Employer Offered Pre-65 Retiree Medical Plan – Worth it?

[yummeemunnkee]

I’m being laid off from my employer and will receive a severance packing including the option to continue medical benefits as a retiree. I’m 50 years old, married with no children. The insurance coverage is through Aetna and it isn't awful; annual deductible is $2,900; 20% out-of-pocket until maximum of $7k reached and then pays at 100%. We do end up meeting the deductible each year, but only met the maximum out-of-pocket once over the last few years.
The current monthly premium deducted from my paycheck is $220/month. Post-surplus, the premium will jump up to $620/month. My husband works and we could sign up for his medical benefits through his employer which are comparable to what I have now for around the same premium of $220/month. However, there’s a good chance my husband’s employer will be doing some “rightsizing” next year at which point we’ll be stuck with COBRA until one or both of us find a job with benefits.
Basically, I’m just curious to hear if any BH have had to make a similar decision. I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs. Thanks.

[brad.clarkston]

Replying mostly to get you more visibility ...

Sorry to hear about the job(s) situation. The $620 made my eyes cross but it isn't the worst option (Cobra) you have. I'm not sure what I would do.

[yummeemunnkee]

Replying mostly to get you more visibility ...

Sorry to hear about the job(s) situation. The $620 made my eyes cross but it isn't the worst option (Cobra) you have. I'm not sure what I would do.

Thanks, Brad. Just for kicks, I asked my employer what COBRA would be and it's going to cost $1,254/mo, so they're essentially subsidizing half of that cost by offering me the retiree medical at $620/mo. At the same time, I was curious about what it would cost if I went through ACA and so I went through the entire application process and found the cheapest option for my husband and me to be $888/mo with a $16,000 deductible. Not an easy decisions.

[flyingaway]

Just put my numbers here for comparison. If I retire, I can buy health insurance from my employer (the 2019 price) for $502 (me) and $836 (spouse) per month. So that is $1,338 per month for a couple.

For this particular plan, we have about $3,000 deductible for each person, and some co-pay after that.

The problem is, if I choose to not buy the health insurance at retirement, I cannot get back into the system.

[BolderBoy]

I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs.

Doesn't sound bad for couple coverage. 10 years ago I was paying $450ish/mo for a single policy.

Is this being offered as a high deductible health insurance plan?

[mkc]

Basically, I’m just curious to hear if any BH have had to make a similar decision. I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs.

You can fairly easily research premium costs (and coverages) on healthcare.gov, Get Coverage, then Plans and Prices to see what it would cost on open market and if you could find anything close to your current plan at that cost. You put in zip codes, ages, etc. and then look at all the plans available (which are likely to be changing for 2021... a quick Google search for our state shows the primary company has applied for a 13% rate increase)

I'm guessing it would be at least 2 to 3 times the price of the retiree medical premium unless your AGI is low enough qualify for a subsidy.

We are a couple in our 50's and for a bronze level EPO, no out of network coverage, 50% reimbursement rate, HDHP ($5650 per person, $11,300 family)), $6650 per person/$11300 family out of pocket maximum. We pay roughly $1500 per month, and that's been roughly our cost for the last 6-8 years (we keep lowering our coverage to keep premiums in check).

Our individual insurance does not have as generous a coverage as either of our previous employers.

We do not have individual dental or vision insurance since outside a group plan those rarely work out when you factor premiums and annual maximums.

Had either of us been able to stay on our employer's group plan, we would have done so in a heartbeat, especially at that low a cost.


ETA, I just looked for the closest to your 20% co-pay, $2900 deductible. In our zip code, for 2 people in their mid 50's, that would be $2666 per month in an EPO with no out of network coverage ($1850 per person/$3700 family deductible), $6350 individual/$12700 family out of pocket maximum.

