Health insurance for FIRE [Financial Independence Retire Early]

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4nursebee
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Health insurance for FIRE [Financial Independence Retire Early]

Post by 4nursebee » Wed Dec 05, 2018 7:11 pm

Background: If health insurance costs were known we would have enough to FIRE now.
Our current situation in FIRECALC suggests 100% chance of success.
Subsidy highly unlikely

We have been searching online for quotes on plans. BC/BS has 3 plans for us, each is almost $2,000 a month but seems to cover a lot. ehealthinsurance.com has many plans from what sound to be smaller companies, these range from $200 up to $3,320. The $200 plan has 10K deductible, a figure that does not scare me.

Are these lesser known companies safe to do business with?
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
We fear the $2,000 a month plans getting more expensive eating up our egg.
4nursebee

Thesaints
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Re: Health insurance for FIRE

Post by Thesaints » Wed Dec 05, 2018 7:13 pm

4nursebee wrote:
Wed Dec 05, 2018 7:11 pm
Background: If health insurance costs were known we would have enough to FIRE now...
Allow me to rephrase it: "If health costs were low enough, we would have enough to FIRE now"

It is not a problem of you not knowing, but of them being potentially much higher than what you can bear.

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4nursebee
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Re: Health insurance for FIRE

Post by 4nursebee » Wed Dec 05, 2018 7:25 pm

Thesaints wrote:
Wed Dec 05, 2018 7:13 pm
4nursebee wrote:
Wed Dec 05, 2018 7:11 pm
Background: If health insurance costs were known we would have enough to FIRE now...
Allow me to rephrase it: "If health costs were low enough, we would have enough to FIRE now" Rephrase for yourself, but not for me.
I intended what I wrote


It is not a problem of you not knowing, but of them being potentially much higher than what you can bear. Again, no, it is a problem of not knowing. I do not think I posted enough info for you to determine if it was a problem of what we could bear.
4nursebee

Thesaints
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Re: Health insurance for FIRE

Post by Thesaints » Wed Dec 05, 2018 7:28 pm

Then you answered your question yourself: it costs 2k/month.
Now you know it; what's the problem ?

Elena
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Re: Health insurance for FIRE

Post by Elena » Wed Dec 05, 2018 7:52 pm

Thank you for the thread, OP. I myself am trying to tackle the "elephant in the room", and have been blocked for quite a while because I do not know how to calculate healthcare costs if I retire early. I have used the official calculator (healthcare.gov), and simulated scenarios.

My understanding is that, if FIREd, one must keep a low income to access subsidies. I have a taxable account to carry me from age 46 to when I can access retirement accounts. If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?

I have to say I have the same issue as the OP. Over 1M in assets, not including condo and car, which are paid off, but have been blocked for a while. I normally do projections for everything, but this I cannot even calculate for one year. The official calculator offers me an array of plans, with different coverage and deductibles, and I can understand all of it, but it does not tell me whether a subsidy is priced in. The most expensive plan it offers costs $7,000/yr. (single person), which I could afford with some juggling, but the amount makes me doubt because when I read other threads everyone talks about higher figures.

Sorry for the rambling. This part of my financial plan is completly confusing, and I have read a lot of threads. Maybe I need an advisor just for this early retirement-medical plan. I cannot assess my FIRE readyness until I clear this healthcare box.
Last edited by Elena on Wed Dec 05, 2018 8:10 pm, edited 1 time in total.

furikake
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Re: Health insurance for FIRE

Post by furikake » Wed Dec 05, 2018 8:01 pm

It depends on what you're looking at. Are you looking at Short Term Medical plans from these lesser known companies? Or are they even health insurance at all? There are a lot of scummy companies/agents selling "health plans" as health insurance. You probably won't find out until you use it, it'll be too late then, you may be owing tens of thousands of dollars at that point.

DH doesn't want to go to HMO, the only Individual plans available in my area are HMO plans or local tiny EPO network that no one accepts. I wish there was a Medicare for all option. Not FIRE yet because of the health insurance unknown. Currently paying $16.5k/year from my company plan. No problems at all, since it's on one of the largest nationwide networks. Dh wants us to keep running the business to keep group health insurance. I do figure this number into my firecalc calculation.

Thesaints
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Re: Health insurance for FIRE

Post by Thesaints » Wed Dec 05, 2018 8:49 pm

A person who FIREs is planning to spend maybe half a century in retirement and if a few extra thousand dollars per year make a difference then the answer is obvious: not ready to retire.
This is compounded by the associated frugal living philosophy. A terrible plan; it leaves no margin for errors. One cannot downgrade from "frugal" and still eat three meals per day.

FIRE = Rev. Jones - koolaid

helloeveryone
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Re: Health insurance for FIRE

Post by helloeveryone » Wed Dec 05, 2018 8:58 pm

4nursebee wrote:
Wed Dec 05, 2018 7:11 pm
Background: If health insurance costs were known we would have enough to FIRE now.
Our current situation in FIRECALC suggests 100% chance of success.
Subsidy highly unlikely

We have been searching online for quotes on plans. BC/BS has 3 plans for us, each is almost $2,000 a month but seems to cover a lot. ehealthinsurance.com has many plans from what sound to be smaller companies, these range from $200 up to $3,320. The $200 plan has 10K deductible, a figure that does not scare me.

Are these lesser known companies safe to do business with?
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
We fear the $2,000 a month plans getting more expensive eating up our egg.
I’m simplifying bigtime but if that is a concern why not work 1 year more or 2 more years? Depending on your income and savings rate those 1-2 years could offset several years of health insurance costs. (I agree though not knowing the EXACT costs makes it so difficult to plan since every other aspect of retirement planning seems more easy to estimate)

bhsince87
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Re: Health insurance for FIRE

Post by bhsince87 » Wed Dec 05, 2018 9:11 pm

I feel your pain! It's a huge unknown.

When I first considered FIRE at age 50, health insurances for wife and I was $14k, with $4k deductable.

The next year it was $22k.

The following year, $28k.

Next year looks like $28k, but the deductible is up to $5k.

So in four years, it went from an $18k budget item, to $26k, to $32k, to $33k. The rest of our budget is about $50k!

It's almost impossible to plan for such a thing.

I'm budgeting $40k until age 65, and then $10k per year thereafter. But that's just a guess.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Watty
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Re: Health insurance for FIRE

Post by Watty » Wed Dec 05, 2018 9:46 pm

4nursebee wrote:
Wed Dec 05, 2018 7:11 pm
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
Trying to predict future healthcare expenses is a fool's errand and you have no hope of coming up with an accurate plan so the best you can do is to plan for a reasonably bad scenario.

