What We Know and Still Don't Know About Early Retirement Health Care // Affordable Care Act, Obamacare, Health Insurance, Health Care Coverage, Early Retirement, Financial Independence, Senate Health Care Bill, AHCA, Early Retireeswe've learned

What We Know — and Still Don’t Know — About Early Retirement Health Care

For those of us who are close to early retirement, or already there, the recent Senate machinations around health care have been extremely consequential, dictating and potentially hugely increasing what we’ll all be paying for health insurance beginning as soon as January. This is something we in the ONL house care a great deal about, given our particular health care needs and the fact that we’re pulling the plug on employer-provided coverage in five months when we retire early.

This week, we all learned that the current set of proposals to reform or repeal the Affordable Care Act (ACA), also known as Obamacare, will not move forward. Full repeal would require 60 votes in the Senate, not the 50-plus-VP-tiebreaker needed to reform the ACA through the reconciliation process they’ve been pursuing, and given the current impasse on getting to even 50 votes, it’s now unlikely we’ll see much movement on the question this year. (But never say never.)

Regardless of personal politics, most early retirees or soon-to-be early retirees we’ve heard from have expressed a simple desire to know what to plan and budget for, and unfortunately, that’s still not entirely clear, at least not in the long run. So today, as a part of our continuing series on health care coverage for early retirees, we’ll take a look at where we are at this moment — what we now know, and the many things we still don’t know, about health care for those of us who are many years from qualifying for Medicare at age 65.

Other posts in the early retirement health care series:

What We Know and Still Don't Know About Early Retirement Health Care // Affordable Care Act, Obamacare, Health Insurance, Health Care Coverage, Early Retirement, Financial Independence, Senate Health Care Bill, AHCA, Early Retirees

What We Know Now About Early Retiree Health Care

For the time being, the ACA remains intact, which means a number of things for everyone, not just early retirees.

First, the requirement on covering the 10 essential health benefits remains in place. This means every health insurance plan must cover preventive care regardless of how high a plan’s deductible is, along with prescription drugs, in- and outpatient care, mental health care, pregnancy and neonatal care, pediatric care include vision and dental benefits, among other types of care.

Second, the individual mandate remains technically in place, though it’s looking unlikely that anyone will be enforcing it for the time being. From a risk perspective, the more people with insurance, the better for everyone, and a de facto lack of mandate could increase premiums across the board.

Third, most people will continue to have access to health insurance via the national or state health care exchanges. There are a few states and counties where the exchanges have been forced into collapse, but overall, analysis shows that the exchanges and markets are stabilizing.

Fourth, protections on coverage for pre-existing conditions remain in place. The most recent versions of the Senate bill would have pushed the decision on requiring this coverage to the states, but for now, no one can be denied health coverage or have specific care denied because of pre-existing conditions.

Fifth, the Medicaid expansion remains in place, which means that residents of states that expanded Medicaid, and a lesser number of people in non-expansion states, will continue to have access to public plans. And related, the idea of health insurance subsidies based on income remains technically intact for people whose income goes up to 250 percent of the federal poverty level, though this is complicated. (Keep reading.)

What We Don’t Know — And May Not Know For a Long Time — About Early Retiree Health Care

Despite a seemingly status quo outcome of the most recent legislative debates, the White House has signaled an intent to “let” the ACA fail (“let” in quotes because it actually means force it to fail by taking actions detailed below). Which throws into question a lot of what otherwise would be knowable for early retirees relying on exchange coverage.

The main unknowns revolve around two key outstanding questions:

Will insurers continue to offer plans on the exchanges in most states? 

What will costs be for those purchasing exchange plans, including many early retirees?

Insurers Offering Exchange Plans

Given the recent stabilization in the insurance markets, most insurers have signaled that they intend to stay in the exchanges — so long as conditions remain favorable for them to do so. And that’s the big question. From the insurers’ standpoint, they want as many healthy people to have insurance as possible, to spread out risk, and they need the continuation of direct payments they currently receive (“cost-sharing reduction payments” or CSRs) to cover low-income people (what most people call the ACA subsidies), so that they don’t lose money. So the stability of the exchanges hinges on two questions:

  1. Will the individual mandate be enforced?
  2. Will direct CSR payments to insurance companies continue?

Along with the current administration signaling that it won’t enforce the individual mandate, meaning the IRS won’t impose tax penalties on those who don’t have insurance, there’s significant question about the payments to insurers. First, Trump has continually said he intends to discontinue subsidy payments, which he has unilateral authority to do following a lawsuit by the House of Representatives during the Obama administration about the legality of non-appropriated payments. If the payment funding ceases, which could happen as early as this week, experts predict insurance plans will flee the exchanges en masse, forcing early retirees and anyone else without employer-provided health coverage to pay full rack rate for insurance directly through the insurance companies.

All of that said, efforts to repeal and replace the ACA have grown increasingly unpopular, with a majority of Americans now saying they don’t support the current efforts. So we’ll have to wait and see if the folks in charge decide to go against public opinion, which could risk a political price.

