Hello from the sucker state! Looking for some kind comments; am I in the ballpark?

[Markola]

Not true anymore after 2005.

Sorry, but you are incorrect. https://www.investopedia.com/articles/investing/092215/how-protect-your-retirement-lawsuits.asp

 

[Aerides]

When I go to the doctor you see the rack rate and the negotiated rate because you have health insurance. It might be $250 full price, but the plan pays $80. This is one big reason to have it. They will rake you over the coals with everything full price without health insurance.

Exactly this. Perfect example: I currently have a torn meniscus - a simple shower slip, didn't even fall, but the act of "catching" myself involved twisting my leg in the perfect combo of saving me and sacrificing the meniscus.

Anyway. A doc visit, xray, and cortizone shot was billed to my insurance at $900 - the retail rate. That's what I'd pay with no insurance. Since I haven't met deductible yet, I'm on the hook and the BCBS doesn't actually pay anything, but it gets reduced to the insurance-agreed amount which is reduced to $200.

 

[MRG]

I didn't have any health issues at age 50. After my upper 50s it's not the same. Trust me you don't want the anxiety that comes from needing a procedure done and not having any idea of what it's going to cost. I lived that last year, its no fun. The out of state provider couldn't even give a guess. They couldn't tell me if it was a 5k or 50k type of bill. Understand ACA and make it part of the plan.

 

[The Cosmic Avenger]

I don't have any direct experience, but I am very recently out of work and I'm musing and running projections about not going back, so I've been looking into SEPP/72t withdrawals. Since you already have 3 full years of expenses in cash, I would consider SEPP withdrawals for the very basic needs (housing, utilities, basic sustenance, health insurance), and use the $120K to pay for any high-priority wants. That way, you are not withdrawing more than you need, and the rest can continue to grow.

And yes, I include health insurance in that. Sure, you probably won't need it, but you probably also will never need a seat belt. But the consequences if you DO need them and don't have them are pretty steep for both. However, if you really want to consider going commando, I'd advise you to run the numbers on ACA subsidies and costs in your state on your projected budget, then do some research on medical costs for the uninsured and consider what you would do if you faced a $500K+ surgery or stroke or heart attack care and rehab bill. If you can figure out a way to live if your nest egg is cut in half, and you're comfortable with that risk, then go for it, but really do some research first so you're sure you are OK with those slim but not negligible odds.

 

[CRLLS]

My outlook so far on that having paid (from my calculations) about $90-100K over the last 35 years into health insurance and having used a grand total of $0 of any benefit thereof.

Even if the insurance didn't actually "pay out" anything, you probably got the benefit of reduced, negotiated rates. My recent surgery was billed at $72K. The agreed rate that the insurance negotiated was just slightly over $4K. Disclaimer, this was on Medicare, but private insurance works the same, just different agreed rates.

No way would I go without medical insurance.

 

[Retired Expat]

Hi! thanks for the comments! I didn't expect a deluge!

@many
I kind of expected the thought of 'self insuring' for general healthcare would raise some comments. Was looking for see if there were any reasoned arguments or studies that could be pointed to for relative risks. My outlook so far on that having paid (from my calculations) about $90-100K over the last 35 years into health insurance and having used a grand total of $0 of any benefit thereof. If I had instead put that into the market would have accrued much more to be able to afford any major issue. I have had a couple close fiends die of cancer so have some idea on the toll that it would take. That being said, (in my opinion only) I would be hard pressed to continue such treatments; more of a quality of life than a length of life debate. In the past, I've had fractures, cuts, and other 'minor' items which I just took care of myself. So the thought process was mainly to see about handling the range of issues between 'small' like above; and 'extreme'. It's something that I know is a contrarian point of view so am welcoming your comments here to perhaps level out or modify my perspective.


@many:
As for paying the 10% penalty. I have done some basic calculations comparing the differences and found that my own calculations seem to align with what was written by the madfientist here. The differences between paying the penalty, sepp/72t, and roth (assuming tax brackets) are small. I've looked into sepp/72t and it is /very/ unforgiving for what appears to be a very little delta of just paying the penalty and doing what I want. Roth conversions I have also looked at but currently (while working) would be more expensive than just paying the penalties due to my current income. Does anyone here have any direct experience?


@latexman,target2019,Winemaker. yes, the handle is related to the roman stoic philosopher and statesman. As for the state; Winemaker has it correct that it's Illinois (older reference).


@Dtail- Thanks for that catch. I must have been thinking about RMD age. As for bonds/equity mix, that is something that I have been thinking about. With the potential longer horizon and looking at the study at EarlyRetirementNow here. I was trying to keep close to a 3% WR, but have enough in bonds to last 7-10 years. That looks like a range between 20 and 30% I was leaning it more towards the lower figure (20%) only really due to the current bond returns being really bad and likely to stay that way for several years (at least that's my current belief).