I planned my retirement so that I would retire in July of 2015. That was important since 18 months of COBRA would get me through 2015 and all of 2016. I have been getting an ACA policy since then.

I have about three years until I will get on Medicare and my gut feel is that something will be available for me even if it is expensive and has a high deductible and I can handle that for a few years.

My fallback plan would be to go back to work for long enough to get on company health insurance then go out on COBRA again for another 18 months. I know someone who did this and retired again when they were 63.5 years old that they could use COBRA until they could get on Medicare.

If you wait to retire until July of 2019 then if you are eligible for COBRA you could use it for the rest of 2019 and all of 2020. A few states (California?) have an extension of COBRA for an additional 18 months.
Elena wrote:
Wed Dec 05, 2018 7:52 pm
If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?
A nitpick, if you had no income you would likely end up on Medicaid and how that works depends on your state and there all sorts of special rules for people with very low income.

In reality this is not a problem since if nothing else you would want to do enough Roth conversions or take capital gains in a low tax bracket.

bhsince87
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Re: Health insurance for FIRE

Post by bhsince87 » Wed Dec 05, 2018 9:55 pm

Watty wrote:
Wed Dec 05, 2018 9:46 pm

Elena wrote:
Wed Dec 05, 2018 7:52 pm
If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?
A nitpick, if you had no income you would likely end up on Medicaid and how that works depends on your state and there all sorts of special rules for people with very low income.

In reality this is not a problem since if nothing else you would want to do enough Roth conversions or take capital gains in a low tax bracket.
Note that dividends and distributions are considered income for ACA subsidy and Medicaid purposes.
Retirement: When you reach a point where you have enough. Or when you've had enough.

Elena
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Re: Health insurance for FIRE

Post by Elena » Wed Dec 05, 2018 10:11 pm

Elena wrote:
Wed Dec 05, 2018 7:52 pm
If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?
A nitpick, if you had no income you would likely end up on Medicaid and how that works depends on your state and there all sorts of special rules for people with very low income.

In reality this is not a problem since if nothing else you would want to do enough Roth conversions or take capital gains in a low tax bracket.
[/quote]

Thank you for y'all replies. Just to make sure: I do know that the ca. half million (current valuation) in the taxable acct. will spit out dividends, year-end distributions and such, and that is income. However, that will hopefully be a small percentage, so in fact I would be "eating" from my taxable acct. principal until I can access the retirement one, thus income will be low, and I could (hypotetically, since this is a moveable scenario) access subsidies.

I have looked at the plans offered in the official site for my state, and played with different income situations, and the most expensive one is $7000/yr. I can afford it. But as the other kind poster was saying, his began at a certain amount, and the increasing variable was not steady. And as the other kind poster wrote, if one feels at the limit of the plan, there is only so much you can do frugality-wise, which is understandable when variables are within a pattern (I feel like this one is not). So, I am still blocked because there is no way to know when I will be ready; if I had 5M., I would not be readier than now that I have 1+M if the cost of this item simply cannot be projected. Again, sorry for the ramble. I keep thinking.

J295
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Re: Health insurance for FIRE

Post by J295 » Wed Dec 05, 2018 10:15 pm

by 4nursebee » Wed Dec 05, 2018 6:11 pm
Are these lesser known companies safe to do business with?
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
We fear the $2,000 a month plans getting more expensive eating up our egg.
1. Safe to do business with? Really, it depends on the insurer. I'd be concerned about their service and financial solvency.

2. What do we do? Retired in 2013 and was prepared to pay for insurance on the open market. We had the resources to retire and were not going to be held hostage by the unknown of insurance. I don't mean to minimize the concern, and it's a big nut to crack for sure and a very fluid situation going forward, but we decided we would make a go of it and adapt to insurance as needed. As it turns out the Affordable Care Act constitutionality was affirmed by the Supreme Court and we have been insured under it since that time (although we came within one vote in the Senate of potentially having to re-load our planning). We manage Modified Adjusted Gross Income for our family of two and qualify for Premium Tax Credits. Our premium cost ends up being less than $500 (and that is with $55k of MAGI). Without the credits it would be around $24k. We have a high deductible plan.

3. If interested in sharing some of your financial details, perhaps we can help you explore ways to try and reduce MAGI to obtain PTC. Our situation may be unique in that we have 7 figures in taxable and twice as much in non-taxable, and the income generated by the taxable is far below MAGI cutoff of $65k.

Best of luck. We are 59 now so a number of years left for us too to be dealing with this issue.

pdavi21
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Re: Health insurance for FIRE

Post by pdavi21 » Wed Dec 05, 2018 10:22 pm

Rich and healthy? Get a catastrophic plan.

The future costs may increase rapidly or fall to free...it's uncertain for retirement whether it's early or not.

PS: I would avoid using that acronim, as it was probably coined by someone who makes money giving financial advice...your choice.

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MP123
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Re: Health insurance for FIRE

Post by MP123 » Wed Dec 05, 2018 10:40 pm

When looking at premiums you should look ahead too. If you're young-ish and looking at FIRE see what your current costs would be if you were 10 years older. Just test a different birthday on the exchange.

In almost all states (other than NY and VT to my knowledge) ACA premiums are indexed to age and increase dramatically from 45-65 every year just because you're a year older. These increases are independent of overall annual increases due to other factors.

This is quite different from the employer based market you may be used to where everyone pays the same regardless of age.

mhalley
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Re: Health insurance for FIRE

Post by mhalley » Wed Dec 05, 2018 10:51 pm

We just don’t know if the subsidies will continue. The insurance costs go up every year, At 64, our bad hsa compatible bronze plan is over 2800 a month.

InMyDreams
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Re: Health insurance for FIRE

Post by InMyDreams » Wed Dec 05, 2018 10:59 pm

OP and others - have you found this website for looking at the market place across insurers?
https://www.healthsherpa.com/marketplace/zip_code

IMO, healthcare insurance is a crap shoot right now. I'm having difficulties discerning the next ~3 years, much less some 20 years. This question is often discussed on MMM. Answers often include relocating within the US to a state that has a tolerable marketplace, or even relocating to another country until MCare eligible.

I am fortunate in that I have a non-marketplace, ACA compliant solution, but that means no subsidies. The year that I become MCare eligible may be the year I'm on the Marketplace at the beginning of the year.