Costs For Exchange Plan Enrollees

The questions facing insurers directly impact the costs that early retiree and other would-be exchange plan enrollees will undertake for care. If the lack of an enforced mandate and subsidy payments force insurers out of the exchanges, then we’ll all have fewer options, and our costs will increase. In addition, the question of cost-sharing subsidies and to what degree they will be funded has a massive and direct impact on many of us, given that a lot of early retirees plan for a low income in retirement, which would qualify them for sizable cost-reduction subsidies which reduce premiums and out-of-pocket limits under the current structure. Overall, 84 percent of exchange plan enrollees receive some form of advance premium tax credit or subsidy, so this is not a small-scale problem.

We’ve always had mixed feelings about having large savings but receiving premium assistance under the ACA’s income-only means testing structure, but have appreciated above all the known and reasonable out-of-pocket limits imposed by it. So while we’d be fine budgeting more for monthly premiums and copays, knowing with certainty that sudden illness or an accident wouldn’t wipe us out, because the subsidized silver plans have reasonable out-of-pocket maxes, gave us tremendous peace of mind. (And the one bit of editorializing I’ll do here is to say that we wish everyone could have that peace of mind. No one should have to carry around the fear of being wiped out by health care costs at all times. This shouldn’t be a privilege limited to those of us who can reverse engineer our income to fit within the narrow rules of the game.) 

Bottom line uncertainty: While coverage for the 10 essentials and pre-existing conditions seems solid for the moment, what the costs for early retirees will be as early as January, and what options we’ll all have available in terms of insurers and plans, is still completely unclear. We know what the current law says those answers should be, but that means very little at the moment.

So the limbo continues.

What This Means For Us

Last year, when it seemed likely that the ACA would remain in place, we did a great deal of planning for our future health care, including determining some ways to keep our income low while keeping cashflow higher, which would optimize our health care costs without significantly compromising our quality of life. (You can use this basic calculator to do simple calculations at different income levels based on your situation to figure out your optimal income level for health coverage, though all of this could change any day.)

While it wasn’t the driving factor in paying off the house, the desire to keep our income low for health coverage was one of the factors. Reducing our taxable income without hurting our cashflow is another reason we haven’t practiced tax loss harvesting. If we reduced our cost basis on our shares, then when we go to sell them, the amount on which we are taxed, and the ultimate amount calculated as income, would become larger, which would directly increase our health care costs. So we’ve opted to pay a bit more in tax now by not harvesting losses, in favor of paying less for health care later (and also in favor of paying some of that forward, what we think of as prepaying for our future health care).

Of course, now it’s entirely unclear whether any of that logic will still help us. But the ACA remaining intact at least gives us clarity on one thing:

Come January, we will opt for an exchange plan rather than purchasing COBRA through my employer.

My COBRA plan is extremely costly, and even if the subsidies disappear entirely, a fully rack rate plan in which we can choose the coverage levels and limits will be cheaper than COBRA on my company’s plan. And if the exchanges collapse, then we’ll buy a private insurance plan directly from an insurer. (After we unmask ourselves, I’ll share more specifics about the rules in our state and how this impacts our decision.)

So we know where we’ll get our insurance, but we are still on pins and needles about how much it will all cost. And as I’ve said before, it’s awfully hard to budget for infinity. Which means that if Mr. ONL has the option to keep working next year in a vastly reduced capacity in exchange for health insurance (or at least the income to pay full price for it), we’ll be mighty tempted to agree to that. Stay tuned.

What’s Your Concern?

Are you following the health care developments closely? If so, what concerns do you have? Any relief or frustration you want to vent about the most recent developments? For those who are already retired and have gone with a health share ministry instead of traditional insurance, care to share your experience and whether you’d recommend that approach? I’d especially love to hear from anyone who’s had a health share AND had a major medical event, not just routine care like office visits. Let’s dig into it all in the comments.

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91 replies »

  1. Health Insurance is one of the costs that I have been blissfully relying on my (or my husband’s) employer to provide without realizing how costly it can be or how hard it would be to cover what has become “basic medication” for me. When I run the numbers or see the premiums of a self employed individual, it is shocking and in some cases, highly variable. While we are far from retiring, this is the biggest unknown expense in my mind and following along with your journey and thoughts on health care has made me realize I am not alone here. Here’s to hoping a reliable solution is on its way in the near future!

    ~Mrs. Adventure Rich

    • Let’s hope it’s all more clear by the time you guys are ready to dive in! But yeah, you are DEFINITELY not alone in this! And I didn’t say it in this post but usually do: We are not complaining. We are the lucky ones, and we will be just fine. It’s just unsettling to have nothing to budget around, especially given how quickly costs are rising year to year.

  2. Thank you for a very informative post about the latest news around the health care saga.

    We are still several years away from potential early retirement and financial independence, but I agree that uncertainty around what healthcare will cost us in the future is the biggest variable when I am running our numbers. With two school-aged children, we will need to get this one right for our FIRE plans to be realistic. I look forward to hearing more about how you navigate this issue in the coming months!

    • You’re welcome! :-) And yeah, I think a lot of us are in that boat of being able to project out every other expense except for health care. I’ll keep writing about this as we know more!

    • We are in a similar boat here. With two small children, I see no reason to take risks on health care. Outside of health care, we could RE today. But my spouse is planning to keep working for several more years.

