We thought we had our health care plan for early retirement all figured out. We were going to buy a silver plan off the exchange, and even optimize our income around it. We’d have a predictable premium because we’d have a low income, we’d know that any pre-existing conditions would be covered, and our out-of-pocket max would be low enough that we could pay it every year and not decimate our budget. Then we’d each get to our 60s and switch to Medicare, which wouldn’t cover all of our expenses, but would do enough to give us peace of mind.
All of that is out the window now, except maybe the Medicare part.
That’s a bummer, but it’s not in itself catastrophic. The system changes, and you adapt to it. You formulate a new plan. The problem is: there’s no new system to plan around. For early retirees, or those who plan to be them soon (hi!), that’s a huge problem.
Such a huge problem that The New York Times offers this advice: Don’t retire now. Keep working until it’s clear that you can afford health insurance under whatever system comes next.
Without the subsidies and protections the A.C.A. put in place, health care coverage would be more difficult to obtain, cost consumers more where available, and provide fewer benefits than it does today.
That means that if the A.C.A. is repealed, retiring early would become less feasible for many Americans.
— Austin Frakt, “If Obamacare Exits, Some May Need to Rethink Early Retirement,” Feb 27, 2017
And he’s not wrong. Early retirement is now officially less feasible for many people in the U.S., even before a new system is passed, because of all the uncertainty that has been introduced into the health insurance marketplace.
Related post: Making Peace with Working the Full Year // Health Care, Philanthropy and Saying No
Stay tuned — we’ll talk all about the impact of any new laws on early retirees just as soon as it’s clear what’s likely to pass. The current iteration seems likely to die at the hands of the CBO or the Senate. Here’s a detailed nonpartisan analysis from the Kaiser Family Foundation if you just can’t wait. But in the meantime…
The question any potential early retiree should seriously be asking right now is: Is this the right time to retire? Or should I hold on at work a little longer?
Of course we all talk about the importance of being flexible and being willing to adapt, but the budget implications of the Affordable Care Act going away are potentially so significant for early retirees that it’s worth some serious come-to-Jesus thinking.
Today we’ll talk about the factors to consider when deciding how the health care law — or current lack thereof — impacts your early retirement timing.
The Fluke of Employer-Based Health Insurance
The U.S. is one of the only countries in the world to rely heavily on employer-provided medical insurance for the health of its population, a system borne not out of thoughtful policy discussions, but entirely by accident. This episode of This American Life has a fascinating breakdown on how it happened, and you won’t be surprised to know that it was driven by the desire to increase hospital profits, and later to attract workers to companies without having to pay them more.
The employer-based coverage system wouldn’t be so bad if everyone could work who wanted to, and if employers offered fairly similar coverage. But of course we know that some companies offer much more generous (untaxed!) benefits packages than others, and having “employer-sponsored coverage” doesn’t even necessarily mean that the employer pays the bulk of the cost. It mostly means that they get to choose what kind of coverage you’ll have and how much it’s going to cost you, which is a bizarrely unfree-market thing if you think about it, given how the employer-based model is the preferred option for free market proponents. (In a true free market model, we’d all individually have the full range of choices of providers, levels of coverage and premium/copay amounts.)
But in relation to early retirement, this employer-provided coverage model is problematic, because it means that there are few good options available for folks who have otherwise made themselves self-sufficient and have no other reason to work aside from health insurance.
There are still a load of details to work out before we’ll have a new health care law, but assuming that Congress is going to follow some core principles it has set out from the beginning, you will basically have two options, assuming that you do not intend to go uninsured (something a rich person would never do): If you keep your income low enough (like under $10,000 a year low), you may still be able to qualify for Medicaid in the absence of the ACA and its Medicaid expansion in some states, but Medicaid coverage is fairly lousy in many places, and is certainly not universally accepted. Or, if your income is above the most bare bones levels, you can buy health insurance at whatever the going market rate is, with no legal caps on premiums, copays or out-of-pocket costs. There may end up being a third option, to buy a catastrophic coverage policy, but those plans will offer far less benefit than those under the ACA that are still required to cover some preventive care and the 10 essential health benefits.
How Health Insurance Can Impact Your Bottom Line
The Affordable Care Act is poorly understood by many Americans, with a recent poll showing that a third of us don’t know that the ACA and Obamacare are the same thing. So it’s probably safe to say that many of us also don’t know the provisions of the ACA inside and out, and therefore don’t know which of our current benefits could go away under a new system.
Related post: What the Election and a Trump Presidency Mean for Early Retirement
This is not an exhaustive list, but is a brief overview of the parts of the ACA that we can expect could go away or change significantly that will impact your bottom line as an early retiree:
Premium subsidies — Premium subsidies are widely expected to go away, perhaps in favor of the current tax credits being proposed in their place. Depending where this nets out, it could actually benefit higher income earners, while disadvantaging low income earners, but remember: income and cashflow are not the same thing. Most early retirees following the Mr. Money Mustache model to any extent will fall into the low-income end of the spectrum. Bottom line: the net cost of insurance will go up for many early retirees, and may be offset by a larger tax credit for some.
Premium limits — Currently the ACA requires that 80 percent of insurance premiums, copays and other charges must go directly into paying for care, which effectively limits the amount of profit that insurance companies can tack on. In addition, large premium increases for exchange plans must be justified and reviewed. If this provision goes away, premiums for publicly available plans can rise any amount insurers feel like raising them. Bottom line: the cost of insurance could go up across the board.
Deductible limits — The ACA limits deductibles for exchange plans to $2,000 per individual or $4,000 per family. If that rule goes away, deductibles could get higher, meaning both higher costs and higher risk of having to pay that full amount. And, as Choose Better Life, an ER physician, recently wrote in a comment: “Health insurance used to pay most medical costs, but not everyone had insurance. Now, most people have insurance but deductibles are so high that patients are still paying most medical costs before any insurance benefits kick in. But most patients can’t afford this and many aren’t paying, leaving doctors and hospitals struggling to keep the lights on and the doors open. If deductibles continue to increase, the situation will get worse and many hospitals will close.” Bottom line: costs and risk could go up for many people, and higher deductibles could have devastating ripple effects across the health care system.
Annual out-of-pocket limits — Under the ACA, annual out-of-pocket maxes are capped for anyone up to 400 percent of the federal poverty level (limits are about $4,000/year for the lowest income families, and about $8,000/year for those at 400%, which is set at $98,400 for a family of four in 2017). Those limits mean that you can budget for the most you could have to pay in a year, a massive boon for early retirees and anyone else on a fixed income. If these limits go away, as they are likely to, then there’s theoretically no limit on how much you could have to pay in a given year, and infinity is hard to budget for. Bottom line: it will be harder to budget for potential out-of-pocket health care costs, and out-of-pocket maxes are likely to be higher for most.
Lifetime limits — In addition to capping out-of-pocket limits, the ACA also prohibits insurers from imposing lifetime limits on insurance benefits. If lifetime limits return, a person facing a costly extended illness or extended injury rehabilitation could find that they essentially run out of insurance and have to pay for all future expenses. Again, it’s hard to budget for infinity. Bottom line: lifetime costs could increase dramatically for some.
