How much will health insurance cost in retirement?

[racy]

I'm paying about $4000 per year in health insurance costs for me & family for a PPO Aetna plan at megacorp. What should I budget for annual costs when I retire? I'm currently 58.

 

[SteveL]

It depends on when you retire and your circumstances. Does your employer provide retiree medical? If so and if you meet the age and length of service requirements, you will just continue with the current plan. (Although some employers put limits on how much they will support future cost increases.)
If your employer does not provide retiree medical (this is a majority of firms today), and you retire before 65, you must do Cobra for 18 months (probably double current cost), and then try to buy coverage as individuals from private insurance companies that serve your state. This coverage is subject to underwriting, meaning if you have pre-existing conditions you may be denied coverage and/or charged much higher prices. Obama care ends this underwriting. In any event this coverage is going to be much more expensive. Before early retirement, I suggest you call a couple of brokers and get some quotes.
Finally, when you get to be 65 you will have Medicare. for you and your wife, figure $200 for Medicare per month, plus another $300 for a good Medicare Supplement, plus $100 for Medicare drug coverage.

In other words, in all cases, the costs will be higher. The current 4000 you pay is subsidized with your employer paying another $6000 or so.

 

[Gone4Good]

Assuming you and everyone in your family is healthy and have a squeaky clean medical history, you can look at quotes for your age and zip code at ehealthinsurance.com. The policy we got through a broker ended up costing exactly what ehealthinsurance quoted on their site.

If everyone doesn't have a squeaky clean medical history, all bets are off.

 

[SteveL]

Just saw this great summary on Yahoo Finance.....It offers a couple of additional sources for pre-65 medical coverage.

get-retiree-health-insurance-before-65-usnews: Personal Finance News from Yahoo! Finance

 

[Webzter]

Some states also offer high risk pools and/or insurer of last resort. I bought health coverage before the health care reform so I'm sure a substantial change has happened (happening?)

We looked at Aetna but, at the time, the application required that I write out 10 years of doctor visits (dr name, date, reason, outcome) for both my wife and I. The legalese also gave Aetna the right to retroactively cancel insurance at any point if they discovered I omitted anything on my app. I'm sure they'd only do that if I, say, claimed a clean bill of health and was in the hospital for cancer treatment the next month.. but, still, I didn't like the idea of that hanging over my head.

So, here in Michigan, if you aren't eligible for group insurance, you can purchase individual insurance from BCBS. Cost is slightly higher but was set by them pulling PHI (my electronic health information). We pay $260 a month (was $250) for a high deductible plan whereas a similar plan with Aetna at the time was $180.

 

[jebmke]

FWIW I budget $1,000 per month for self+spouse (age=58). This covers:

Retiree medical premium
Out-of-pocket maximum for HDP
Dental (no insurance - all out-of-pocket)
Eyes (checkups and glasses)

The first couple years I was below budget. This year may hit the budget since I am having a tooth implant.

 

[Gone4Good]

We looked at Aetna but, at the time, the application required that I write out 10 years of doctor visits (dr name, date, reason, outcome) for both my wife and I. The legalese also gave Aetna the right to retroactively cancel insurance at any point if they discovered I omitted anything on my app. I'm sure they'd only do that if I, say, claimed a clean bill of health and was in the hospital for cancer treatment the next month.. but, still, I didn't like the idea of that hanging over my head.

Yup. That's the other thing . . . extensive applications asking for 5 to 10 years of medical history. Forgot to include that diagnosis for XYZ four years ago because it is something that's all cleared up now? Potential gotcha.

"Best Healthcare System In the World"

 

[golfnut]

We are covered by my company's subsidized retiree plan. It costs us $900 per month to cover three of us. It's a HSA plan with a $4,000 deductible/$8,000 family deductible/$8,000 max out of pocket thru United Healthcare.

Dental is another $123 per month.

 

[walkinwood]

Health Insurance and Coverage Help for Consumers Everywhere for information specific to your state.
ehealthinsurance.com for quotes.

I have had individual insurance for the past 3 years. I suggest contacting a local health insurance agent. They can help you navigate the various options. They get paid by the insurance company, so your premiums are the same whether you use their services or not.

 

[ls99]

In western PA for a Highmark (BCBS) policy, individual, 8500/yr. + about 2K worth of various deductibles for meds, office visits etc.

 

[megacorp-firee]

I'm paying about $4000 per year in health insurance costs for me & family for a PPO Aetna plan at megacorp. What should I budget for annual costs when I retire? I'm currently 58.

