Does it make sense to drop health insurance?

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fredflinstone
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Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:24 pm

I recently retired from the quarry (early retirement). The wife (Wilma) and I are too young to go on Medicare so we buy health insurance on our own through the individual market. In our town of Bedrock, premiums are going up big-time in 2018. We will have to pay more than $1,300 per month for our family of three (me, Wilma, and Pebbles). That's for a plan with a family deductible of about $10,000. So we would pay $25,600 out of pocket ($15,600 in premiums plus a $10,000 deductible) before we would receive even a penny from the insurer.

Let's say I work as an independent contractor and our income next year will be $120,000. If we go without health insurance, we will have to pay a penalty to the federal government of $3,000.

We have substantial assets and of course I worry about a very high cost health care expense that would wipe out those assets. That said, there surely is a point at which premiums become so high that even a risk-averse person would prefer to go without coverage. For example, even a highly risk-averse person would not pay $100,000 per month for a health insurance plan since surely it would be more sensible in that case to simply self-insure.

My question is: Is my family at the point where it is rational to forego coverage?

Obviously, I am taking some liberty with the names of my family members and other details, but the numbers are roughly correct and this is a serious question.

Thoughts?

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WoodSpinner
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Re: Does it make sense to drop health insurance?

Post by WoodSpinner » Wed Nov 29, 2017 12:30 pm

OP,

No it doesn't make sense!!

You are gambling with Financial Ruin, Bankruptcy, not to mention Significantly Poorer Health Care that may be critical to save your life or the lives of your family.

Health care costs are crazy -- but it is even crazier to go without.

That's my take on the situation....
:confused

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Re: Does it make sense to drop health insurance?

Post by Mike Scott » Wed Nov 29, 2017 12:33 pm

It is a very serious question. The sticky bit is that the worst financial case is pretty bad.

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Re: Does it make sense to drop health insurance?

Post by smitcat » Wed Nov 29, 2017 12:35 pm

"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?

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flamesabers
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Re: Does it make sense to drop health insurance?

Post by flamesabers » Wed Nov 29, 2017 12:37 pm

Unfortunately I have more questions then answers for your situation.

Have you looked at short-term health insurance as an alternative?

Does your wife work? If so, can she get access to health insurance or transfer to a company that offers health insurance?

How long will you be going without health insurance for you, your wife and your child?

Does any of you require ongoing care or prescriptions?

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:38 pm

@woodspinner:

Thank you for your perspective. You write "No it doesn't make sense!! You are gambling with Financial Ruin, Bankruptcy, not to mention Significantly Poorer Health Care that may be critical to save your life or the lives of your family."

Is there any point at which you think premiums would be so high that it would be preferable to be uninsured? $3,000 per month? $30,000 per month? $300,000 per month? I think that clearly at some point it becomes better to go without coverage.

If I were to set aside $1 million in a stand-alone "unexpected medical expense" account, would that be adequate, in your view, to protect against the risk of financial ruin and bankruptcy?

Why do you assume that we would receive poorer health care if we are uninsured? We can pay for anything we need out of pocket, just as we do now (since we are below our deductible). The only difference is that if we forego coverage we would not be backed up by a health insurance plan.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:40 pm

smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
The price I quoted is for a very high deductible plan aka a catastrophic plan. The low-deductible plans are much more expensive.

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Re: Does it make sense to drop health insurance?

Post by smitcat » Wed Nov 29, 2017 12:43 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:40 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
The price I quoted is for a very high deductible plan aka a catastrophic plan. The low-deductible plans are much more expensive.
That is not a catastrophic plan around here - you would be looking for an option that would cut off much higher than $10,000 and have premis much lower and still likely have to pay the penalty if it is still in place next year.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:45 pm

flamesabers wrote:
Wed Nov 29, 2017 12:37 pm
Unfortunately I have more questions then answers for your situation.

Have you looked at short-term health insurance as an alternative?

Does your wife work? If so, can she get access to health insurance or transfer to a company that offers health insurance?

How long will you be going without health insurance for you, your wife and your child?

Does any of you require ongoing care or prescriptions?
Great questions. No, we have not looked at short-term coverage as an alternative. Because I feel that premiums will only go higher from here, I view this as a long-term problem requiring a long-term solution.

My wife works, but she is currently an independent contractor. She cannot get health insurance for any of us.

We will not be eligible for Medicare for another 20 years or so. Perhaps my wife or I will work for a large firm (one that provides its employees health insurance) at some point before then, but I really doubt it. The other possibility is to deliberately lower our income to such an extent that we become eligible for free or subsidized health insurance. This is an option we are seriously considering. I guess we would have to move our assets in a way to minimize our interest and dividend income (i.e., short-term bonds rather than long-term bonds; growth stocks rather than dividend stocks).

