Poll: How do you cover health care expenses in ER?

[audreyh1]

Quote:

Originally Posted by FIRE'd@51 My guess is that most of those plans are for government retirees.

49.5% of ERs responding here are government retirees? Really?

Audrey

[W2R]

Quote:

Originally Posted by audreyh1 49.5% of ERs responding here are government retirees? Really?

I'm one of those responses who is (or rather, will be as soon as I ER). There do seem to be quite a few of us here.

It's one of the biggest incentives to consider federal employment, these days. So, life being the way it is, I'm expecting it to become more limited or changed substantially pretty soon.

[Dog]

I retired from megacorp a couple of years ago (back as a contractor for 2 years). Part of my package includes medical coverage at about 67% of medical premium, but it is not guaranteed. So, we converted to DH's medical plan through USPS. Healthcare seems to be the wildcard for retirement planning. :P

[toofrugalformycat]

State of Alaska retiree health insurance. If you worked for the state before the mid-1980's, you could be vested with 5 years or more of work, retire at age 50 (early) or 55 (normal) and have health insurance for yourself, spouse and dependents. They've been making the deal worse for people who started later, but for us oil-pipeline era workers who would accept the low state salary back then, it was a great deal. It's made my early retirement possible. Before retirement, my DH and self were paying about $1000/mo for private insurance, and we had no serious health problems!
Wish I could say I planned it, but it was just dumb luck.
We'll see if the State figures out a way to get out of it. They'd have to change the State Constitution but I wouldn't put it past them. I'd be angry as a young person seeing us geezers getting health insurance for free, and they can't without working a lot longer than we did.

[HelpMeRhonda]

Pay thru the nose plan...

Currently have temp (30 day) coverage.

I'm looking to be covered under state high risk pool.

DW and kids under individual plan.

It appears somewhere around 1000 - 1200 / month.

The health insurance system / medical system truly sucks. Doctors are motivated to document every possible illness (even if it turns out to be incorrect) to cover their A##. Then the insurance companies, read this bogus info and adjust coverage cost accrdingly.

[perinova]

Quote:

Originally Posted by HelpMeRhonda Pay thru the nose plan... Currently have temp (30 day) coverage. I'm looking to be covered under state high risk pool. DW and kids under individual plan. It appears somewhere around 1000 - 1200 / month. The health insurance system / medical system truly sucks. Doctors are motivated to document every possible illness (even if it turns out to be incorrect) to cover their A##. Then the insurance companies, read this bogus info and adjust coverage cost accrdingly.

That's very expensive! where are you living?
Is it going to be an HMO kind of plan with no deductible?

[ESRBob]

Quote:

Originally Posted by kate I don't remember the exact name, but NY has a community rating approach, like other northeastern states, which means healthy young people pay the same as older and possibly sicker people, but everyone has the opportunity to buy health insurance. I shopped around for the best bare bones/cheapest among the providers, which isn't cheap. I only decided to buy it because I wanted to protect my assets. (I rarely go to the doctor.) When I find a high deductible type policy, I'm bolting.

Kate,
There is a plan if you either have low income "Healthy New York" or have a self-incorporated company. Still not cheap by national standards but pretty good for New York.
http://www.ins.state.ny.us/website2/hny/english/hny.htm

[webbach]

From the healthy NY eligibility criteria for individuals: "You or your spouse must either be currently employed or must have been employed within the past 12 months." It doesn't seem that HNY would work out for FIREees.

Webby

[Billy]

Kate:

Quote:

I don't remember the exact name, but NY has a community rating approach, like other northeastern states, which means healthy young people pay the same as older and possibly sicker people, but everyone has the opportunity to buy health insurance. I shopped around for the best bare bones/cheapest among the providers, which isn't cheap. I only decided to buy it because I wanted to protect my assets. (I rarely go to the doctor.) When I find a high deductible type policy, I'm bolting.