[deltaneutral83]

I’m being laid off from my employer and will receive a severance packing including the option to continue medical benefits as a retiree. I’m 50 years old, married with no children. The insurance coverage is through Aetna and it isn't awful; annual deductible is $2,900; 20% out-of-pocket until maximum of $7k reached and then pays at 100%. We do end up meeting the deductible each year, but only met the maximum out-of-pocket once over the last few years.
The current monthly premium deducted from my paycheck is $220/month. Post-surplus, the premium will jump up to $620/month. My husband works and we could sign up for his medical benefits through his employer which are comparable to what I have now for around the same premium of $220/month. However, there’s a good chance my husband’s employer will be doing some “rightsizing” next year at which point we’ll be stuck with COBRA until one or both of us find a job with benefits.
Basically, I’m just curious to hear if any BH have had to make a similar decision. I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs. Thanks.

Given the age, $620 a month is good for the deduc/OOP max. If you plan on having an AGI 4x the FPL, take the package in a heartbeat. You will see some others post their premiums similar to your deduc/OOP max that are mutliples of $620 monthly premiums on the exchanges. What's the problem with not going on spouse's until he loses his employer health ins? I guess you have to decide to take yours or not right now?

[carolinaman]

Given the uncertainty of your husband's situation, it might be good idea to take the retiree option. You can cancel it in the future if you have better options and you are more confident of job situation.

What would comparable coverage cost you on ACA market place?

[anon_investor]

Replying mostly to get you more visibility ...

Sorry to hear about the job(s) situation. The $620 made my eyes cross but it isn't the worst option (Cobra) you have. I'm not sure what I would do.

Thanks, Brad. Just for kicks, I asked my employer what COBRA would be and it's going to cost $1,254/mo, so they're essentially subsidizing half of that cost by offering me the retiree medical at $620/mo. At the same time, I was curious about what it would cost if I went through ACA and so I went through the entire application process and found the cheapest option for my husband and me to be $888/mo with a $16,000 deductible. Not an easy decisions.

I think it makes sense to sign up for the retiree medical plan right now. You can always drop it later, but it sounds like you have to decide to join it now or you lose that option forever (use it or lose it right?).

[BogleTaxPro]

My husband was in a similar situation, but he was given an option to delay the decision to take the retiree coverage (and the coverage is so terrible that we postponed and took cobra instead, for now). Did your employer give you an option like that? If not, I'll agree with the crowd and you should take the retiree coverage now.

[Sandi_k]

Take it. It's a bargain.

Since we won't be able to get below the ACA AGI threshold in retirement, we're looking at $3k per month for a Bronze-level plan if my retiree health care is changed or revoked.

[Dottie57]

Take it. It's a bargain.

Since we won't be able to get below the ACA AGI threshold in retirement, we're looking at $3k per month for a Bronze-level plan if my retiree health care is changed or revoked.

+1

[yummeemunnkee]

Just put my numbers here for comparison. If I retire, I can buy health insurance from my employer (the 2019 price) for $502 (me) and $836 (spouse) per month. So that is $1,338 per month for a couple.

For this particular plan, we have about $3,000 deductible for each person, and some co-pay after that.

The problem is, if I choose to not buy the health insurance at retirement, I cannot get back into the system.

Exactly! This is a one-time deal here - no turning back if I reject it. I'm leaning towards taking it, but my DH is thinking he'll always be able to get a job with benefits...hmmm, I'm not so confident only because these are shaky times, job-wise, for many.

[yummeemunnkee]

My husband was in a similar situation, but he was given an option to delay the decision to take the retiree coverage (and the coverage is so terrible that we postponed and took cobra instead, for now). Did your employer give you an option like that? If not, I'll agree with the crowd and you should take the retiree coverage now.

Thank you for that suggestion! I don't know if it can be delayed, but I'm definitely going back to HR and I will ask the question and let you know!

[yummeemunnkee]

I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs.

Doesn't sound bad for couple coverage. 10 years ago I was paying $450ish/mo for a single policy.

Is this being offered as a high deductible health insurance plan?

Yes, it is considered a HDHP and I currently have an HSA plan in place with them through Fidelity, but the HSA account is not offered once I'm released from the company, so I would then look into setting up a separate HSA if I go with this option.

[Katietsu]

-Retiree health plan for $650 a month.
-Covers a couple in their 50’s and beyond.

If:
-Coverage is good with respect to network and geagraph.
-The company is likely to still be around and still offer similar coverage for the next 15 years.