      I have been seriously thinking about pulling the plug myself. However, my employer provides the better health care plan, and right now also more stability, as rumors have started about my spouse’s company going out for an IPO. No telling what that might mean for his job and compensation. If it was just the two of us, I’d take the risk. Instead, I’ll keep working a while longer and let the savings grow and guarantee that my kids will be secure.

      I am extremely frustrated that health care is tied to employment. There is no rational reason for this to be the case, and it really does make it a challenge to try to pursue non-normative careers/hobbies. What do all the “gig economy” workers do?

      • Yeah, I’m with you on how illogical it is to keep insurance so closely tied to employment. I think a lot of the gig economy folks are still on their parent’s health insurance (until age 26), or are on a partner’s, or are uninsured. I’m sure some do buy health insurance on the exchanges or perhaps directly from Kaiser or other HMOs, but that is cost prohibitive for so many.

        I hope at some point we can at least have this national conversation. If this is, in fact, the policy we want — people must work for health care alone, and not in ways that might spur innovation or create more small businesses or startups — then let’s at least be honest about the fact that that’s what we’re doing.

      • Agreed. I recently (reluctantly) returned to full time employment strictly for health insurance coverage. Hubby & I both spent the last year building up a small book of accounting business that was to be our early retirement gig — keep us engaged, fund our health insurance costs until Medicare, and allow for some extended road trips or even relocation. When I shared with my fellow small accounting biz owners that I found it necessary to return to full time employment just for insurance, they almost universally came back and said the only reason they could stay independent was because their spouse’s employer based insurance covered them. Sad that we have to tell young people that unless they make it big by age 26 they will need to “work for the man” indefinitely. Also sad to tell people like me over 50 and with a pre-existing condition, that early retirement and/or having a small business just may not be doable or wise in the current environment. On the plus side, my new employer is global and very open to remote work (I do it 2 days a week already). So our new plan may be to pack the laptop and the unanticipated income from my job, and “live” some of the places we would like to try for a couple months out of the year. My coworkers do similar in going home to India and other parts of the world, so why not me here in the USA? It may just be the new “retirement” for us.

      • It makes me crazy to hear stories like this. I don’t understand how we can talk about small business being the engine of our economy and then continue to create instability in the health insurance markets that allow people to be independent, or to create so much uncertainty around costs. :-( But I do love your remote work plan! And I think if you can settle in a place for more than a few weeks, you’ll still get to experience it for real, even if you’re spending a good chunk of your time working.

      • Forgot to add. If my current employer sells or changes into something that does not provide a healthy work/life balance, my plan is to grab Cobra, take a full year off, and then search for the next job during the last 6 months of cobra. Finding freedom where we can.

      • That’s smart, too. Given that you don’t need the work other than for health care, no reason to stick with a job that no longer has those perks!

  3. I’m following the health care stuff very closely, but not for personal reasons. Our plan is still to have insurance through the military when my wife retires in a few years. I realize that not everyone is as fortunate.

    I’m more concerned about the costs of healthcare overall. It’s becoming more and more of our GDP. I read it grew from 5% a few decades ago to 17%. I don’t think that’s healthy for our economy.

    I’m also interested in how many politicians seem to be focused more on who is paying for the health care (rich vs. poor) rather than reducing costs.

    • Well you already know how jealous I am of that! ;-) And YES. I didn’t want to repeat what I wrote a few weeks ago, but this whole discussion is essentially entirely about insurance regulation and who pays and through what mechanism. It does nothing to make care more effective or efficient or to make any of us healthier, except for the preventive care provision in the ACA that remains, removing the deductible and copay barrier from annual physicals. So yeah, totally with you. We cannot sustain these continually skyrocketing costs as a society.

  4. I’m 3 years from qualifying for Medicare and this issue is my main concern with retiring next year. Not to mention the cuts to Medicare (and Social Security) included in the budget that is being introduced. Many years of working, saving, planning may be undone by this Congress and President.

    • Yeah, the uncertainty is the hardest part. The silver lining for you is that with the ACA intact, the limits are still in place on what people over 50 can be charged, so you won’t see skyrocketing premiums compared to premiums for younger people. But I guess when everything is skyrocketing, that’s little comfort. Good luck getting through those last three pre-Medicare years!

  5. I was happy to see that McConnell couldn’t wrangle the votes, but the President’s statements are still very concerning. Insurance markets rely on predictability and Trump bases his negotiation strategy on unpredictability. I think dangling the CSRs as a carrot scares me the most. It seems like it would be easy for insurers to decide they don’t want to put up with the unpredictability anymore and pull out of the marketplaces.

    I have been heartened by Collins and others suggesting that it is time to start the health care reform process over and work across the aisle. I don’t anticipate all that much getting done in a bipartisan manner, but if they can tweak a few problem areas and guarantee the CSRs, it would go a long way towards stabilizing health care for the near future.

    • Regardless of what anyone’s politics are, it does seem reckless to be willing to “collapse” nearly a fifth of our economy to make a political point. Even if you don’t care about the people’s lives that will be impacted, at least care about the economic impacts. (And having written that, I still can’t believe there are those who are willing to be so reckless with other people’s lives.)