So is NY a 'right to insure' state? Maybe it's just me, but this type of approach leaves me a bit confused. On the one hand 'everyone' has the right to be insured no matter if you carried insurance before or paid into it for any length of time. If you are uninsured for years, but then become ill, then you have the 'right to be insured.' (which sounds great.) This raises the premiums for people who have been paying all along (like you said - to protect your assets). And then OTOH those who don't want to pay those higher prices and aren't electing to be insured fall into the high numbers of people who aren't insured and can't afford insurance. Then we hear about the millions 'who can't afford insurance" and the government should supply it.

It feels to me that this position is a bit on both sides of the fence here... What am I missing?

Be well,
Akaisha
Author, The Adventurer's Guide to Early Retirement

[chinaco]

Quote:

Originally Posted by Billy ... leaves me a bit confused. On the one hand 'everyone' has the right to be insured no matter if you carried insurance before or paid into it for any length of time. If you are uninsured for years, but then become ill, then you have the 'right to be insured.' (which sounds great.) This raises the premiums for people who have been paying all along (like you said - to protect your assets). And then OTOH those who don't want to pay those higher prices and aren't electing to be insured fall into the high numbers of people who aren't insured and can't afford insurance. Then we hear about the millions 'who can't afford insurance" and the government should supply it.

I will bet pre-existing conditions are not covered... Called antiselection or adverse selection in insurance underwritting parlance. You may be insured, but you will not get payment for the condition if it was known (detected/diagnosed). I am not sure about NY laws/regulations... however, I doubt they allow this behavior and impose the penalty on the company and consequently on the increase premiums to all people who do biz with the company. This is gaming the system!

[Billy]

Chinaco:

Quote:

I will bet pre-existing conditions are not covered... Called antiselection or adverse selection in insurance underwritting parlance. You may be insured, but you will not get payment for the condition if it was known (detected/diagnosed). I am not sure about NY laws/regulations... however, I doubt they allow this behavior and impose the penalty on the company and consequently on the increase premiums to all people who do biz with the company. This is gaming the system!

I understand what you are saying. I don't pretend to know the total picture of the 'right to insure' states. But when I read about New Jersey (who is/was a right to insure state) they said that those who had not been covered previously (because they couldn't afford the payments) but then found out they had a serious illness had a 'right to be insured' under NJersey law.

I, too, thought it was odd... Now again, I could be wrong.
Does anyone know?

Normally, pre-existing conditions are not covered (depending on what they are) for a certain length of time. After that time passes, and there is no 'event' then the pre-existing condition is covered. This has been my experience.

Anyone else? Experience? Insight?

Be well,
Akaisha
Author, The Adventurer's Guide to Early Retirement

[ESRBob]

In NY, pre=existing conditions are excluded for 12 months. Otherwise people would wait until they got sick, then bind an insurance policy over the phone on the way to the hospital... I guess somebody here decided they didn't want to be that naive...

Hadn't noticed the thing about needing to be employed within the last year to get Healthy NY. One more reason to have a little self-employment company, I guess. 8) (Shameless plug for the merits of semi-retirement)

[AlmostDone]

ESRBob mentioned a self-incorporated company. What is that?

[BUM]

DW and I go it alone. We ER'd in '05, kept the S corp. open so we could afford group health insurance. Its our largest monthly expense :P


Its enough to make you sick

[ESRBob]

Quote:

Originally Posted by AlmostDone ESRBob mentioned a self-incorporated company. What is that?

If you have any kind of profitable little sideline business, you can have that business buy your health insurance. A couple caveats, if I'm remembering it all correctly (haven't dared to ask my accountant this stuff for the last few months, but they should be approachable by next week...):

If the business is not incorporated, ie a sole proprietorship or partnership, then you file a Schedule C and you can take the deduction for health insurance expenses on the front of your 1040, up to the limit of the profits in your business.