@USGrant1962: Yes the $28K bump was to handle any needed 'lumpy' costs that are expected such as HVAC; Roof; Car; major appliances; etc. And the rest would go into an after-tax S&P500 index fund. The point there is that the after-tax account would step up in basis at my death so would be more valuable for heirs than the pre-tax. I didn't think of the house as a source of funds for LTC, but I guess that can make some sense. It really I guess comes down to the disposition of the house if I want to bequeath it to someone or do something like a reverse mortgage. But that's an interesting thought!


Thanks for all the comments thus far. It's a major change of thought from accumulating for the last 3 decades+ and then turning around and seeing the steep downward drop-off of decumulation ahead. It is kind of dizzying coming to grips with everything.

Having self insured there for a bit when I first retired I can say it does add to one’s stress levels. But there is insurance and there is insurance. Doctor visits are cheap where I live, most prescriptions in the US are available over the counter and for equal or less than I paid as a co-pay In the US. But GoodRX is getting me equivalent prices on many items.

So a limited major medical policy for hospitalization should protect you from most catastrophic expenses and I would highly recommend one. If you don’t need Prescription coverage, or see many doctors then don’t take that coverage but you can’t know when accidents will strike or sudden illness hits so plan accordingly.

 

[Rianne]

Exactly this. Perfect example: I currently have a torn meniscus - a simple shower slip, didn't even fall, but the act of "catching" myself involved twisting my leg in the perfect combo of saving me and sacrificing the meniscus.

Anyway. A doc visit, xray, and cortizone shot was billed to my insurance at $900 - the retail rate. That's what I'd pay with no insurance. Since I haven't met deductible yet, I'm on the hook and the BCBS doesn't actually pay anything, but it gets reduced to the insurance-agreed amount which is reduced to $200.

Exactly. Here's our example:

Silver ACA plan: $500/month (DH and myself) + Co pays and $4000 deductible per person, $8000 family deductible

Bronze ACA-HSA plan: $7.66/month (DH and myself). All charges go to $6000 per person deductible. After deductible 100% coverage.

In the years we took the silver plan our spend for that years HC was $5000 + co pays + services not covered that went to deductible. This is without HSA benefits. All said HC costs were ~$5500-$6000 without applying to the deductible.

The last 2 years on Bronze plan, HC costs (for both of us) $2500-$3000 range for the year. We contribute the max to our HSA. This is because the insurance discount covers so much! Everyone should look into how their insurance discounts procedures, meds, Dr visits etc Honestly, I was astonished.

Moral of our story: Even if something catastrophic happened to one of us, our max out of pocket is $6000. The $8000 we contribute to HSA comes off our MAGI to keep us under the max income for ACA. And we can use that HSA $$ for medicare expenses when we get to 65. The HSA savings acct is there in case of a catastrophe. Bronze is a win/win in my opinion.

 

[sengsational]

Keep your income under 4X poverty and get a subsidized ACA plan, self-insure is crazy talk.

I'll be the lone dissenter. You're single, relatively young, and have a good health track record. Presuming you can't get under the 400%FPL without cramping your style in a severe way, AND you're willing to travel to another country for major medical treatment, then your plan to self insure might pay off. Other posters brought up huge cancer treatment costs. But say you banked 50K over the next few years that would have otherwise would have gone to premiums. Now you're sick and the doc says you have cancer. You fly to somewhere, get treated like a king (unlike in the US) and pay out of pocket. AND, you continue that for an average of 6 months, because after that, you'd have gone through a November, and had a chance to buy a HI policy here in the US. If I were single, I'm not sure I'd be struggling to stay under 400%FPL, and instead, self insure. Like you, I've spent a whole hell of a lot of money on health insurance and have used as close to zero services as one can get. While I like that I didn't pay the "rack rate", it's an awfully expensive way to get a discount. Especially when better service and better prices than those negotiated rates are available if you cross out of the US.

 

[ivinsfan]

If you need to drop medical insurance to pay your bills you aren't ready to retire. To me it's like saying I want to quit working and I have some money but would need to live on the streets to get by.

There is no "self-insuring" for HC, it doesn't work that way....it's not having HC.

You need to keep working...as far as you "coming to grips" with everything, you aren't even close if you are considering not having HI.