We do not require any ongoing care or prescriptions of note.
Last edited by fredflinstone on Wed Nov 29, 2017 12:46 pm, edited 1 time in total.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:46 pm

smitcat wrote:
Wed Nov 29, 2017 12:43 pm
fredflinstone wrote:
Wed Nov 29, 2017 12:40 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
The price I quoted is for a very high deductible plan aka a catastrophic plan. The low-deductible plans are much more expensive.
That is not a catastrophic plan around here - you would be looking for an option that would cut off much higher than $10,000 and have premis much lower and still likely have to pay the penalty if it is still in place next year.
I see. I can look around for something like that. The insurer I'm looking at does not offer anything less expensive than the one I quoted. It is possible that another firm offers something, but I doubt it.

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Re: Does it make sense to drop health insurance?

Post by Jack FFR1846 » Wed Nov 29, 2017 12:46 pm

smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
That's the question I'd have. We could pay the $150 office visits and $900 every 3 month insulin pump supplies, but if I needed yet another surprise triple bypass, I wouldn't be too keen on shelling out half a mil.
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Re: Does it make sense to drop health insurance?

Post by nisiprius » Wed Nov 29, 2017 12:46 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:24 pm
...We have substantial assets...
Well, the one number you didn't mention in your summary is the approximate total of those assets.
...and of course I worry about a very high cost health care expense that would wipe out those assets...
Indeed.

In the bad old days, in some states insurers were allowed to put a total lifetime cap on the benefits to be paid to a family, and the number was often $1 million. There are reasons to say "that isn't enough," but for the moment let's put that aside.

We need to multiply that $1 million by a factor to take into account the fact that insurance companies negotiate lower rates than you, as a self-pay client, can probably get. I really have no idea what that factor is. I can see from various bills that the negotiated rate, and the Medicare rate, are in the ballpark of 1/4th to 1/3rd of the "chargemaster" rate that a self-pay customer gets billed, but I don't know how successful self-pay customers are in negotiating it down. For discussion purposes, let's say you would pay double what an insurance company would pay.

If you have sufficient assets that you can literally say that you have a spare $2 million that you do not need, have not dedicated (even mentally) to some other purpose, can earmark for medical costs (and not double-count by also earmarking it for another purpose), and can take it philosophically if your medical costs spend it down to zero, then it seems to me that you would be no worse off without health insurance, compared to a family without substantial assets, insured by a policy with a $1 million cap.
Last edited by nisiprius on Wed Nov 29, 2017 12:52 pm, edited 4 times in total.
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MP123
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Re: Does it make sense to drop health insurance?

Post by MP123 » Wed Nov 29, 2017 12:47 pm

I pay similar premiums and completely sympathize with you on how crazy they've become.

But $25,600 would look like a bargain if you or someone in your family came down with a serious health problem. I don't really think you can self insure for healthcare unless you are very comfortable with writing a million dollar check with no hesitation. Pre-ACA that was often the cap on policies anyway. Of course most things would be less but you never know. Even leaving aside the really rare medical conditions you still have to think about car accidents, slip/fall, kids sports injuries, and so on. If you think the insurance premiums are bad just wait until you see the hospital bills...

So I'd say no don't drop it.

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dm200
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Re: Does it make sense to drop health insurance?

Post by dm200 » Wed Nov 29, 2017 12:48 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:24 pm
I recently retired from the quarry (early retirement). The wife (Wilma) and I are too young to go on Medicare so we buy health insurance on our own through the individual market. In our town of Bedrock, premiums are going up big-time in 2018. We will have to pay more than $1,300 per month for our family of three (me, Wilma, and Pebbles). That's for a plan with a family deductible of about $10,000. So we would pay $25,600 out of pocket ($15,600 in premiums plus a $10,000 deductible) before we would receive even a penny from the insurer.
Let's say I work as an independent contractor and our income next year will be $120,000. If we go without health insurance, we will have to pay a penalty to the federal government of $3,000.
We have substantial assets and of course I worry about a very high cost health care expense that would wipe out those assets. That said, there surely is a point at which premiums become so high that even a risk-averse person would prefer to go without coverage. For example, even a highly risk-averse person would not pay $100,000 per month for a health insurance plan since surely it would be more sensible in that case to simply self-insure.
My question is: Is my family at the point where it is rational to forego coverage?
Obviously, I am taking some liberty with the names of my family members and other details, but the numbers are roughly correct and this is a serious question.
Thoughts?
Is this fully correct? Many types of plans with various deductibles offer some services, such as office visits, annual physicals, immunizations, etc. with no or low copays before having to satisfy the deductible(s)

Keep in mind also that as a "cash only" patient, I suspect you would be billed at a much higher amount than the negotiated amounts when you are insured.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 12:51 pm

Jack FFR1846 wrote:
Wed Nov 29, 2017 12:46 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
That's the question I'd have. We could pay the $150 office visits and $900 every 3 month insulin pump supplies, but if I needed yet another surprise triple bypass, I wouldn't be too keen on shelling out half a mil.
This web site cites much lower costs for triple bypass surgery: http://health.costhelper.com/bypass.html. I'd rather pay $71,000 out of pocket for triple bypass surgery once or twice than pay $15,000 for health insurance every year for the next 20 years.