If the business is incorporated, though, -- an S-corp, or LLC that is incorporated (LLC's apparently can go both ways), then you can deduct the health insurance premiums as a business expense and that will flow through as a loss in the business, (and onto your 1040) making it fully deductible even if you don't have enough profit to cover the premiums. Having said that, you don't want to run losses forever in your company, in case somebody from the IRS comes knocking, so best to have enough self-employment income to cover the premium even in the self-incoporated case.

[kramer]

If you are really trying to get maximum benefit from the govies for your ER health care buck, then combine an HSA with the above the line deduction for Schedule C income.

Everyone can deduct the amount you annually contribute to an HSA (up to $2850/$5650 for single/couple) against earned or unearned income. Then you can deduct your actual premiums against your schedule C earned income. Schedule C income (if there is enough), also allows you to contribute to an IRA or ROTH IRA.

Of course, I believe that you must pay FICA/Medicare taxes on all of your schedule C income starting from profit dollar zero (~15% tax). At least your contributions to Social Security do slightly increase your social security check.

I am applying for a high deductible HSA policy. If I get it (big if, of course), just the HSA tax deduction will pay for all of my health insurance premiums for the rest of the year. I was working until recently. The value of this deduction will be worth less in future years when I have lower income.

Kramer

[ESRBob]

Quote:

Originally Posted by kramer Of course, I believe that you must pay FICA/Medicare taxes on all of your schedule C income starting from profit dollar zero (~15% tax). At least your contributions to Social Security do slightly increase your social security check. I am applying for a high deductible HSA policy. If I get it (big if, of course), just the HSA tax deduction will pay for all of my health insurance premiums for the rest of the year. I was working until recently. The value of this deduction will be worth less in future years when I have lower income.

Yep, you do need to pay sefl-employment tax on profits, although that also makes you eligible for contributing to an IRA. Note to self: can you use the 'same' dollars of self-employment profit to give you deductible health insurance premiums and deductible IRA?

And I think I know what you are saying about the HSA premiums being 'paid for' by the deduction (fungible dollars moving around your pockets, and two deductibles we're talking about here) but to be clear, the premiums aren't expenses you can pay for out of the HSA account balance, only the amounts you pay out of pocket toward the deductible are. The premiums get deducted in another place if you are self employed. If you aren't there is still a Schedule A deduction for premiums, but they are not likely to get over the 7.5% of AGI threshold, limiting or eliminating the value of the deduction.

[Allegany]

Unfortunately in NYS it is against state law for an individual to purchase a high deductible health plan with a HSA. NY needs to update their insurance laws.

[kramer]

Bob,

You are correct. I was employing mental accounting only when I said that the HSA tax deduction "paid for" my premiums this year. In reality, I cannot apply the HSA funds toward my premiums (nor would I even if it were possible).

My state (California) does not allow an HSA tax deduction and also taxes the gains. A bill to change this has been in the legislature each year but of course it goes nowhere. It would have a very low cost to the state, but the opposition to the bill is ideological in nature.

Kramer

[perinova]

Quote:

Originally Posted by ESRBob If you have any kind of profitable little sideline business, you can have that business buy your health insurance. A couple caveats, if I'm remembering it all correctly (haven't dared to ask my accountant this stuff for the last few months, but they should be approachable by next week...): If the business is not incorporated, ie a sole proprietorship or partnership, then you file a Schedule C and you can take the deduction for health insurance expenses on the front of your 1040, up to the limit of the profits in your business. If the business is incorporated, though, -- an S-corp, or LLC that is incorporated (LLC's apparently can go both ways), then you can deduct the health insurance premiums as a business expense and that will flow through as a loss in the business, (and onto your 1040) making it fully deductible even if you don't have enough profit to cover the premiums. Having said that, you don't want to run losses forever in your company, in case somebody from the IRS comes knocking, so best to have enough self-employment income to cover the premium even in the self-incoporated case.

I haven't looked at schedule C recently but you can now deduct self employment health insurance on 1040 line 29.
I believe that an S-corp has a special rule making it apart from a C-corp and cannot deduct health spending (if I am wrong let me know I am interested to find this information). An S-corp shareholder would use the line 29 on his 1040.