Greetings! 44 yr old ER'ing in 13 months

[Mulligan]

I have enjoyed reading the forum the past 6 months and have decide to be brave and join, ask questions and maybe add my 2 cents occassionally if it is worth adding. I am fortunate to be retiring with a Cola'd pension that will pay starting out about 70k a year. In Missouri our retirement system is funded with 13.0% deduction from our paycheck and the school matching the same amount. The government enacted a law that allowed me to buy 4 years of social security work years (for me done in college) buy paying for both my % and the employers matching %. This has allowed me the chance to be considered as having 28 years in the system even though I have only worked 24 (the cost to purchase was around 80K). I have had a burning question that I was looking for input from any who would care to offer it. Retiring educators are allowed to buy their health insurance through the school group plan (a perpetual COBRA, so to speak) until they decide they dont want to. Here is my delima: I can stay on the plan and pay approx. $500 a month for a run of the mill plan: 1000 deductible, 30 office copay, script co-pay. Our rates have been sky rocketing the past few years as our group has not been a healthy one so to speak. I have discovered that at my age I can get a 3000 deductible, HSA plan for $200 or so by going out on my own. I am healthy, take no meds, and have no health issues. If I go out on my own, I cannot get back on the group plan at a later date. Would you pay more and stay with group, or pay the lower rate and use the HSA and try to build up some funds to eventually pay for incurred costs, and maybe get lucky and have some left over money down the road? I have enjoyed reading some past HSA threads dealing with costs, etc, but haven't came across this type of situation. Thanks for any input, and I look forward to participating in the forum!!!!

 

[Coach]

Mulligan, glad to hear that you're de-cloaking! Welcome to the posting part of the forum. And congratulations on your impending retirement. Being retired by 45 with a COLA-ed pension that should let you live comfortably is a remarkable accomplishment.

Your health insurance dilemma is an interesting one. I'm so damned scared of individual health insurance that I'd stick with the group plan. This might be paranoia on my part. I'd tend to be conservative at this point in anticipation of significant changes in the health insurance system over the next couple of years.

I didn't really have an option for individual insurance because of my health history, so I am very grateful that my former employer allows me to buy into their group plan. Without that I wouldn't be retired.

If you don't mind saying, at what level do you teach? Or are you an administrator?

I hope you get comments from some others -- and again, welcome!

Coach

 

[plex]

You may want to look at the rates when you are 45-65 for the individual health plans, and determine an average payment amount based on the rates at those ages, this would allow you to at least make a direct comparison between the individual health plans and your school plan. You should not be comparing your school health plan against what the individual health plans are for you right now, the premium payment structures are different.

Another really important factor that I didn't see mentioned was the maximum health benefit limit, that is one of the most important factors in considering a health plan, among others like the coverage area of the plan (some plans, including employer plans, are very regional).

The HSA should makeup for most of any additional deductible costs each year for an individual plan, but that would be about it. From what I have read, it becomes much harder to switch plans once you are 55-65 (because you are "high risk" automatically), so choose wisely before you get into that age range, if you go with the individual high-deductible/HSA health plan, you would need a plan with a company with a good track record that is financially sound.

Sometimes, an individual health care plan can be much better than a employer/school plan. For instance, one of the students at the school I went to was on the school's student health care plan. It costs 2.5x as much as a reasonably priced individual plan for someone of the same age (using same age since both plans have the same rates, and can only be used in the same age range). The benefit cap was only 50k on the student plan, vs. 5M on the individual high deductible plan. The school plan only applied in the County of the school, and no where else, the individual plan applied anywhere in the country, and to a large degree outside the country. The student health care plan at least allowed for routine checkups at a lower price though.

The student lost their leg during a routine operation to fix something totally different, gangrene somehow got into the leg. The student health care plan's cap was immediately reached, and now she is in debt for hundreds of thousands of dollars (she also probably happens to have 100k in student loans, which are only dis-chargeable through death, thanks to current bankruptcy law).