In a worst-case scenario, I would consider getting surgery abroad where costs are even lower. I know many here will not agree, but it is something I would consider.

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Re: Does it make sense to drop health insurance?

Post by bottlecap » Wed Nov 29, 2017 12:52 pm

smitcat wrote:
Wed Nov 29, 2017 12:43 pm
fredflinstone wrote:
Wed Nov 29, 2017 12:40 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
The price I quoted is for a very high deductible plan aka a catastrophic plan. The low-deductible plans are much more expensive.
That is not a catastrophic plan around here - you would be looking for an option that would cut off much higher than $10,000 and have premis much lower and still likely have to pay the penalty if it is still in place next year.
You don’t save much with a catastrophic. Plus you still pay the penalty because you have to be quite young for it to satisfy the forced insurance requirement.

JT

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dm200
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Re: Does it make sense to drop health insurance?

Post by dm200 » Wed Nov 29, 2017 12:56 pm

Unfortunately for the OP, I suspect the fees/premiums will go up in future years as the age multiplier goes up and even more if this is increased by proposed changes.

I don't know any details, but I understand that some kinds of associational or small employer groups can get lower premiums.

If not already investigated, I might look at some HMO plans - over the years, I/we have had positive experiences with various types of HMOs - and at significant cost/expense benefits.

I ran some "what if" scenarios for an HMO in this area for 40 year olds with 2 young children - and the monthly premium was under $1,300 with individual deductible of about $5,500 and family of 11,000. BUT there were some degree of modest cost benefits (such as 2 $50 office visits per year and others) before hitting the full annual deductible.
Last edited by dm200 on Wed Nov 29, 2017 1:03 pm, edited 1 time in total.

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bottlecap
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Re: Does it make sense to drop health insurance?

Post by bottlecap » Wed Nov 29, 2017 12:59 pm

Sad to say it probably makes sense to drop it.

Some people, including many otherwise rationale people on this site, will never consider going without no matter the costs. I can’t justify that.

Look into asset protection for a complete picture. Health care costs could never ruin me because much of my assets are in retirement accounts. Health insurance costs could.

My family did drop it after the ACA. My employer then offered a half-decent plan so we got back on. Employer insurance is getting unaffordable again. We might be back without insurance in a year or two.

Good luck,

JT

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dm200
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Re: Does it make sense to drop health insurance?

Post by dm200 » Wed Nov 29, 2017 1:05 pm

It is (in my opinion) one thing to make such choices for yourself - when others are not affected. BUT - still another when family members (including children) could be so harmed.

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Re: Does it make sense to drop health insurance?

Post by ncbill » Wed Nov 29, 2017 1:06 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:45 pm
flamesabers wrote:
Wed Nov 29, 2017 12:37 pm
Unfortunately I have more questions then answers for your situation.

Have you looked at short-term health insurance as an alternative?

Does your wife work? If so, can she get access to health insurance or transfer to a company that offers health insurance?

How long will you be going without health insurance for you, your wife and your child?

Does any of you require ongoing care or prescriptions?
Great questions. No, we have not looked at short-term coverage as an alternative. Because I feel that premiums will only go higher from here, I view this as a long-term problem requiring a long-term solution.

My wife works, but she is currently an independent contractor. She cannot get health insurance for any of us.

We will not be eligible for Medicare for another 20 years or so. Perhaps my wife or I will work for a large firm (one that provides its employees health insurance) at some point before then, but I really doubt it. The other possibility is to deliberately lower our income to such an extent that we become eligible for free or subsidized health insurance. This is an option we are seriously considering. I guess we would have to move our assets in a way to minimize our interest and dividend income (i.e., short-term bonds rather than long-term bonds; growth stocks rather than dividend stocks).

We do not require any ongoing care or prescriptions of note.
Yep, plenty of RE folks do that.

People debate the ethics, but you can save a ton on health insurance if you can 'manage' your MAGI down to between 100-400% of federal poverty level for your household size (see https://www.zanebenefits.com/blog/2017- ... guidelines)

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Re: Does it make sense to drop health insurance?

Post by jayk238 » Wed Nov 29, 2017 1:06 pm

If you have an adverse outcome. Say a heart attack or cancer youre looking at 200k+ for those bills.

Once u have the acute phase over ur looking at the maintenance phase. Upwards of 20k a year.

This excludes medications easily upwards 50k for cancer meds.

Al for one uninsured pt.

Just my 2 cents.

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Re: Does it make sense to drop health insurance?

Post by bottlecap » Wed Nov 29, 2017 1:10 pm

jayk238 wrote:
Wed Nov 29, 2017 1:06 pm
If you have an adverse outcome. Say a heart attack or cancer youre looking at 200k+ for those bills.