And my planning means including all premiums + MOOP for each year. Any MOOP not spent is icing on the cake.

Good luck!
Last edited by InMyDreams on Wed Dec 05, 2018 11:14 pm, edited 1 time in total.

Elena
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Re: Health insurance for FIRE

Post by Elena » Wed Dec 05, 2018 11:04 pm

MP123 wrote:
Wed Dec 05, 2018 10:40 pm
When looking at premiums you should look ahead too. If you're young-ish and looking at FIRE see what your current costs would be if you were 10 years older. Just test a different birthday on the exchange.

In almost all states (other than NY and VT to my knowledge) ACA premiums are indexed to age and increase dramatically from 45-65 every year just because you're a year older. These increases are independent of overall annual increases due to other factors.

This is quite different from the employer based market you may be used to where everyone pays the same regardless of age.
That is an excellent idea. Thank you. I am indeed in a group plan (HSA), and even though I choose the cheapest option and highest deductible, my premiums are far from cheap. It must be because it is all averaged amongs older and younger.

JackoC
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Re: Health insurance for FIRE

Post by JackoC » Wed Dec 05, 2018 11:33 pm

4nursebee wrote:
Wed Dec 05, 2018 7:11 pm

We have been searching online for quotes on plans. BC/BS has 3 plans for us, each is almost $2,000 a month but seems to cover a lot. ehealthinsurance.com has many plans from what sound to be smaller companies, these range from $200 up to $3,320. The $200 plan has 10K deductible, a figure that does not scare me.
Wondering which state. In NJ the variation in costs on real (permanent not temporary, no payout limit) plans is nothing like that. Our BC/BS $3k/$6 deductible 6.5k/13k max out of pocket Bronze plan will be $1538 a month in 2019. The cheapest plan we could qualify for (I believe 'catastrophic' plans are 30 and under only) would be $1276, Amerihealth. But we tried them one year and almost nobody would take it, real hassle, regretted and went back to BC/BS. No way could we quality for Premium Tax Credits, so we just have to pay what it is.

I'd love there to be a plan with a $100k deductible, forget $10k, if the price were commensurate and it was widely accepted (so I'd pay insurance co network cost for the OOP, not 'list price' 2,4,10 times higher).

But hard to imagine who can provide permanent (they have to renew) coverage with no payout limit (if I'm unfortunate/fortunate enough last through multiple rounds of cancer treatment and multi-$100k/yr drugs keep me around for years, then they pay $millions minus the OOP limit every year) for $200/mo when BC/BS wants $2000/mo. I don't work for BS/BC :happy . That just seems weird based on relative pricing here.

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JoMoney
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Re: Health insurance for FIRE

Post by JoMoney » Wed Dec 05, 2018 11:38 pm

I see three options:
Manage your income to try and qualify for a subsidy and hope that doesn't change. If your money is in IRA, using a "FIRE Roth IRA conversion ladder" can help manage your income easier than 72t SEPP withdrawals.

Take on more risk by not having coverage, having a lower cost catastrophic plan, or maybe a "cost sharing plan"... Better make sure that whatever assets you have are shielded from creditors - medical bills are often cited as top cause in personal bankruptcies.

Don't really "retire". Find a part time job that offers health cover... has the advantage that you'll continue to earn social security credits and remain eligible for disability/medicare in the event of disaster.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Rob1
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Re: Health insurance for FIRE

Post by Rob1 » Thu Dec 06, 2018 2:33 am

FIRE for 10 years now. Aside from enjoying the extra money and stimulation, I continue to do some consulting to pay for health insurance...and as a hedge against future health insurance costs.

I have a high deductible HSA plan by a well known insurer to cover me and my spouse at a cost of ~$1,000/month, paid under my corporate entity (age 50 now, living in a HCOL area).

I don’t qualify for ACA subsidies, but ACA gave me some peace of mind in terms of not being denied or priced out of coverage.

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4nursebee
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Re: Health insurance for FIRE

Post by 4nursebee » Thu Dec 06, 2018 3:30 am

Don't really "retire". Find a part time job that offers health cover... has the advantage that you'll continue to earn social security credits and remain eligible for disability/medicare in the event of disaster.
[/quote]

Trying to avoid the work part time for insurance scenario but it is likely the path to take. A reliable catastrophic policy would be an option also.


We can stomach the higher cost plans but don't want to.
Dialing back our income is also not desired nor easy.
4nursebee

SoAnyway
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Re: Health insurance for FIRE

Post by SoAnyway » Thu Dec 06, 2018 5:04 am

4nursebee wrote:
Wed Dec 05, 2018 7:11 pm
Background: If health insurance costs were known we would have enough to FIRE now.
Our current situation in FIRECALC suggests 100% chance of success.
Subsidy highly unlikely

We have been searching online for quotes on plans. BC/BS has 3 plans for us, each is almost $2,000 a month but seems to cover a lot. ehealthinsurance.com has many plans from what sound to be smaller companies, these range from $200 up to $3,320. The $200 plan has 10K deductible, a figure that does not scare me.

Are these lesser known companies safe to do business with?
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
We fear the $2,000 a month plans getting more expensive eating up our egg.
Thanks for posting, OP. You are correct: Healthcare expense is the wild card for anyone in the US planning to quit the workforce before Medicare eligibility (self included), esp. if anyone in your HH has a pre-existing condition (self not included-knock on wood). [OT comment removed by admin LadyGeek] Be grateful for ACA, OP, even if you don't qualify for subsidies. At least you can't be turned down for a pre-existing condition, as was routinely done in the pre-ACA days. ACA isn't cheap (assuming no subsidies), but at least it's there. For now, at least.

To answer your question, I agree with others that your issue isn't coverage for this year. Your issue if you plan to retire is coverage from your retirement date until Medicare-eligibility. How old are you and your spouse? Do you have children and if so, how old are they? Congrats on reaching FI, OP. I know it's not what you want to hear, but FI and FireCalc numbers are irrelevant if you have a lot of years to cover health insurance on your own dime and don't have a TON of cushion.

If it helps, I'm in the same boat. I have 13 years to cover before Medicare-eligibility. I won't qualify for ACA subsidies since I'll be doing aggressive Roth conversions in those years. My plan first is to eat right/exercise/etc. to stay healthy and avoid getting diagnosed with anything serious, with coverage via ACA for as long as it lasts. I will simultaneously be engaging in advocacy efforts relating to ACA and pre-existing condition exclusions. (I'll say no more and ask that others not respond, so as not to violate forum rules or risk locking this thread.)