    • I don’t know that that’s helpful, because it’s just the rack rate of the particular plan my company has chosen, which is relatively generous. If we were paying full price, we’d choose our own plan, and at least at this stage, we’d pick one with a higher deductible and higher copays to keep the premiums lower. But with all those caveats, my understanding is that it’s currently about $800 a month for two adults, and could be higher next year. But that’s not apples-to-apples with other COBRA plans.

  6. Ugh. I’m so frustrated with everything these days. I just wish we could come to a decent consensus about healthcare instead of making it, y’know, worse. It’s such a damn mess.

    • Or at least have a real conversation about it and the trade-offs of each approach instead of having it be done by one side only, and in secret. :-(

  7. The uncertainty has been nerve-wracking for us. We have an ACA policy, and the fluctuations in the carriers have meant that we’ve changed insurance companies a couple of times and seen the number of good options decrease (with increasing premiums).

    Like Lazy Man, I’m really frustrated by the fact that all of the policy discussions in Congress have centered around the costs and payment structure for insurance, rather than the costs of healthcare. I’m pretty unconvinced that market forces work for health care….the market lacks the price transparency or cost-saving incentives for individuals to make good decisions, even if you got rid of most of the subsidies (Medicare, Medicaid, Employer-Provided Insurance.) And no one has the political will to do much about any of that.

    • The discussions haven’t talked about the cost OR the quality of health care! And I know I’ve said this here before, but anyone who thinks that price competition is the magic bullet to improve quality, look no farther than the airlines. There’s peak competition on airfares, and customers have never been happier and better treated, right? ::sarcasm:: So yeah, we really need to have a much bigger picture discussion than the insurance regulations we’re essentially focusing entirely on now.

  8. As I have written before, we are easing into retirement by working part time and keeping employer healthcare insurance for now. We need a bipartisan solution to healthcare that won’t be in jeopardy with every Presidential election. How about a veto-proof mix of reasonable Senators who are looking out for all of us, and a House to match? It might take turnover in the mid-term elections to get it done, or maybe 2020. Kudos to those who already refuse to be bullied.
    What can we do? What is in our control? Save more. Write our representatives in DC. Consider and choose alternatives, like medical tourism, and health share options. Or keep working for employer health insurance.
    I’ve read that 80% of healthcare costs are consumed by 20% of the people, and >50% of costs by 5% do the people. We need to address the costs of delivering healthcare for these 20% or the 5%, and the rest could afford healthcare for much less. Note that I’m not saying to make the 20% pay their way in expensive high risk coverage, but actually address the costs of care. Some of that would be rationing, but we already ration, mostly through the uninsured and by exclusions in insurance.

    • Currently, we ration far less than we used to, because we have a record number of people insured and the ACA barred the insurance companies from denying lots of the coverage they used to refuse to pay for, plus it outlawed things like lifetime caps that insurance companies used to use heavily. Of course, all of that could officially or unofficially disappear. And yeah, it does no one any good to live in a constant state of limbo. We’re not ever going to get a system that feels perfect to anyone, and it would be nice if folks could accept that, figure out something that works on a pragmatic level, and move on from rehashing the same questions.

  9. Re health sharing ministries: This is an article I wrote about health sharing ministries.

    They are large enough to absorb expenses, and I was only able to find one lawsuit against the largest ministry (plaintiff claimed that Samaritan’s failed to share a legitimate $400K surgery bill, but the plaintiff lost due to the fact that the she had not revealed a pre-existing condition). Most of the ministries have many success stories of covering major medical expenses including the medical costs of children with severe disabilities.

    Personally, I’m part of a health sharing ministry, but Rob and the kids have Blue Cross health insurance (premiums are just $2400 per year since Rob is covered by school). It just seemed silly to pay an extra $3600 per year for insurance for just me since I’m healthy.

    Re Politics: Since Obamacare supports the corporate insurance model that I vehemently oppose, and it limits innovation in healthcare financing and healthcare itself, I am no fan of it. However, I admit that it has sucked less than I expected (though I know more than a few families caught in the so-called family glitch).

    I think most current proposals to the bill will do more harm than good, and while I wouldn’t mind blowing the bill to bits, slowly letting it collapse is the kind of political gamesmanship that makes me sick. Too much collateral damage.

    Re alternative options: I’ve scoped out costs of private healthcare in Costa Rica. Right now, for us, it’s more cost effective to purchase health insurance state side, but Costa Rica is the backup plan for if political gamesmanship makes health insurance untenable for a year or two. It might be worth a look for you too.

    • Thanks for sharing this. I don’t think I realized that health ministries were allowed to violate the ACA ban on denying coverage of pre-existing conditions. That would be a deal-breaker for us. And we’ve for sure thought plenty about health care tourism or moving abroad, but we are still clinging to the hope that it won’t come to that. We like it here and think it’s appalling that people would have to leave just to afford basic health care. That said, we’ll for sure do some routine care when we travel in retirement, especially dental care since this is our last year, most likely, of dental insurance.

      • The lawsuit was pre-ACA. I want to say 1997 or so, but I can’t find the details. I only remember Samaritan’s and $400k. I wish I had saved the link, but I cannot find it at all.

        Anyways, the ministries don’t have to follow the same rules as insurance companies because they don’t provide “coverage” they provide “sharing” in a sort of mutual aid format.