Once u have the acute phase over ur looking at the maintenance phase. Upwards of 20k a year.

This excludes medications easily upwards 50k for cancer meds.

Al for one uninsured pt.

Just my 2 cents.
Open enrollment starts every year.

JT

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Re: Does it make sense to drop health insurance?

Post by crystalbank » Wed Nov 29, 2017 1:14 pm

I honestly think the insurance industry really made it worse for everyone except for well themselves. Unfortunately, I don't see the system getting fixed anytime soon so you really have no choice.

Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket which effectively pushes everyone to get health insurance.

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Re: Does it make sense to drop health insurance?

Post by delamer » Wed Nov 29, 2017 1:14 pm

Of course no one is going to buy health insurance if it cost $30,000/month. It simply would be out of the question except for the top 0.1%.

That isn't relevant to your decision.

As someone else mentioned, you are going to pay "retail" for any care you do receive if you go without insurance. Health insurance negotiate discounts with doctors, hospitals, labs, etc. for their enrollees.

If you really have virtually no health care expenses, then you should be focusing on the premium rather than the deductible. Your out-of-pocket will be minimal due to the deductible.

If someone gets sick and you end up with $200,000 in bills, the $10,000 will be a drop in the bucket.

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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:14 pm

bottlecap wrote:
Wed Nov 29, 2017 12:59 pm
Sad to say it probably makes sense to drop it.

Some people, including many otherwise rationale people on this site, will never consider going without no matter the costs. I can’t justify that.

Look into asset protection for a complete picture. Health care costs could never ruin me because much of my assets are in retirement accounts. Health insurance costs could.

My family did drop it after the ACA. My employer then offered a half-decent plan so we got back on. Employer insurance is getting unaffordable again. We might be back without insurance in a year or two.

Good luck,

JT
JT: Thank you for your comments. I am thinking along the same lines. In my state, 401K assets and 529 assets are exempt from creditors in the case of bankruptcy. We have put a lot of our assets into those vehicles -- far more in the 529s than is necessary to pay for college tuition. In addition, my wife and I have separate bank accounts and separate brokerage accounts. If I am hit by a bus and go bankrupt paying my hospital bills, I believe it will not affect her assets. (I could be mistaken, but I don't think creditors can go after her money.)

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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:17 pm

crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
I honestly think the insurance industry really made it worse for everyone except for well themselves. Unfortunately, I don't see the system getting fixed anytime soon so you really have no choice.

Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket which effectively pushes everyone to get health insurance.
Thank you to all of those who mentioned this point. What a bummer. It strikes me as unfair. Why not give uninsured people an extra large discount, knowing that a hospitalization is more of a burden on the uninsured than on those who have coverage?

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Re: Does it make sense to drop health insurance?

Post by dual » Wed Nov 29, 2017 1:17 pm

I was in a similar situation to yours and decided to self-insure. If the ACA had been in force, it would have actually made the decision to self insure easier. My understanding is that the worst case scenario is that you have to pay your expenses until Jan 1 after the next open enrollment period.

When I self-insured, I set aside the foregone deductible and premiums in a separate bank account. This quickly built up a pretty good buffer if unexpected expenses came up.

I know the buy insurance for all situations at any price zealots will react in horror but I figured the worst case was that I got an illness with high expenses and I survived long enough to incur them. In that case, I would go through my assets and end up on welfare and Medicaid. Not a good situation but not the end of the world. At least I would be alive!

Good luck and congratulations on trying to look at the situation rationally. Living is a risk and having insurance does not guarantee that bad things will not happen to you.

Regarding negotiating prices:
My experience is that you can negotiate prices with doctors and get a large discount from list price if you offer to pay cash. Fortunately I did not need hospitalization.
Last edited by dual on Wed Nov 29, 2017 1:20 pm, edited 1 time in total.

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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:18 pm

bottlecap wrote:
Wed Nov 29, 2017 1:10 pm
jayk238 wrote:
Wed Nov 29, 2017 1:06 pm
If you have an adverse outcome. Say a heart attack or cancer youre looking at 200k+ for those bills.

Once u have the acute phase over ur looking at the maintenance phase. Upwards of 20k a year.

This excludes medications easily upwards 50k for cancer meds.

Al for one uninsured pt.

Just my 2 cents.
Open enrollment starts every year.

JT
Great point. So if we develop a chronic, expensive condition that requires ongoing care, we can simply sign up for coverage the following November or whatever.

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Re: Does it make sense to drop health insurance?

Post by cherijoh » Wed Nov 29, 2017 1:19 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:51 pm
Jack FFR1846 wrote:
Wed Nov 29, 2017 12:46 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
That's the question I'd have. We could pay the $150 office visits and $900 every 3 month insulin pump supplies, but if I needed yet another surprise triple bypass, I wouldn't be too keen on shelling out half a mil.
This web site cites much lower costs for triple bypass surgery: http://health.costhelper.com/bypass.html. I'd rather pay $71,000 out of pocket for triple bypass surgery once or twice than pay $15,000 for health insurance every year for the next 20 years.