For now, until Medicare-eligibility I'm very conservatively budgeting $1500/mo. in current dollars for health insurance that I hope I never need. (I'm in excellent health, rarely go to doctors, take no prescription drugs, etc., and current ACA plans for someone 10 years older are in the $800-$1k/mo. range.) My Plan B if that doesn't work out - whether due to skyrocketing costs, elimination of ACA, what-have-you - is to get a job with healthcare coverage until Medicare-eligible. BTW, the latter might sound inconceivable to you, but in the pre-ACA days that's what EVERYONE (who was able-bodied) did, unless their employer was more generous in extending lifetime healthcare coverage to retirees earlier than 65.

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Tamarind
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Re: Health insurance for FIRE

Post by Tamarind » Thu Dec 06, 2018 8:22 am

If one is living off a taxable account and does not have other income streams like pension or working spouse, then one ought to be able to manage income quite precisely to get at least some subsidy to help limit increases. Just went through this exercise with my mother, though she will only need to do it for a couple of years until Medicare. I think this would be true unless the taxable account is truly huge (in which case a few K of healthcare premiums should be nothing) or inappropriately invested such that it throws off big distributions, or one is unlucky enough to have a very high ratio of gains to account size.

OP, are you certain you can't control income down into subsidy range?

StopIroningShirts
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Re: Health insurance for FIRE

Post by StopIroningShirts » Thu Dec 06, 2018 8:35 am

I'll chime in here...I'm planning on quitting my job a couple weeks shy of my 37th birthday, already FI and going to at least take an extended work sabbatical. I've worked longer than planned already due to an injury my wife suffered two years ago and we've been heavier consumers of healthcare because of that

To the original question, the biggest risk between an ACA plan with the Big 4 and one of these micro-network plans is the negotiated price on some of the ancillary stuff (ie prescription drugs). Outside of that, read the plan summary to see whats covered/not covered.

Here is my healthcare plan:

First 9 months: COBRA. I'll have a large income in 2019 due to bonuses/restricted stock and the company's plan is better than the ACA.
Months 9-18: Either COBRA or an ACA plan.
After Month 18: ACA

A few other random thoughts:

Association plans: There are many associations out there that help self-employed people get into a group plan. Chambers of commerce, industry associations. That may provide access that I couldn't get if the ACA plans turn terrible

Backup Plan: I have a couple clients with outstanding job offers, I am likely going to do some consulting work for them. If healthcare gets too bad, I am sure I can cut a deal to move this to a part-time employment arrangement with benefits.

ACA Offset "subsidy" cliff: We'll be close to the 400% of poverty level in income in early retirement. There's probably 30k/year that'll come in that's not controllable, then the rest is. I'm not a huge fan of this idea, but my lifetime tax bill is probably already in the top quartile of the US Population so I can get over the moral issues of taking the subsidy.

Geographic Changes: If the ACA is disbanded, I would likely move to a guaranteed issuance state, which were starting to come out before the ACA was in place. My wife's pre-existing condition disqualifies us from the healthshare or some of the catastrophic options.

scrabbler1
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Re: Health insurance for FIRE

Post by scrabbler1 » Thu Dec 06, 2018 8:55 am

I FIREd 10 years ago, at age 45, a few years before the ACA. At the time, I had a reasonably affordable individual plan. But its premiums rose 50% in 2 years and I had to ditch it for a bare-bones plan which left me underinsured for 2 1/2 years until the ACA's exchanges began in 2014. Premiums dropped below the 2009 level, the first year I was buying an individual policy. and didn't rise much for the first few years.

Then I had some health issues in 2015. My policy protected me well enough as I hit my max OOP so the rest was covered. Since then, premiums have risen sharply, not 50% in 2 years like in 2010-2011, but in the 14%-18% range per year. I barely qualified for a small ACA subsidy (under $1,000) until 2017 and 2018, when a large, unexpected cap gain distribution tossed me over the subsidy cliff.

I live in NY where insurance is expensive but is not age-rated.

But the new obstacle I have encountered for 2019 is the increased use of Step Therapy for one particular, vital drug I have been taking since 2015, after I developed health issues. My doctor will either have to get passed the new hurdles or find a different but equally effective drug, one without ST, or else I will have to pay nearly $400 per month for the drug. This adds insult to injury when the insurance company is raising my premiums 17% for 2019 following a similar increase in 2018. Change insurance companies? Nope, because the other 2 companies offering similar plans in my area are all implementing ST for my drug.

I have enough of my current drug through April so my doctor has time to pursue his 2 options.

J295
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Re: Health insurance for FIRE

Post by J295 » Thu Dec 06, 2018 9:02 am

To stopironingshirts... what I love about your post is not necessarily the substantive advice ( which I didn’t drill down on) but the fact that you have a solution oriented I will deal with it as it comes along attitude. Sure, health insurance is a unknown for the future. But in a couple of years for those of us who are retired, something else may be the issue in healthcare may have even resolved itself then… We humans are resilient and creative… In our particular case we don’t let the tail wag the dog in terms of life choices on our end… Probably lucky that we have the financial ability presently and the confidence and grit regardless of financial conditions to not let insurance or other unknowns hold us back ( and please don’t get the idea we are irresponsible and are minimizing the risk of unknowns .... The attitude I am complementing is for those who may be at or near our situation and, at least from our perspective, might be too conservative in making current decisions because they can’t get complete control around the future unknowns)

Once again stopironingshirts… Nice post

NotWhoYouThink
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Re: Health insurance for FIRE

Post by NotWhoYouThink » Thu Dec 06, 2018 9:51 am

pdavi21 wrote:
Wed Dec 05, 2018 10:22 pm
Rich and healthy? Get a catastrophic plan.

The future costs may increase rapidly or fall to free...it's uncertain for retirement whether it's early or not.

PS: I would avoid using that acronim, as it was probably coined by someone who makes money giving financial advice...your choice.
If you are young, healthy and under 30 you can get a catastrophic plan. For those of us over 30 those plans are no longer available. But maybe they will be again one day in the future, who knows? As others above have said, you have to be flexible and roll with the punches.

We are a few years shy of Medicare eligibility, and it looks like $3k/month is what we will pay for the 2 of us after COBRA runs out. Maybe if we were 40 it would be cheaper. And maybe before we are Medicare age it will go up substantially.

