Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Would you risk no insurance and ACA Penalty?
Old 10-14-2016, 06:21 AM   #1
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 412
Would you risk no insurance and ACA Penalty?

DW and I (53/54) went to semi-retired status in late 2015 and were on Individual health plan for 2016. Our rental income and some consulting income means we don't qualify for subsidies. Doing HSA plan -

2016 Premium w/ $13k deductible - $8,400/yr
2017 Premium w/ $13k deductible - $12,800/yr

We live in Minnesota where there's been lots of news about our system.

So the question - It looks like the ACA penalty for no insurance would be around $2,500-3k. With no insurance we'd have to pay all in cash but right now we are basically going to pay the first $26k in medical expenses.

We are both pretty healthy. It seems like there's a 98% chance that we'd be better off not getting insurance. The problem is that 2% chance that we get sick which could be a killer. Of course, we could re-enroll in 2018 if needed.

Would anyone roll the dice and not get health insurance under these circumstances?
__________________

__________________
Fishingmn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-14-2016, 06:32 AM   #2
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: On the road again
Posts: 21,510
Quote:
Originally Posted by Fishingmn View Post
Would anyone roll the dice and not get health insurance under these circumstances?
No way. The financial risk is far too great. Not having health insurance was one of the few things that kept me up at night. Costly premiums irritate me but I sleep so much better.
__________________

__________________
MichaelB is online now   Reply With Quote
Old 10-14-2016, 06:35 AM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 39,405
Quote:
Originally Posted by MichaelB View Post
No way. The financial risk is far too great.
+1

If the cost is unbearable consider looking for a low-stress job with health benefits.
__________________
Numbers is hard.

Retired in 2005 at age 58, no pension

REWahoo is offline   Reply With Quote
Old 10-14-2016, 06:40 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,346
You are not saving $26k by having no insurance because the deductible would only need to be paid if you had big bills, which you would also have with no insurance (maybe higher bills with no company negotiating the rates).

So you are saving $12,800 - $2500 (penalty) - $500 (checkups and mam mograms included) = $9800

Would you risk $150,000+ of your portfolio to make just $9800 on a high risk investment? If so, head over to my biotech thread and we will get started.
__________________
Fermion is offline   Reply With Quote
Old 10-14-2016, 06:42 AM   #5
Recycles dryer sheets
 
Join Date: Sep 2016
Location: Acworth
Posts: 175
Risk:reward not worth it in my opinion.
__________________
exnavynuke is offline   Reply With Quote
Old 10-14-2016, 06:54 AM   #6
Thinks s/he gets paid by the post
John Galt III's Avatar
 
Join Date: Oct 2008
Posts: 1,055
Not sure what I would do in your situation, but I went without HI for a year in my 50's. Premiums were just too huge. I had a low paying job I liked, but with no bens. I shopped around for cheap medical services. Blood test for my hypothyroid was only $25. Paying cash for an annual physical was only $45. I suppose I was lucky I didn't need expensive care.
__________________
John Galt III is offline   Reply With Quote
Old 10-14-2016, 07:21 AM   #7
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 85
You do not have to get really sick to blow through 26k especially if you end up not being able to negotiate the cash price. I just had an overnight observation stay ( less than 24 hours- no surgery no specialist consult but blood xray and ekg) follow up was pcp, 3 blood values which are among the cheapest around and one ultrasound cost was 9k cash. Less than 1/2 that with the insurance discount- partly paid by my insurance as my deductible is 2k

My point is that, although this in your case would still be a win, a slightly bigger issue would not be. Suppose you broke a bone? I did once, in a freak gym accident, when I was young and in superb health. 2 days in hospital,surgery, multiple doctor visits, multiple xrays and pt. That would a manageable loss for you. And something serious? Cancer, heart, some weird disease?
__________________
Sarah S is offline   Reply With Quote
Old 10-14-2016, 07:35 AM   #8
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 412
Thanks for the feedback.