In a worst-case scenario, I would consider getting surgery abroad where costs are even lower. I know many here will not agree, but it is something I would consider.
That only works for elective surgery.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:20 pm

dm200 wrote:
Wed Nov 29, 2017 12:48 pm
fredflinstone wrote:
Wed Nov 29, 2017 12:24 pm
I recently retired from the quarry (early retirement). The wife (Wilma) and I are too young to go on Medicare so we buy health insurance on our own through the individual market. In our town of Bedrock, premiums are going up big-time in 2018. We will have to pay more than $1,300 per month for our family of three (me, Wilma, and Pebbles). That's for a plan with a family deductible of about $10,000. So we would pay $25,600 out of pocket ($15,600 in premiums plus a $10,000 deductible) before we would receive even a penny from the insurer.
Let's say I work as an independent contractor and our income next year will be $120,000. If we go without health insurance, we will have to pay a penalty to the federal government of $3,000.
We have substantial assets and of course I worry about a very high cost health care expense that would wipe out those assets. That said, there surely is a point at which premiums become so high that even a risk-averse person would prefer to go without coverage. For example, even a highly risk-averse person would not pay $100,000 per month for a health insurance plan since surely it would be more sensible in that case to simply self-insure.
My question is: Is my family at the point where it is rational to forego coverage?
Obviously, I am taking some liberty with the names of my family members and other details, but the numbers are roughly correct and this is a serious question.
Thoughts?
Is this fully correct? Many types of plans with various deductibles offer some services, such as office visits, annual physicals, immunizations, etc. with no or low copays before having to satisfy the deductible(s)

Keep in mind also that as a "cash only" patient, I suspect you would be billed at a much higher amount than the negotiated amounts when you are insured.
You are right. I was wrong. Immunizations are covered with no copays. Thank you for the correction.

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Re: Does it make sense to drop health insurance?

Post by bloom2708 » Wed Nov 29, 2017 1:20 pm

I completely understand the question. The system cannot ever work when anyone at any age has some chance of having a $200k, $500k, $1 million+ health issue. That doesn't even consider ongoing health issues where the cost is $500k every year for life.

It can't work. No plan can fix it other than limiting what can be charged/billed.

At 15k, 20k, 30k, at some point you have to consider going without.

OP, have you looked into health sharing plans? Liberty Health Share is one.

https://www.libertyhealthshare.org/
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

Spirit Rider
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Re: Does it make sense to drop health insurance?

Post by Spirit Rider » Wed Nov 29, 2017 1:20 pm

With substantial assets it never makes sense to be without health insurance. You really can not take the risk of even a low probability health event that costs high six figures to seven figures. If you have substantial assets, then the health insurance premiums are at most an inconvenience.

With $120K in net self-employment earnings (net business profit - 1/2 SE tax) in 2018. You can adopt a one-participant 401k for 2018. You can make a traditional employee deferral of $18.5K + $6K catch-up contribution >= age 50 and an employer contribution of $24K. This will be a 401k deduction total of $42.5K - $48.5K.

Your spouse can make a $5,500 + $1,000 catch-up contribution to a traditional IRA. You can do the same if your IRA MAGI <- $101K. This will be an IRA deduction total of $5,500 - $13,000.

If the ACA health insurance plan is an HSA qualifying HDHP, you can make a $6,900 HSA contribution + $1,000 catch-up contribution for each of you >= age 55. This will be an HSA deduction total of $6,900 - $8,900.

The deduction total will be ($42.5K - $48.5K) + ($5,500 - $13,000) + ($6,900 - $8,900) = $54,900 - $70,400. The ACA MAGI contribution from the $120K in net self-employment income will be $120K - ($54,900 - $70,400) = $49,600 - $65,100. The 2018 400% of FPL MAGI cliff is $81,680.

This means you could have $16,580 - $32,080 in additional MAGI income and still get an ACA subsidy which could be substantial. This might enable you to maybe get a Silver HSA plan with a lower deductible and lower net premium.

You should seriously investigate what it would take to get under the ACA 400% FPL subsidy cliff.

delamer
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Re: Does it make sense to drop health insurance?

Post by delamer » Wed Nov 29, 2017 1:22 pm

It is my understanding that doctors are not legally required to treat either Medicaid or Medicare patients, and that many do not because of the low reimbursement rates.

So I assume that a doctor could refuse to treat you if you did not have the insurance, other than in an emergency situation.

Does anyone know if that is true?

LiterallyIronic
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Re: Does it make sense to drop health insurance?

