Health Insurance options and feedback on my choice

[ER Eddie]

Hi folks. I'm posting this in the hopes to get some feedback on my health insurance dilemma and my choice among the various options.

Here's the skinny: I'm 57, and in 5 months, I will lose my health insurance. My company, where I work part-time, is eliminating health coverage for part-time workers. I could retain health insurance if I increased my work hours, but I don't want to do that. So, I need to cover health insurance.

My options seem to be:

1. ACA plans
2. COBRA
3. Christian health sharing plans
4. Short-term policies
5. No insurance; self-insure

I've investigated each of these, and #4 seems to be my best option. Here's my analysis:

1. ACA plans are too expensive. I can't see myself writing a check for $1000 every month, just to cover a low-probability event. My expenses run around 25K per year without health insurance. I'm not going to raise my total expenses by 50%, just for a single item which, in all probability, I will not use. I can do it financially; I budgeted for it; I can afford it. I just don't want to do it. I find it a ridiculous expense. Plus ACA plans often have restricted provider networks.

There is the issue of subsidies. To qualify, I'd need a MAGI of under 48K. My MAGI would be over that, assuming the market does as well as it has over the past 5 years (I've averaged 43K/yr from cap gains and dividends; I'm also going to continue to work a little and draw a pension, which would add another 28K, so that totals 71K). While it's true that my MAGI would drop below 48 if the stock market has a bad year, I don't want to bet on it it happening.

2. COBRA is priced around the same as ACA plans ($1000/mo, maybe increasing). So again, I can't see writing a check for $1000+ every month, just to protect me against some low-probability event. Plus, it runs out in 18 months, and I'd be faced with the same problem.

3. The Christian healthshare plans appealed to me at first, at least the more lenient ones that don't require strict adherence to specific dogma. But I am hesitant, because they are under no legal obligation to provide services; it's not a legal contract. You just have to trust that they'll stick to their agreements. They do seem to have a good track record of doing that. But I don't know, and I'm not confident about putting my financial security in the hands of an organization that ultimately is under no legal obligation to do what they say. Also, I didn't see any high-deductible options.

Another negative was that if you have a pre-existing condition like high cholesterol, you have to work with a health coach to get it down, and you have to do what the coach says, or else. I don't believe a lot of what passes for standard nutritional advice, and "high cholesterol" is junk science for the most part. So I can imagine getting into debates with my health coach, then being tossed out for non-compliance.

4. Short-term plans seem like my best option. They allow you to have really high deductibles, like 10K or 12.5K, and to select a wide variety of parameters. The provider network is good. The annual cost can be around 2K per year, which is much more reasonable than the 12-14K/yr of the ACA plans. The government has lifted restrictions on the plans, so that they can extend a full year rather than the 3 months they were limited to previously. And you can renew the policy 3 times, so it can go 4 years. Although the plans are not ACA compliant, that doesn't matter anymore, because the tax penalty has been removed.

The downside is that I'll have to pay out-of-pocket for all my routine medical care -- doctor's visits, blood work, medication. That's okay. I like the idea of insurance covering catastrophic expenses, not every little thing (I think that's one reason why insurance is so expensive ... different subject). I don't really know how much paying out of pocket will cost, because I've never done that, but as a rough guess, I'll say 3K/yr. for 2 doctor visits, one pill, and two rounds of labs.

5. Go commando; self-insure. As I understand it, this option is basically just saying you'll pay for whatever comes up, out of your own savings. I suppose that's an option, and it might be a good one for people who have massive savings and good health. I'd have more peace of mind if I knew I had some protection against catastrophic expenses.


So that's my analysis of the options and my plan. Thanks for taking the time to read through it.

I'm interested in any feedback you might have. Does my analysis make sense? Does my selection of a short-term plan sound like the right choice, given my circumstances? Did I overlook something?

Cheers.

 

[Aerides]

I would never think of doing #5, because...cancer. Any long term chronic thing that turns up, similarly, would wreck anyone's finances and provide so much more stress in such an unfortunate event. It's not so much the risk of paying for a catastrophic event, like an accident, but an illness which could need longer term care. That's the kind of thing I don't think anyone can self-insure for. And no one can reasonably predict their odds at avoiding one of those.

As far as the ACA, I'm guessing you're single hence the $48k cap. You will find the presence of restricted provider networks in everything but the higher end employer coverage plans. (or the very high end ACA plans, but I don't know who is the customer for those).

Short term plans often have a heck of a lot of exclusions, so they do require a lot of research. In your case I'd probably still sign up for COBRA to cover the back half of 2019, since at least your deductible expenses would continue to count, which they would not if you moved to a non-cobra plan.

