Health ins cost

[bentley]

I plan to early retire next year around april, 2008. I will have 30.5 years in and will be 55 at that time, and will be able to obtain health insurance from company. Problem is the cost which will be $850/month.

Question; Can I find cheaper and comparable insurance on open market?
My wife has had cancer 17 years ago, and have no reason to expect a return,...but....
At this time, I'm assuming that keeping the company insurance will be the best bet.
Am very interested in opinions and/or advice of others.


Thanks

bg

[Freein05]

If your company allows you to continue in their group health insurance you can probably not do better. One question is it going to be COBRA? If it is you only have coverage for 18 months and some states take on another 18 months for a total of 36 months. Once you are over 50 the premiums go through the roof. My wife and I retired at 60 and 58 and our premiums are now almost $1000 per month under COBRA. Because of preexisting conditions we would not be able to get any other we could afford. Our conditions are not on going but if you have ever had even a hang nail insurance companies don't want you especially when you are over 50.

You may be able to get high deductible for less but you will also in most cases have a lot less coverage. You can get an online quote from Ehealth .

edited to add: Plan on premiums going up 8 to 10% a year. That is what ours have been going up.

[bentley]

Thanks free. No it's not cobra. Unless the company decides to drop retirees, then the insurance is for life, or medicare I guess.

The co changed the formula a year ago on how they determine the retiree's portion of the cost. They promised to offset 70% for years and years, ...now at the 11th hour for me, they change it to just 10%. This is what is driving the high monthly premium cost.

Well...I have confidence that our next pres will fix this.....

yeah right..

Thanks for your input.

[RetireeRobert]

Quote:

Originally Posted by bentley I plan to early retire next year around april, 2008. I will have 30.5 years in and will be 55 at that time, and will be able to obtain health insurance from company. Problem is the cost which will be $850/month. Question; Can I find cheaper and comparable insurance on open market? My wife has had cancer 17 years ago, and have no reason to expect a return,...but.... At this time, I'm assuming that keeping the company insurance will be the best bet. bg

You are likely correct. Assuming the coverage is "group" policy that you simply get the option to continue by self-pay as long as company offers group coverage to its employees, you are probably best served by staying with that coverage. You have already eliminated any concern about policy exclusions for pre-exisiting conditions or of waiting periods. With new coverage in private market, you might have to deal with those concerns.

If your policy is continued by virtue of COBRA and self-pay (18 months in most cases) you will be shopping again in the 18 months on private market.

The $850 a month does not sound unreasonable for couples coverage. We are paying close to that for family coverage, but ours is the low-cost plan with higher deducts/co-pays and lesser coverages. The better plans are going for over $1000 a month. So I think your cost is about what one should expect.

You could shop the markets just to see what private market coverage is going for and what terms you get, but I think you will find you have a fair deal from company. I think there is a site something like ehealthinsurance.com or something like that to compare shop at---google it.

As another poster mentioned, and you are likely aware, expect premium increases 6-8-10-12% a year for who knows how long.

[lazygood4nothinbum]

they just pumped mine up 18% in one year, the bastids, with not a single claim by me. will look into increasing deduct to $5k and see what that does. i'll put up with such increases for maybe another five years before i opt out of this system and go international for half the price. not that i can't afford it but this is just silly.

Quote:

dear... thank you for trusting (insert your favorite insurance company name here) with your health insurance. we are working hard to hold down costs for our policyholders. in spite of our efforts, medical costs continue to go up due to increased utilization and higher charges for health care. new technology and procedures often improve the qulity of care but also contribute to rising costs. in addition, we tend to use more health care as we age. periodically, we have to adjust our premium rates to compensate for these costs pressures. these premium adjustments are not based on your individual claim costs. they are based on the combined costs of all insured individuals in your plan. everyone covered by your plan is receiving a rate adjustment... we truly value your business. we strive to maintain premiums that are as affordable as possible. however, we understand that for some customers, these premium adjustments may create a financial strain. if this is the case for you, we will gladly accept and find a recipient to sell your extra lung, kidney, or left testicle. you may contact us to explore other ways to lower premiums.

[mn54]

Bently, what type of ins. do you have now? High ded, low ded, 100% cov, 80% cov., etc. As you know this will double or triple the cost depending on what cov. you have. As was suggested it is easy to compare on line what kind of cov. you can get at what cost.

[mn54]

Also, if your paying for your own ins. don't forget about opening an hsa if you can.

[bentley]

Quote:

Originally Posted by mn54 Bently, what type of ins. do you have now? High ded, low ded, 100% cov, 80% cov., etc. As you know this will double or triple the cost depending on what cov. you have. As was suggested it is easy to compare on line what kind of cov. you can get at what cost.

Current insurance is probably above average with low copayments ($15) and low deductibles ($150). Retiree insurance is 80/20 with $500 ded, and I'm not sure about the copay's. I think they go to $25. However the meds are expensive. My wife takes Nexium, and a 90 day supply is going up to $125 after jan 1, 08. That's $500/year for just that one drug.