Guaranteed insurance and pre-existing condition coverage — One of the best things about the ACA, regardless of how you feel about it politically, is that it requires insurance companies to cover everyone, even the oldest and sickest among us under the high risk pool. While Congress has promised to retain the pre-existing condition coverage, assuming you maintain continuous coverage (which, by the way, was what the law required before the ACA — the ACA guarantees pre-existing condition coverage even if you have a gap in your insurance), it has made no such promises about the requirement that insurance companies offer policies to everyone or keep them on their plans even if they get sick. Before the ACA, people could be turned down for coverage, or could be dropped from their insurer if they got cancer or another costly illness. If this protection goes away, it will be catastrophic for some people. Bottom line: costs could increase dramatically for those who are currently sick or anyone who gets sick in the future.
Essential coverage — Currently the ACA requires all insurance companies to provide preventive visits at no charge (no copay, and you don’t have to have met your plan deductible). It also requires insurers to cover 10 essential health services including prenatal care, mental health care, outpatient care, etc. If this requirement is eliminated, preventive visits may no longer be covered at 100 percent or covered at all if the deductible hasn’t been met, and certain services may not be covered at all under some plans. Bottom line: preventive health costs could go up for everyone, and costs could go up dramatically for services removed from essential coverage.
Medicare Part D — Though Medicare was not the focus of the ACA, it did include several provisions that benefit Medicare recipients, namely reducing the cost of Part D prescription drug coverage, and limiting costs of Medicare replacement policies. Bottom line: costs for Medicare recipients could increase.
What To Do With This Information
I have zero interest in telling anyone they should work longer than necessary, but I also have zero interest in sugar coating potentially bad news and saying that everything is going to be just fine. Flexibility in early retirement is super important and super helpful, but being flexible won’t necessarily be enough if your health care costs triple or quadruple (not unthinkable, especially in years with a major health event — a single uncovered MRI could cost thousands of dollars out of pocket, not counting whatever treatment the MRI indicates you need).
The best thing the ACA did for early retirement is introduce some level of cost predictability for a lot of folks — not perfectly, and not for everyone — but it helped many early retirees know approximately what to budget for.
Regardless of what comes next, it’s unlikely based on indications we’ve gotten so far that we’ll have nearly as much predictability moving forward on premium costs, office visit or procedure costs, or annual out-of-pocket limits, and that’s a whole lot harder to plan for.
None of us spend years working hard and saving aggressively so that we can live a short life with poor quality of life. We’re all banking on a lot of awesome years, and that means we’d be outright idiots to shortchange our health or health care, or to assume that best case scenarios will always be the outcome.
Emergencies happen, and otherwise healthy people who do everything right still get sick suddenly. We can’t always hop a flight abroad to get health care somewhere cheaper, and we can’t assume we don’t really need good insurance until we’re older.
So don’t brush off this discussion. Make sure you have a good-sized cushion to cover increased health care costs, and have a realistic backup plan. If you have those things in place, and you go into your retirement timing decision with a clear-eyed perspective on how your costs could increase, then we’ll be here to cheer you on.
Is Health Care on Your Mind, Too?
Anybody else have health care on the brain pretty much constantly these days? It’s a hot topic of discussion in the ONL house, and not just because I’m eager to blog about whatever the new law ends up being. Has the health care uncertainty changed your thinking on timing? Or still planning to forge ahead with your original timeline? How are you adapting your plan to account for the end (or significant revision) of the ACA? Anyone just feeling generally anxious about health care and want to commiserate about it? Let’s chat about it all in the comments!
P.S. The header photo is a completely unretouched view of the Pacific Ocean through the window of a Dreamliner 787. How trippy are those windows?
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Categories: gearing up
Agreed, healthcare should probably be the biggest red flag in any U.S.-based early retiree’s plan right now. For me, it’s a little too late to change my timing on jumping ship from my job (whoops!), but I’ll be keeping a close eye on where things progress. I’m not panicked about it, but I am concerned.
If the outlook is not looking good, work may factor into my plans more seriously to build that bigger cushion, like you suggest. I’m also open to more creative options, like seeking citizenship elsewhere for health coverage purposes. It will also depend on Daniel’s career goals and how long he expects to work (and if I can get on those benefits… assuming they still exist).
For now, it’s too early to know what will happen. The current draft bill is dead in the water, but it’s a sign of what might be to come. Then again, by the time I’m 50, we might have single-payer socialized medicine. Or we might be back where we started. Thanks, politicians, for making it impossible to plan!
Well thank goodness you live in a state that has a strong Medicaid plan, at least! That’s certainly not true everywhere, as you well know. Your thinking mirrors a lot of others’ in terms of exploring work options solely for health care, which is so backwards it makes me crazy. Shouldn’t we be freeing up those jobs for people who truly need them? And shouldn’t we be untethering people from traditional jobs to drive entrepreneurship? But, as you said, the pendulum could also swing back quickly and maybe we’ll have a totally different system in a decade! (We can dream…)
That’s true re: Medicaid, though I don’t count on that always being an option. A few months of more committed side hustling or part-time work will bump my income too high for eligibility, and under the current proposal (depending on how states choose to respond) could make me ineligible to re-enroll later without a much smaller income. I probably can’t force that low of an income level; I’m already right on the line even with the expansion. It’s a weird incentive to either not work at all or work enough that I can draw benefits. A great system indeed.
Adding to clarify: my personal eligibility for any kind of tax credit or subsidy right now isn’t really consequential (whether it’s an ACA subsidy, Medicaid, etc.). My financial plans, at least in the short-term, accounted for buying individual coverage with no subsidy whatsoever. What would be consequential is not having any affordable insurance options when I’m 50 or 60. That’s my biggest concern and one that is really tough to evaluate with such a long time horizon.
I think that makes tons of sense, and you’re right — it’s impossible to plan for a long-term question like that with essentially zero sense of what things might look like then!
#truth. I don’t like that the current system disincentivizes work, but I like even less that the proposed system would give people no feasible option beyond staying with an employer, meaning say goodbye to lots of potential innovation and great small businesses that would have been formed.
Yes, I’m concerned. I’ve always had employer-based health care, but given my husbands near-death from sepsis five years ago, it’s a topic that’s very near and dear to me. Lifetime limits? We hit almost $300k in covered medical expenses due to that event. Pre-existing conditions? Not sure if it would be considered pre-existing, but he certainly doesn’t have a clean medical history. High deductibles and out of pocket? I hit my deductible – over three thousand – every year, and I’ve hit the out of pocket before. If these go up, my costs go up too. I’ve been thinking about starting a business in the future, but depending on this law I’m going to need to keep it as a side thing rather than transitioning to it full time. It would just be too risky for a family like ours to go without employer-sponsored health insurance.
Your husband’s case is exactly what I mean. $300K in charges for a single illness is not abnormal, and if lifetime limits return, a great many of us will be in rough shape. Your point about not starting a business as your full-time gig is one of the thing that frustrates me most. We profess to value entrepreneurship and small business creation highly, but we’re creating a health care system that chains people to their jobs permanently… how is that good for innovation and job creation? Of course I think you’re smart to be thinking that way (though it also makes me a little sad for you!), but that system makes no sense.
How to secure health insurance has always been the limiting factor in my early retirement plan. My current FT job offers generous paid time off and a 10% base contribution to my 403 (b) (this is not a match – i don’t have to contribute to get this) and eligibility for health coverage for those working 20 hours per week. So my new plan is not to retire fully, but instead to ramp down from 40 hours to 30, then 20, just to keep health insurance. I will work basically for benefits until I qualify for Medicare. It isn’t quite the same as the FIRE I planned, but an acceptable variation to early retirement with a side gig that would provide extra income and flexibility, but no health insurance.
