Are you FI? Still work for insurance?

[FinanceGeek]

Going back several years on this forum it was always said that a huge number of people were working only for access to health insurance and were likely to RE as soon as the ACA law went into effect. One estimate, from the CBO, estimated that 2 million people would leave the workforce once pre-existing condition underwriting went away (which would have been a several percent hit to the workforce participation statistics).

Some people on this forum were even talking about RE on July 1, 2012 - an 18 month Cobra-cycle before the ACA took effect.

But this article says it isn't occurring:
Obamacare not spurring more early retirements yet despite predictions | Reuters

Thoughts?

 

[W2R]

I worked for insurance for about 2 years after I was FI, until the day I qualified to officially retire (and qualified for retiree insurance). That was in 2009. I didn't have to wait for Obamacare.


I suspect that at least at first, some people were waiting to see how Obamacare would "shake out" before counting on it enough to retire.

 

[photoguy]

It's unlikely that I would have retired without ACA staying in effect. But I wouldn't count in the survey group due to age.

If you look at the original michigan study: http://www.nber.org/programs/ag/rrc/rrc2015/papers/6.3 - Levy, Buchmueller, Nikpay.pdf the authors basically think people were waiting for obamacare to "shake out" as W2R suggests.

Several factors
may have led prospective retirees to exercise caution in relying on ACA coverage in 2014. First, there were well-publicized obstacles to enrollment in health insurance exchanges in the first open enrollment period in fall 2013/winter 2014. Second, prospective retirees may have been prudently waiting to see whether the ACA reforms survived significant legal challenges that were not resolved until a US Supreme Court ruling (King v. Burwell) in June 2015. With these barriers removed, the ACA’s reforms will become more firmly established and more familiar, and the availability of subsidized coverage that is not tied to employment may result in increases in early retirement over the next decade.

 

[growing_older]

I'm still waiting for Obamacare. Rates are climbing rapidly in some markets and there are still legal challenges that haven't been resolved. I do not want to be dependent on ACA for my healthcare only to see that the rules weren't as stable as I hoped and I'm now uninsurable.

 

[wmc1000]

I cut back to 30 hours per week in July 2014 to retain company health insurance and will stay that way at least until the end of 2016. Work isn't tough, no BS to worry about and I go home at 2pm every day.

 

[rodi]

Insurance was definitely a factor. ACA and hitting my number coincided pretty close - I retired halfway through the first year of the exchanges. I had a decent cobra deal and didn't qualify for premium tax credits that year - so I waiting till 2015 to sign up on the exchange.

But the pre-existing conditions thing was ABSOLUTELY a factor. My husband has some issues, I have some issues, good chance we might have had issues getting insurance prior to the ACA.

I also know folks who switched to consulting once the pre-existing condition part of the ACA came online. No need to be a direct employee for benefits.

 

[MichaelB]

If not for the ACA I'd be working with my brudder, just to get health care insurance.

 

[easysurfer]

Health insurance (HI) for me was the final piece of the puzzle when I FIRE'd. I was a few years short of insurance from megacorp so got my own. At that time, luckily, I didn't have any pre-existing conditions so could get my own insurance. Now, I wonder should have just stayed on the grandfathered plan (this was a real PPO and not the watered down ones with limited networks today)? But that rate was going up and up anyhow. Plus, the plan only had a measly $5 million lifetime cap.

 

[Senator]

I am working for the extra financial insurance, not health insurance. I can see someone in the 'old' days staying at a job, as there may not have been any insurance company to accept them.

 

[Sasset]

I am definitely working for the insurance. I turned down a severance package to work a few more months to get to 55 and qualify for the retiree medical.

 

[Alan]

I was FI before retirement and worked a couple of extra years to get to 55 and retiree medical. This was before ACA but having seen the lack of PPO plans in the current ACA where I live then I would probably have stuck it out the extra 2 years working to get the much better retiree medical.

 

[ziggy29]

I was FI before retirement and worked a couple of extra years to get to 55 and retiree medical. This was before ACA but having seen the lack of PPO plans in the current ACA where I live then I would probably have stuck it out the extra 2 years working to get the much better retiree medical.

Yeah. People used to work for health insurance, period. Now they'll be working for the PPO plans, larger networks and out-of-network benefits...

 

[pacergal]

Yes, most definitely. I was at full pension 5 years ago, staying for insurance, not so much for the availability (due to ACA) but the cost. At age 60, I will only pay about 10% of the cost of employers ins plan vs 50% or more through age 65. The added years also are increasing savings and helped pay off mortgage earlier than planned. Triple bonus! Although, 11-2016 can't come soon enough.

 

[harley]

I also worked for a couple of years past FI to qualify for retiree health coverage. This was 6 or so years before ACA, so it wasn't even a consideration at the time. My main reason for doing so was the guaranteed coverage, since DW and I both had pre-existing conditions that would have made buying our insurance on the open market extremely expensive if not impossible. However, my Megacorp also pays a portion of the premium, which is nothing to sneeze at either. However, since I retired so early (age 50) I was penalized down to about half the cost coverage. C'est la vie. As I said, the main reason was for the guaranteed coverage.

 

[scrabbler1]

Around the time I ERed in late 2008, the one thing I did NOT want to be doing was to work but yet have to buy my own individual policy outside of work. In June of 2007, I reduced my weekly hours worked from 20 to 12 and became ineligible for my company's group health plan. I went on COBRA to retain the equivalent of my HI coverage even though I didn't have to be working to be on COBRA.


