How did you solve the pre-medicare healthcare riddle?

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

Post by Watty » Fri Jan 11, 2019 6:46 am

White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
So I've got to go buy my own health insurance on the open market. So I'll call up my health insurance broker and buy a policy. Why wouldn't an early retiree do the same?
The big question is if you will actually be able to do that in the future, and if you can how much will it cost. It is hard to plan when the rates can go up 50% a year for several years in a row.

Before the ACA a huge percentage of people in their 50s and 60s would not have been able to get any sort of viable private health insurance like that. If you had a kid with health issues that was also a no win situation.

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

Post by Grasshopper » Fri Jan 11, 2019 7:03 am

Wouldn't help new early retires, But we were on private HI for years before retiring at 54/50. We were lucky to have a grandfathered policy that mostly just raised prices as we aged. Every time I did the math and also looked at income restriction and roth conversion possibilities I believe I chose the right thing. For 2019 we will both be on Medicare.

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

Post by MikeG62 » Fri Jan 11, 2019 7:21 am

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

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

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

1.3m in taxable even yielding 3% (TSM yield is lower) is only 39k. The cliff for a couple is around 65k. That still leaves some of room to raise additional funds via selling in taxable and staying below cliff, and in 0% LTCG range.
You're right - my math was wrong. It's more in the ballpark of $1.6M in taxable for a single, and $2.2M for a couple to lose subsidies completely based on interest/dividends. Still a problem if you have the kind of savings you need to be able to retire early, definitely in an HCOL area.
Keep in mind Muni bond interest is an add-back to income in computing MAGI, putting further pressure on qualifying for the subsidy - especially for those early retired without a pension and living off their taxable investments in a HCOL area.
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pennywise
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Re: How did you solve the pre-medicare healthcare riddle?

Post by pennywise » Fri Jan 11, 2019 7:49 am

[quote=MikeG62 post_id=4312838 time=1547162899 user_id=114308
Short answer is to build the cost into your budget, the same as any other expense line item (i.e., pay for it like any other expense). It should not necessarily require one spouse to work any more than covering any of your other expenses.
This is our plan. My husband just turned 65, retired and has Medicare part A coverage along with being a dependent on my company health care insurance. I'm 61 and plan to retire this year so we'll need to take care of my health insurance for ~3 years till my own Medicare eligibility.

Our company offers the option for retirees to continue health care coverage by paying the full premium amounts until that time, so basically extended COBRA. I've baked that cost into our projected income needs, it is simply an additional $700/month along with his Medicare premium. I'm estimating an additional $300/month for the Medicare (parts A/B and supplement) so I assume we need to fund ~$1000/monthly for the foreseeable future and our plans include that as a fixed cost, one which could go higher of course.

If or when our employer stops offering the extended coverage to retirees or if the cost becomes prohibitive, we can switch to a marketplace option without a subsidy.

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

Post by munemaker » Fri Jan 11, 2019 7:53 am

One word: Obamacare

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

Post by IngognitoUSA » Fri Jan 11, 2019 9:06 am

It is virtually impossible to be employed from 21 to 65 without interruption. Is there a wiki that provides list of employers for p/t work and health benefits. Or other strategies such as enrolling in college or moving to healthcare friendly states? This is assuming that you can’t get subsidies for ACA.

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

Post by dodecahedron » Fri Jan 11, 2019 9:26 am

marcopolo wrote:
Fri Jan 11, 2019 12:28 am
White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
BH:

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

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

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

I know pretty well what i am going to spend on food the next few years, and I can make different choices to control my costs.
How would i even venture a guess at what my health insurance might cost in a few years?
I agree with marcopolo. Health insurance is in a category by itself as far as predictability of costs. When my husband and I started our own business in the mid-1990s, we were in our mid-40s and happy to see that our state (NY) required insurers to offer guaranteed-issue (no underwriting) community-rated policies. Premiums were not allowed to vary based on age on health status. We looked at prices at the time and saw that we could get an excellent PPO for something like $478/month (family of four coverage.) Less than ten years later, the same policy cost $3,000/month (and the others available were not much less expensive.) Adverse selection had led us to be sharing risks with a much smaller and sicker pool.