It breaks my heart a little to see you redefining your FIRE dream so dramatically in the face of this one factor, especially because health care should be a right, not a privilege. Of course I think what you’re doing makes tons of sense practically and financially, but it’s completely nuts that a country that professes to value entrepreneurship and innovation so highly is creating a system that ties people permanently to their jobs.
Hi – really enjoy your blog and can’t wait for you to reach retirement. However, I’m a bit perplexed regarding the comment that health care should be right since that would require other people paying for your health care. Shouldn’t everyone pay for their health care? If health care is considered a right, then so must be food and housing since those are more important. Just a thought. Anyway, good luck on your journey and again, great blog.
Hi Luis — Thanks for the nice note! So glad you found us. The Q on health care really warrants a longer discussion, but bottom line for us is: Nearly *everything* we do is subsidized in one way or another, and yet we tend to zero in on one or two things that rise to the top in current politics to focus on, ignoring all the rest. Health care happens to be that thing right now, but there are dozens of other ways we all subsidize each other. Here’s a post I wrote about it that I think speaks well to this point: https://ournextlife.com/2016/11/16/subsidized/.
“Premium subsidies are widely expected to go away, perhaps in favor of the current tax credits being proposed in their place.” Sorry to be nitpicky, but subsidies were always advanced premium tax credits just like those in the AHCA proposal. As you mentioned there are significant differences in how those are distributed but the whole subsidies replaced by tax credits line is a GOP marketing line that has caught on too easily. (Sorry, I just keep seeing headlines like this from news outlets and it drives me bonkers.)
At least in its current iteration, it seems like the current bill would be great for retirees under 40. Lower premiums, potentially higher subsidies for those with high income/cash flow. That said, it will probably collapse a bunch of rural or already struggling marketplaces, make health care prohibitively expensive for the 50+ set, drain the Medicare coffers, defund PP, and slowly kill Medicaid expansion. So I guess what I’m saying is might as well retire now while you still can afford healthcare outside of your employer.
This is all speculation, of course. I personally think their bill is DOA in the Senate and that they’re ready to let this fail quickly so they can move onto the other insidious things on their agenda. As long as you live in a region whose marketplace wasn’t already struggling, the inaction should be fine.
Couple of things. 1. You know I call BS on a lot of things that are in reality subsidies but aren’t called that, so I agree with you it’s still a subsidy. 2. I’m using the terminology that the GOP is using to provide context for the way the current proposal and future proposals are being talked about. 3. The most important piece — it is unclear, but it seems based on the text of the current proposal (see pages 14 and 15 here: https://waysandmeans.house.gov/wp-content/uploads/2017/03/AmericanHealthCareAct_WM.pdf) that the payments could shift from being in advance (the current subsidies) to being given retroactively when filing your taxes (like a traditional tax credit). There are also far wider income bands, more like a traditional tax credit and less like what we’d typically deem a subsidy. So that’s to answer your question of why I used those terms. :-) An important note in the idea that the current proposal is good for those under 40 is that, for married filing jointly households, your credit is based on the age of the older spouse, which makes things worse for virtually everyone. I don’t think it’s helpful to debate the current proposal, as it clearly will not pass in its current form, but note that there are some tricky elements in there that make it not as straightforward as it seems.
Have you considered health share coverage? I’ve looked into it as an option after reading about it on a few different blogs, and it seems to provide good coverage for the same or lower than ACA plans. There are definite gaps (e.g. don’t seem to cover mental health), and haven’t evaluated it from a retirement coverage perspective, but it might be worth a closer look.
I do think it’s worth a look for a lot of folks, but we’re holding off judgment until it’s clear what the new system will be. Under the ACA, we would qualify for far cheaper coverage with higher quality coverage than any health shares we’ve seen, but that’s specific to our situation. We also live in a region where many providers won’t even see cash-paying customers, which is what health share subscribers are often considered to be. So it’s not an approach without its own set of risks!
I’m looking at FIRE in June 2018, and am worried about Health Care. I am looking at the Health Share option, and may well go that route. First, I’ll likely buy COBRA to finish out 2018, then get serious about my options starting in 2019.
A major factor for those of us nearing FIRE, but I’m not planning on having it delay my plans at this point….
I think buying some time with COBRA is smart, and I’m glad to hear that this health care abyss isn’t changing your timeline!
Be sure to run the numbers.
Under the ACA (with “affordable” being a complete misnomer), our best price for a silver-level plan had a $1,100 monthly premium plus something like a $15,000 deductible. Health share company: $500 a month.
Yeah, it’s totally dependent on individual circumstances, including income, what state and county you live in, what level of coverage you want, etc.
Health share could be a good option, if you are in a good one with healthy people.
The main issue currently is that neither the ACA nor the GOP plan address reducing the actual costs of delivering health care. They only argue about who pays and how much. Before the ACA, I considered direct primary care plus a catastrophic policy. One such company in Seattle is Qliance. For a flat monthly fee, they provide primary care. Because it is direct, it cuts out the greedy health insurance companies. The ACA almost ruined that, but fortunately Qliance teamed up with an ACA compliant plan. Another option going forward is Kaiser, which does a reasonable job managing costs.
Totally right. That is fundamentally the problem, and none of the proposed solutions address the problem of rising costs and a broken incentives system for providers that basically guarantees that costs will only continue to rise (while returning worse health outcomes, by the way). And it’s interesting to hear about your experience with the company you found!
I don’t actually get to try it, but may get to when we pull the trigger on retirement. Currently, I’m stuck in a crappy employer plan.
Ah, gotcha. I think we can all relate to that. :-)
Yes, this is a big unknown for anyone trying to plan their retirement soon. It’s so frustrating that there is no plan and it’s impossible to guess what will be decided. I guess this kind of thing can change but it’s such an important area, so hard to plan for, and has never been so volatile as it is now–at least that I know of. Thanks for sharing that episode of This American Life. I will definitely give it a listen!
When I first heard that This American Life, I remember thinking, “Huh! That’s interesting!” And when I re-listened to write this post, I found myself getting a lot angrier… which just proves your point that it’s all so much more charged now, which makes no sense when you think about the fact that we’re not talking about something that should be politicized, we’re talking about people’s health and well-being. I really do think at this point we’d be willing to pay more for all of it if we could just have some predictability!
We just bought ourselves a Health Share ministry plan, which keeps our costs consistent and coverage steady where ever we happen to be in the United States. $299 for the two of us. $1,000 yearly deductible.
For full-time travelers, a Health Share is one of the only affordable options. There are no “in network” doctors, for example. You get treatment and submit the bills. It’s also one of the more straightforward. We were going to buy off of the Exchange as well. In fact, I did quite a bit of research a year or so ago about what our options would be. And you’re right, it’s complex.
But, I think we found our solution. We’re young and healthy, but realize that anything can happen. Health Shares won’t work for everyone, but I think it’ll work for us.
Under the exchange plans currently available under ACA, you guys should be eligible for a high coverage plan (like super silver) that would cost far less than what you’ll be paying for your health share plan… but given that those plans are likely going to go away, I think you’ve probably chosen your best option! Of course, it remains to be seen if those plans are even sustainable, because with no in-network doctors, for example, your plan will pay a much higher cost for office visits and procedures than a traditional insurer would pay for the same visit based on their negotiated rate. So much yet to be seen for all of us… it’s a murky world out there!
It’s true that there are less expensive plans, but the difficulty came with our mobile lifestyle and finding doctors and coverage where ever that we happen to be. That proved exceedingly difficult. :)
That makes sense. Insurance is so state-based, so I’ll bet it’s tough to find something with coverage everywhere. Are you guys planning to keep your permanent residence in AZ when you hit the road, or are you going to switch to one of the Dakotas or something like a lot of perma-travelers do?