What I wanted to avoid, after COBRA expired 18 months later, was to have to buy my own individual HI policy but still be working. Six months before I gave my notice, I asked my HR area if they could either extend COBRA beyond 18 months or allow me to go back on their group health plan while paying 100% of the premiums (which is what COBRA was). Without either of those two choices, there was no way I could be convinced to stick around a little longer (which I might not have done anyway).


So I ERed in late 2008 and I am now just starting my 8th year of ER. YAY!

 

[NoiseBoy]

I recently survived a corporate restructuring that reduced headcount by roughly 10%. While waiting to see if my name was on the list to be let go, I updated all my spreadsheets and really dug into the rules for my pension and 401(k) plans. I concluded that, with the severance package and ACA, I would probably be okay, but I would be living pretty close to the line.

One of the calculations I ran while waiting for news, was a comparison of the value of my pension at age 55 if I were let go at age 52 versus being able to stay employed at megacorp until I reach 55. I took that difference ($18k per year!) and ran it through an annuity calculator and learned that 3+ years of employment is worth $297k to me. This is primarily due to the severe penalties written into the pension plan for workers who leave before reaching age 55 AND who want to start their pensions early.

To answer the OP's original question; I am minimally FI now, but by working until 55 I will bump up my FI to a level with more room for error and also add employee HI, so I plan to keep going into the office. FWIW I have a friend who retired recently and he is paying $250/month for retiree medical coverage and it doesn't include any vision or dental benefits. He is single.

 

[Walt34]

I qualified for retiree HI at 20 years service, long before I retired in 2002 with 29 years. It has changed some since then but I was grandfathered in on the old plan. I consider myself fortunate.

 

[JoeWras]

DW is Two More Years for insurance. I'm sticking with her so we retire together.

Yeah, we could retire now, but her Kilocorp is really, really good about things and we're confident they will stand up to their commitment for retiree health insurance. Of course, never say never. But we're doing TMY to get it.

If promises are kept, it is a significant benefit of over $12k per year. Considering we don't have pensions, this counts.

As for ACA, people probably said they'd ER until they learned that ACA wasn't free.

In any case, if the roof caves in and DW loses her insurance, or I lose the privilege of paying 14k per year to my Megacorp for retiree insurance, we at least have ACA to fall back on.

 

[AllDone]

I ER'ed 6/12, but DH waited another year. We wouldn't have done it without the ACA because I'm a former PCP and saw all the funny business that went on.

In 2007 my group had a 27% increase in HI premiums for the year. HI is still a worry for me.

 

[FinanceGeek]

Yeah. People used to work for health insurance, period. Now they'll be working for the PPO plans, larger networks and out-of-network benefits...

I think it depends on where you live. In many states the ACA plan offerings are geared to offering HMO plans with very limited networks and drug formularies. It bears resemblance to the opportunity to buy in to Medicaid.

But, if you are able to forgo a shot at a subsidy than you can gain access to the better plans since all must be sold with regard to pre-ex conditions. Pre-ACA many FI people had no way to retire before Medicare eligibility. The ACA is a game changer!

 

[Car-Guy]

I was in my early 50's when I first became FI. I told myself at that time that I really needed to keep working to 55 so I could keep my emp's subsidized health insurance coverage once I retired. When I hit 55, I then asked myself, how can I walk away from the salary I was getting. The DW and I agreed I'd stay on to 57 1/2. Once I hit that, I quit setting retirement dates and foolishly hung around 3 more years.

So at first it was for heath insurance but at 55 it then became all about more money that I didn't need. (Greed)

 

[mystang52]

[only a little exaggeration]: DW loves me......SHE is working for our insurance coverage so I can be a stay-at-home bum.
Before I pulled the plug we had numerous discussions but the most important subject was health insurance. We have great coverage - she is a teacher - and I have a medical condition so insurance is that much more important. We agreed that she would continue to w*rk until at least Medicare age, although she may want to go even longer.
She loves what she does and actually wants to keep working; that's an emotion I can't identify with

 

[Mo Money]

The ACA's implementation (and its survival in various U.S. Supreme Court battles) was absolutely critical to my decision to ER. I have a preexisting condition. About a year before I ER'ed, on a whim I searched for the cost of health insurance in western Pennsylvania for a man in his 50s with a preexisting condition. I could not even find any policies! I was even considering moving to Massachusetts to ER, if the ACA was stricken down by the Supremes. Thankfully, while the Supremes weakened the ACA a bit, the legislation survived, and I jumped ship. So while the 2MM people may not have left their jobs with the help of the ACA, this one did.

 

[sengsational]

ACA was the largest of 3 factors for me; without it, I wouldn't have walked. The other two factors? Turning 55 later in my departure year (penalty-free access to 401k, if needed), and being asked to train my replacements in India (BS bucket).

As to the study, since it's 2014 data, yeah, not showing a trend from releasing job-lock is not surprising. But I thought it would be a flood back in September of 2013: http://www.early-retirement.org/for...th-plan-into-exchanges-68251.html#post1355502

 

[Nunthewiser]

Megacorp defined pension benefit @60 : $36k (not too shabby)
Megacorp retiree family healthcare @60: $17k (are you kiddin?)

Obamacare /CHIP healthcare @ 60: $1k

...I'm outta there....