At that point, in 2004, we decided that one of us needed to take a job with group health insurance benefits because things were spiraling out of control. Good thing we did because after we left the pool of people buying those policies statewide got smaller and smaller and sicker to the point that by 2012, nongroup policies in the state cost up to $100K per year.

It is very hard to plan for health insurance coverage costs before Medicare eligibility. I am grateful to be 65 (finally!) Now I just need to worry about long term care costs.

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

Post by White Coat Investor » Fri Jan 11, 2019 10:51 am

Watty wrote:
Fri Jan 11, 2019 6:46 am
White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
So I've got to go buy my own health insurance on the open market. So I'll call up my health insurance broker and buy a policy. Why wouldn't an early retiree do the same?
The big question is if you will actually be able to do that in the future, and if you can how much will it cost. It is hard to plan when the rates can go up 50% a year for several years in a row.

Before the ACA a huge percentage of people in their 50s and 60s would not have been able to get any sort of viable private health insurance like that. If you had a kid with health issues that was also a no win situation.
Agreed. It's much better now for earlier retirees with the ACA in place, although to be fair the ACA did cause a dramatic increase in prices. But at least you can get it.
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White Coat Investor
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Re: How did you solve the pre-medicare healthcare riddle?

Post by White Coat Investor » Fri Jan 11, 2019 10:53 am

marcopolo wrote:
Fri Jan 11, 2019 12:28 am
White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
Bloodsuckingleeches wrote:
Thu Jan 10, 2019 10:41 am
BH:

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

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

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

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

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

So, as i said up thread, I budget a big chunk of dollars, assume higher than inflation growth in that budget, stay flexible with my plans, and hope for the best from a public policy perspective. I try not to let the healthcare tail wag the living life dog.
I think that last paragraph is good advice.

I also agree health care is a huge problem. Embarrassing to be a part of it really. But obviously 50% increases can't continue for long and if something cannot continue forever, it won't.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by HoosierJim » Fri Jan 11, 2019 11:16 am

White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
This is an oversimplification for average people. ACA subsidy strategies are not known to everyone. How should people plan for huge deductibles? Also a pending court case doesn't simplify things.

I would like to see how a FIRE - lets say somebody 58 years old with a spouse living in a HCOL place (ex. annual budget over the subsidy limits) with much of their savings in IRA/401 should plan the years till Medicare.

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

Post by SimonJester » Fri Jan 11, 2019 12:14 pm

In the past couple of years many of the PT jobs no longer offer health insurance. My wife's past two employers it was not even an option to purchase if she wanted to... No benefits for PT employees beyond 401K with matching.
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Re: How did you solve the pre-medicare healthcare riddle?

Post by go_mets » Fri Jan 11, 2019 12:55 pm

IngognitoUSA wrote:
Fri Jan 11, 2019 9:06 am
It is virtually impossible to be employed from 21 to 65 without interruption. Is there a wiki that provides list of employers for p/t work and health benefits. Or other strategies such as enrolling in college or moving to healthcare friendly states? This is assuming that you can’t get subsidies for ACA.
https://www.propublica.org/article/olde ... retirement
someone posted that here recently

https://www.moneycrashers.com/part-time ... -benefits/
https://ptmoney.com/the-ten-best-part-t ... -benefits/
https://www.thefrugalgene.com/part-time ... insurance/
https://due.com/blog/part-time-jobs-wit ... insurance/
https://outofyourrut.com/20-part-time-j ... insurance/

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

Post by Alan S. » Fri Jan 11, 2019 2:22 pm

Eventually, when the Cobra interchange between the employer and the Cobra provider broke down, such that they did not pay claims but still sent me monthly bills, I stopped paying the premiums and went uninsured for about a year until age 65. Lucked out, no medical bills and saved a ton of premium. However, had there been a major claim, there also would have been a lawsuit, as I kept good documentation of the entire fiasco.

During this time I called the DOL and found out that while there were severe penalties if an employer did not offer Cobra, there was no interest on their part if the Cobra provider failed to provide coverage. Later I found out that the Cobra provider was in the process of being ACQUIRED by the employer while all this was going on!!

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

Post by cyclist » Fri Jan 11, 2019 2:44 pm

I’m retiring presently at 62, DW already did. Most of our assets are tax-deferred. We did Roth conversations in 2018 to make certain we had access to sufficient funds and to minimize long-term taxes. We will limit our income to stay below the ACA cliff and rely on ACA until Medicare.