For now, we plan to keep our Arizona address. In the future, though, we may look at South Dakota or maybe Texas, depending on which one is more convenient.
Gotcha. Have you blogged about that? Seems like an interesting topic that I’m sure you’ve explored in depth!
Haven’t blogged about that…didn’t think it would be interesting enough to people, but perhaps I was wrong about that! :)
Don’t listen to me, but I’d think for folks thinking about hitting the road permanently, it’d be a big question with a lot of factors to consider like health care rules by state, taxes, residency requirements, etc. ;-)
This might be a good topic for one of our videos, actually. Appreciate the idea!
Cool!
I think we’re going to be lucky when it comes to health care. My wife’s military pension will provide some kind of TriCare insurance that will likely be at a predictable rate. Politicians usually don’t mess with military benefits, but the costs of TriCare is on the table too due to the high expense.
Thank you for this post and helping to explain to people that the ACA provides a lot of benefits that just make sense. It has become a political football and we are all paying the price. The people who say that it doesn’t work due to rising costs never bring up that we could stop subsidizing drug costs for other countries.
Where is the health care proposal that includes that very obvious solution to the high costs?
That IS lucky — what a relief it must be for you guys to know that you will always have TriCare in some form. Some marginal things about it could change, but I agree with you that military benefits tend to be a third rail issue. I agree with you — we’re all paying for the politicization of our health care (and a bunch of other issues, frankly), and so much of the debate makes no sense. Your point is a perfect example. Why are so many potential cost-saving measures just off the table entirely? And why can’t we have a practical discussion about health policy without it devolving into a partisan nightmare?
As soon as it was clear that DT and his motley crew would occupy Washington and proceed to repeal ACA, our healthcare coverage plans changed completely. With all the unknowns of what the “new plan” is going to look like for us, we will be getting healthcare coverage in retirement through my (former) employer (obviously with premiums higher than my current ones as an employee) . The fact that we will understand with great clarity the premium, deductible, all the ins and outs of coverage details for our family is a great weight off our mind. I can imagine it would be unlikely we would shift down the line to a government plan, certainly with this regime running the show. We would need to see a lot more stability and details about any government plan before jumping off the employer plan.
It is highly unfortunate that retirees are gonna have to be even more conservative and flexible with other spending categories to off-set the bigger unknowns with healthcare costs. It is not what any of us want to be doing in retirement but right now there are no clear answers or even a well laid-out road-map.
Our timeline has not changed but I can completely understand why this whole sorry situation would cause some potential early retirees to pause and think very hard about the timing of FIRE.
It’s so great for you guys that you have that option of long-term employer coverage, as most people do not! I’m sure it’s no small thing to adjust your budget accordingly, but I’m relieved on your behalf that it doesn’t change your timeline. It’s all making me wish that we had followed different career paths that came with retiree benefits… but then again, had we done so, we might not be able to retire soon. So, chicken or egg? ;-)
Are you planning to use COBRA when you first retire? This option could buy time while the new laws are being finalized.
TBD. Depends where a few things net out this year. Agree it could buy time, but for those who live in a Medicaid expansion state, it could be advantageous to get on an expanded Medicaid plan ASAP as the current and likely future GOP proposals are likely to include a phase-out of the Medicaid expansion, and that could mean that folks already on it could stay on but new folks can’t get one of those plans. Still a lot to figure out!
I’m curious if some of the more progressive states (CA, OR and WA and maybe some in the northeast) will adopt some sort of solution similar to MA. Medicaid block grants won’t work for a state as large as CA and since my state had adopted so many of the ACA policies so quickly, the benefits of the ACA – better health outcomes for folks with chronic but manageable conditions – had already started to show in the data. I’m on a communication spree with my state and national representatives personally.
Good for you for communicating with your representatives! That feels like the only way to push things in the direction that actually benefits people instead of taking away their health care. And yeah, it absolutely will be interesting to see what the states do. Some of those proposals have failed in recent years, though there was also less urgency then.
Thank you so much for this detailed post about the scary health care insurance market we’re facing. I’m hoping to stick to my original 2017 date, and probably will unless 45 and Capitol Hill do something even more destructive than is currently predicted. My spouse is eligible for Medicare, so once I leave my job, he’ll come off of my employer plan and enroll in Medicare Part B. That piece of our plan won’t change. However, I had planned to buy insurance for me on the Exchange. I’ll probably go with COBRA for now. Higher than I had hoped for, but at least it is a known cost and reliable coverage.
I’m in a little different place than many in the FIRE community. There is a significant age difference between my husband and I. My plan is to take a year or two out of the job market to travel and do some things we may not be able to do as a couple if we wait much longer for me to retire. I would then like to return to the workplace in a part-time capacity.
Depending on what happens with health care, I may choose to earn some income by substitute teaching or something else that allows for plenty of flexibility during my career break. And, when I return to the workplace, I may well be limited to working for an organization that provides health care for part time employees.
Sadly, “scary” is a good word for it! It’s eminently reasonable that you’re looking at COBRA for now, though it also bums me out on your behalf that you have to do that. Same with maybe substitute teaching or any other work you’d do essentially just for the health insurance. It makes zero sense to us to tether people to jobs they don’t otherwise need, but that is the system we’re now looking at reverting to. :-/
That’s one of the main reasons why Mrs. RB40 doesn’t want to retire yet. She has some pre-existing conditions and she needs good healthcare. Her ER goal is 2020 so hopefully things will be more solid by then. It would be great if health insurance is more affordable. This whole healthcare fight is pretty crazy.
I don’t blame Mrs. RB40! Gosh, I sure hope health care is more solid and predictable by 2020, for all of our sakes, but also so she doesn’t have to keep working indefinitely just for health care when you guys are otherwise good to go.
That sounds fantastic like an unfun (is that a word) event to happen…
We are kinda preparing by paying now into an insurance product with a 5 pct entry fee. In exchange, the insurance already accepted us, no matter what happens.
Bad news, i have one major exclusion due to an existing medical condition I have. At least, my wife and kids should be fine…
Oh gosh, you are soooo happy you don’t have to deal with U.S. health care! On top of all of this uncertainty, we also spend the most of any industrialized nation to get the worst health outcomes. Super unfun! ;-) With your exclusion, do you have other national health care that will provide for you, or is it completely excluded? As you can guess, other countries’ health care systems are a total mystery to me, other than the vague sense that they are better and cheaper.
The basic government has it covered, and the current insurance via the work of my wife as well… so far, so good. TO me, it is about having alternatives the day we need it.
To be honest, to me, healthcare could be a damn good reason to keep working, assuming I can have a flexible holiday schedule…
Well that’s good. We have no basic guaranteed coverage in the States, so many people have no back-up option. I’m glad for you that you do have that, and that you can explore alternatives!
That is the advantage of high income taxes…. There are basic elements in place.
The down side is that the system assumes you work till 67. Jence, there are not a lot tax shielded pension saving systems in place. Can’t have it all.
So true… every system has upside and downside… though I’m not sure I know what the upside of the U.S. system is. ;-)
Among other Belgian bloggers, we consider the US system very favorable to FIRE, given the systems in place to save tax sheltered and the low taxes. And yes, there is the downside of no decent social security…
That’s soooo interesting! I know we do offer good tax shelters for early retirement and later retirement, but I would think the health care challenges would be such a downside that they’d balance that stuff out. Thanks for sharing that perspective! What about other EU countries… are there better places in Europe for FIRE that you could somewhat easily move to?
