OMY or stay 3MY to get cheap Health Care from 55-65

[JackJester]

I have been working towards the goal to FIRE in July 2020 (age 53). My DW (basically the same age) will retire at the same time as me. My dilemma like many is HC. My Mega Corp provides an “early retiree health care plan" in which I would pay the same amount now as an employee and it covers me and DW until Medicare at 65. Its a great deal (right now annual cost to cover both of us = approx $1000). Coverage is about the same as a Silver plan on the WA state exchange. But the MC could always revoke early retire medical coverage; I am union represented and they would fight so most likely I'd be grandfathered in. Certainly costs would rise along with what the MC employees will be paying over time, and the MC will try to pass on more cost to employees in the next union contract. So, if I work to 55 we’re looking at HC cover by the MC for 10 years: $10K total (keeping it simple with no annual increases for comparison purposes).

On the other hand, the cost of a Silver plan on the exchange for us is $14000 annual and I would need that for 12 years vs 10: $168K total …that’s a huge difference! We would not qualify for ACA subsidies; its close but I’m not banking on it.

I have been building up the cash/investments to cover this HC difference (FIRECALC gives 95%), but it is still hard to pass up the MC-provided HC. I fully accept that Time > $. But, is 2 years of freedom worth paying $158K?, plus there is the unknown with the ACA’s future. I know only I can make this decision, but I’d appreciate your opinions. Thx

 

[Jerry1]

I waited until 55. I recommend you do the same unless you have a lot more saved, which, based on your FireCalc percentage, you do not. Sure, it can always be taken away but you can only work with the cards you're dealt at the time they're dealt. Right now, you have a potential benefit that is very significant. I would not walk away from that.

 

[DrRoy]

If you can get the $1000/yr HC now then go.

 

[joeea]

On the other hand, the cost of a Silver plan on the exchange for us is $14000 annual and I would need that for 12 years vs 10: $168K total …that’s a huge difference!

If $168k is actually a huge difference to you, then the conclusion is clear - keep working.

 

[Dtail]

I would see how the ACA issue plays out, but you are working in the meantime. Being at 95% in Firecalc, I would also stay for the retiree medical. Yes time>money, but retiring at 55 y.o. still sounds good to me.

 

[VanWinkle]

I waited until 55. I recommend you do the same unless you have a lot more saved, which, based on your FireCalc percentage, you do not. Sure, it can always be taken away but you can only work with the cards you're dealt at the time they're dealt. Right now, you have a potential benefit that is very significant. I would not walk away from that.

+1 This makes very good sense.

 

[Alan]

Facing a very similar decision I waited until 55 to get the retiree health insurance and was really pleased that I did. (This decision was made in 2007 so pre-ACA)

 

[RunningBum]

If you can get the $1000/yr HC now then go.

I think the issue is they have to stay 3 more years to get the $1000/yr HC. If they retire in 1 year they go on the ACA. There is no option stated to retire now, at least not with the cheap retiree HC.

I'm only guessing from the title though. The post itself is not at all clear on the point. OP, perhaps you can clarify.

I would plan to stay the extra 2 years. 95% is great but probably doesn't have a lot of buffer, and at a stock market high isn't quite as safe as coming off of a bear market, so the extra time to build up your portfolio wouldn't hurt. Unless your job is really taking a toll on your health or there is some other issue you haven't mentioned. You can always change your mind and cut the cord early, but I'd keep the mindset that you have 3 years left.

The other factor is just how big the $168K is in relation to everything else. If you plan to spend $150K/yr and have a portfolio that gives you 95%, $168K probably isn't that huge of a deal. But if you plan to spend $50K, it probably is.

 

[Aerides]

In your situation I would have decided on 55 before I started flirting with July 2020.

The ACA is fine, and we are doing nicely with our Bronze plan, but each year we will have to cross our fingers. And we live in FL, with a lot of good blue cross coverage. Even so, by dropping our cobra and going ACA we had to leave behind our docs and best hospitals (only available on a super-pricey platinum plan). Your MegaCorp plan probably has less general OOP costs, lower deductible, as well. It's not just the premiums. (You get one iffy blood test and you'll find you easily spend your high deductible after you go to a few specialists...)

For 10 years to cover, given you are that close, I would plan to stay.