 

[ivinsfan]

I'll be the lone dissenter. You're single, relatively young, and have a good health track record. Presuming you can't get under the 400%FPL without cramping your style in a severe way, AND you're willing to travel to another country for major medical treatment, then your plan to self insure might pay off. Other posters brought up huge cancer treatment costs. But say you banked 50K over the next few years that would have otherwise would have gone to premiums. Now you're sick and the doc says you have cancer. You fly to somewhere, get treated like a king (unlike in the US) and pay out of pocket. AND, you continue that for an average of 6 months, because after that, you'd have gone through a November, and had a chance to buy a HI policy here in the US. If I were single, I'm not sure I'd be struggling to stay under 400%FPL, and instead, self insure. Like you, I've spent a whole hell of a lot of money on health insurance and have used as close to zero services as one can get. While I like that I didn't pay the "rack rate", it's an awfully expensive way to get a discount. Especially when better service and better prices than those negotiated rates are available if you cross out of the US.

I think you will be the lone dissenter, how do you fly somewhere after a serious auto accident Also be sure to caution yourself to have it not happen in January or get a bad case of flu or COVID and end up in the ICU..50K would last you about one day. The flaw in your story is if something happens the nest egg is lower and then you have to continue to buy HI to cover the problem it's a double whammy.

OP doesn't have enough money if they need to drop HI to RE

 

[Time2]

I hope you get the point that going without HI is a real risk to the value of your portfolio, while paying for HI is just part of your 4%.
I went for 10 years with a $10k deductible policy, but it saved me enough, (vs a $2.5k deductible) to put $10k in my HSA in two years, I also maxed in out every year after.

 

[sengsational]

The sudden onset, very expensive medical scenario is a problem, but two counterpoints. First, I figured the auto accident would be covered by automobile medical coverage. You might need to add an umbrella, but that's cheap. Second, we're dealing with a stochastic thing here; what are the chances you have a medical issue that arises so quickly as to prevent travel? I'd say before Covid-19, it was very low. Nowadays, you can't just up and go to another country for treatment, so I guess I'll relent and agree... just stay under the 400% FPL.

 

[DD4L]

As the social media types are prone to saying...I’m just gonna leave this here:-

https://www.seattletimes.com/seattl...omes-with-a-1-1-million-dollar-hospital-bill/

 

[Scratchy]

The sudden onset, very expensive medical scenario is a problem, but two counterpoints. First, I figured the auto accident would be covered by automobile medical coverage. You might need to add an umbrella, but that's cheap. Second, we're dealing with a stochastic thing here; what are the chances you have a medical issue that arises so quickly as to prevent travel? I'd say before Covid-19, it was very low. Nowadays, you can't just up and go to another country for treatment, so I guess I'll relent and agree... just stay under the 400% FPL.

Any emergency department is regularly filled with such medical issues, any of which could strike at any time without warning and could require immediate expensive treatment/diagnostic workup and hospitalization. I'll list some that are not uncommon:

Pneumonia/influenza requiring hospitalization
Acute appendicitis
Diverticulitis
Sepsis
Heart attack
Stroke
Pancreatitis
Bowel obstruction
Pulmonary embolism
Renal colic due to obstructing stone
Meningitis
Subarachnoid hemorrhage
Pyelonephritis
Arrhythmia
Septic arthritis
Severe allergic reaction

If there's anyone reading this who does not have a friend or family member who has required emergency treatment for one of these conditions, I'd be very surprised.

 

[Markola]

As the social media types are prone to saying...I’m just gonna leave this here:-

https://www.seattletimes.com/seattl...omes-with-a-1-1-million-dollar-hospital-bill/

Perfect example of someone who gets hit with something unexpected , in this case Covid 19, and there’s no way to fly to another country for treatment. $1.1 million medical bill. Fortunately, this patient is smart. He has insurance.

 

[Aerides]

so I guess I'll relent and agree... just stay under the 400% FPL.

And it's not always an A/B: You just take a bigger income one year and forgo subsidies for that year, then smaller and stay on them the next 3-4 years, rinse and repeat.

Medical tourism or riding self-insured at 50 is risky. It's good for an event, but not a condition - you're one surprise iffy blood test from "let's see about 3 more docs and 12 more tests" kinda stuff. Even if it ends up being nbd.

Either way it's a long road from 50-65. Personally I'm ok with risks in my portfolio, but not with my health insurance, so we just planned for a decent amount in our expected annual expenses to plan the amount we'd need to retire comfortably.