Post by LiterallyIronic » Wed Nov 29, 2017 1:22 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:38 pm
Is there any point at which you think premiums would be so high that it would be preferable to be uninsured? $3,000 per month? $30,000 per month? $300,000 per month? I think that clearly at some point it becomes better to go without coverage.
There certainly is a point where the monthly premiums are not worth the benefit (and you have to consider the odds that you would've gotten the benefit - i.e., the odds of the medical emergency). At $1,300/month, that crosses the line for me. In retirement, I'm only banking on expenses of $2,000/month at the absolute max - maybe as low as $1,700. That rate would make health insurance 65% of my expenses! That's not even health expenses that's health insurance. Spending 65%-75% of my income to make sure I'm covered in the event of a problem? Sorry, but that's over the line.

Now, that being said, I won't have any kids to cover in retirement. You do. If I were in your situation, assuming your health was exactly like mine, I'd buy health insurance for my (under age 18) kid and not cover myself or my wife and I'd cancel my kid's health insurance at age 18 - they're on their own at that point. I would also have very little income, $20-24k/year, so ideally the ACA penalty would be zero or close to it.

But, then again, I'm pretty jaded by health insurance because we had health insurance, including maternity coverage, and we still ended up paying the entire $12,000 bill for our baby being delivered earlier this year with insurance not chipping in a cent.

So, yeah, there does come a point where the premiums aren't worth it, but you need to figure out what that point is for your own circumstance.
crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket which effectively pushes everyone to get health insurance.
Not true. Our local hospital gives a 40% discount if you're paying in cash AND you pay immediately in full, instead of going through insurance.
Last edited by LiterallyIronic on Wed Nov 29, 2017 1:24 pm, edited 2 times in total.

Rupert
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Re: Does it make sense to drop health insurance?

Post by Rupert » Wed Nov 29, 2017 1:23 pm

fredflinstone wrote:
Wed Nov 29, 2017 1:18 pm
bottlecap wrote:
Wed Nov 29, 2017 1:10 pm
jayk238 wrote:
Wed Nov 29, 2017 1:06 pm
If you have an adverse outcome. Say a heart attack or cancer youre looking at 200k+ for those bills.

Once u have the acute phase over ur looking at the maintenance phase. Upwards of 20k a year.

This excludes medications easily upwards 50k for cancer meds.

Al for one uninsured pt.

Just my 2 cents.
Open enrollment starts every year.

JT
Great point. So if we develop a chronic, expensive condition that requires ongoing care, we can simply sign up for coverage the following November or whatever.
This assumes the ban on pre-existing condition exclusions remains in effect either under the ACA or its eventual replacement. I'm not sure I would take that risk. "Continuous coverage" seems to be a term I hear a lot these days as different possible ACA replacements are discussed/debated.

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dm200
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Re: Does it make sense to drop health insurance?

Post by dm200 » Wed Nov 29, 2017 1:25 pm

This assumes the ban on pre-existing condition exclusions remains in effect either under the ACA or its eventual replacement. I'm not sure I would take that risk. "Continuous coverage" seems to be a term I hear a lot these days as different possible ACA replacements are discussed/debated.
BIG assumption for future years - in the current environment - IMO.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:25 pm

Spirit Rider wrote:
Wed Nov 29, 2017 1:20 pm
With substantial assets it never makes sense to be without health insurance. You really can not take the risk of even a low probability health event that costs high six figures to seven figures. If you have substantial assets, then the health insurance premiums are at most an inconvenience.

With $120K in net self-employment earnings (net business profit - 1/2 SE tax) in 2018. You can adopt a one-participant 401k for 2018. You can make a traditional employee deferral of $18.5K + $6K catch-up contribution >= age 50 and an employer contribution of $24K. This will be a 401k deduction total of $42.5K - $48.5K.

Your spouse can make a $5,500 + $1,000 catch-up contribution to a traditional IRA. You can do the same if your IRA MAGI <- $101K. This will be an IRA deduction total of $5,500 - $13,000.

If the ACA health insurance plan is an HSA qualifying HDHP, you can make a $6,900 HSA contribution + $1,000 catch-up contribution for each of you >= age 55. This will be an HSA deduction total of $6,900 - $8,900.

The deduction total will be ($42.5K - $48.5K) + ($5,500 - $13,000) + ($6,900 - $8,900) = $54,900 - $70,400. The ACA MAGI contribution from the $120K in net self-employment income will be $120K - ($54,900 - $70,400) = $49,600 - $65,100. The 2018 400% of FPL MAGI cliff is $81,680.

This means you could have $16,580 - $32,080 in additional MAGI income and still get an ACA subsidy which could be substantial. This might enable you to maybe get a Silver HSA plan with a lower deductible and lower net premium.

You should seriously investigate what it would take to get under the ACA 400% FPL subsidy cliff.
Great post. I will look into all of this.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:27 pm

Just a quick note to thank everyone for their thoughts. There is an incredible depth of knowledge on this site.

alfaspider
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Re: Does it make sense to drop health insurance?

Post by alfaspider » Wed Nov 29, 2017 1:28 pm

Some years ago, the CFO of my company retired. This person's net worth is likely in the $50m range. One of their biggest regrets is that they didn't negotiate retiree medial benefits as part of the retirement package.