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cookymonster
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Re: Health insurance for FIRE

Post by cookymonster » Thu Dec 06, 2018 9:58 am

NotWhoYouThink wrote:
Thu Dec 06, 2018 9:51 am
pdavi21 wrote:
Wed Dec 05, 2018 10:22 pm
Rich and healthy? Get a catastrophic plan.

The future costs may increase rapidly or fall to free...it's uncertain for retirement whether it's early or not.

PS: I would avoid using that acronim, as it was probably coined by someone who makes money giving financial advice...your choice.
If you are young, healthy and under 30 you can get a catastrophic plan. For those of us over 30 those plans are no longer available. But maybe they will be again one day in the future, who knows? As others above have said, you have to be flexible and roll with the punches.

We are a few years shy of Medicare eligibility, and it looks like $3k/month is what we will pay for the 2 of us after COBRA runs out. Maybe if we were 40 it would be cheaper. And maybe before we are Medicare age it will go up substantially.
You can get a catastrophic plan if you are over 30 and qualify for a hardship exemption. One particular exemption with apparently very loose restrictions is death of a family member within the past three years. healthcare.gov does not seem to specify any degree of kinship required of the deceased.

JackoC
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Re: Health insurance for FIRE

Post by JackoC » Thu Dec 06, 2018 10:31 am

NotWhoYouThink wrote:
Thu Dec 06, 2018 9:51 am
pdavi21 wrote:
Wed Dec 05, 2018 10:22 pm
Rich and healthy? Get a catastrophic plan.

The future costs may increase rapidly or fall to free...it's uncertain for retirement whether it's early or not.
If you are young, healthy and under 30 you can get a catastrophic plan. For those of us over 30 those plans are no longer available. But maybe they will be again one day in the future, who knows? As others above have said, you have to be flexible and roll with the punches.

We are a few years shy of Medicare eligibility, and it looks like $3k/month is what we will pay for the 2 of us after COBRA runs out. Maybe if we were 40 it would be cheaper. And maybe before we are Medicare age it will go up substantially.
The obstacle to catastrophic plans for us are three: First we're around 60 average, not under 30 and don't meet the hardship exemption (within reason). Second, the only catastrophic plan in NJ (that's appreciably cheaper than our current 'Bronze') is by one of the insurance co's not many health providers accept. That means significant extra cost when routine medical spending ends up 'out of network'. Third, the catastrophic plan isn't HSA, the HSA tax deduction saves us around 12% of the cost of our plan.

You can look up the current progression of premiums by age, at least NJ publishes that. Our plan would be only ~53% of what it is (it's actually $1538/mo 2019) if we were 45, 82% if we were 55, 10% more expensive if we were 64+. Of course that doesn't tell you what the premium actually will be in the future, since the whole curve will shift, probably up and probably faster than CPI if history is a guide (ours actually went down 3% despite age progression from 2018>2019, but went up 28% 2017>2018). But it tells you the baseline of progression with age. All bets are off if the law basically changes, but AFAIK you're not supposed to speculate and give opinions about that here even with disclaimers that other people shouldn't respond to your posts which give those opinions. :happy As a matter of current law though NJ has had gteed issue since before the ACA, and from 2019 there is a state individual mandate to buy health insurance; the penalties are those from the ACA before its individual mandate was repealed.

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Cyclesafe
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Re: Health insurance for FIRE

Post by Cyclesafe » Thu Dec 06, 2018 11:06 am

Retired in 2000 with eligibility for Medicare in 2019.

As a couple, our costs for health insurance began at ~$10k and ended (in 2018) at ~$20k, all with a ~$10k deductible (HSA Bronze). No subsidies. In 2019, Medicare Parts A/B with Medigap Plan G and a prescription drug plan - including IRMAA for B/D - will be ~$19k* with a total (B/D) deductible of ~$1k. Happy days. :annoyed

Our experience was therefore a compounded cost increase of private health insurance between 2000 and 2018 of ~4%.

But the number lies.

Prior to ACA, the cost of our health insurance actually dropped in some years. Credits for unused deductibles actually got our subsequent deductible down to $3000 in one year. Since the start of ACA in 2014, our cost of essentially the same health insurance went from ~$10k in 2013 to (as mentioned) ~$20k in 2018, a compounded cost increase of ~15%. Our insurer quoted a 11.47% increase for 2019 and raised the deductible to $12k - but we are obviously shifting to Medicare, thank goodness.

Going forward, I'd figure a minimum of 10% compounded growth in the annual cost of health insurance for a FIRE calculation.

* corrected for two rather than one person.
Last edited by Cyclesafe on Thu Dec 06, 2018 4:45 pm, edited 1 time in total.

JackoC
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Re: Health insurance for FIRE

Post by JackoC » Thu Dec 06, 2018 3:19 pm

Cyclesafe wrote:
Thu Dec 06, 2018 11:06 am
Since the start of ACA in 2014, our cost of essentially the same health insurance went from ~$10k in 2013 to (as mentioned) ~$20k in 2018, a compounded cost increase of ~15%. Our insurer quoted a 11.47% increase for 2019 and raised the deductible to $12k - but we are obviously shifting to Medicare, thank goodness.

Going forward, I'd figure a minimum of 10% compounded growth in the annual cost of health insurance for a FIRE caculation.
Just as another data point ours went from $12.3k (what's with a rough correction removing our youngest kid who was still on our plan then) in 2013 to $18.5k in 2019, 7% pa. Also note that even if 'baseline' health insurance rates stopped going up altogether, there's a significant increase over a long period just as a result of getting older, in the states (except NY, and any few others?) which allow pricing by age. And that's steeper at a younger age. For example in NJ now the progression is over 4% pa due to age between 45 and 60, it's only 2.5% pa between 60 and 64.

One reason our rate of increase is so 'low' even considering change in age is that NJ was so relatively expensive having had gteed issue (but no state mandate till starting in 2019, and no state subsidies of private insurance) prior to the ACA. Since the ACA, I believe NJ increases are less than national average.

I agree to make sure a pretty high rate of annual increase in the cost of buying private health insurance works for you before you cut yourself loose from the W2 workforce voluntarily. 10% is not ridiculously too high IMO, even though it's more than we've experienced since ACA. Although like you I'm speaking from perspective of no subsidies, no chance of them.