My biggest concern with retireing with just $1.4mil is the impact of inflation. Although SS will certainly offset that, and help a lot at age 62. The time slot between retirement day, and age 62 will be the tough time.

Anyway, thanks a ton to everyone for the input. If anyone else has thoughts or suggestions, feel free to continue to post.

B

[template]

Quote:

Originally Posted by bentley .. My biggest concern with retireing with just $1.4mil is the impact of inflation. Although SS will certainly offset that, and help a lot at age 62. The time slot between retirement day, and age 62 will be the tough time. ...

You didn't mention how much, if any, pension you will receive from your company nor your living expenses after retirement.

I feel your pain. My former megacorp employer pulled a similar trick, raising retiree healthcare costs humongously after the fact. They needed a way to fund bloated executive compensation packages.

[bentley]

Quote:

Originally Posted by template You didn't mention how much, if any, pension you will receive from your company nor your living expenses after retirement. I feel your pain. My former megacorp employer pulled a similar trick, raising retiree healthcare costs humongously after the fact. They needed a way to fund bloated executive compensation packages.

Thanks; no pension. I will receive a lump sum distribution but that $ is included in the 1.4 mil. Living expenses are $60k to $65k before taxes. I'm currently making $115k/year + co car, but it's just DW and I now, and we're saving 40%. I've maxed out 401k AND 401k catchup. So, 20% there + match.

My megacorp has raised the retiree healthcare costs to PREVENT people from retireing. Average age within company now is over 50, and they are scared of a mass exodus of expertise, so they are doing what they can to prevent that. We are now paying the price for all those years of downsizing and not hiring younger workers. Used to be a good group that actually cared about their employees. Not any more. Employees are no longer an asset....you are a necessary..... just like a desk....and have about the same value to them.
I've been here for over 30 years now, and have seen the changes. I'm not as bitter as I may sound, but it does bother me when they change the rules and the formula's a year before someone retires.

Corporate greed is worse than I've ever seen it. All those managers (I am one) have their bonuses tied to certain goals, and every goal is about money.

Happy Thanksgiving all

b

[TickTock]

Quote:

Originally Posted by bentley Unless the company decides to drop retirees, then the insurance is for life, or medicare I guess. The co changed the formula a year ago on how they determine the retiree's portion of the cost. They promised to offset 70% for years and years, ...now at the 11th hour for me, they change it to just 10%. This is what is driving the high monthly premium cost.

bentley,

My suggestion - figure out what health insurance would cost if the company dropped it tomorrow. Plan your retirement spending plan around that. If they continue to offer it, great, you have extra money to spend. If not, your plan accounts for it.

TickTock Rule of Finance - heavily discount promises of anything to be given to you in the future.

Also note that the courts have consistently ruled that companies can reduce/eliminate health benefits for retirees at any time.

[Ed_The_Gypsy]

bentley,

$850 sounds reasonable to me, too. Can you convert it into a high deductable HSA?

I agree 100% with TickTock. Beware.

(Consider shorting their stock, too. )

[Allegany]

Just got a letter from the health insurance that the cost for a two person is going from 1368 to 1642 / month or about a 20% increase. OUCH

[Martha]

Allegany, do you mind saying what state you live in and if the policy is one bought on the private market?

[Martha]

Quote:

Originally Posted by TickTock Also note that the courts have consistently ruled that companies can reduce/eliminate health benefits for retirees at any time.

Well, not really. If you have a contract which says you are entitled to health benefits, and the company doesn't provide those benefits, then the company breached its contract and you have a claim against the company.

However, the contract may not be so clear an unequivical and instead provide "outs" for the company.

Also, if the company files bankruptcy odds are it will "breach" the contract and you will be left with a claim for damages that will not get paid in full, if at all. If you have a union contract, there are some restrictions in bankruptcy law regarding how and when a company can set aside a union contract.

The pension guaranty corporation does not guaranty retiree health insurance payments.

[TickTock]

Thanks for the info, Martha!

[Allegany]

Martha, the state is NY and it is private purchase. In NY it is ILLEGAL to sell an individual or two person a High Deductible Health Plan with a Health Savings Account. I've contacted my state legislators about this but don't seem to get anywhere. I think that being able to purchase a HDHP with HSA would dramatically lower the cost of health care in NY but there is no interest in doing so.

[Martha]

Thanks Allegany.

[uwhateva]

I know this is kinda late but I had a question. Are you guys military retirees? If so, is there a reason that you are paying so much for medical coverage when you have TRICARE with a catastrophic cap of $3000?

[megacorp-firee]

bentley, I think you are seeing the best you will see, especially with your wifes existing conditions and medication requirements.
My COBRA payments for two of us is $865/month. We are 57.
My megacorp retiree insurance is currently $950/month. Same policy.
I will have to go from COBRA to retiree policy at the end of the year.
I have tried to get DW her own policy last year and found that she had the 'hang nail' problem and they nixed the policy. I have to get into gear and revisit that ASAP.