 

[zinger1457]

Sounds like you're in good health so would agree option 4 is probably your best choice. Preventive care, even if it all comes out of your pocket is relatively cheap. Although covered by my ACA policy my annual preventive care doctors bill is around $150 and that includes the flu shot, basic lab test come to around $25, so preventive cost should be well under your $3K estimate. Any needed prescriptions could easily eat into that.

 

[Rianne]

Personally, #1 and #2 are the only options I would consider. The most out of pocket on our ACA plan is $15,000/yr. I find this comforting as both D/H and me have pre existing conditions and we sleep better knowing we have the protection. You must be in good health and are confident you'll remain that way.
My DMI went without health insurance for approx. 10 years before she turned 65. She was lucky. She had a stroke at 66 and went downhill needing lots of care.

 

[COcheesehead]

Have you looked into a high deductible combined with an HSA account? There are some nice advantages to those. I didn’t see that as an option in your list.

 

[geeky_grrl]

Short-term policies pre-existing conditions clauses scare me. I've read stories about people being denied cancer coverage when they didn't know about the cancer when they signed up for the plan because the insurance company decided it must have existed before the plan.

For #1 - are you realizing all of those capital gains? If stocks go up and you don't sell them you won't be increasing your MAGI. My plan is to stay with as tax efficient investments as possible to stay in the subsidy limit.

 

[pb4uski]

Well, Eddie, what do you think health insurance should cost? What did you pay as an employee?

$1,000/month unsubsidized for a HDHI plan isn't out of line with what I have seen.

I view health insurance a bit differently, it is more wealth insurance.... to protect your nestegg from an exhorbidant cost of cancer or some other serious illness... and also to gain access to negotiated rates for any health services that you do end up needing.

It can also be viewed as part of the cost of freedom from full-time work.

 

[Another Reader]

How much would you have to increase your hours? Is that option available to you?

 

[cathy63]

You really only have to make the decision for one year at a time. If the plan you choose for the first year is not to your liking, you can choose a different option later on. (With the exception of COBRA.)

The big risk is if you get diagnosed early in the year and you can no longer work and for some reason your chosen plan doesn't cover you sufficiently. You could have almost a full year's wait with very high treatment expenses before you can get onto an ACA plan that would cover you.

 

[explanade]

Health and wealth insurance.

 

[BeachOrCity]

I took a close look at short term insurance for this year and decided against it. If you really read the exclusions you quickly realize they are focused on not covering anything expensive.
You have another option. Get an “affordability exemption” based on the premium for bronze being over 8% of projected income. Then you can buy a catastrophic plan. The premiums for this are usually much cheaper (look at your states options for someone 25 years old to get an idea of the percent of premiums you will save)

 

[Calico]

Hi folks. I'm posting this in the hopes to get some feedback on my health insurance dilemma and my choice among the various options. <snip>

1. ACA plans are too expensive. I can't see myself writing a check for $1000 every month, just to cover a low-probability event. My expenses run around 25K per year without health insurance. I'm not going to raise my total expenses by 50%, just for a single item which, in all probability, I will not use. I can do it financially; I budgeted for it; I can afford it. I just don't want to do it. I find it a ridiculous expense. Plus ACA plans often have restricted provider networks. <snip>

2. COBRA is priced around the same as ACA plans ($1000/mo, maybe increasing). So again, I can't see writing a check for $1000+ every month, just to protect me against some low-probability event. Plus, it runs out in 18 months, and I'd be faced with the same problem. <snip>


4. Short-term plans seem like my best option. They allow you to have really high deductibles, like 10K or 12.5K, and to select a wide variety of parameters. The provider network is good. The annual cost can be around 2K per year, which is much more reasonable than the 12-14K/yr of the ACA plans. The government has lifted restrictions on the plans, so that they can extend a full year rather than the 3 months they were limited to previously. And you can renew the policy 3 times, so it can go 4 years. Although the plans are not ACA compliant, that doesn't matter anymore, because the tax penalty has been removed.

The downside is that I'll have to pay out-of-pocket for all my routine medical care -- doctor's visits, blood work, medication. That's okay. I like the idea of insurance covering catastrophic expenses, not every little thing (I think that's one reason why insurance is so expensive ... different subject). I don't really know how much paying out of pocket will cost, because I've never done that, but as a rough guess, I'll say 3K/yr. for 2 doctor visits, one pill, and two rounds of labs. <snip>


I'm interested in any feedback you might have. Does my analysis make sense? Does my selection of a short-term plan sound like the right choice, given my circumstances? Did I overlook something?

Cheers.