We consume a fair bit of medical services. It is looking like it will be worth it for us to use a Kaiser HMO plan, even if DW chooses to pay some existing docs out-of-pocket. (The subsidized cost of a Platinum Kaiser plan is little more than half the cost of a subsidized CareFirst gold PPO plan for us. )

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

Post by White Coat Investor » Fri Jan 11, 2019 5:28 pm

HoosierJim wrote:
Fri Jan 11, 2019 11:16 am
White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
This is an oversimplification for average people. ACA subsidy strategies are not known to everyone. How should people plan for huge deductibles? Also a pending court case doesn't simplify things.

I would like to see how a FIRE - lets say somebody 58 years old with a spouse living in a HCOL place (ex. annual budget over the subsidy limits) with much of their savings in IRA/401 should plan the years till Medicare.
What does the health insurance you plan to use in year one cost? Budget that amount plus your deductible adjusted by whatever inflation adjustment you feel comfortable with times the number of years until you turn 65. Why is this complicated? How do you plan for food, property taxes, and travel expenses? Same way, right? The only uncertainty is how much the cost will go up in any given year. So pick a generous inflation adjustment, make sure you have enough to cover it before retiring, retire, and then travel more when it goes up less than you planned for.
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Bloodsuckingleeches
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Re: How did you solve the pre-medicare healthcare riddle?

Post by Bloodsuckingleeches » Fri Jan 11, 2019 5:47 pm

The purpose of my thread is not due to confusion as to how “complicated” getting a price is for insurance.

It was meant to hear how others experiences have been in one of, what I guess are three likely scenarios:

1) finding work at some different level than previously experienced that provides health care. I.e. working not for money or career development as much as simply for the benefits.

2) experiencing the changing landscape of paying out annually for insurance on the exchanges and how it is impacting lifestyle

3) other options such as “medi share”

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

Post by HoosierJim » Fri Jan 11, 2019 7:31 pm

White Coat Investor wrote:
Fri Jan 11, 2019 5:28 pm
Why is this complicated? How do you plan for food, property taxes, and travel expenses? Same way, right?
Here are some Chicago area rates:

Image

You see this is not exactly like planning for food, property taxes and luxuries like travel expenses.

The original poster asked about what people have done to navigate this problem. Assuming near retirement age people with possibly chronic conditions, you might have to budget $34,000 (after tax) for health insurance - but most likely not - but you would only know after you hit 65 what you should have budgeted. Much more complicated than the food budget.

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

Post by MP123 » Fri Jan 11, 2019 8:23 pm

White Coat Investor wrote:
Fri Jan 11, 2019 5:28 pm
HoosierJim wrote:
Fri Jan 11, 2019 11:16 am
White Coat Investor wrote:
Thu Jan 10, 2019 11:41 pm
If you don't have enough money to retire early and buy your own health insurance, you don't have enough money to retire early.
This is an oversimplification for average people. ACA subsidy strategies are not known to everyone. How should people plan for huge deductibles? Also a pending court case doesn't simplify things.

I would like to see how a FIRE - lets say somebody 58 years old with a spouse living in a HCOL place (ex. annual budget over the subsidy limits) with much of their savings in IRA/401 should plan the years till Medicare.
What does the health insurance you plan to use in year one cost? Budget that amount plus your deductible adjusted by whatever inflation adjustment you feel comfortable with times the number of years until you turn 65. Why is this complicated? How do you plan for food, property taxes, and travel expenses? Same way, right? The only uncertainty is how much the cost will go up in any given year. So pick a generous inflation adjustment, make sure you have enough to cover it before retiring, retire, and then travel more when it goes up less than you planned for.
In the individual market (unlike employer based) rates are set by age in almost all states. So your premium is guaranteed to go up in year two just because you're a year older. Plus of course the overall inflation of rates every year which can easily be 30%

Premiums for a 64 year old are capped at 3 times what they are for an 18 year old. One recent proposal in congress was to raise this cap to 5 times. Who knows what the future holds?

Very difficult to plan for health insurance pre-medicare except that it's likely to be a very large number.