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Re: Health insurance for FIRE

Post by marcopolo » Thu Dec 06, 2018 3:37 pm

J295 wrote:
Wed Dec 05, 2018 10:15 pm
by 4nursebee » Wed Dec 05, 2018 6:11 pm
Are these lesser known companies safe to do business with?
What do you do for FIRE insurance? What is the cost and have you had any problems?
Any pointers?
We fear the $2,000 a month plans getting more expensive eating up our egg.
2. What do we do? Retired in 2013 and was prepared to pay for insurance on the open market. We had the resources to retire and were not going to be held hostage by the unknown of insurance. I don't mean to minimize the concern, and it's a big nut to crack for sure and a very fluid situation going forward, but we decided we would make a go of it and adapt to insurance as needed. As it turns out the Affordable Care Act constitutionality was affirmed by the Supreme Court and we have been insured under it since that time (although we came within one vote in the Senate of potentially having to re-load our planning). We manage Modified Adjusted Gross Income for our family of two and qualify for Premium Tax Credits. Our premium cost ends up being less than $500 (and that is with $55k of MAGI). Without the credits it would be around $24k. We have a high deductible plan.
The highlighted statement above, I think is the key if you want to retire early.
We grappled with the same issue. Retired earlier this year at age 51, with a plan, and realizing that plans might change.

The only think i am sure of is that things will change over the next 10, 20, 30 years.

It does not seem like your $2k/month estimate is really that high.
Health insurance is expensive because healthcare is expensive. Have you seen the posts from from all the HNW medical professionals here! :beer

We are on company paid COBRA through the end of the year.
We budgeted $30k for 2019, and 6% inflation after that.
Who knows if that will be sufficient.

We will try to qualify for Tax Credit (while they still exist), when they make sense (vs Roth Conversion) by running i-ORP simulations on the conversion. Any such savings will help offset any shortfall from higher price increases.

If ACA protections go away, we will adapt. Some state have similar provisions, others will likely add them if federal protections go away.
I have been pretty resourceful through my life. If all else fails, I am pretty sure i could find a job with health insurance if I really had to. It would not be ideal, but better than continuing to work for the next 10-15 years just for the fear of losing health insurance in the future.

It is a bit risky, but so are a lot of other aspects of life.

For those advocating continuing to work until Medicare age, even if financially able to retire earlier, have you looked at the finances of Medicare? Is the risk Zero that Medicare also get changed in significant ways? If the risk is non-zero, would you now recommend working till you die to have access to health insurance?
Once in a while you get shown the light, in the strangest of places if you look at it right.

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DWesterb2iz2
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Re: Health insurance for FIRE

Post by DWesterb2iz2 » Thu Dec 06, 2018 3:47 pm

Elena wrote:
Wed Dec 05, 2018 7:52 pm
Thank you for the thread, OP. I myself am trying to tackle the "elephant in the room", and have been blocked for quite a while because I do not know how to calculate healthcare costs if I retire early. I have used the official calculator (healthcare.gov), and simulated scenarios.

My understanding is that, if FIREd, one must keep a low income to access subsidies. I have a taxable account to carry me from age 46 to when I can access retirement accounts. If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?

I have to say I have the same issue as the OP. Over 1M in assets, not including condo and car, which are paid off, but have been blocked for a while. I normally do projections for everything, but this I cannot even calculate for one year. The official calculator offers me an array of plans, with different coverage and deductibles, and I can understand all of it, but it does not tell me whether a subsidy is priced in. The most expensive plan it offers costs $7,000/yr. (single person), which I could afford with some juggling, but the amount makes me doubt because when I read other threads everyone talks about higher figures.

Sorry for the rambling. This part of my financial plan is completly confusing, and I have read a lot of threads. Maybe I need an advisor just for this early retirement-medical plan. I cannot assess my FIRE readyness until I clear this healthcare box.
Be careful of the focus on subsidies. There are places where ACA compliant plans off the exchanges (and so non subsidy plans) have much better network options. In Chicago, for example, plans on the exchange have very limited networks, and include hospitals you would not likely choose on your own. Even off-exchange plans are limited, of course, but at least some of the better hospitals are included in some plans. Your area may not have this problem, but check. You may actually need hospitalization sometime, I’d focus on that possibility before subsidies.

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Re: Health insurance for FIRE

Post by JackoC » Thu Dec 06, 2018 4:36 pm

marcopolo wrote:
Thu Dec 06, 2018 3:37 pm
J295 wrote:
Wed Dec 05, 2018 10:15 pm

2. What do we do? Retired in 2013 and was prepared to pay for insurance on the open market. We had the resources to retire and were not going to be held hostage by the unknown of insurance. I don't mean to minimize the concern, and it's a big nut to crack for sure and a very fluid situation going forward, but we decided we would make a go of it and adapt to insurance as needed.
The highlighted statement above, I think is the key if you want to retire early.
We grappled with the same issue. Retired earlier this year at age 51, with a plan, and realizing that plans might change.

The only think i am sure of is that things will change over the next 10, 20, 30 years.

It does not seem like your $2k/month estimate is really that high.
Health insurance is expensive because healthcare is expensive. Have you seen the posts from from all the HNW medical professionals here! :beer

We are on company paid COBRA through the end of the year.
We budgeted $30k for 2019, and 6% inflation after that.
Who knows if that will be sufficient.

It is a bit risky, but so are a lot of other aspects of life.
I agree with your general theme. Just in numbers though as I noted above in NJ (and I believe it's true nationally except the one or few states that prohibit pricing by age) insurance goes up 4% pa just from aging in the 'FIRE-ish' age range 45-60. So 6% really means a given basket of health care services only increasing at 2% pa. Healthcare costs, as opposed to insurance, in the US rose 5.3% pa (1.8% pa faster than CPI) in 1948-2017 and 3.6% (1.4% faster than CPI) in 1997-2017 per this Federal Reserve blog piece. Not as scary as many insurance premium increases in recent years, but not CPI either.
https://fredblog.stlouisfed.org/2017/07 ... inflation/

I could see assuming 8% maybe, but 6% seems pretty optimistic and again I don't think 10% is ridiculously pessimistic. Because, with *insurance* as opposed to underlying avg healthcare costs there's more risk of an 'adverse selection death spiral' where healthier people bail out and the insured pool becomes increasingly older and sicker than all the people who *could* buy private insurance. I guess for example the people on this forum saying 'maybe I don't really need health insurance' skew younger and healthier. 6,8 10% is a minor quibble for one year, but not as minor over 15 yrs (2.4, 3.2 or 4.2 times more in nominal $'s; 1.8, 2.4 or 3.2 times more adjusted for CPI).
Last edited by JackoC on Thu Dec 06, 2018 4:43 pm, edited 1 time in total.

