continuing to buy her benefits at the cost her district had been paying, but because it is a group plan, it is much lower than what people pay on the open market. I had COBRA after a divorce at about $800/month; now I have to buy it on the open market (I am not eligible for subsidies because my pension pushes me barely over the edge of the "ACA cliff"). Anyway, because of various health conditions, I pay about $1650/month in platinum plan premiums and sometimes close to $2,000/month including my co-pays. Five more years--it's a chunk of change!!
+1
OP: pay heed to this real life example from "LilyFleur".
The ACA Subsidy Cliff can make ACA Healthcare premiums "brutal and punishing", and with inadequate coverage and high copays.

DW and I paid $2200 per month for ACA Healthcare Premiums for 3 years, and a lot for copays and lack of coverage, so "out of pocket" for some things, before finally qualifying for Medicare and Supplementals.

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azianbob
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Re: working longer for free health care? is it worth it?

Post by azianbob »

Like others have said, no need to make a decision now. Perhaps you should re-visit this when you are 58 or 59.
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Re: working longer for free health care? is it worth it?

Post by MandyT »

azianbob wrote: Mon Jun 15, 2020 4:23 pm Like others have said, no need to make a decision now. Perhaps you should re-visit this when you are 58 or 59.
I have to agree. Many things could change on campus and/or in your life in the next five or six years. In five years, you'll be able to make a more informed decision based on more concrete information and how you feel.
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Re: working longer for free health care? is it worth it?

Post by Socrates »

It would be a good idea to check with your district to see if, even if you have to pay for it out of pocket, you would have access to your employer's group health insurance as a retiree. This was the case for a friend of mine who was a STRS employee at an elementary school. She is continuing to buy her benefits at the cost her district had been paying, but because it is a group plan, it is much lower than what people pay on the open market. I had COBRA after a divorce at about $800/month; now I have to buy it on the open market (I am not eligible for subsidies because my pension pushes me barely over the edge of the "ACA cliff"). Anyway, because of various health conditions, I pay about $1650/month in platinum plan premiums and sometimes close to $2,000/month including my co-pays. Five more years--it's a chunk of change!!
Thank you....I did check with my district and I am very lucky as my spouse and I are eligible to buy in at the discounted district rates when I retire which is huge. They will pay total share if I work 20 years, but if I leave before then I can still buy a quality plan at a discount.
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Re: working longer for free health care? is it worth it?

Post by Socrates »

Like others have said, no need to make a decision now. Perhaps you should re-visit this when you are 58 or 59.
yeah....I'm a pre planner and would love to retire now, but I need to be patient. I am not even eligible for the pension until I reach 55!
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thank you all

Post by Socrates »

Is the $8400-8800 in 6 years or now? Have you considered taking the reduced pension so that if you die first, your wife can continue it at the same amount for the rest of her life?
I also have a retirement account with $250,000 in it, another cash pension account of about $75,000 and will inherit approximately $750,000 through an IRA my dad left us kids (total approximately $3 million).
Has your dad died or are you projecting this for after age 60?



Thank you all for taking the time to respond.....I wish the board was threaded so I could respond individually to everyone easier.

I have met with STRS and yes the money is projected for when I retire at age 60 or 61. This is what the rep projected and they have an online calculator.

The money through my dad resides with my living 94 year old mom, but he and we have worked with attorneys and have it set to go to the kids when she passes. We all ensure she is taken care of and lives in a very nice assisted living facility (private home with nurses).

and yes, I do need to adjust for the lower amount of pension $$ to ensure my wife who is 36 is provided for. I did not build that into the calculation.
“Don't waste your time looking back. You're not going that way.” ― Ragnar Lothbrok.
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Re: working longer for free health care? is it worth it?

Post by Socrates »

You have to weigh the stress against more freedom. That is different for everyone.
How many good quality years is the job going to take off your life?
So true......I'd retire yesterday (like many here wish), if I could...... :sharebeer
“Don't waste your time looking back. You're not going that way.” ― Ragnar Lothbrok.
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