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Health Care
Old 02-20-2004, 10:53 AM   #1
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Health Care

Seems to me that the biggest hurdle in early retirement is health care. Medical costs are growing at a rate of 5 times the rate of inflation -it is basically impossible to keep up with this.

A policy to cover my family (I have one kid nad my wife) would set me back $1200 a month. That premium would increase 9-12% annually, to the point of becoming completely unaffordable.

How does a person who wants to retire early contend with health care costs?

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Re: Health Care
Old 02-20-2004, 11:00 AM   #2
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Re: Health Care

Apparently you move to california. I dont have family rates handy but bc/bs for a minimal plan here is under $100 and full HMO care with no deductables is around $220.

Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: Health Care
Old 02-20-2004, 12:23 PM   #3
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Re: Health Care

Apparently you move to california. I dont have family rates handy but bc/bs for a minimal plan here is under $100 and full HMO care with no deductables is around $220.
That depends how old you are. TH, I think you are under 40? Rates do go up quite quickly as you get older -- I'm 57, single, and pay $319 per month for a high deductible Blue Cross PPO. Admittedly this is in the SF Bay area, but in general I don't think California is a low cost state for medical insurance.

However, I do think high deductible policies, combined with the new HSAs, are one way to keep insurance costs under some sort of control. Wherever you live.

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Re: Health Care
Old 02-20-2004, 08:28 PM   #4
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Re: Health Care

How does a person who wants to retire early contend with health care costs?
A common way is to forget about the blanket type of coverage that we had while we were working. When you have to pick up the total tab on that type of plan, $12-14k a year sounds about right. Which is why many people can not afford to run COBRA for any length of time.

Look into high-deductable policies, so that you in effect "self insure" for the smaller stuff. And the insurance policy kicks in if something really major happens. A $2500 a year deductable per-person is a good starting point. If you are covering three or more people, many plans have a "family deductable" that is less than 3 x the individual deductable.

Another point to look into is "List" versus "Allowed" costs at the Dr. office. Most health providers have multi-tiered cost structures. If you go in, and don't have insurance, then you pay list. But the ins. co's won't pay "list", so they have negotiated down "allowed" prices.

You want to be able to go in, flash your insurance card, and get the negotiated rate, even though you will be paying it yourself up through the big deductable amount. This is actually good - your ins. co. wants the fees to be lower, so that you are less likely to make it up to the deductable, where they would have to start to pay out. And you want the lower fees too, because you are betting that year for year, that you will be under the deductable. And those dollars are right out of your pocket. So having a plan where that occurs is worthwhile.

And dental insurance, forget it, just pay as you go.

Now if a person was working, had a good group plan, and had major health problems, my advice would be, stay on the payroll! Ins. co's that sell individual health insurance don't want to pick up sick people, for obvious reasons!

So, in a way, there is a trap here. I know people who were laid off, and have decided to retire. Their wives still work, and they just get picked up onto the wives group policy at her place of work. So for a relatively low monthly amount, they get the full coverage again. Problem solved. They are happy. But not really thinking ahead. Or maybe just gambling. If they become ill, the costs will be picked up by the wives group policy. But that illness will likely forfeit the ability to obtain a reasonable (or any) individual policy in the future.

Its ok to get sick when ON an individual policy, but not before! So with a bad health record, they can't get an individual policy. So then they need to stay on the group policy, until medicare kicks in @ 65. Or else no insurance for them. So the wife would have to keep working till he gets to age 65. An inducement there for the old man to have a freak accident, eh?
-- Telly, the D-I-Y guy --
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