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Re: Health insurance for FIRE

Post by Elena » Thu Dec 06, 2018 4:39 pm

DWesterb2iz2 wrote:
Thu Dec 06, 2018 3:47 pm
Elena wrote:
Wed Dec 05, 2018 7:52 pm
Thank you for the thread, OP. I myself am trying to tackle the "elephant in the room", and have been blocked for quite a while because I do not know how to calculate healthcare costs if I retire early. I have used the official calculator (healthcare.gov), and simulated scenarios.

My understanding is that, if FIREd, one must keep a low income to access subsidies. I have a taxable account to carry me from age 46 to when I can access retirement accounts. If I retire early, I will not have any "income" (other than mu.funds divs. and distributions), hence will be able to access some kind of subsidy. Is that correct?

I have to say I have the same issue as the OP. Over 1M in assets, not including condo and car, which are paid off, but have been blocked for a while. I normally do projections for everything, but this I cannot even calculate for one year. The official calculator offers me an array of plans, with different coverage and deductibles, and I can understand all of it, but it does not tell me whether a subsidy is priced in. The most expensive plan it offers costs $7,000/yr. (single person), which I could afford with some juggling, but the amount makes me doubt because when I read other threads everyone talks about higher figures.

Sorry for the rambling. This part of my financial plan is completly confusing, and I have read a lot of threads. Maybe I need an advisor just for this early retirement-medical plan. I cannot assess my FIRE readyness until I clear this healthcare box.
Be careful of the focus on subsidies. There are places where ACA compliant plans off the exchanges (and so non subsidy plans) have much better network options. In Chicago, for example, plans on the exchange have very limited networks, and include hospitals you would not likely choose on your own. Even off-exchange plans are limited, of course, but at least some of the better hospitals are included in some plans. Your area may not have this problem, but check. You may actually need hospitalization sometime, I’d focus on that possibility before subsidies.
Ah, thank you! I will run that scenario too, punching in a high income figure. Who knows, maybe I can even afford a decent plan without a subsidy (though my income will be low anyway), given that my current group plan (cheapest option) is not cheap at all.

marcopolo
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Re: Health insurance for FIRE

Post by marcopolo » Thu Dec 06, 2018 4:50 pm

JackoC wrote:
Thu Dec 06, 2018 4:36 pm
marcopolo wrote:
Thu Dec 06, 2018 3:37 pm
J295 wrote:
Wed Dec 05, 2018 10:15 pm

2. What do we do? Retired in 2013 and was prepared to pay for insurance on the open market. We had the resources to retire and were not going to be held hostage by the unknown of insurance. I don't mean to minimize the concern, and it's a big nut to crack for sure and a very fluid situation going forward, but we decided we would make a go of it and adapt to insurance as needed.
The highlighted statement above, I think is the key if you want to retire early.
We grappled with the same issue. Retired earlier this year at age 51, with a plan, and realizing that plans might change.

The only think i am sure of is that things will change over the next 10, 20, 30 years.

It does not seem like your $2k/month estimate is really that high.
Health insurance is expensive because healthcare is expensive. Have you seen the posts from from all the HNW medical professionals here! :beer

We are on company paid COBRA through the end of the year.
We budgeted $30k for 2019, and 6% inflation after that.
Who knows if that will be sufficient.

It is a bit risky, but so are a lot of other aspects of life.
I agree with your general theme. Just in numbers though as I noted above in the 45-60 age range in NJ (and I believe it's true nationally except the one or few states that prohibit pricing by age) insurance goes up 4% pa just from aging in the 'FIRE-ish' age range 45-60. So 6% really means a given basket of health care services only increasing at 2% pa. Healthcare costs, as opposed to insurance, in the US rose 5.3% pa (1.8% pa faster than CPI) in 1948-2017 and 3.6% (1.4% faster than CPI) in 1997-2017 per this Federal Reserve blog piece. Not as scary as many insurance premium increases in recent years, but not CPI either.
https://fredblog.stlouisfed.org/2017/07 ... inflation/

I could see assuming 8% maybe, but 6% seems pretty optimistic and again I don't think 10% is ridiculously pessimistic. Because, with *insurance* as opposed to underlying avg healthcare costs there's more risk of an 'adverse selection death spiral' where healthier people bail out and the insured pool becomes increasingly older and sicker than all the people who *could* buy private insurance. I guess for example the people on this forum saying 'maybe I don't really need health insurance' skew younger and healthier. 6,8 10% is a minor quibble for one year, but not as minor over 15 yrs (2.4, 3.2 or 4.2 times more in nominal $'s; 1.8, 2.4 or 3.2 times more adjusted for CPI).
You bring up a very good point that should be considered.

Fortunately, I hope we covered this sufficiently by using the age 64 premiums in coming up with our initial estimate. We are using that in our budget the first year because we will have kids on our plan for a couple of years.
Once in a while you get shown the light, in the strangest of places if you look at it right.

deikel
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Re: Health insurance for FIRE

Post by deikel » Thu Dec 06, 2018 4:50 pm

Thesaints wrote:
Wed Dec 05, 2018 8:49 pm
A person who FIREs is planning to spend maybe half a century in retirement and if a few extra thousand dollars per year make a difference then the answer is obvious: not ready to retire.
This is compounded by the associated frugal living philosophy. A terrible plan; it leaves no margin for errors. One cannot downgrade from "frugal" and still eat three meals per day.

FIRE = Rev. Jones - koolaid
Not quite half a century, in terms of health insurance you only need to make it to Medicare to be able to plan it a whole lot better..so more like maybe 25 years give or take a little.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

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Cyclesafe
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Re: Health insurance for FIRE

Post by Cyclesafe » Thu Dec 06, 2018 4:57 pm

Seems like FIRE with income less than four times the federal poverty level and qualify for a subsidy (MFJ) or be prepared to shell out $20k, increasing at X% (6,8,10%) compounded every year to age 65. Or I guess go without insurance and take your chances......

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4nursebee
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Re: Health insurance for FIRE

Post by 4nursebee » Thu Dec 06, 2018 6:13 pm

It seems like the cost of healthcare is prohibitive of FIRE for many people thus making the whole industry (books, blogs, advice, internet sites, magazine articles) BUNK.
4nursebee

BrooklynInvest
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Re: Health insurance for FIRE

Post by BrooklynInvest » Thu Dec 06, 2018 6:32 pm

My concern isn't just the cost, it's that if insurers can go back to discriminating against people with preexisting conditions then we could wind up uncovered despite being nominally "insured."