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

Post by quantAndHold » Fri Jan 11, 2019 8:25 pm

White Coat Investor wrote:
Fri Jan 11, 2019 5:28 pm
Why is this complicated? How do you plan for food, property taxes, and travel expenses? Same way, right?
It isn't complicated, as long as the ACA continues to tread water. But what if it doesn't? People are reacting to the uncertainty that early retirees live with every day.

So you didn't work quite enough hours to get employer based coverage. Meh. If *you* can't get individual coverage, you suck it up and work more hours. Someone who's 60, has been out of the workplace for a few years, possibly with some health issues that keep them from working full time...if they lose individual coverage, their retirement just failed, in a big way.

I knew someone this happened to in the pre-ACA days. It wasn't pretty.

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

Post by White Coat Investor » Fri Jan 11, 2019 10:03 pm

HoosierJim wrote:
Fri Jan 11, 2019 7:31 pm
White Coat Investor wrote:
Fri Jan 11, 2019 5:28 pm
Why is this complicated? How do you plan for food, property taxes, and travel expenses? Same way, right?
Here are some Chicago area rates:

Image

You see this is not exactly like planning for food, property taxes and luxuries like travel expenses.

The original poster asked about what people have done to navigate this problem. Assuming near retirement age people with possibly chronic conditions, you might have to budget $34,000 (after tax) for health insurance - but most likely not - but you would only know after you hit 65 what you should have budgeted. Much more complicated than the food budget.
No, I don't see that. That's what I pay every month for health insurance. It's expensive stuff. If you don't have enough money to retire early and pay that much, you don't have enough money to retire early. You should probably work a few more years if you can. (Of course, we're both also ignoring the presence of a likely ACA subsidy for many early retirees).
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

nguy44
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Re: How did you solve the pre-medicare healthcare riddle?

Post by nguy44 » Sat Jan 12, 2019 12:15 am

I delayed retiring to ensure we had enough set aside worst case for premiums. My pension alone disqualifies us from subsidies. Megacorp FAs were using $25k for 2 of us, so we ramped up savings to ensure we had $150k that we could spend on premiums without touching investments.

The good news is that, retiring at 60, COBRA rates for 18 months are much less than ACA rates. 2020, 2021, and some of 2022 (DW turns 65 that year, I in 2023) are what we are now planning for. In our area the worse case for premiums for us will probably be around $75k, which we have covered. We can purchase retiree insurance post COBRA from Megacorp, but it remains to be seen if their rates will be better than ACA.

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

Post by HoosierJim » Sat Jan 12, 2019 8:55 am

White Coat Investor wrote:
Fri Jan 11, 2019 10:03 pm
That's what I pay every month for health insurance. It's expensive stuff.
Me too.
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
Me too
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
My pension alone disqualifies us from subsidies.
I, like most people these days don't have a pension. And not everybody has access to Cobra.

So getting to the original poster's question on navigating this process - if you had to give advice for somebody planning early retirement - and not eligible for subsidies (lets say you DO have a pension and it's $48,001 / year) - you might direct them to Firecalc or ORP . You might also direct them to social security resources such as Open Social Security..

My question is - how should they realistically budget for health care - one idea is to take the premium and increase it by some health care inflation rate but what advice would you give for deductible planning - just assume max oop each year? I know people with chronic conditions and special drug requirements and do pay max oop each year.

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

Post by Watty » Sat Jan 12, 2019 9:00 am

nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
The problem is that the worst case is that you can't buy any policy. That was often the case before the affordable care act.

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

Post by White Coat Investor » Sat Jan 12, 2019 10:21 am

HoosierJim wrote:
Sat Jan 12, 2019 8:55 am
White Coat Investor wrote:
Fri Jan 11, 2019 10:03 pm
That's what I pay every month for health insurance. It's expensive stuff.
Me too.
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
Me too
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
My pension alone disqualifies us from subsidies.
I, like most people these days don't have a pension. And not everybody has access to Cobra.

So getting to the original poster's question on navigating this process - if you had to give advice for somebody planning early retirement - and not eligible for subsidies (lets say you DO have a pension and it's $48,001 / year) - you might direct them to Firecalc or ORP . You might also direct them to social security resources such as Open Social Security..