Good question… Have not yet looked into that. It is not on my radar to leave the country… Boring me ;-).
It is cheap to be retired in Portugal I read.
My mom is German by birth, so I used to think about moving to Germany. But then the formation of the EU essentially made it near-impossible for Americans to move to Europe. I’ve wondered if the one upside of the Brexit for U.S. citizens is that it will make it easier to move to the UK, but all the rest of the EU still feels off-limits to us. Maybe if the EU dumps Portugal over its debt crisis, then we’ll have this option. ;-)
How does the EU makes it difficult to move?
Mostly on the employment side, by giving any EU citizen preference over a non-EU national. So a company has to prove that there is NO ONE IN THE EU QUALIFIED before hiring a non-EU person, which is a very high bar. And I’m not an expert on this, but I don’t think most countries have many other avenues for moving there without paid employment.
That rule… Similar to the green card? In FIRE, you could be self employed via your own company… No?
I am not an expert in this, but based on what I’ve read (this is a good breakdown: https://blog.migreat.com/2014/07/22/start-a-company-in-europe-the-10-best-visa-options-for-entrepreneurs-and-startups/), it seems like to be self-employed or be an entrepreneur, most of the EU countries require you to demonstrate that you’d create some number of new jobs, and they require you to continually update your status and prove that you are doing what you said you’d do. You can’t just come in to be self-employed and take care of yourself but not create jobs for others.
Hmmm… Complex matter… Seems that self employed is easier in some stuff i found on expatica. Thankfully, i already live here…
Yes, lucky for you! :-)
A couple things of which the biggest is that nobody is talking about how to drive costs out of the antiquated insurance payer system we live in here in the U.S. It’s possible that insurance companies will be able to sell across state lines which should allow them to spread risk and lower costs. Why are
Is the U.s. One of 2 countries that allow Direct to Consumer (DTC) drug company advertising (Australia is the other). Can you turn on the TV and NOT see a drug commercial?!
I like that it appears we will be able to increase our HSA contributions to off set some expense.
I, too, am on the EArly Retirement bubble. With the individual mandate going away, I am hopeful pure, cheap catastrophic policies will come back to bridge the years to 65.
Lastly, Why can’t someone compare the U.s. to every other industrialized country and figure out what we are doing so different and fix it. If Single Payer is the issue then get over it and fix it. We are hardly the only country in the world that provides decent health care for its people. If it’s insurance lobbyists walking the halls of congress preserving their fat cat insurance co annual bonuses, then ban the lobbyist’s👍
The crazy thing is that we are not universally providing decent care to our people — the U.S. has the highest per capita health care spending in the world, and some of the worst health care outcomes of any developed nation. I will not pretend to be an expert on exactly why that is (though I have my own theories, of course), but much has been written on how to fix this, and we get nowhere when we treat the right to basic health care as a political issue. So frustrating! That’s my way of saying I agree with you! Though I don’t know that in our case we’d feel totally comfortable with a catastrophic plan, but I get why you want that option back!
Almost 2 years ago my husband decided to retire in May 2017 after 30 years at his job. I am (voluntarily) leaving my job in June and we are moving out of state to live in a place that we have always dreamed about living. We are taking the rest of 2017 as a mini retirement and then I will likely work full time for a couple more years and my husband will plan to work part time. We are planning to do COBRA until we see what will happen with health care, have more time to research other options, and/or see what type of jobs we get and whether we have an employer-provided plan. We are 60 and 57 so not even close to Medicare age. The future is uncertain but we are determined to continue with our plans as scheduled. I had a health scare last year so we have a “life is short” mentality. It might not be the smart thing to do to retire or semi-retire right now, but I won’t let the government and politics spoil or interfere with my excitement and plans for our future!
:::standing up clapping!::: I love your sentiment: “I won’t let the government or politics spoil or interfere with my excitement!” It sounds like you know what you’re getting yourself into and have thought it through, and that’s what matters. If you know what you’re up against and decide to live your life on your own terms in the face of that, then more power to you!
I plan to retire in 2021, and Mr. BITA works for a few years after. Most of the time I moan about the fact that retirement doesn’t get here till 2021. Healthcare is the one thing that makes me glad that I still have some years to go. I optimistically hope for the world of healthcare to be a better place by then. If it isn’t, we are going to relocate. Mr. BITA’s job offers opportunities in a couple of Western European countries. We will move as soon as I retire and he will work for 5 years so that we can get permanent residency and access to the healthcare there in the long term. Our other choice is to move back to India (we will all be overseas citizens of India, and thus able to move back and stay long term if we want) and healthcare is affordable.
Yeah, I completely understand that feeling because, though I am so eager to retire already, I’m also totally freaked out at the prospect of quitting before we know what the deal is. It’s great you all have those options of moving abroad — as you know, it’s much tougher for most people! We’ve done some basic exploration, and there are not very many countries with solid medicine interested in offering us permanent residency without working for many years there!
Sorry, but this will probably be a very unpopular comment, but I will include it here anyway: I am not a proponent of early retirees “managing their income” down so that they can get the government subsidies under the ACA. While I understand that we all pay taxes (and I’ve paid more than most), but I believe that undermines the intention of law which is to help people that are genuinely poor – not high net worth individuals that no longer want to work. I know many argue both sides of this issue on the ER Forums, but I believe it is an important issue. The ACA has been a boon to early retirees, but their jumping on the welfare dole bandwagon has been one of the contributors to the systemic collapse. I’m not sure why the government did not require a needs test for these subsidies beyond an income test. At our house, we are paying $15K for three people with a $13K deductible, plus an additional $5K tax. Nonetheless, I don’t view health insurance as a “right” and don’t expect a government subsidy. Sorry for being a wet blanket!
I think your viewpoint on this is totally legitimate, and I am not going to try to talk you out of it. I honestly wish we could have a discussion about the role of government and whether we should treat health care as a right or not, but instead it all gets mired in politics and it becomes impossible to have a reasoned discussion on it all. On the topic of wealth testing, there’s a huge negative flipside to wealth testing that essentially boils down to unjust harassment of people and huge costs for the bureaucracy needed to verify the wealth, both of which make me staunchly against any means testing that goes beyond income. If you’re curious, I highly recommend Matt Taibbi’s book The Divide: American Injustice in the Age of the Wealth Gap (https://www.amazon.com/Divide-American-Injustice-Age-Wealth/dp/081299342X), which has a startling description of what means testing really looks like. I think if people had a better sense of what they’re really asking for (like in most things!), they’d view the issue a little differently!
So I guess you’re also not a proponent of managing income for favorable capital gains/qualified dividends tax rates, or generally managing within tax brackets. I don’t like the tax laws being so complicated that they benefit those rich enough to hire CPAs to work them out for maximum financial advantage. But when regular folks work out the provisions of the law to work the best they can for themselves, I have to applaud, and that includes ACA subsidies.
In this country, healthcare isn’t a right unless you go the ER. However, people need to be able to get cost effective healthcare, without breaking the bank. We don’t need the government endorsing the insurance industry monopoly to get healthcare. They add no value.
I agree 100% that it’s not right that those who can hire CPAs can get out of paying their fair share while most regular folks are just stuck with the bill. And I often wish when folks talk about the question of whether health care is a right or a privilege, they’d actually talk about the economics of it, namely that emergency care is vastly more expensive than preventive care, and that we all end up footing the bill for those who can’t pay for it or don’t have adequate insurance. So right now we’re all paying much more through taxes and higher health insurance premiums exactly because we don’t truly think of health care as a right. If we did, we’d all pay less. So while I get the philosophical argument to some extent, it doesn’t check out in terms of actual economics.