Hopefully things will stabilize in the next 3 years. We always have the option of moving to Europe but not an option for most folks.

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David Jay
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Re: Health insurance for FIRE

Post by David Jay » Thu Dec 06, 2018 6:39 pm

As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 and 2021 because I can keep income below $64K next year.
Last edited by David Jay on Thu Dec 06, 2018 7:38 pm, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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JoMoney
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Re: Health insurance for FIRE

Post by JoMoney » Thu Dec 06, 2018 6:39 pm

4nursebee wrote:
Thu Dec 06, 2018 6:13 pm
It seems like the cost of healthcare is prohibitive of FIRE for many people thus making the whole industry (books, blogs, advice, internet sites, magazine articles) BUNK.
I don't think FIRE advocates claim that most people will be able to do it, it would be economically catastrophic if everyone retired early.
The problem with many attempting it, is they're either not really FI (financially independent)- they're very much reliant on subsidies from others, or are taking on extra uncovered risks.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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JoMoney
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Re: Health insurance for FIRE

Post by JoMoney » Thu Dec 06, 2018 7:20 pm

aspirit wrote:
Thu Dec 06, 2018 6:53 pm
Cyclesafe wrote:
Thu Dec 06, 2018 4:57 pm
Seems like FIRE with income less than four times the federal poverty level and qualify for a subsidy (MFJ) or be prepared to shell out $20k, increasing at X% (6,8,10%) compounded every year to age 65. Or I guess go without insurance and take your chances......
You never take your chances as long as you can get to ANY Hospital.

AS long as you get there THEY/HOSP is obligated to treat your EMERGENCY/CRISIS, only if they accept medicaid/Medicare they MUST treat you and release you, asap. 99.99% do.
Google it-> EMTALA nixon/ ITS Still in effect.
This health care fiasco is a TAX and it is unsustainable & outrageous, it has bankrupted a couple self-employed associates I know whom knew no better than to just keep paying their bills. Unreal.
Things will change.
What's "unreal" are the people being grinded in the middle. I've known people who had health cover, are not wealthy - but have a small amount of savings and trying to get ahead, but have several thousand dollar deductibles and trying to make the call on whether they're just having a bit of gas or a cramp that will go away, or if they're having a heart-attack or appendicitis. If you're broke you've got nothing to lose, but there are scores of people stuck in the middle that wind up having to make life impacting judgement calls (that they're not qualified to make) on whether or not it's worth wiping out their savings for a bunch of tests that might turn out to be a non critical issue.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

marcopolo
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Re: Health insurance for FIRE

Post by marcopolo » Thu Dec 06, 2018 7:24 pm

David Jay wrote:
Thu Dec 06, 2018 6:39 pm
As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 because I can keep income below $64K next year.
How would you become eligible for Medicaid expansion if you say your income is too high for ACA subsidy level?
Once in a while you get shown the light, in the strangest of places if you look at it right.

michaeljc70
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Re: Health insurance for FIRE

Post by michaeljc70 » Thu Dec 06, 2018 7:34 pm

I haven't read all the replies. I would carefully check any short-term insurance though as many have a lot of limitations. Many don't even cover prescriptions. I take no regular prescriptions, but I cannot predict whether I will need an expensive life saving prescription, so I am not going to opt for that type of plan.

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David Jay
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Re: Health insurance for FIRE

Post by David Jay » Thu Dec 06, 2018 7:36 pm

marcopolo wrote:
Thu Dec 06, 2018 7:24 pm
David Jay wrote:
Thu Dec 06, 2018 6:39 pm
As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 because I can keep income below $64K next year.
How would you become eligible for Medicaid expansion if you say your income is too high for ACA subsidy level?
In Michigan, it is based on monthly income, not annual income. My January lump sum would not prevent me from applying in August, but I would need to have less than $2200 a month income in July (and perhaps June???).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

michaeljc70
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Re: Health insurance for FIRE

Post by michaeljc70 » Thu Dec 06, 2018 7:40 pm

David Jay wrote:
Thu Dec 06, 2018 6:39 pm
As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 and 2021 because I can keep income below $64K next year.
With 2 people that are retired paying $300 a month, there has to be so many holes in the policy you can drive a truck through it. Are prescriptions covered?

User avatar
David Jay
Posts: 5756
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Health insurance for FIRE

Post by David Jay » Thu Dec 06, 2018 7:56 pm

michaeljc70 wrote:
Thu Dec 06, 2018 7:40 pm
David Jay wrote:
Thu Dec 06, 2018 6:39 pm
As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 and 2021 because I can keep income below $64K next year.
With 2 people that are retired paying $300 a month, there has to be so many holes in the policy you can drive a truck through it. Are prescriptions covered?
No prescription coverage below the deductible. The first $2500 you pay regardless. Like a HDHP, where you pay from your HSA.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

User avatar
MP123
Posts: 793
Joined: Thu Feb 16, 2017 3:32 pm

Re: Health insurance for FIRE

Post by MP123 » Thu Dec 06, 2018 8:19 pm

David Jay wrote:
Thu Dec 06, 2018 7:56 pm
michaeljc70 wrote:
Thu Dec 06, 2018 7:40 pm
David Jay wrote:
Thu Dec 06, 2018 6:39 pm
As I prepared to retire, I looked at the following possibilities (prices are for married couple):
1. COBRA
2. ACA
3. Medicaid Expansion
4. Short term policy
5. Medishare

1. $8000 a year. Pretty steep for a moderate income person in LCOL area.
2. My retirement payout (sick bank, vacation) exceeds ACA subsidy level (64K) so that is out for 2019, it will likely work for next year.
3. Would require that I live mostly out of my Roth accounts, depleting them.
5. About $400 a month with $10,000 out-of-pocket before start of coverage

Which leaves #4 - a short term policy (6mo, renewable) for 2019. $300 a month with a $2500 deductible per person. $2M max coverage. Policy is offered by the largest hospital network in out-state Michigan. If something came up that prevented renewal at mid-year, options 3 and 5 are available.

I will likely use ACA for 2020 and 2021 because I can keep income below $64K next year.
With 2 people that are retired paying $300 a month, there has to be so many holes in the policy you can drive a truck through it. Are prescriptions covered?
No prescription coverage below the deductible. The first $2500 you pay regardless. Like a HDHP, where you pay from your HSA.
Does it cover preexisting conditions? Is it an indemnity policy? The price is too good to be true, I'd look at it very closely.

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