 

[Bestwifeever]

Stay both for the health insurance option and for two more years of growing the nest egg (and two less years of spending the nest egg).

 

[JackJester]

Yes. If I leave the company now or anytime before I turn 55, then I forfeit the MC-provided HC, and thus I have to purchase on the ACA exchange instead. Our annual expenses are estimated at $95K and that would include the $14K for the ACA Silver Plan.

 

[Dtail]

Are you including potential SS income in your Firecalc 95%?

 

[pjigar]

HC is the biggest wild card for my RE. I would not hesitate to stay 2 more year for getting reasonably priced insurance. I would say stay!

 

[24601NoMore]

Your MegaCorp plan probably has less general OOP costs, lower deductible, as well. It's not just the premiums.

ACA deductibles are significantly higher than corporate plans. Most "decent" ACA plans have a PER PERSON deductible anywhere from $6K - almost $8K/yr. And if you ramp down the deductible to something more reasonable, your already sky high premium is likely to go even more insanely high. ("Affordable", my hiney - these plans are anything BUT affordable if you don't get subsidies and/or cost sharing..)

So, as Aerides said - it's not just the premiums you need to consider.

As Medical coverage is the single biggest risk to my ER plan (ER'd early this year in Jan @ 55 WITHOUT any goodies like retiree medical and am not going to be able to do subsidies due to overall income), I'd definitely be in the camp of saying to stay 3 more years to get the retiree medical. And keep in mind - that $14K premium you saw today is likely to go up, up and MORE up every single year between now and the time you start Medicare..it's crazy how much the plan costs increase year over year..

 

[mystang52]

Echoing others, I vote to hang on to age 55. The HC benefit is a great value. Keep in mind that retirement at age 55 is pretty darned good.

 

[jollystomper]

I will also agree with those who say wait until 55. One reason I did OMY for several years was to get my pension level to a desired amount and build up reserves for health care, and it has worked very well so far. I think waiting to 55 is a good trade off for what you can gain.

 

[Telly]

In your situation I would have decided on 55 before I started flirting with July 2020.

Yes!

And this situation is a good example of applying Pascal's Wager to economic probability.

 

[pacergal]

I stayed on for retiree health care rates, mine was age 60. I could have left at age 54 and paid 50% of employee rate, but that was still significant to me. At age 60, employer pays almost 100% cost.
It was worth it to work a few more years, pad the retirement portfolio and decrease medical costs until Medicare kicks in.

 

[BeachOrCity]

Have you checked to see if you can do a leave of absence and then qualify at the end of it? A lot of mega corps allow this. Some times just 1 yr. other times they allow more

 

[JackJester]

Thanks everyone. Its an overwhelming consensus from you all to stay until 55 and get the HC. It's not of course what I want to hear since I'm like Veruca in Willy Wonka .... I WANT IT NOW!" So, I'll keep trudging along. Damn I wish we were smart like Canada with universal HC; but that's a topic for another thread.



To answer some questions. Yes, I do include SS (at 62) in my FIRECALC calculations. Yes, I could get a Leave of Absence for up to 2 years and then return to work for a day and retire. But that has to be approved at the Exec level, and it has to be very justifiable like a serious illness (fighting cancer), or something major life changing. I have never heard of anyone getting it approved.

 

[EastWest Gal]

I went back to work over health insurance fears in 2017. We still don’t know what’s going to happen with the ACA. The SCOTUS is now looking at an appeal. I’d probably do the OMY thing at least, then decide next year. You could mentally plan for the 3 more years and see how the case goes and politics goes over the next year. No need to make a final decision now.

Also, count on rising premiums. Another factor for us was that premiums doubled between 2015 and 2017.

 

[pacergal]

Op-- for NOW, consider using all available time off every year, start taking the vacations/trips that you plan for during retirement, know retirement is in the near future and try to ignore all of the BS at work. That's what I aimed for the last few years and it made things much more tolerable on a day to day work day basis.
I had it down to "each month I work, I am saving $XX in healthcare dollars and for retirement".

 

[Clone]

The other thing about staying until 55 is that it may allow you to tap your 401k without penalty. You don't say anything about how you plan to finance your living from 53 to 60, but access to the 401k may be a factor.

 

[joeea]

It's not of course what I want to hear since I'm like Veruca in Willy Wonka .... I WANT IT NOW!"

Yeah, don't be a veruca.