Nice rundown of the possible consequences…it’s pretty clear that you’re a consultant in your day job! Just a note…you state “The ACA limits deductibles for exchange plans to $2,000 per individual or $4,000 per family. ” There are a lot of plans on the federal and state exchanges with deductibles of $10,000+…so that particular statement is either wrong or should be qualified in some way.
The exchanges need fixing, because there are too few healthy people in those risk pools to cost share with those with expensive pre-existing conditions. I do think Washington has the capacity to get the fix right, someday…as Winston Churchill said, “You can always count on the Americans to do the right thing after they have tried everything else.”
Also, I agree with Mrfirestation above that a safety net is poorly designed when those who don’t need it can engineer their way into it.
The deductibles point I pulled straight from the text of the law, so you’re right that it must be qualified, or it might have later been amended in a way that I missed. Something to research and update! And I think the broken system requires us going deeper than getting more healthy people into the risk pool, but that’s a debate for another day. ;-)
It’s a disgrace that one of the most lucrative countries on earth can’t find a way to provide standard health care to everyone. Politics aside, when you look at other countries like Singapore for example, they have a flat tax and use a combination of compulsory savings and payroll deductions to provide nationalized health coverage for all of their citizens.
Why is it that we can’t come up with a comparable system? Oh I know…GREED!! Unfortunately, I’ve lost all hope that our country, regardless of who is running it, will solve our healthcare crisis.
Amen, my friend. I won’t go so far as to say that I’ve lost hope, but it’s discouraging to see that we can’t even have basic discussions about this stuff without name-calling and alternative facts. Sigh.
I’m sorry but this is the one blows my mind about the US and really wish it could be better for you. As a Canadian I can’t fathom not having free healthcare and not having to worry about my family or myself (heck even Search and Rescue is free) . My wife just had knee surgery and orthoscopic work done on it, all the tests visits and surgery itself cost us nothing. As I look to FIRE this summer I wouldn’t be able to do it if health care costs were something I had to forecast and prepare for. I really really hope it works out for you guys and if not I am sure we can find a remote cabin on the Canadian Cascadia region for you to call home :)
#truth. It makes me sick to live in this system, especially because our health outcomes are WORSE than in countries that spend far less and guarantee health care to everyone. It’s mind-boggling that a country with as many smart thinkers as we have would be so dumb about something so important! But if we don’t get our act together, then let’s talk for real about that cabin! ;-)
Hope it works out and the current administration protects the largest demographic they tried directly appealing to but which is also most affected by changes away from a more social based system.
Amen, brother!
It has been mentioned above, but our deductibles and out-of-pocket max are much higher than listed (>$6500, >$13,000, with premiums approaching $1000/month for a couple), and this is with the ONE company that offers policies in our county for non-employer sponsored coverage.
Unfortunately, many of us aren’t offered employer-sponsored coverage so we’re working longer to build a larger emergency fund rather than for the security of having less expensive coverage.
I went by the text of the law on the deductible piece, and I don’t know if it’s a question of what qualifies as an exchange plan, or if something was amended in the law after the version I reviewed, but in any case, high deductibles are obviously a huge problem already, and the problem could potentially get worse.
2017 limits are $7150 and $14,300. I think the limits started much lower and have been increasing every year. https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
Oh okay, but that’s different from deductibles, which is what I thought you were giving those amounts for. And the OOP maximums are still capped at lower totals for people under certain income thresholds.
Our deductibles are the same as our OOP maximums. I don’t know who runs this site, but it seems pretty helpful. http://obamacarefacts.com/out-of-pocket-maximums-and-deductible-limits-for-2017-health-plans/
I did find one tiny ray of sunshine for you, if you can call it that: HHS has ruled (at least under the current ACA system) that for high deductible health plans like yours, they have to provide coverage after any single individual hits 50% of the deductible/OOP limit: http://benefitadvisorsnetwork.com/legal-alert/out-of-pocket-limits.
That is true and a silver lining. Unless we’re both in a bad car accident when we’re together, we’re unlikely to both hit our caps in the same year.
So wrong that that counts as a silver lining! :-/
Depending on where you are in the income distribution you might get a higher subsidy under the GOP plan. So, I actually cross my fingers that the ACA will be replaced with the AHCA. It takes away the headache of having to stay below the 400% times poverty limit every year. Either way, I budget over $20k per year just for healthcare costs.
I feel quite sure that every person in a universal health care country would gasp at reading what you are budgeting for health care. On some level, it’s crazy that that’s necessary. But also, good for you for planning so thoroughly!
Thanks! Funny that you bring that up. Both my wife and I grew up in countries with a national healthcare system. But we’re still here, naturalized citizens by now. Net-net, it is a still a huge privilege and an advantage to be here despite the steep cost of healthcare.
But I still cross my fingers that we’ll get a tax credit and are able to buy a bare-bones health plan for much less than the worst-case budget scenario. :)
It’s good to get reminders like that for those of us who’ve only lived here, that we have plenty of upside to balance the downside of our crazy health care system! :-)
I can only echo what ERN is saying. Mrs. PIE and I were brought up in the UK NHS system and although we didn’t see the downside of it as kids, we certainly do now. The fiascos that Mrs. PIE’s aging father had to go through recently with respect to critical hip surgery and eye surgery were downright scandalous. The NHS system in the UK – no thanks! BIG NO THANKS. People often ask us if we would be happy to relocate and/or retire in the UK. No way. That healthcare system has big problems and they are only going to get worse. It is also the culture in the aging population to not ask the right questions or push back on things when they start to go sour. The whole aging population in the UK situation is a nightmare on many levels, both culturally and financially, as applied to healthcare.
Check out the various articles at the site linked below for more detail.
http://www.bmj.com/nhs-2017
Don’t even get me started on what NICE in the UK is doing in terms of restricting access to highly efficacious new therapeutics for hideous diseases. And much of the time, not even acknowledging the downstream costs of caring for very sick patients who have been denied access.
We’ll be paying ~$14,000 per annum (inc. monthly premiums, deductible) for family of four, through my (former) company plan. We are fortunate that we have more than enough investments to cover this and still support a life of our dreams. We’ll pay that knowing we will get access to highly efficacious and potentially life saving medicines if we need to get them. Or not be placed 9 months back in the queue for a bed/slot to get some critical back surgery done.
If you ever start to consider a move to the UK or EU, look carefully under the hood of healthcare. The NHS engine is very old and a top-up of fresh oil ain’t gonna get it running smoothly.
I’m sure that all of what you say about UK health care is entirely true, BUT, the problem with aging people not knowing what to ask and getting caught in fiascos is 100% a problem here too. And I am glad you guys will have great insurance and have access to top-notch care, but that is not true for everyone here. Tons of people in the U.S. have “insurance” in name only, in that no providers will accept it because reimbursement rates are poor. Others can’t afford insurance at all (a problem sure to worsen in the near future). And people outside of the big cities simply don’t have access to the same level of doctors at all. Moving to our mountain town from our prior big city has been a stark reminder of that — there are very few medical options here, and I’ve definitely taken access to top-notch providers for granted in the past! None of this is to argue with you at all, just to vent about the problem broadly. ;-)
I really hope that all of this somehow gets magically fixed in the coming years. Maybe, somehow, someone in congress will be smart enough and convincing enough to actually solve the problem. Probably overly optimistic.