I was paying about (memory is failing me) $200 per month for the 2 of us just before retirement. It was a bluechip plan with a moderate deductible and covered annual physicals (no charges). When I retired, I was offered the retiree policy for $1200 per month for the 2 of us. A bit rich for our blood, so we went out to an insurance broker who put us onto a policy that cost us about $460 per month, big deductible (6k) and we pay co-pays for annual physicals and everything else. The company went out of business in our state and we were placed with BCBS and they paid for annual physicals. The costs went up each year ... this year the monthly cost is $509. I am only 5 years from medicare.

Doesn't answer your question, but I hope it gives you another reference point.

Good luck.

 

[dgoldenz]

The answer depends whether you have any retiree benefits or not. If you do, check with your company for cost and compare to the individual market. If not, check the rates on ehealthinsurance.com for your family and then find a good independent agent. Those rates are your starting point if everyone's in perfect health. An independent agent who knows what they're doing should be able to match any pre-existing conditions to the best company based on underwriting, cost, and coverage.

I'd also suggest checking the Blue Cross/Blue Shield rates for your state if they aren't listed on ehealth....some states BCBS is on there, some states it's not.

 

[misty57]

This is the million dollar question for us. DH will get retiree medical. It will cost us about $800/mo., but we're still getting the details on the coverage. It could be up to $3K deductible/year. We have budget $15K a year for medical insurance premiums, deductibles, and co-pays. Who knows FOR SURE what will happen in the future with medical insurance, if Obamacare will be fully implemented or not, etc.

Medical insurance and costs are the biggest "iffy" part about retirement planning as far as we're concerned.

 

[explanade]

Is COBRA definitely a good idea for FIRE'd people?

Sounds like it's more expensive than any individual plan you could get but also more comprehensive than any high-deductible/catastrophic plans.

Do most of these catastrophic plans have annual or lifetime caps on coverage or out-of-pocket costs?

I recall during the health care reform debates, the ex-Cigna exec said the industry loved these high-deductible plans because mostly they ended up collecting premiums and rarely paid claims. Sounded like it was way more lucrative for insurers than any other types of product they offered.

It would be interesting to know the avg/median deductible for these plans.

 

[Mulligan]

Is COBRA definitely a good idea for FIRE'd people?

Sounds like it's more expensive than any individual plan you could get but also more comprehensive than any high-deductible/catastrophic plans.

Do most of these catastrophic plans have annual or lifetime caps on coverage or out-of-pocket costs?

I recall during the health care reform debates, the ex-Cigna exec said the industry loved these high-deductible plans because mostly they ended up collecting premiums and rarely paid claims. Sounded like it was way more lucrative for insurers than any other types of product they offered.

It would be interesting to know the avg/median deductible for these plans.

The Cigna exec. may be correct in general, but not for me. My 5k deductible is under $65 a month, I passed up a chance to stay on my companies $500 a month, $1000 deductible plan. 10 months into this "gamble", I've saved over 4k, not including the $1000 I got from the govt for funding my HSA, last year. If you don't need meds and are fortunate to be in good health, I don't know why you wouldn't want a more catastrophic plan.

 

[explanade]

So how much of your deductible have you spent?

ARe you getting the annual checkups to see that you're in good health?

Someone I know who chose Kaiser (he's 77) has just been diagnosed with stomach cancer. Supposedly early but their annual physical didn't catch it.

What did catch it was a mild heart attack for which he had a stent put in. While this was occurring they noticed he was anemic because of bleeding in the stomach so they ordered a biopsy.

Before the attack, he was apparently in good health, playing golf 4 days a week, still fairly active otherwise.

Do these high deductible plans make people skimp on preventive care?

 

[BTravlin]

Is COBRA definitely a good idea for FIRE'd people?

I think the main point about COBRA is guaranteed coverage. Plus, it can give you time to shop around and get something else lined up if you haven't done so already.

 

[Mulligan]

So how much of your deductible have you spent?

ARe you getting the annual checkups to see that you're in good health?

Someone I know who chose Kaiser (he's 77) has just been diagnosed with stomach cancer. Supposedly early but their annual physical didn't catch it.

What did catch it was a mild heart attack for which he had a stent put in. While this was occurring they noticed he was anemic because of bleeding in the stomach so they ordered a biopsy.

Before the attack, he was apparently in good health, playing golf 4 days a week, still fairly active otherwise.

Do these high deductible plans make people skimp on preventive care?