The issue was not cost, but the fact that dealing with medical providers when you are uninsured is a huge pain. But open market plans did not have the same network and wide availability. Add to that- when you get hit by a bus and taken to the hospital unconscious the hospital may assume you are indigent if you do not have evidence you are insured. In a perfect world, none of that would impact care- but it might. Is it really worth the risk if you can afford it?

TravelforFun
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Re: Does it make sense to drop health insurance?

Post by TravelforFun » Wed Nov 29, 2017 1:29 pm

I looked up the costs of several catastrophic procedures and found on the avaerage:

- Heart by-pass surgery: $70K - $200K
- Heart transplant: $800K
- Brain cancer chemo: $150K
- Cancer drugs: $2K - $10K per month

Those are the costs insurance companies pay. I'm pretty sure non-negotiated individual costs would be higher.

You're in a tough spot because you're still years away from getting Medicare.

But given all of those information, I would put away a couple of millions for medical expenses, self insure, and save the premium.

TravelforFun

michaeljc70
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Re: Does it make sense to drop health insurance?

Post by michaeljc70 » Wed Nov 29, 2017 1:31 pm

fredflinstone wrote:
Wed Nov 29, 2017 12:51 pm
Jack FFR1846 wrote:
Wed Nov 29, 2017 12:46 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"

Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
That's the question I'd have. We could pay the $150 office visits and $900 every 3 month insulin pump supplies, but if I needed yet another surprise triple bypass, I wouldn't be too keen on shelling out half a mil.
This web site cites much lower costs for triple bypass surgery: http://health.costhelper.com/bypass.html. I'd rather pay $71,000 out of pocket for triple bypass surgery once or twice than pay $15,000 for health insurance every year for the next 20 years.

In a worst-case scenario, I would consider getting surgery abroad where costs are even lower. I know many here will not agree, but it is something I would consider.

I doubt you will be searching for the lowest price when in the back of an ambulance passed out....

SrGrumpy
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Re: Does it make sense to drop health insurance?

Post by SrGrumpy » Wed Nov 29, 2017 1:33 pm

crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket ...
I don't think this is true.

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fredflinstone
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Re: Does it make sense to drop health insurance?

Post by fredflinstone » Wed Nov 29, 2017 1:35 pm

SrGrumpy wrote:
Wed Nov 29, 2017 1:33 pm
crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket ...
I don't think this is true.
There seems to be a difference of opinion on this point.

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dm200
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Re: Does it make sense to drop health insurance?

Post by dm200 » Wed Nov 29, 2017 1:37 pm

michaeljc70 wrote:
Wed Nov 29, 2017 1:31 pm
fredflinstone wrote:
Wed Nov 29, 2017 12:51 pm
Jack FFR1846 wrote:
Wed Nov 29, 2017 12:46 pm
smitcat wrote:
Wed Nov 29, 2017 12:35 pm
"My question is: Is my family at the point where it is rational to forego coverage?"
Have you priced a catastrophic plan that would protect you on the very high side of medical costs?
That's the question I'd have. We could pay the $150 office visits and $900 every 3 month insulin pump supplies, but if I needed yet another surprise triple bypass, I wouldn't be too keen on shelling out half a mil.
This web site cites much lower costs for triple bypass surgery: http://health.costhelper.com/bypass.html. I'd rather pay $71,000 out of pocket for triple bypass surgery once or twice than pay $15,000 for health insurance every year for the next 20 years.
In a worst-case scenario, I would consider getting surgery abroad where costs are even lower. I know many here will not agree, but it is something I would consider.
I doubt you will be searching for the lowest price when in the back of an ambulance passed out....
Of course, if you die (due to delays of being uninsured) before the triple bypass - then the costs will be less.

Your money or your life : https://www.youtube.com/watch?v=SOHpfP9cVGo&t=1169s

cherijoh
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Re: Does it make sense to drop health insurance?

Post by cherijoh » Wed Nov 29, 2017 1:41 pm

dual wrote:
Wed Nov 29, 2017 1:17 pm
I was in a similar situation to yours and decided to self-insure. If the ACA had been in force, it would have actually made the decision to self insure easier. My understanding is that the worst case scenario is that you have to pay your expenses until Jan 1 after the next open enrollment period.

When I self-insured, I set aside the foregone deductible and premiums in a separate bank account. This quickly built up a pretty good buffer if unexpected expenses came up.