My hat’s off to ya for doing a great job at explaining a complicated topic.
Thanks… this is a topic we’re thinking about a lot lately, so I felt I had to share this with folks! And yes… let’s all hope for that magic solution! ;-)
It does suck how all this healthcare stuff is going down so close to your FIRE date. But I guess that’s what F-you money is all about–planning for unforseen things. You’ll do just fine. :)
I’d love to think we’ll do just fine, but the amount extra we’re having to budget for health care based on the uncertainty now is SO much more than we’d originally planned, and enough to essentially sink the whole thing. I’m not good at just trusting that things will work out, as you’ve probably noticed ;-), and so this stuff is pretty darn consequential!
This whole thing is a mess. We have gone independent now and out income is too high to qualify for subsidies. But you hit the nail on the head. Why is this so complicated? And why can’t the government figure this out. This system is so broken its ridiculous.
I was in an accident in October, no fault of my own. The hospital f’ed up my billing and now I’m dealing with the repercussions of that. And its not the first time its happened. And now insurance is fighting over what to pay? Why am I messinbg with this when I got run over by a car???
Really, it’s almost going to push us out of the country. I just can’t understand how this system is defended. I don’t mind paying for healthcare or coverage but its just completely out of hand as it currently stands and these knuckle heads are going to make it worse.
Amen to that! There are many fundamental flaws in the system that go well beyond this question of how big a tax credit and whether we get insurance independently or through work, and nothing will meaningfully change until we address those bigger issues. I get so angry hearing stories like yours, and how much of the burden of figuring things out falls to the person who gets sick or injured and has to navigate a system they are not expert in… while sick or injured! I hope you’re doing better???
See, you were talking me over to the “budget for less” side for ER and now I’m back to having eyebrows buried in my hair.
Honestly I haven’t scoped a new timeline based on lower numbers like we talked about since it’s been an excessively several weeks househunting but once that’s nailed down, I’ll have a better sense of what our true horizons will be.
Having good and continuous health care is non negotiable for me, but then, as it turns out, so is the need to spend my best years with my family and not working to keep health care. So … we’ll see.
Nooooooo! Don’t stretch your amount more or increase your timeline! Your amount is already so far beyond what most people would even consider that I still think you have tons of contingency room in there for a worse health care situation.
I wish I could say that reading this gave me some new insight or hope, but I think while we don’t agree on the political side of the solution that we agree that our healthcare system is one of, if not the biggest downside of being an American living in the US. Bottom line for me is that my disgust with the system and lack of hope for meaningful change was one of my biggest drivers to pursue FI and get out, while at the same time the inability to cap our risks due to this system is why we are not pursuing a more traditional retirement or even shifting towards self-employment so that we can stay on my wife’s medical insurance as long as it is an option. SAD!
It frustrates me to no end that this has become an issue where you have to be on one side or another, because clearly we all can agree that nothing about our current system is sustainable. But that’s a soapbox for another day! ;-) And we’re in the same boat as you guys of reconsidering what our future looks like based solely on the health care mess… which is crazy. Having to hold onto a job that we don’t need and keeping someone who does need that job from filling the spot in our place, all just to get health care? And then we can’t pour our energies into entrepreneurship or building a small business that might create more jobs… Blurg!
We’re seriously considering our options because of the change. We’ve enjoyed our semi-retirement. We’ll likely go with a catastrophic plan, but before we settle, I’ll probably look at some of the health sharing ministry plans (at least the broader based ones that might accept Episcopalians like us.)
I do wonder if some organization like AARP might step into the pre-Medicare arena by organizing group health plans for members. Obviously, that would be a big incentive to join for early retirees.
I’m so curious to know what the catastrophic plans will look like, if they come back. I think the hardest thing for me to accept with those is that the cash price we’d pay for normal care is SO much higher than what insured people and insurance companies pay (like $400 for an office visit vs. $100). But it could certainly still turn out to be the best option. And that’s a good point about AARP — I know they’ve so far focused on defending Medicare from cuts, but I think you’re right that there is a compelling business case to be made for them to offer insurance to, say, folks who are 50+.
[blockquote]”It mostly means that they get to choose what kind of coverage you’ll have and how much it’s going to cost you, which is a bizarrely unfree-market thing if you think about it, given how the employer-based model is the preferred option for free market proponents. (In a true free market model, we’d all individually have the full range of choices of providers, levels of coverage and premium/copay amounts.)”[/blockquote]
Huh? The foremost advocates of free market thinking have been saying that employment and health insurance should be disentangled for many years, well prior to the enactment of the ACA. See, e.g.:
http://reason.com/archives/2007/10/16/ending-employer-based-health-i
https://www.cato.org/pubs/briefs/bp019.html (criticizing the employer-based system way back in 1993)
http://www.hoover.org/research/how-cure-health-care-0 (Milton Friedman stating “We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical.”)
I could go on. I’m happy to proven wrong; who are these free market advocates who love employer-provided healthcare?
No disagreement — true free market thinkers (and I would not say I am one of them, probably obviously) have been talking about this for a long time. I’m mostly talking about GOPers in Congress who claim to want to let the markets find the right solutions, but then do everything possible to perpetuate the employer-based insurance status quo.
What a cool pic! #nofilter
I really appreciate this breakdown. I’m trying to read the news less often, but that’s led to more confusion. Ha!
Garrett’s latest health hurdle is something that has the potential to impact him for a couple of years (fortunately, it’s not life-threatening). We don’t know the extent just yet, but it does mean our spending increases for the foreseeable future, which also means that his employer-subsidized plan continues to be our best, most affordable option…
Fingers crossed that we’ll see some light at the end of this healthcare tunnel…
I couldn’t believe what I was seeing when I undimmed the window. The 787 is my fave plane ever. <3 I'm bummed to hear that Garrett has another health hurdle and that it's a long-term thing. :-( And yeah, we're feeling SUPER grateful to have employer coverage right now, and starting to ask ourselves what we might be willing to do after the end of this year to keep access to that. Which is not what we thought we'd be thinking about at this stage in our FIRE journey!
US healthcare is a crazy beast! We have had many a heated conversations about it in the WOW household. It is impossible to navigate for our personal plans, but I even run my own company within the healthcare world and refuse to accept insurance due to the utter chaos and headaches that it causes.
Whoa, that’s a pretty big testament to the state of the system if you refuse insurance in your business!
This stuff worries me a lot. I have a small business and I would like to eventually be FT at it. I purchased my insurance on the exchange and actually do the preventative/maintenance health care now. I went with a bronze plan because I am healthy and not planning on having children; if my girlfriend eventually wants us to have children, we’ll get me on her insurance and go from there. If I quit my FT job, I worry about my ability to afford the insurance I have assuming that it still exists.
The Health Savings Ministries are not an option for me because they are religious and most don’t include access to abortion and other things that some religious folks are opposed to. Strangers determining if I get healthcare is not a good luck for me.
Yeah, I get your anxiety. We’re feeling it in a big way too. And amen to not letting others determine what kind of care you’re entitled to!
Strangers telling LGBT folks what we deserve by way of rights (healthcare included) has never gone well for my people.
That’s for sure true. I think your community has taken more than its fair share of lumps, but I think anytime anyone pretends to know what’s best for another community or category of people, there’s nothing good to come of it.
So true!