 

[Rambler]

Seneca, I don’t know if you are male or female. I’m male. Ended up with prostate cancer 3 years ago, at 55. My insurance would cover open surgery, but not the current gold standard Da Vinci surgery if I had to go out of system to get it. My cancer was on the aggressive side, and my urologist suggested it needed to be excised ASAP. Second, and third opinions concurred. Radiotherapy was not an option, and my only option was to wait nearly a year in line for the only DaVinci surgeon in network to do it (not really an option with aggressive cancer) or open surgery. So, I found my own surgeon, a world renowned urologist and DaVinci surgeon. I had to fly across the country to do it, and it cost me over $60k including convalescing in a hotel for two weeks while I still had the catheter. I was blessed to have the assets to be able to do that. But, if a serious issue like this...or a heart attack, or some kind of accident at home we’re to happen, you could easily be set back much more than that. My dad had prostate cancer, at 60. His surgery was open surgery, and they almost lost him on the operating table. He spent 3 days in ICU and another 10 days in a regular ward. His insurance paid $125k for that...24 years ago. Self insuring is not the way to go. Please don’t do it.

 

[Sunset]

Illinois is regarded as the sucker state.

Does everybody know I live here

 

[triangle]

Hi! thanks for the comments! I didn't expect a deluge!

@many
I kind of expected the thought of 'self insuring' for general healthcare would raise some comments. Was looking for see if there were any reasoned arguments or studies that could be pointed to for relative risks. My outlook so far on that having paid (from my calculations) about $90-100K over the last 35 years into health insurance and having used a grand total of $0 of any benefit thereof. If I had instead put that into the market would have accrued much more to be able to afford any major issue. I have had a couple close fiends die of cancer so have some idea on the toll that it would take. That being said, (in my opinion only) I would be hard pressed to continue such treatments; more of a quality of life than a length of life debate. In the past, I've had fractures, cuts, and other 'minor' items which I just took care of myself. So the thought process was mainly to see about handling the range of issues between 'small' like above; and 'extreme'. It's something that I know is a contrarian point of view so am welcoming your comments here to perhaps level out or modify my perspective.

Healthcare and health insurance is an emotional and political issue, so I don't think there is a lot of room for reasoned debate. You could sign up for an ACA plan, one of the non-compliant services, or take your chances. If you take your chances you could sign up for ACA later.

It would be easier to self-insure if there was any transparent pricing of procedures available, but the tiered pricing system of in-plan VS out-of-plan coupled with after-the-fact charging make it very difficult to plan or predict anything. If your income if variable, ACA cost premium planning is difficult.

Every year that famous Eastwood movie line comes to my mind....."You've got to ask yourself one question. Do I feel lucky? Well, do ya, punk?"

 

[DD4L]

Perfect example of someone who gets hit with something unexpected , in this case Covid 19, and there’s no way to fly to another country for treatment. $1.1 million medical bill. Fortunately, this patient is smart. He has insurance.

I think it was the ICU at $9736 per day that blew me away the most, it wasn’t even the ventilator itself that was the most expensive. [emoji15]

Then to be elated to have survived followed by survivor guilt when you see the total bill.

Then obviously the follow-on survivor guilt from that survivor guilt after the dust settles. The bit where I spend eternity trying to explain to the DW that MMM and a whole host of other FIRE bloggers said we’d be good...as she attempts to relocate the 25p special deal ALDI tulips into my derrière...*[emoji51]

 

[pb4uski]

OP, it's not health insurance, it's wealth insurance.... and access to health care services at generally favorable negotiated rates. Even if it costs you $1k a month for 15 years, that's only $180k and well under the potential cost if you were to have a serious accident or illness... plus you get annual physicals, etc. IMO it would be foolish to forgo wealth insurance.

It is so easy to avoid the 10% penalty with a 72T/SEPP that that is a no-brainer.

 

[pb4uski]

... My outlook so far on that having paid (from my calculations) about $90-100K over the last 35 years into health insurance and having used a grand total of $0 of any benefit thereof. If I had instead put that into the market would have accrued much more to be able to afford any major issue. ...

Many people could say the same about home insurance or car insurance... I would self-insure for home or car insurance before I would self-insure for health insurance... the likelihood of a huge claim are a lot less.

 

[ivinsfan]

Healthcare and health insurance is an emotional and political issue, so I don't think there is a lot of room for reasoned debate. You could sign up for an ACA plan, one of the non-compliant services, or take your chances. If you take your chances you could sign up for ACA later.

It would be easier to self-insure if there was any transparent pricing of procedures available, but the tiered pricing system of in-plan VS out-of-plan coupled with after-the-fact charging make it very difficult to plan or predict anything. If your income if variable, ACA cost premium planning is difficult.

Every year that famous Eastwood movie line comes to my mind....."You've got to ask yourself one question. Do I feel lucky? Well, do ya, punk?"

Emotional and political, I dunno if you want a secure retirement at 50 it's a financial issue, you could be one medical event away from destitution and looking for the proverbial WalMart greeters job.