        From my research the ministries do not deny membership based on pre-existing conditions. However some (including Medishare which is my provider) have a phase in period for sharing costs associated with preexisting conditions (which I think is a deal breaker for you).

        The ministries are very eager to help potential customers see if they are a fit, so feel free to call if it comes to that.

      • Ah, okay gotcha. That makes sense then. And the sticky wicket in the pre-existing condition discussion is what actually counts. Like if you have autoimmune disease, for example, obviously that counts. But then what if you develop a subsequent issue that might be caused by it, and might not — is that pre-existing or new? This question extends to all talk of pre-existing conditions, not just for health shares, and it’s something I worry about — so having the pre-existing coverage of the ACA stay in place is a huge relief for the time being!

  10. Your series on health care is a great service you are doing to us all. Thank you!

  11. Re: Health Sharing Ministries

    What if I was raised Jewish, currently consider myself agnostic, want to get a vasectomy after my second kid is born, and enjoy adult beverages from time to time. Is there a health sharing ministry for my family and I?

    Do these plans cover you if you’ve had 4 beers and happen to trip, fall, and break a hip playing around with the littles ones at a BBQ?

    • Read that back – I’m completely serious with both questions; They came off a bit condescending in tone, but are both things I’ve seriously been curious about

      • Haha, no worries. I do think they are a bit mysterious, and some clearly have some very strict “moral” rules. So they are fair questions!

    • Steve at Think Save Retire wrote about the one he and his wife Courtney have that doesn’t have some of the usual religious requirements. But I don’t know the answers to your questions because we haven’t seriously considered this option. ;-)

    • We have Liberty Health Share and, while they are “technically” religious-based, they are one of the less strict health share organizations out there. All we had to do was agree to their core principles (which are pretty high level), but we didn’t have to testify that we are members of a *specific religion*. Also, consumption of alcohol is fine. They do insist that you aren’t a user of tobacco, though. If you’re seriously looking into a health share organization, Liberty might be something to check out.

      • Thanks for that info, Steve! I knew you guys had found an option that was less strict than some.

  12. You’ve come down exactly where we have; we’ll be enrolling in ACA this fall, rather than COBRA.

    Interesting how the various levels of coverage under ACA have really crystallized what we decided was most important for us: insuring against catastrophe. After thinking and thinking and thinking about it, we’re going to end up with a less-expensive plan than if we’d tried to replicate what we had @ work.

    • I think that makes total sense, assuming you’re healthy. Our single most important factor is the out-of-pocket max, more so than the premium, copay or deductible amounts. Especially given that we’re loading up on health care this year, we expect/hope to be low consumers of care for the next several years, but want to be sure a catastrophe won’t wipe us out. Of course, if the subsidies stay in place, then we’ll be able to get a plan with better coverage, so we hope that option stays on the table!

      • You’re probably already doing this math, but just in case: The premium and OOP Max really go hand in hand if your biggest worry is the total potential outlay in case of catastrophe. You know FOR SURE you’re going to pay the full premium amount for the year regardless. The OOP Max only kicks in if you have very high ongoing costs (expensive medications for example) or if you have a massive medical issue. To compare your potential exposure under different plans, you’ve got to add the annual premium and OOP Max together.

        The composition of the provider network is also super important, especially if you live in a smaller town. Having fewer in-network providers may mean you get out of network care, which may have much higher (or no) OOP Max. For out of network care, coverage may be heavily limited by having benefits based on arbitrary ‘allowed charges.’ Although plans generally provide the same cost sharing percentages to out of network emergency care (which they have to cover), benefits are often still based on (and capped by) ‘usual and customary’ charges, which can be significantly less than the amount a hospital actually bills. And you’ll be the one left holding the bag.

        It’s a crazy system! But I agree with you – I hope our government starts to realize the value of maintaining stability with the system we have today… At least until there’s a super compelling (and politically viable) alternative that’s worth breaking a few eggs for.

      • We are, but I’m glad you made this point here so it’s in writing for folks to see here! It feels premature to talk actual specifics given how much is still in flux, so I didn’t address the different types of costs directly in the post.

  13. I have decided to stay employed for the time being – On going medical expenses and condition for my spouse makes it too risky to move states and get a new plan in year 1 (and it would be tough to enjoy FI right now too). .

    Whether it was the last administration or the current one, the lack of enforcement of the individual mandate is a critical issue. I believe 2/3 of the people choosing not to purchase insurance in 2016 received hardship waivers of the penalty.

    I also struggle with the news saying “X number of people will loose health insurance” – No one is taking away health insurance, these are individuals choosing to purchase things other than health insurance with their money. The debate should be if that’s optional. We already require emergency rooms to take anyone who shows up, but don’t feel like we can require insurance. Just don’t issue government IDs or process tax returns until proof of insurance is provided.

    The closest model the US can convert to is Costa Rica or Switzerland, two of the top 20 nations in the world in healthcare. The Swiss require everyone to purchase basic medical coverage and Costa Rica provides a baseline level of care via goverment hospitals, which we could do by simply opening up the VA to the uninsured/poor. Until either party realizes this is where the country is headed, we will remain in health insurance limbo.