I just turned 63. With the exception of a couple of broken bones and one surgery, I was extremely healthy my entire life - until the minute I wasn't.

Last year a routine scan revealed a small, localized, early cancer. I am cancer free now, and expect to remain so. To get here I underwent surgery and chemo. I still w#rk, and I have what can only be described as a "gold-plated" insurance plan with my employer. The OOP and deductibles are fairly low, and even so, it cost me thousands of dollars out of pocket last year for ancillary expenses related to medical treatment. And that was with a gold-plated insurance plan. I can only imagine what it would have cost me with a "skinny" plan. I cannot tell you how many times I gave thanks last year for my insurance plan.

When you have always been healthy, it is easy to think you always will be, trust me! You may get lucky and not experience any health issues in the next few years, and I certainly wish that for you. But I can tell you that $12,000 (a year's worth of premiums) can be exceeded by less than one day's chemo treatment.

If you do go with a short-term plan that is not ACA compliant, I recommend you carefully research the coverage you are getting, to see exactly what is excluded.

Best of luck with whatever you decide.

 

[EastWest Gal]

Some questions for the OP to consider:

If you are part time, can you set yourself up as an independent contractor with your company? That will allow you to subtract the cost of health insurance premiums from your income, which helps some. Of course, that is somewhat offset by self-employment tax.

Or,

You can increase your hours just enough to qualify for benefits, if your company allows you to.

Or

You can retire completely, if you can, which will limit your income to investment income, possibly reducing your income to below that $48K.

I feel your pain--your quandary sent be back to work for four OMYs. But I'm now willing to pay the premiums. As long as I've budgeted for it, there isn't much I can do.

I too recommend #1 or #2. I would strongly recommend against going uninsured--without insurance, one significant illness could leave you in dire straits financially. The short term insurance option is problematic-check out the article below. Many states have put significant restrictions on short term plans, restricting them to 3-6 months with no renewal. And your state laws can change if the legislature decides to make a change. I found information regarding this in a rather thorough article:

https://www.healthinsurance.org/so-long-to-limits-on-short-term-plans/

Perhaps you've seen this article.

BTW, I agree with you in every way. And working in health care, I see what the system is doing, more and more, to illegitimately jack up what they charge consumers. And since insurance companies just increase the premiums to cover this nonsense, they do not go to bat for the consumer. I feel your pain. It is mine also.

I like the post about viewing health insurance as wealth insurance. It makes sense, an easier way of looking at it.

 

[Sojourner]

I'm in a similar boat as OP, except that I'm seven years younger. I weighed the various options listed in the first post, except for #2 (not eligible), #3 (philosophical issues), and #5 (far too risky). In the end, I opted for a bronze-level, HSA eligible ACA plan. Like OP, I make too much in dividends and CG distributions to qualify for subsidies, so I have to pay the full retail price of my premiums. In my case, it worked out to $450 per month, and I weighed this against various short term policies that were about half as expensive. I decided to go with the ACA plan due to the restrictiveness and exclusions of the ST policies. I probably would have come to a different decision if the ACA premiums in my case had been $1,000 instead of $450.

 

[Teacher Terry]

I wouldn’t gamble. I would choose 1 or 2.

 

[DanteAlighieri]

I just turned 63. With the exception of a couple of broken bones and one surgery, I was extremely healthy my entire life - until the minute I wasn't.

[SNIP]

If you do go with a short-term plan that is not ACA compliant, I recommend you carefully research the coverage you are getting, to see exactly what is excluded.

Best of luck with whatever you decide.

What Calico said, x10

At 57, you should not think of a major health event as unlikely - I am 55 and consider myself to be very fit, yet managed to have a major health issue 10 years ago that cost ~$20k even with a good large corp insurance plan. Trust me, $12-25k per year is chump change if you get cancer or get hit by a car while exercising (two common examples from my friend cohort.)

Is it expensive in the US to have ACA-compliant health insurance? Yup, it sure is! But not nearly as expensive as NOT having it when you need it...

 

[Ian S]

I would seriously look into MAGI reduction to take advantage of ACA subsidies. There's no free lunch: those short term plan premiums are low for a reason. If you wind up with a catastrophic health issue, you can be sure they will do their best to find some way to limit what they pay out.

 

[GTFan]

Restructuring a portfolio to reduce div/cap gain income can be way more expensive than losing the subsidies. If you have $100s of K in unrealized LT gains it takes years to get that moved around while avoiding taxes. Even more so for OP if he's already filling the free tax bucket with divs and cap gains every year.

 

[W2R]

[…]Or,
You can increase your hours just enough to qualify for benefits, if your company allows you to.

+1

I think this is probably the best option and you need to find out whether it is possible.