Thought I'd bring it up here before discussing with DW - she'd probably freak out about the idea too
__________________
Fishingmn is offline   Reply With Quote
Old 10-14-2016, 07:46 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,044
If the cheapest ACA plan costs more than 8.12% (maybe 8.13%) of your income, you can get an exception to the requirement to have insurance (i.e. no penalty). If this is true you loose the penalty.
There should be some catastrophic policies that on your state's ACA platform. In some states these will be less expensive if they are not priced by age. This is not the case in my state, but others have posted that these are available in theirs. It depends on the the choices your state made in setting up their implementation. Check out your state's site.
Would I go without insurance? No, full stop.
About 4 years ago I started having odd light headed spells that would last a few seconds or so. I went to the ER after 5 episodes in 5 days. They ran a few tests and admitted me for more (MRI, Eco Stress test and EEG). I was in the ER for a couple hours and admitted one evening and by 9:30pm the next night they found the problem... intermittently the electrical signals would not get to the bottom of the heart. Bill before insurance was approximately $48k and new hardware... dual chamber pacemaker. At that time I was in good health. Actually, I'm still in good health in my mind. I still can can do what I did before unless there are EMI constraints.

Typical year with the cardiologist (due to the pacemaker) is one short visit to the doctor and twice reading the data out of the pacemaker. This year and next he has added one test.

It's the unexpected for me that I'm insuring for, not the routine. Is it more expensive than I think it should be? Yes.

If you get into a car accident that is your fault or with an under insured driver... who pays for your care?
For me I will likely pay more in insurance that I benefit. Most do.

You need to make your choice of what to insure against.
__________________
“Remember where you came from, where you're going, and why you created this mess you got yourself into in the first place.”
― Richard Bach, Illusions
bingybear is offline   Reply With Quote
Old 10-14-2016, 07:58 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 13,420
Quote:
Originally Posted by Fishingmn View Post
....Would anyone roll the dice and not get health insurance under these circumstances?
No way. Think of it this way. Let's say you or your DW have some sort of medical event and it costs $250,000 at rack rates. Without insurance, you are on the hook for $250k, but let's say you can negotiate it down to $175k... your total cost is $178k with the penalty. With insurance, your worst case is $26k (assuming you stay in network) so that is a difference of $150k. Is it worth paying the $10k difference between the HI premiums and the penalty to avoid the risk of a $150k or higher loss?

I view health insurance as simply financial protection insurance with an added benefit of getting access to negotiated rates for health care services for our normal stuff.

On other angle to check out, if the lowest bronze level premium exceeds ~8% of your income then you may be able to buy catastrophic coverage even though you are over 30. In many states, there is not a big discount between bronze and catastrophic coverage but in some states, there is a significant difference (~40% discount in my state for example).
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is offline   Reply With Quote
Old 10-14-2016, 09:02 AM   #11
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,520
Nope! You also gain access to the discounted "in-network" provider rates via the insurer--especially if you use the large dominant player in your area.

Without insurance there are no limits on what the providers can charge you.

I look at the premiums as half "insurance" and half "group purchasing".

-gauss
__________________
gauss is offline   Reply With Quote
Old 10-14-2016, 09:15 AM   #12
Full time employment: Posting here.
Cobra9777's Avatar
 
Join Date: Jul 2012
Location: Texas
Posts: 807
Quote:
Originally Posted by Fermion View Post
You are not saving $26k by having no insurance because the deductible would only need to be paid if you had big bills, which you would also have with no insurance (maybe higher bills with no company negotiating the rates).

So you are saving $12,800 - $2500 (penalty) - $500 (checkups and mam mograms included) = $9800 ...
Plus you mentioned doing the HSA plan. So I assume you're making HSA contributions. If so, you'd need to factor in the value of the immediate deduction (depends on bracket) as well as ongoing tax savings. Once you're 55, the contribution amount increases and the tax savings can be a meaningful offset to the cost of health insurance.

I'll admit, it's hard for me to get my head wrapped around the numbers you posted. Not sure how I would react if I was facing that. But as others have stated, there's no way I'd go without insurance. A perfectly healthy family member was recently diagnosed with Stage 1 non-Hodgkin's lymphoma, which is fairly common, easily treated, and has a very high survival rate. Treatment included 5 chemo sessions followed by 2 weeks of daily radiation. Gross cost before insurance = $175K.
__________________
Retired at 52 in July 2013. On to better things...

AA: 45% stock, 35% bonds, 15% real estate, 5% cash
Cobra9777 is offline   Reply With Quote
Old 10-14-2016, 09:16 AM   #13
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 1,379
Well let's talk about this since I live in the great state of MN too. First question, are your assets all in protected areas, house you live and or IRA's they can't get at that for medical bills.