I know the buy insurance for all situations at any price zealots will react in horror but I figured the worst case was that I got an illness with high expenses and I survived long enough to incur them. In that case, I would go through my assets and end up on welfare and Medicaid. Not a good situation but not the end of the world. At least I would be alive!
Are you single or do you have a family? That makes a difference. Did you also forego disability insurance?
fredflinstone wrote:
Wed Nov 29, 2017 1:18 pm
Great point. So if we develop a chronic, expensive condition that requires ongoing care, we can simply sign up for coverage the following November or whatever.
Health care is currently in flux and discussion of prospective legislation is not permitted on Bogleheads. But some of you younger folks may not be aware of exactly how it worked pre-ACA. If you had a lapse of insurance coverage of longer than xx days (30? 60?) you could have been deemed uninsurable at ANY price as an individual policy holder. So the assumption that all you have to do is wait for open enrollment in the future could come back and bite you in the butt.

Super Hans
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Re: Does it make sense to drop health insurance?

Post by Super Hans » Wed Nov 29, 2017 1:41 pm

It seems like moving outside the United States would be a viable alternative for those too squeezed by health insurance premiums. This is a problem peculiar to the US, and I suspect a nice private policy in another country must be considerably cheaper.

IMO
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Re: Does it make sense to drop health insurance?

Post by IMO » Wed Nov 29, 2017 1:42 pm

Your post doesn't make sense, you say you are retired 20 yrs prior to Medicare eligibility, but then you're going to be working as a contractor for $120K. So 1st, I'd say you're not really retired by my definition. But putting that aside:

Contractors are paid more than employees in all situations that I have personally seen. Sometimes dramatically more doing the same job, but the caveat is that they are not getting benefits, and that typically includes some aspect of health insurance being covered by the employer. Thus a very realistic way at looking at your $120K is that you're not getting paid $120K, but probably more like $100K when comparing apples to apples. Like paying taxes, I think you have to accept that fact of being a contractor (life's not fair). On the other hand, you can shelter significantly more retirement income from taxes as a contractor (life's not fair).

Healthcare is extremely expensive. That should be obvious from the salaries you see from those in healthcare on this site :shock: Somebody has to pay that, and in the US it's a combination of private insurance, government funds, and some funds coming directly from the patient.

On one hand, you CAN probably just self insure and pay the penalty. On a typical year, it is unlikely that you'll have to pay much for some doctor visits here/there, and all those premiums can be saved up. You could seek out using medical tourism to pay much less for surgeries outside the US and save money that way for those planned type of events.

You're biggest risk is the unplanned events, such as those that cause hospitalizations, emergency surgeries, massively expensive pharmaceuticals costs, etc, where it will become apparent, healthcare is extremely expensive. Really just comes down to how much risk you want to take in life.

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bottlecap
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Re: Does it make sense to drop health insurance?

Post by bottlecap » Wed Nov 29, 2017 1:43 pm

fredflinstone wrote:
Wed Nov 29, 2017 1:35 pm
SrGrumpy wrote:
Wed Nov 29, 2017 1:33 pm
crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket ...
I don't think this is true.
There seems to be a difference of opinion on this point.
It will likely depend on the hospital/provider. Many offer up to 20% cash discounts even if you have insurance.

When we didn't have insurance, some didn't want to discount, others gave us 70% discounts for paying cash without insurance. Guess who we went back to?

However, hospitals will also give you a break or put you on a reduced payment plan after-the-fact, which no one ever seems to acknowledge.

Medical bills are an unsecured debt, if they won't reduce them on the front end, they will on the back end. I've seen it happen with friends pre-ACA. "Oh, you can't pay $20,000 for your emergency treatment? Why don't you pay $50 a month for 2 years and we'll call it even."

JT
Last edited by bottlecap on Wed Nov 29, 2017 1:48 pm, edited 1 time in total.

SrGrumpy
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Re: Does it make sense to drop health insurance?

Post by SrGrumpy » Wed Nov 29, 2017 1:45 pm

^ Medical tourism is an option, as long as your intestines aren't splattered all over the place. People talk a lot about excellent Asian hospitals, but there are also options in many other countries, as diverse as Israel and New Zealand.

crystalbank
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Re: Does it make sense to drop health insurance?

Post by crystalbank » Wed Nov 29, 2017 1:47 pm

fredflinstone wrote:
Wed Nov 29, 2017 1:35 pm
SrGrumpy wrote:
Wed Nov 29, 2017 1:33 pm
crystalbank wrote:
Wed Nov 29, 2017 1:14 pm
Like many posters already mentioned, hospitals likely won't give you the same discount when paying out of pocket ...
I don't think this is true.
There seems to be a difference of opinion on this point.
There's an episode of Adam Ruins Everything that explains it rather well. Chargemaster prices in many hospitals are due to insurance companies.
https://www.youtube.com/watch?v=CeDOQpfaUc8

I have experienced it firsthand. I used to visit a certain primary care physician and the price for a visit is $800. The hospital is part of my then insurance carrier 'network' hence the hospital only charges the insurance company $250. The insurance paid $200 and I was left with a $50 bill. Later on, I had to change carriers and this time that hospital isn't part of the network of this carrier. I had to pay the full $800 out of pocket and the hospital flat out denied any discount because it would violate their existing contracts with insurance companies.

Locked