 

[Mulligan]

Thanks for the inputs Coach and Plex. Coach, I got into education first as a teacher/coach. Really loved coaching, especially basketball, though I did assist in various other sports. Eventually drifted into an athletic director, then assistant principal, then principal. Been at present job 6 years. The school has been good to me, I still have a 2 year contract, but will give it up next year. Financially I would be better staying, but I care about the school enough to not be a "hanger on". Plex, I need to check into the maximum amounts like you said. I've guess I have always thought of paying for insurance as a nuisance. Probably have taken my health for granted. I've had my daughter on an individual plan and they have been fair to me, but thats probably because she is a teenager with no health issues either. So can they (insurance companies) really put the screws to you when you reach the 50-60 year range? That does concern me. I have read some horror stories about people being dropped or rates drastically raised. I hate paying insurance premiums, that is why I have a car with 150K that is 8 years old so I only have to pay liability. Coach are you (or have) still coaching? I miss it so I do the next best competitive thing which is small bet sports wagering.

 

[donheff]

If you are in doubt you could go with the high priced spread for now and what what happens with the Obama Administration's plans. You may have more options in a couple of years.

 

[DJRR]

Does not seem to be worth the risk to me. You save an extra $300 per month = $3,600 and have a $2,000 higher deductible. One emergency room visit could wipe out your deductible. I have had 2 in the past 10 years for weird things, otherwise healthy. My wife was in for 5 hours and $5,200!!! Then you will start getting into rising premiums because you are medically underwritten and unprofitable. Your premium could double or triple or you could just be dropped. Then you would have a big issue.

I would keep it until the healthcare reform settles out unless you have significant assets and can build up a large HSA quickly. The delta is only 5% of your pension right now and is tax deductible. I would take the security of the group.

 

[dex]

Re: health care ins.
The issue is who is carrying the risk - you or the insurer - you pay higher premiums for giving the risk to the ins. co. - simple I know.

I'm 54 and pay 150/mo for a policy with a 5K deductible - BCBS - includes 3 DR. visits with a $40 co pay.
My rational is similar to yours. In the past I have been healthy and didn't use ins. so, it is a good bet I will not use it in the future.
Another aspect is that if you did have to pay the deductible you would not be spending other budgeted money e.g. travel costs. So net worth wise you are OK and that is the purpose of insurance - to protect your assets.

PS - that pension is fantastic - it makes me wish I didn't go into corporate life.

 

[Mulligan]

Dex- The I study and research pensions the more fortunate I feel. I read something like 60% of all people had some type of pension plan in the 80's. Now its under 20%. A lot of educators with good pensions really dont understand how much money in the bank and individual would have to have to fund it. I have a feeling I could have turned a 401k into a 201K even in a bull market if i was in charge of my investments. I thought about boosting up my social security since I am already vested through various jobs, but just found about missouri teachers can only draw no more than 30% of soc. sec. benefits because of a "pension offset act". Have to figure that one out, too. Really torn on the insurance. I need more info on how ins. comp. can raise or drop you. That does scare me. If I knew I could have your exact policy/premium at 54 Dex, I would love to have it.

 

[CuppaJoe]

Welcome, Mulligan!

Golfer? It's been 13 hours since your first post and no one has made a "take a Mulligan" joke yet.

 

[leftbucket]

M-

Keep the group plan. And lobby your congressman to support the HELPS II bill,
which would give you a $3000+ tax deduction to help out.

NCPERS | Latest News | NCPERS Response to Recent Bloomberg Article

H.R. 1413: Healthcare Enhancement for Local Public Servants Act of 2009 (GovTrack.us)

-LB

 

[Moemg]

Welcome ! I'd keep the group for now but look for an individual with a high deductible and a high limit . I've seen too many healthy people have Heart attacks followed by surgery or Cancer where the costs could bankrupt you .Is there a Mrs. Mulligan if so then I would definitely stick with the group plan and hope for health care reform .