Second question, for anything but an emergency you are going to have to get thru the billing offices for treatment. You'll need to pay all up front costs at a minimum.

Third question if you drop your current policy consider it gone. We have now enrollment caps and getting re-enrolled might prove impossible. You could get a Blue Plus HMO but that's the only one that isn't capped. Are these caps legal, IDK, but since they just threw them on 30 days ago, they will be in place for at least 2017. Right now current policyholders are not affected by caps.
__________________
ivinsfan is offline   Reply With Quote
Old 10-14-2016, 09:18 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Apr 2013
Posts: 4,024
Wouldn't even think about it. Woke up this spring with a special kind of pain. The kind no male could ever ignore. Few hours in the ER was 20k after the insurance companies discount.

All that money for a few tests and bottle of pills, and a diagnosis of "don't know".
__________________
MRG is offline   Reply With Quote
Old 10-14-2016, 09:25 AM   #15
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 66
No - the risk is too high. Hopefully, you will not need the insurance, but if you have a serious illness or an accident, you will not have to worry about how your treatment will be paid. This is the last thing that you will want to deal with at that time.

I just went to a funeral for a 57 year old friend who had just retired. Very healthy, exercised regularly and was in very good shape. He died from complications from pneumonia. You just never know when a sudden illness will happen. We always think it will happen to someone else.
__________________
whatnot is offline   Reply With Quote
Old 10-14-2016, 09:48 AM   #16
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 3,293
I wouldn't.
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 10-14-2016, 09:50 AM   #17
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,449
No. The risk of having an expense large enough to affect portfolio survival over our lifetimes is too high.
__________________
walkinwood is offline   Reply With Quote
Old 10-14-2016, 10:03 AM   #18
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Posts: 1,382
Yeah, I wouldn't think of skipping insurance. I am a young, healthy guy and had to have my gall bladder out back in February. Without insurance, I would have been on the hook for about $25,000. And the DW had a spinal tumor removed last year, and that would have cost us over $200K...and since it wasn't an emergency (yet), we would have had to pay OUT OF POCKET before they operated.

That risk is simply way too great for me.
__________________
Founder and Head Lounger @ The Life of Leisure Institute
Retired in 2014 at the Ripe Age of 40.
ExFlyBoy5 is offline   Reply With Quote
Old 10-14-2016, 10:29 AM   #19
Recycles dryer sheets
 
Join Date: Jun 2013
Posts: 477
Quote:
Originally Posted by Fishingmn View Post
Would anyone roll the dice and not get health insurance under these circumstances?
I wouldn't do it, and I wouldn't recommend that somebody else do it. But that being said, the math might favor doing it for someone who (1) is comfortable taking such a risk, and (2) is in perfect health and has had near-zero medical expenses over the past couple of years, and (3) has "more than enough" money, so portfolio survival would not be threatened if the very-unlikely-but-worst-case occurred, where they had to pay a couple hundred grand out of pocket in 2017.
__________________
Which Roger is offline   Reply With Quote
Old 10-14-2016, 10:43 AM   #20
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 7,029
Insurance doesn't just avoid the penalty - it gets you the "negotiated rates". I'm on a HDHP with HSA. Last year (2015) we hit a patch of bad luck for medical incidents. (Kids and sports injuries) and racked up major medical bills. But when I look at what it would have been without insurance - we're talking about a factor of 7!!!! So the 9k we paid would have been $63k. Even stuff like DH's statin drug, which he pays about $4/month would be a ridiculous $300/month without insurance according to the pharmacy EOB.

Insurance is worth it just for the negotiated rates.
__________________

__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
rodi is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Repay ACA credits - Penalty? Blueskies123 Health and Early Retirement 12 06-10-2016 04:51 PM
ACA Penalty wrigley Other topics 14 03-12-2015 10:20 AM
ACA Tax Penalty imoldernu Health and Early Retirement 11 01-25-2015 04:15 PM
Need advice, would you take this risk? nkdude FIRE and Money 26 10-06-2008 02:58 PM
between 55 and 59 and the 10% early withdrawal penalty albundyz FIRE and Money 23 10-12-2007 07:38 AM

 

 
All times are GMT -6. The time now is 08:14 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.