My question is - how should they realistically budget for health care - one idea is to take the premium and increase it by some health care inflation rate but what advice would you give for deductible planning - just assume max oop each year? I know people with chronic conditions and special drug requirements and do pay max oop each year.
I think I'd look at my own history. If I usually hit max OOP, I'd use that. If I rarely do, I'd use something lower.
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WillRetire
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Re: How did you solve the pre-medicare healthcare riddle?

Post by WillRetire » Sat Jan 12, 2019 10:54 am

Here's the process we use.

1. Each Fall, price individual plans. Note: We did this even BEFORE ACA, because contrary to popular belief non-group plans were available to many people in many states even before ACA, and they helped many people like independent contractors.

ehealthinsurance.com was (and still is) a very useful resource for this purpose.

2. Compare coverage & pricing with retiree coverage (if any) from former employers, tenuous as that may be. Give +1 point for group coverage (which is what retiree plan is) because that tends to give more value = coverage/premium $. Give +1 point for comprehensive coverage including very expensive things like organ transplants and centers-of-excellence care for serious conditions. Give +1 point to cheapest premiums.

3. Decide on a plan for the next year.

4. Don't worry about the year after next (yet) because things are changing. Worry about the next year in the Fall.
Worry-warts will find this whole situation challenging. Try yoga or meditation.

5. Live as healthy a lifestyle as possible. Healthy diet & exercise, wellness screenings, maintain healthy weight. The produce aisle in the grocery store is your friend.

6. Track all expenses of household, including premiums etc., and adjust expense forecast as needed in retirement plan.

7. If the premiums are in the same range as a mortgage payment, and they may well be, and if your retirement plan cannot support that, then start job hunting to find a job that either (a) can support the premiums, or (b) provides healthcare.
Hold up sign: "Will work for group health plan only". Look at govt jobs on www.usajobs.gov

8. Itemize medical deductions and include after-tax premiums. Yes, this is still possible. Expenses & premiums are deductible if over the 7.5% AGI threshhold, and if high enough, will exceed the standard deduction. Report mileage too.
ETA: Include dental and vision expenses too, and LTCi premiums if applicable.

ETA: Regarding step 7, which is basically a "plan B", there are additional backup plan options, such as:
- Consider moving to an area where health insurance premiums are more affordable. This is not the same thing as affordable healthcare, which is important too. But the premiums need to be affordable first.
- Reduce your income to try & qualify for ACA subsidies. Might be difficult, especially if you were a good planner years ago and gave yourself income in retirement, income which may not be so easy to turn off. And the other problem with this is... see #4 above: Things may change.
Last edited by WillRetire on Sat Jan 12, 2019 11:32 am, edited 1 time in total.

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

Post by randomguy » Sat Jan 12, 2019 11:11 am

Watty wrote:
Sat Jan 12, 2019 9:00 am
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
The problem is that the worst case is that you can't buy any policy. That was often the case before the affordable care act.
That isn't quite true. You might not be able to buy a policy where you want to live but there are a bunch of states with preexisting conditions and guaranteed issue laws. See Mass. for the poster child for a state running a healthcare system. If you are already enrolled in plan, more states have guaranteed renewal (granted the plans might get really expensive). Like taxes, COL, and the rest, ability to buy insurance will be a factor in where you choose to live when you retire.

nguy44
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Re: How did you solve the pre-medicare healthcare riddle?

Post by nguy44 » Sat Jan 12, 2019 3:33 pm

Watty wrote:
Sat Jan 12, 2019 9:00 am
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
The problem is that the worst case is that you can't buy any policy. That was often the case before the affordable care act.
Before the affordable care act I could get a retiree insurance policy, so that was not the issue. And as ramdonguy mentioned, you still could get a policy in in many states (including me) though you might have to pay for it a lot as well as relocate. Thus planning for the worse case (which for now the ACA has perhaps made a little easier).

nguy44
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Re: How did you solve the pre-medicare healthcare riddle?

Post by nguy44 » Sat Jan 12, 2019 3:39 pm

HoosierJim wrote:
Sat Jan 12, 2019 8:55 am
White Coat Investor wrote:
Fri Jan 11, 2019 10:03 pm
That's what I pay every month for health insurance. It's expensive stuff.
Me too.
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
I delayed retiring to ensure we had enough set aside worst case for premiums.
Me too
nguy44 wrote:
Sat Jan 12, 2019 12:15 am
My pension alone disqualifies us from subsidies.
I, like most people these days don't have a pension. And not everybody has access to Cobra.