    • The Congressional Budget Office is the source of the “lose health insurance” stats, not the media, and that is based on calculating the affordability of plans moving forward and acknowledging that someone earning $30K cannot afford $10K in premiums, regardless of whether they are being smart about their spending or not. I think that’s an important point. And we need to fix the VA problems before we open it up to more people! Most vets aren’t even eligible for VA care presently, and those who are often have to wait a ridiculously long time to get care, though that varies greatly by location. (Some see patients quickly and provide excellent care.) I know that wasn’t your point — I just can’t pass up an opportunity to remind everyone that we ALSO need to improve care for our vets who defended the country and suffered major health consequences as a result (the only ones the VA serves, not the ones who come back healthy) — we owe them that.

      As for you guys, I don’t blame you for continuing to work. There’s so much uncertainty right now, and if you have immediate health care needs in the family, that should be the top priority.

      • Thank you for the kind words.

        The VA also kind of shows the challenge with a full government-run model in the US and why privatized care will always be around.

        There are huge challenges in estimating the # of insured for the CBO because it still comes down to the free will of each individual and family if a mandate isn’t enforced, affordability or not. Not mandating coverage while requiring pre-existing conditions to be covered ins’t sustainable, it leads to adverse selection as long as people can choose to purchase Cable TV before health insurance, which saddles us with an unsustainable insurance pool.

        I struggle to see how as a country we can hand someone a large Earned Income Credit “refund”, then provide a hardship waiver on carrying insurance when said “refund” is large enough to cover insurance.

        A real individual mandate seems to be a third rail for either party.

      • EITCs are pretty small. Max of $500 with no kids, and then about $2K per kid (https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts), which doesn’t even cover the cost of child care, even in locations that have subsidized options like Head Start. But this is all complicated stuff, and I don’t pretend to have the answers. I would, however, like to have an honest discussion about all of it. As you said, whether the individual mandate is something we want to support with policy and what that really means, whether we actually care about bringing down the actual cost of health care instead of just regulating insurance, etc. It’s all so politicized right now that we can’t have the actual discussions we need to have.

      • Agree on it being way too politicized. Unfortunately politicians don’t get credit for fixing things early either…something massive is going to have to happen for both sides to get together and act like adults. Unfortunately in healthcare, this probably means a few states have their markets collapse and a lot of people get hurt.

      • Given the number of GOP governors who chimed in in the most recent debate to push for keeping the Medicaid expansion, going against the party line, I’m hopeful that it won’t come to that.

  14. Honestly, we aren’t following the whole healthcare controversy. For us as full-time travelers, there aren’t many affordable options on the market anyway – subsidy or no subsidy, so we’re okay with opting out of “insurance” altogether and relying on our health share plan that we’re currently using. This treats us like cash-paying recipients of care, which means we can see any doctor, at any time, anywhere in the country. So far, we’re happy with our choice.

    I can see the wisdom of your hubby staying on if it means an affordable healthcare solution. It’ll also keep at least one finger in the pie for him…just in case.

    Great summary of the current goings-on. In fact, this article is BY FAR one of the best I’ve read on the subject – enough detail to understand the primary components of what’s going on, but without the needless minutia that we get sometimes with these types of healthcare articles. Absolutely well done, guys.

    • Thanks, Steve! You know this is something we follow CLOSELY, but the minutiae just aren’t that helpful to most folks who aren’t paying as close of attention as we are. I’d rather put something out there that’s as clear as possible! ;-)

  15. Love this — super clear!

    We’re definitely concerned about costs, and might also be considering one or both of us working in a reduced capacity for a year or two, for this reason.

    You’ve talked about travel plans in retirement — is travel insurance / healthcare costs a consideration for you there, as well? Love to hear your thoughts. 😃

    • Thanks! And of course today there was tons of news about these questions no longer being closed, so there’s clearly a LOT we still don’t (and may never) know. Re: travel, we’d always planned to get travel insurance for longer trips (shorter ones are covered by Chase Sapphire Preferred benefits), but might definitely do some selective health care tourism, depending on our eventual insurance situation, and assuming the stuff we need done can wait long enough to plan a trip around it. But man, it bums me out hardcore that we have to think about this stuff!

  16. I have to second the other comments – great post that is easy to understand! Some have asked how much people are budgeting for ER healthcare. The answer is different for everyone depending on their situation. Our ER (2020) passive income streams eliminates any “subsidy” options (not even close). We are budgeting $2,500 / month (2017 dollars) for premiums and out of pocket costs for two, with estimated annual premium increase adjustments. Even with that high amount, we do not feel secure in this area. We are getting ready to experience our first “health care tourism,” an operation that would cost $16,000 (not covered by our insurance) in the states, but will cost us $6,500 in Mexico (at a highly rated facility that deals primarily with Americans). There is so much uncertainty with health care. As we have all learned, any health care system has the potential of being significantly changed by future administrations. This makes it very difficult for the FIRE community to make reasonable estimates prior to reaching the age of Medicare.