I would jump at it. Does your husband understand how many people are working for health insurance? The uncertainty of whether the ACA will continue? Or, if the ACA continues, will the premiums, by law, continue to be kept low for 60 year olds because the 30 year olds are subsidizing the old people or will market pricing return? And forget for a minute about whether your husband can get benefits with his job, there is a real question of staying employed until 65. Your husband should google “involuntary retirement”. When the interview 55 year old about their plans and compare those answers with what actually has happened in the previous decade to a 65 year old, there is a huge difference. I hope your life goes great. But even without a major catastrophe, the chance of employment being affected by job loss, personal health, the health of a spouse, etc looks much different at 62 years old vs 52 years old.

That said. I know others who would say that you have too many years until Medicare eligibility to pay more of a premium than you need to.

Just another thought. Your husband could get another job with health insurance but the employee contribution could be higher than the retiree premium. I know a lot of people who have an employee contribution for family/spouse while actively working that is in the ballpark of your retiree coverage.

[anon_investor]

I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs.

Doesn't sound bad for couple coverage. 10 years ago I was paying $450ish/mo for a single policy.

Is this being offered as a high deductible health insurance plan?

Yes, it is considered a HDHP and I currently have an HSA plan in place with them through Fidelity, but the HSA account is not offered once I'm released from the company, so I would then look into setting up a separate HSA if I go with this option.

Fidelity offers 100% free individual HSA accounts. I am sure there is a relatively painless way to convert your existing HSA to that.

[yummeemunnkee]

I’m torn. I like the idea of always having insurance coverage regardless of our job situation now that we’re heading into our 50s, but the premium of $620/mo will only go up from there. I don’t know what premiums are like on the open market, so curious to hear other POVs.

Doesn't sound bad for couple coverage. 10 years ago I was paying $450ish/mo for a single policy.

Is this being offered as a high deductible health insurance plan?

Yes, it is considered a HDHP and I currently have an HSA plan in place with them through Fidelity, but the HSA account is not offered once I'm released from the company, so I would then look into setting up a separate HSA if I go with this option.

Fidelity offers 100% free individual HSA accounts. I am sure there is a relatively painless way to convert your existing HSA to that.

+1

[Lalamimi]

take it and run! Can always cancel later if you get a job with better coverage. I was laid off in 2018 and company paid our Cobra - $1200 a month, with $3000 each deductibles. Lessens the stress of being let go.

[KRP]

I cannot get back into the system.

Long time lurker, registered just to respond to this. (I'm always appalled by how "helpful" systems are set up to eject whomever it can...permanently)

I am familiar with such a system. The folks I worked with wisely recommended keeping a foot in the door of the retiree health program by maintaining at least a minimal amount of coverage. For us, it's about $10/month aka ~$120/year for single (i.e. not family) vision coverage to remain in the plan, giving us the ability to shift back to it if we lose employment coverage elsewhere. Also, be sure to rig up auto-payment and check for successful payment montly because it's typical to get booted from the plan if payment goes astray for longer than the stated grace period.

[FIREchief]

I cannot get back into the system.

Long time lurker, registered just to respond to this. (I'm always appalled by how "helpful" systems are set up to eject whomever it can...permanently)

I am familiar with such a system. The folks I worked with wisely recommended keeping a foot in the door of the retiree health program by maintaining at least a minimal amount of coverage. For us, it's about $10/month aka ~$120/year for single (i.e. not family) vision coverage to remain in the plan, giving us the ability to shift back to it if we lose employment coverage elsewhere. Also, be sure to rig up auto-payment and check for successful payment montly because it's typical to get booted from the plan if payment goes astray for longer than the stated grace period.

Are you saying that by continuing to buy vision that you are able to start up medical coverage again in the future? That would be highly unusual.

[FIREchief]

I’m being laid off from my employer and will receive a severance packing including the option to continue medical benefits as a retiree.

Is your employer Megacorp, small company, government or non-profit?

[KRP]

Are you saying that by continuing to buy vision that you are able to start up medical coverage again in the future? That would be highly unusual.

Yes, that's what I'm saying. Sample size is one, so could be highly unusual. It was introduced towards the end of my tenure, so certainly a newish development, but it's a Fortune 500 company.