So getting to the original poster's question on navigating this process - if you had to give advice for somebody planning early retirement - and not eligible for subsidies (lets say you DO have a pension and it's $48,001 / year) - you might direct them to Firecalc or ORP . You might also direct them to social security resources such as Open Social Security..

My question is - how should they realistically budget for health care - one idea is to take the premium and increase it by some health care inflation rate but what advice would you give for deductible planning - just assume max oop each year? I know people with chronic conditions and special drug requirements and do pay max oop each year.
Fortunately we have been tracking our expenses (via Quicken) since 1996 so we knew what our out of pocket medical expenses were for a while. We used that base our future potential OOP costs. I understand this may not work for everybody (e.g. for us our past OOP was mainly for our kids, who are all grown and on their own now). But it gave us an idea on how it might impact our expenses, and contributed to my decision on when would be best to retire.

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

Post by grayfox » Sat Jan 12, 2019 4:09 pm

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

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

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

Id really like to hear who has done this and how happy they were and any lessons they could teach me as I am in likely going to be in that 10-12 year no mans land re medicare if I retire or semi retire.
When I was working, the companies always paid for health insurance, which I rarely made use of. Maybe I went to the doctor once every 10 years.

After retiring, at first I had no health insurance. I figured I never used it anyway. Then someone said a broken leg costs $20,000 on average so I decided I better get a high-deductible, low-use policy in case some big medical expense comes along. So I signed up with Blue Cross and paid something like $125 per month.

Then ACA came along and signed up with that. This year the premium is about $900 per month for lowest Bronze plan, but there is a tax credit of about $780 per month as long as keep MAGI below 400% of FPL. So it still costs me about $125 per month like before ACA.

This seems like a racket for the Insurance Companies. They used to collect my $125 per month. Now the gov kicks in another $780 per month for the same service, which is nothing.

The big problem is, if I do ROTH conversion, I will have to pay back over $9,000 of tax credit.

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

Post by Cloud » Sat Jan 12, 2019 4:20 pm

We Retired at 47. Paid full price for ACA (married). 2018 and 19 decided to lower income to under 400% of FPL. 2018 subsidy was 497 a month. 2019 our subsidy increased to 700 a month due to Trump killing the CSRs. The insurance companies raised only silver rates to make up the loss of CSR payments from the Fed. Subsidy is based off the second lowest cost silver plan in your area so by staying on the bronze plan our costs were greatly reduced due to the larger subsidy.

FYI insurance company profits are limited under ACA rules. Don't place all the blame on insurance companies, blame your drug companies, hospitals, device manufacturers, Doctors and new expensive advances in medicine for the year over year cost increases. This stuff is expensive....

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

Post by Deblog » Sat Jan 12, 2019 5:27 pm

dcabler wrote:
Thu Jan 10, 2019 5:07 pm
I know of at least one person taking the minimum required classes at the local community college to get the health insurance available to students. Even with the cost of tuition and a recent rate increase, it was a good deal for him and his family. Plus there's always room to learn something new.
Thank you so much for this. My husband is almost 59 and may be losing his job. I am 59 in a very insecure industry. I can get retirement insurance but it runs 1200/person and right now with age and years of service company will pay only 25%. I checked the local college and min hours are 6 per semester at 280 per credit. Insurance for student and spouses is 6480/ year with pretty good coverage. We cannot stay below the ACA 65000 for subsidy and no idea how long that subsidy will last. The college idea is brilliant plus I can work on another degree.

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

Post by Artsdoctor » Sat Jan 12, 2019 6:10 pm

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

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

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

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

Inevitably, you do have to consider the politics associated with healthcare access because it is such a hot topic. As I'm sure you're aware, a federal judge in Texas struck down the entire ACA last month; additionally, you do have a large chunk on Congress which would love to gut the whole ACA as well. Ultimately, the subject of pre-existing illness will come up, as it has for the past two years.

So the real question will not be whether or not you can afford coverage, but whether or not the coverage will actually be there if you want it. As a physician, I'm sure you remember pre-ACA days when people with lower back pain or asthma were unable to obtain coverage on the individual market and were essentially forced to find work with healthcare coverage.

For now, by all means, go for COBRA or ACA plans. But don't just assume they will always be there.

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