If not, it sounds like the wisest choice may be ACA insurance (Obamacare). It's not a great choice but at least you have that choice. I didn't, since it didn't exist at that time, so I had to keep working full time longer than I wanted to. Oh well, it made my choices simpler.

Health insurance is expensive, but going without it is a terrible idea. As others have mentioned, medical expenses have skyrocketed so much that self insuring is impossible even for the very rich if you have a catastrophic health situation, AFAIK.

 

[Scuba]

Thanks for this thread. I was unaware of the short-term insurance option, but it sounds problematic. I don’t want to risk my health so we will keep paying for our costly PPO Plan, which just increased 25% in cost.

 

[Bir48die]

Hey, I don't like $865 per month with $3,500 deductible as it by far my biggest bill. However things happen and it's called insurance for a reason. I'm just trying to survive until Medicare kicks in.

 

[utrecht]

I use Christian Healthcare Ministries and will never go back to traditional insurance. At least not until Im eligible for Medicare.


Sure, they technically don't have to pay, but they've been in business over 30 years and I couldnt find one single incident some posted anywhere online where they didnt pay. On the other hand, its easy to find 1000s of cases where traditional insurance companies wont pay, deny claims, deny a treatment that your doctor says is necessary..ect.


First year of retirement our premium was $680/month
Second year it went to $890
Third year it was going to be $1150 and I said enough is enough and switched.


Now we pay $450/month. Those ACA plans had a $7000 deductible. There's no deductible with CHM. Any incident that costs go over $500, they pay 100%.


3 years under ACA wouldve cost me $32,640. We have a total of $3200 in medical costs during that time. None of which the ACA plans wouldve covered so that puts us at $35840 over 3 yrs.


Those same 3 years would've cost $16200 under CHM. They have reimbursed the entire $3200 so no additional cost there.



I only used CHM the 3rd year (now starting the 4th) but if I had used it all 3 years of retirement I wouldve saved $19640 so far. Its a no brainer for us.

 

[zinger1457]

I use Christian Healthcare Ministries and will never go back to traditional insurance. At least not until Im eligible for Medicare.

It's helpful to get feedback by someone who actually has experience using it. Thanks!

 

[Rianne]

I use Christian Healthcare Ministries and will never go back to traditional insurance. At least not until Im eligible for Medicare.


Sure, they technically don't have to pay, but they've been in business over 30 years and I couldnt find one single incident some posted anywhere online where they didnt pay. On the other hand, its easy to find 1000s of cases where traditional insurance companies wont pay, deny claims, deny a treatment that your doctor says is necessary..ect.


First year of retirement our premium was $680/month
Second year it went to $890
Third year it was going to be $1150 and I said enough is enough and switched.


Now we pay $450/month. Those ACA plans had a $7000 deductible. There's no deductible with CHM. Any incident that costs go over $500, they pay 100%.


3 years under ACA wouldve cost me $32,640. We have a total of $3200 in medical costs during that time. None of which the ACA plans wouldve covered so that puts us at $35840 over 3 yrs.


Those same 3 years would've cost $16200 under CHM. They have reimbursed the entire $3200 so no additional cost there.



I only used CHM the 3rd year (now starting the 4th) but if I had used it all 3 years of retirement I wouldve saved $19640 so far. Its a no brainer for us.

That sounds like an excellent option, but 2 questions:
1. How does CHM verify you're a Christian?
2. The "didn't pay" reviews, did any include long term cancer treatments or major heart procedures? Based on a friend of mine who chose chemo to treat his cancer, one treatment was close to $25K. He estimated (although HI paid for large portion) the entire treatment over many months was in the neighborhood of $450K (chemo alone).

 

[BeachOrCity]

The health sharing ministry is basically an exemption that allows fairly healthy people without preexisting conditions to cleave themselves out into their own risk pool.

As long as one is reasonably healthy these Healthsharing ministry plans work well. The real risk is that you will have a major event long before open enrollment (Think cancer or bad accident in March for example).
The insurance companies by law have to spend 80% on actual payouts for medical care. Their rates with providers are definitely lower than you can negotiate yourself. So people need to ask themselves where the rest of the 2-3X difference in premiums comes from? Basically it is two things 1). Having healthier enrollees and 2). Not having to pay large claims for the enrollees they do have.

For those people in a health sharing ministry who get a major illness or have a health event how many at the next open enrollment would stay with the ministry vs paying the ACA premiums? Not many I would guess. And the healthshare ministry will be happy to see you go

Alas, everyone has to look out for their own economic need to some extent and balance that with risk. For some who are healthy, the ministries offer a huge economic savings with some risk, but not huge risks.