I realize I’m probably the only one here who doesn’t “believe” in health insurance, but just for the sake of seeing the other side: I would like very much not to be forced to spend thousands each year on something I neither believe in nor use. I am responsible for my own health, wellness/illness, and treatment if I so desire (& no, I’m not one of those who opposes going to a Dr.) I’m kinda playing the devil’s advocate in asking, “What would life (pursuing your dream) look like without health insurance?” (which is what I did until just a couple years ago.) You raise a very good point in defining the struggles of planning around it. Maybe, you can’t imagine life without it, but it is an option nonetheless. Just a thought.
PS- My experience w/ office visits is that there is usually about a 15-20% savings (sometimes as much as 40%) if you pay cash vs. go through insurance (in ref. to your response to Emily.)
Amen! Don’t get me started. To private-pay $1,000 a month premium to be granted the right to pay another $10k in deductible before the fat cat insurance companies decide or not to cover a medical expense is just completely rediculous to me. We watch what we eat in our family, exercise regularly but still pray someone will offer a catestropic policy that we actually value what we pay for. For those who may not be aware, some services are popping up to avoid the proverbial “CareNOT”, local Urgent/ER ripoffs. One is http://www.doctorondemand.com/ and another is https://www.teladoc.com/. Virtual doctors via your PC/Mac in the privacy of your home. Obviously they can not take vitals or blood work. But for 10 minutes and about $40-50 bucks can triage your situation. Real docs, and they can wire prescription to the local pharmacy. You can have your meds for the easy stuff in about an hour start to finish. Anything more you will get referred to you doc and the $100 office visit (pay on your HSA debit card and avoid insurance companies whose motivation is to grow their stock price at your expense).
Hoping the Republicans sweeten the pot this week for us ‘Early Retirees Staring At The Health Care Abyss)!
Factual point of clarification: You can only get an HSA if you have health insurance, specifically a high deductible plan: https://www.zanebenefits.com/blog/bid/309389/health-savings-accounts-hsas-10-faqs.
I’m 100% with you in terms of taking responsibility for your own health and getting a catastrophic plan to cover emergencies. The absolute ideal plan would also cover basic preventive medicine, e.g. immunizations, an annual checkup, and reproductive care, but not chronic disease caused by our own lack of responsibility. Good for you, and I wish everyone would focus on daily exercise and whole food, plant-based nutrition, which are what science says are best for human health.
Unfortunately, the teledoc service is not a good “solution.” The vast majority of significant medical conditions cannot be accurately diagnosed without a physical exam and/or tests. If you just need reassurance that you only have a cold, a teledoc call will be fine. At some point, though, you should learn what symptoms result from a simple viral infection on your own and the teledoc call will be nearly useless. At this point, many comorbidities remain unaddressed (e.g. high blood pressure) with a teledoc visit and patients are much more likely to end up on an antibiotic or other medication that they did not actually need. These excess prescriptions result in hundreds of thousands of unnecessary complications, additional prescriptions, hospitalizations, and increased health care costs. It truly is worth it to find a responsible health care provider… and then try not to need to see them.
I would love if we could live in a world where taking responsibility was enough — but there are so many people who, because of poverty or where they live, don’t have access to the healthy food they know they should eat, or have access to safe places to exercise outside. And so building a system around those “choices,” when they aren’t a choice for everyone, will only perpetuate the disparities we have now, along with the high costs associated with treating people in poor health. And agree 100% that we need fewer procedures and tests especially — that’s a HUGE cost driver.
I can understand your thinking, but I also think that’s a fairly limited view. Health insurance isn’t really insurance (with homeowners or car insurance, for example, you hope to never use them, but you DO plan to receive health care), it’s really just cost-sharing. And the stats suggest that we will all get some major illness or be in a car accident at some point, and I’ve seen what those prices are (you don’t get much of a cash discount on a $5,000 MRI, for example, like you might on an office visit). Cancer treatment can easily cost a million dollars without spending a single night in the hospital, and several readers here have shared stories of getting charged $300,000 for a single bout of an illness. And I doubt anyone with a chronic illness would suggest going uninsured, and diet and exercise don’t control everything. Strokes and Alzheimer’s have a big genetic component, autoimmune diseases are getting ever more common, and sometimes the healthiest eaters still get cancer. Just consider how many people continue to file for bankruptcy because of health care costs — it’s not a small number. So obviously you’re free to view this however you want, and if you’re comfortable being uninsured, that’s your right. But the flipside is that uninsured people are a huge reason that health care costs keep going up for all of us. If you had a million dollars in bills for cancer treatment and couldn’t pay them, would you expect the rest of us to pick up the tab for you? Because that’s what happens.
Yes, strokes and dementia have a notable genetic component, but they have a MUCH larger lifestyle component. Everyone can drastically reduce their risk of these conditions with daily exercise, maintaining a normal weight, eating a healthful diet, avoiding tobacco and other drugs (including “medical” drugs!), and spending time with friends & family (social/emotional health). As a society, though, we just don’t do it.
That said, obviously not every single pathology can be prevented or cured with the above… just 80+% of what afflicts Americans.
Regarding the rest of your comment, you’re right. Health “insurance” is a misnomer, as you’ve stated. Skipping insurance is just pushing your eventual costs onto everyone else. It’s frustrating when people abdicate their health costs and responsibility, forcing the rest of us to pay for their negligence and willful ignorance.
You raise something that I struggle with a lot — it’s important that we encourage more healthful behaviors among people, but the flipside is that we end up blaming people for their own health challenges when there’s literally nothing they could have done to prevent it. I have countless examples just in my family of people who did everything “right,” and still ended up with serious physical or mental illness. So I totally know what you’re saying about paying the costs of people who make bad choices, but calling it negligence is too much victim blaming for me, because we don’t know the particulars of anyone’s situation, and the environment, their access to health care, their socioeconomic status, etc., all might have much larger roles in their health than we know. ;-)
I retired quite young in 2010 (not as young as you guys though – kudos). Let me share a slightly different perspective. Then I could purchase a $5k deductible plan with 100% coverage beyond the deductible. That plan cost me $120/month. Total annual cost of less than $1500/year. Total annual cost if I used the deductible – $6500.
Fast forward through the horrendous torture of ACA – that same plan has changed dramatically. Lowest deductible $6500, max out of pocket $13,000 and the monthly premium now total not $1500/year over $10,000/year!!!!!! Total annual cost using the deductible – over $23,000/year!!!!!!! Holy Crap!!!! Of course because I worked very, very hard (yes, despite your other article about no one being self-made you’d be surprised how “self-made” I am) and saved diligently. My investments throw off to much for me to get any subsidies, not that I’d ever expect it.
As far as I’m concerned it probably can’t get much worse than ACA. Who knows, politicians control it so I have little hope that it will get better. At least now I have coverage for maternity care and lactation services, something I’m sure I’ll use someday in the future – I’m male by the way – lol! Ah the beauty of gov’t lunacy – libertarian anyone???
It’s interesting that we call health care “insurance” because, unlike actual insurance, most of us USE our health insurance. (With other insurance, you’re betting that you won’t need it.) So what this supposed health insurance is is really spreading the cost and risk among all of us. And I definitely get how it’s painful to see your costs go up that much. But all the analysis I’ve seen shows that costs would have gone up MORE without the ACA, not less. Sure, your catastrophic plan was cheap, but tons of people couldn’t get those, namely anyone who’s ever been sick, most women, anyone above a certain age, etc. And of course the real benefit is that $25+ million people who were uninsured now have access to health care. I’m not stoked to pay for your prostate exams, either, ;-) but if plans didn’t cover maternity care, it would equate to yet another tax on women, which is all the more ridiculous because women don’t impregnate themselves.
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