    Side not for Ms. ONL from above comment – check out the Chase Sapphire Reserve travel insurance benefits. They are significant (Infinite card). The travel accident insurance is $1 mil vs. $500,000 with the preferred card. There is a high fee with the card ($450), but if you know you will spend $300 out of pocket with travel every year, this effectively reduces the annual fee to $150 (versus $95 with preferred) due to annual travel reimbursement. And, the UR benefits are 1.5:1 when you book on the UR Website vs. 1.25:1 with the Sapphire Preferred. Nope – I’m not a blogger and nope, I don’t get any money for this : )

    • Thanks! I don’t think you’re overbudgeting for care, sadly. I know health care cost uncertainty is something that everyone has to deal with, but I think the stress is greater for those of us choosing to extricate ourselves from employer-provided coverage. And I commented to someone else about using the CSR as our travel insurance for many (but not all) trips! ;-)

  17. I see two reasons to be optimistic for the future of the ACA. The first reason has been discussed extensively….the GOP hasn’t been able to get the votes in the sentate or the house.

    The other, less talked about reason, is that it seems the American people for the most part want to keep the ACA. So, if the federal government does manage to repeal the ACA, many states may step in and offer something equal to or even BETTER than the ACA.

    California already has. The Nevada legislature passed a “medicaid buy-in option” for those that didn’t qualify for Medicaid. However, the governor vetoed the bill, but my gut tells me he would reconsider if the ACA is repealed. He’s a moderate republican that pressured senator Heller (R) to oppose the GOP repeal and replace plan.

    As much as I would like the ACA to succeed, I think *some* states would devise better plans if the ACA is repealed and the better ones could be models for other states. The people WANT affordable health care, regardless of what the GOP thinks.

    • I wish it was true that states were moving on this. So far, all the action is essentially symbolic. And unless we dramatically change our tax system, in which the bulk of taxes go to the federal government first before coming back to the states, and states have comparatively little direct income taxation power, we won’t see meaningful changes in how health care is funded. If Congress refuses to give the funding to the states to make these other coverage options work, the states will have no actual way to fund them.

  18. I’ve said time and time again that this to me is an unacceptable practice by one of the strongest nations in the world. It is spread in the media constantly that the country is the greatest in the world. Unfortunately as an outsider to the US often all we see is a country that wants to be maintain superiority in both military and money. Unfortunately when it comes to helping others why is it that selfishness of capitalism raises it’s head and the tone becomes why should I spend my hard earned money on somebody else. What is so evil about a social program that would actually strengthen a country by caring for it’s people. Are $13 billion dollar aircraft carriers more important than ruining people’s lives. Entitlement and greed are unbecoming and the administration could do so much better. I’m sorry to be so opinionated but I just can’t fathom paying for health care, it is so foreign to me and I can’t wrap my head around it.

  19. We’re currently covered 100% through my employer (grandfathered in as the policy has changed since I got hired), so I know we’re going to have to think about this seriously if we both decide to RE. FI is still likely 15 years out so hopefully things will be well settled out by then. I wonder if we will finally get to a point as a nation where the healthcare debate is mostly over?

    • You know every American is jealous of you, right? ;-) And gosh, let’s all hope this is all settled by the time you guys get to ER!

  20. For some people saving for FIRE who are in the 15% tax bracket and have health insurance from their employer, harvesting gains before FIRE can provide a free step up in basis. One FIRE’d and on ACA (or whatever takes its place) the free step up in basis can then potentially allow a tax loss harvest in a future year. Harvesting gain unfortunately affects income for the ACA.

    • Yeah, I am not intending to give anything close to investing advice, but it’s worth considering whether harvesting losses or gains could have a future detrimental impact on health care costs. As long as everyone does the math for their own situation, it’s all good. :-)

  21. My last employer covered me 100%, but this is the one issue that’s a consistent nagging problem for self-employment. In fact, I’m helping a friend make the jump an we’re having the same problems of finding even half-decent plans on an exchange (before even getting into the cost issues). Prices have skyrocketed under the ACA, and healthcare prices were already increasing significantly every year. It’s a challenge. I wish I had more answers…

    • It’s frustrating that so many people believe that — that the ACA *caused* health care costs to go up. It’s true they’ve gone up, but every estimate is that the ACA made them go up LESS than they would have without the law in place. So if the ACA goes away, we should expect costs to rise faster, not more slowly. Here are some studies to back this up: http://www.pbs.org/newshour/rundown/trumps-debate-claim-health-care-costs-rising-true/ and http://thehill.com/policy/healthcare/228890-study-premium-growth-slowed-after-obamacare and http://www.factcheck.org/2015/02/slower-premium-growth-under-obama/

      • I won’t get into a debate about ACA on here – it’s your blog, and too close to what I do for my day job – but I will add that I pay 250% as much now as I did only a handful of years ago for a policy that’s not just more expensive but also far worse. I counsel clients routinely who can’t even obtain comparable policies anymore, let alone affordable ones. It has both dramatically increased costs for some (who aren’t uber-wealthy, to be clear; they’re not even wealthy) and distorted the market by removing a variety of useful options. What I’m certain of is that much depends on the assumptions made: who’s paying, how, and *what* they’re paying for. Two of the sources of those studies are directly funded by the government, and the third is highly incentivized by the government since its reporters obtain most of their leads (and ledes) there. We could just as easily discuss this piece, where premiums nationally rose more than 2x the historic increase (pre-ACA) per year this year: http://fortune.com/2016/10/25/obamacare-insurance-premiums-2017-healthcare/
        Or this, from HHS: http://www.breitbart.com/big-government/2017/05/24/hhs-report-average-health-insurance-premiums-doubled-under-obamacare/