I haven't spent a penny yet. Had a check up and blood work right before I retired 10 months ago everything great. I dont get sick, so I have never gone more than once a year, just to have doc check me out and say hello to him. I should preface I am not quite 47. Will I skimp on preventive care? That's a good question.... I am funding my HSA to have funds to do this, but being honest I won't go too often. For me, working out, eating right,etc, is important preventive care which I am doing. I didn't skip my first dental cleaning that I had to pay out of pocket, so maybe I will not skimp. Not saying I'm right, but I treat all insurance as minimal as possible except for my liability auto which I have more of. Insurance companies don't make profit by everyone being sick and making claims, they take the majority of the peoples premiums who are healthy and pay for the fewer who are sick. I am taking the favorable odds that I am one of those (at least until 65) and taking the minimal premium, with the knowledge that I have the resources to cover the 5k annual yearly in a worse case scenario.

 

[Buckeye]

Is COBRA definitely a good idea for FIRE'd people?

The warning generally given with respect to COBRA is you may become uninsurable while on COBRA so purchase individual health insurance as soon as possible. Once you have individual insurance, the insurance company cannot cancel you or increase premiums due to your claims history. They may start raising the premiums by hefty amounts on everyone in the plan. All those who are healthy migrate to cheaper plans and you are stuck if you have a bad health history but technically they are not raising the price on you due to your claims history. You may reach the point where you can no longer afford the monthly premiums.

If COBRA will bridge you to Medicare or if COBRA is the only coverage you can get because you are already uninsurable then it's a different story.

 

[explanade]

I recall financial planner types saying some people get individual coverage before leaving jobs which already give them coverage so that they could be grandfathered in.

But these were people who worked for a big brokerage firm so they were fishing for customers and they were trying to list all the things you would need money for, beyond regular retirement expenses.

 

[Buckeye]

We had individual health insurance in place prior to my resignation 2 weeks ago. I knew the COBRA premium would be more than I wanted to pay because the deductible was only $3,000. Given we are in good health and insurable, I agree with folks who say it is too risky to stay on COBRA becauses some health event may occur making it impossible to purchase individual health insurance when COBRA expires.

 

[nvestysly]

eHeathinsurance.com

Somebody already mentioned ehealthinsurance.com and I've found that web site to be very helpful. DW and I plan to submit an online application this week through ehealthinsurance.

The plan we are considering is an HSA with a $5000 per person deductible but there are caveats that if you don't meet your deductible in a given year 1/2 the amount transfers to the next year so that makes it more tolerable. The proposed plan is also very similar to the plan I currently have through megacorp.

My plan is to leave megacorp in the next few months so I need to have my own insurance lined up. However, I'll have retiree status at megacorp so I can sign up for their plan during open enrollment periods. So if I don't like going it on my own I have a backup plan.

By the way, the outside plan is $350 per month including both people. The megacorp plan for retirees is $1000 per month but you cannot be denied coverage through megacorp.

 

[dgoldenz]

Somebody already mentioned ehealthinsurance.com and I've found that web site to be very helpful. DW and I plan to submit an online application this week through ehealthinsurance.

The plan we are considering is an HSA with a $5000 per person deductible but there are caveats that if you don't meet your deductible in a given year 1/2 the amount transfers to the next year so that makes it more tolerable. The proposed plan is also very similar to the plan I currently have through megacorp.

My plan is to leave megacorp in the next few months so I need to have my own insurance lined up. However, I'll have retiree status at megacorp so I can sign up for their plan during open enrollment periods. So if I don't like going it on my own I have a backup plan.

By the way, the outside plan is $350 per month including both people. The megacorp plan for retirees is $1000 per month but you cannot be denied coverage through megacorp.

I'd suggest using the help of an independent agent to apply even if you've already decided on the plan. Doesn't cost you anything....sounds like you're describing the United Health One plans with the deductible credit. If so, the deductible reduces by 20% the first year, 20% the second year, and 10% the third year until you are down to half the original deductible, then it resets when you do reach it. The deductible on that policy would be a single $10k combined, not $5k per person.

 

[teejayevans]

FYI: I went through ehealthinsurance, had UHC, after 1st year they raise my rate by 20%, when I called to ask why, they said I had a special introductory rate. This might be business as usual, I don't know.
TJ

 

[dgoldenz]

FYI: I went through ehealthinsurance, had UHC, after 1st year they raise my rate by 20%, when I called to ask why, they said I had a special introductory rate. This might be business as usual, I don't know.
TJ

That's why you use an independent agent. An agent would tell you the truth instead of giving you a BS line like that.