      • I don’t think we’re actually disagreeing here. (Unless it’s over whether Breitbart counts as credible “news.”) We agree rates have gone up a ton. And if you’re read my other health care posts, you know I feel strongly that we need to address the health care problem more holistically than just regulating insurance differently, which is essentially what the ACA and any replacement plan floated thus far are. Unfortunately, there’s been no political will to do that, and the last time anyone tried, the term “death panels” got floated to try to distort the conversation, and that was the end of that for maybe a generation. But as for health care costs, we’re all deluding ourselves if we think that anything we do on the margins (what all of this debate is) will reduce costs if we don’t fundamentally change some big things about how, why and when we deliver care, and how sick we let people get before they come in.

      • Indeed. We need an honest conversation about how much health care we want, how it’s delivered, and who pays for it. Sadly, it’ll probably get a lot worse before something is done about it.

  22. We are already retired, in our 50s. We purchase through the exchange. The rack rate for our policy ($2,500 deductible each) is $1,300 per month. It is much less with our subsidy. We are moving out of the country for a year, partly due to the uncertainty of whether we would be able to get insurance next year. It’s insane.

    • Wow, that’s crazy that you feel your best option is to leave the country rather than pay potentially crazy high rates here. I’m so puzzled by those who think it’s better for our economy to have people STOP SPENDING MONEY HERE and leave altogether. :-/

      • Yes, sad that some of us are thinking of leaving the country due to the health care situation in this country currently. We are also 50 somethings like Czelazek and had planned on using the exchanges this year after I early retired in March. Instead my husband managed to work out a deal with his employer to work part-time and get insurance ( although it is high deductible $5000 each/ 10,000 family ) but for now we are able to at least have some protection yet not be completely tied down to full time jobs. We want to travel- so maybe like Czelazek we will have to explore other countries where we can afford medical care if we need it. We live in Ohio and I call Senator Portman’s office at least every other week to complain about their proposed health care bill.

      • This might be a good time to start calling every day, given how rapid-fire the votes are coming! (Three versions of the bill in the last 24 hours.) I’m glad you guys were able to work out that part-time deal with at least some level of health care protection, but I don’t blame you for looking at all your options! Sad that’s necessary.

  23. I’m FIRE’ing in June 2018, and will be paying for private insurance for 10 years until Medicare kicks in. We’re leaning toward Health Sharing Ministries, and I’ve started a Google Spreadsheet on what everyone is writing on the subject. So far, I have articles from DoughRoller, ThinkSaveRetire, Lauren Greutman, The Green Swan, and ESI. I’ll be adding yours to the list.

    In our case, we won’t get any subsidies, so we’re leaning toward COBRA for 18 months. Hopefully by then (~Jan 2020) the market will have sorted itself out. A True Mess, and a major issue for those looking to set themselves on FIRE.

    • Are you SURE you wouldn’t potentially get any subsidy? It depends on the state, but up to 400% FPL gets something under current rules in many places. And considering that a lot of ER cash flow isn’t actually income, it’s *possible.* (Obviously I’m sure you’ve done the math — just reminding everyone to be sure for sure.) ;-)

  24. You might want to talk to some people who actually have plans offered through the marketplace before you assume that the talking points in favor of the ACA are actually accurate. In my case, I could not take my kids to the doctor for a checkup because there was literally no doctor that would accept new patients on my marketplace plan, and when I got sick the only place I could go in network was a standalone rip-off emergency room, so what should have cost $150 if I had paid out-of-pocket cost over $900.

    • They are not talking points, they are the law. That said, I totally understand your frustration, and the fact that lawmakers have failed to provide the funding to the insurance companies that was promised when the law was passed is why markets are collapsing in many places, why there are problems with providers accepting it, etc. There is a great deal that has to be fixed one way or another.

      • The law says insurance companies must provide usable networks, but has no teeth to actually force them to do so. You can’t switch companies or plans midyear if/when you realize your insurance card is worthless. I hope you don’t wind up experiencing what I did, which is that the entire individual marketplace is built on the fiction that insurance companies exist to provide care. Buyer beware!

      • It’s unfortunate that so much in the law has been weakened so that it can’t work as intended. I’m sorry you’ve had such a troubling and negative experience!

  25. This scares me so much. I purchase my plan out of the exchange. No subsidy, but it is how I am able to have a small business without fearing bankruptcy. I don’t know what I’ll do if the marketplace is taken away.

    • I totally hear you. Especially because there could actually be scenarios in which there are no plans to be purchased by individuals at any price in some places. This idea that there will always be an individual market is one that’s not based in history — pre-ACA, it was impossible to buy a non-employer plan in lots of places.

  26. What are your thoughts about healthcare now in 2019? I’m a few years away from a planned slightly early retirement (at age 60) and health care has been my biggest worry. By the way, I just found your website so if you updated after this post, if you wouldn’t mind pointing me to that post :). I’m loving this blog! So many good articles to read. Thank you so much!