Budget for health care costs?

[Scuba]

DH and I plan to retire when he is 57, I am 56. We have a high deductible ($5,900 each) plan that costs us about $675/month for now. Neither of us has any chronic conditions, both have good genetics and good health stats. We are active and not too overweight.

What do you recommend budgeting for healthcare between age 58-65? What about after Medicare? This is the single biggest variable in our FIRE plan. So hard to predict. Any advice is appreciated.


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[Trawler]

DW and I have a HSA compatible high deductible plan so we budget $7550 the HSA contribution plus our insurance premium . Then we use a 8% per year inflation factor. Our health has been pretty good but our dental costs have been higher than we thought. If we did not have HSA Plan I would budget and put away at least one years worth of deductible in savings plus premium plus average year of medical, dental and eye care.

 

[Dash man]

We don't break out health care in our budget. Our spending plan is currently $15K/month on average and includes all expenses except taxes. If we spend more on health care we spend less on something else. It's worked well for us and we reevaluate our spending annually. We use a separate account for taxes and capital expenses for home improvements and major repairs, also evaluated annually.


Enjoying life!

 

[ExFlyBoy5]

We don't break out health care in our budget. Our spending plan is currently $15K/month on average and includes all expenses except taxes. If we spend more on health care we spend less on something else. It's worked well for us and we reevaluate our spending annually. We use a separate account for taxes and capital expenses for home improvements and major repairs, also evaluated annually.


Enjoying life!

15,000 or 1,500 per month? There is a *slight* difference.

Sent via mobile device. Please excuse any grammatical errors.

 

[Dash man]

$15K=$15,000/month...$180,000/year


Enjoying life!

 

[MichaelB]

There are a couple of sources to estimate health care costs. The KFF annual survey of employer sponsored healthcare shows that average yearly family premiums for 2015 were $17.5K (source here). The Milliman Index (here) shows that the average total cost for healthcare for a family of 4 was $26K.

Fidelity just released it's annual estimate of total healthcare expenses during retirement. Business Wire reports (here) the new projected cost is $260K.

A 65-year-old couple retiring in 2016 will need an estimated $260,0001 to cover health care costs in retirement, according to Fidelity’s Retiree Health Care Cost Estimate. This is a six percent increase over last year’s estimate of $245,000 and the highest estimate since calculations began in 2002.

To estimate healthcare costs, including premiums, two critical questions are 1) do you expect to receive subsidies, and 2) do you expect the subsidies to apply for the entire planning period.

 

[RunningBum]

For both budgeting and to pick a policy type, I estimated over 10 years I'd have about half the years with $1000 or less actual claims, 3 with gradually more but under the deductible, and 2 above the deductible. So far in 5 years that's been pretty accurate with 2 years of practically nothing, 1 year over the deductible, 1 about half, and so far about 1/4 this year.


Your experiences may or may not be mine, and with two of you the chances of a zero year are probably a lot lower.


I also max out my HSA but I don't really consider that a budget item, but rather a different place to keep money that I can tap as needed. So far I've been paying expenses out of pocket and letting the HSA account grow tax free. I keep records and receipts so I can claim expenses and withdraw from my HSA in a later year.

 

[Fermion]

$15K=$15,000/month...$180,000/year


Enjoying life!

No doubt! Pass the caviar please!

 

[Dash man]

No doubt! Pass the caviar please!

No caviar...that kind of spending isn't what got us to this place in our lives. Probably one third of our spending goes to help family or charities.


Enjoying life!

 

[Fermion]

No caviar...that kind of spending isn't what got us to this place in our lives. Probably one third of our spending goes to help family or charities.


Enjoying life!

I have no problem with your spending, it just is at a level we could barely have sustained after accounting for taxes when we were making $250k+ per year. I think it is great, and caviar isn't really that expensive.

 

[Dash man]

I have no problem with your spending, it just is at a level we could barely have sustained after accounting for taxes when we were making $250k+ per year. I think it is great, and caviar isn't really that expensive.

We had several years where we paid seven figures in taxes thanks to performance of stock options. DW's company made a lot of millionaires over the years.


Enjoying life!

 

[razztazz]

No doubt! Pass the caviar please!

Would you like some Gray Poupon on that?

 

[Danmar]

We budget $1,500 per month but are usually under. We are Canadian so most of our expenses are paid by gov't. We need to cover dental, elective procedures, or items not otherwise covered by the gov't health plan ( like our comprehensive private annual physicals).

 

[serie1926]

There was a separate thread last week that has been closed.

http://www.early-retirement.org/for...d-pre-medicare-how-much-do-you-pay-82961.html

I've been discussing the following option with a friend and it sounds so far to be an interesting option.

Brother's Keeper

 

[Bamaman]

I consider myself fortunate to have made it to Medicare age and have a supplement purchased through my ex-employer at favorable rates. When I was paying just over $400 monthly from age 58 to 64, a Retiree Health Saving Account had enough money to pay my premiums.

When it comes to actually purchasing healthcare, many on this website control their incomes to allow them coverage under the ACA's subsidies. But with politics so much a part of the healthcare business, you cannot depend on the ACA to be with us permanently. And our state's virtual monopoly is with Blue Cross Blue Shield has already announced 40% increases in ACA subsidized healthcare programs.

In other words, long term budgeting for healthcare may just be about impossible, It remains important to have a lifestyle that's a little more conservative than spending all of your money over a projected life span.

 

[ivinsfan]

A friend at church was talking about the Brother's Keeper option.

I'm troubled that it looks as if it could be a big ponzi scheme.

I wouldn't mind a thread devoted to this subject if anyone is interested in having the information all in the same place the closed isn't very useful. Anyone interested in it?

 

[Alan]

We retired in January 2010 at ages 55 & 54, and in Fidelity's RIP I had $15k/year budgeted for healthcare, including dental.

We have been very fortunate so far as our out of pocket expenses have been well below budget. First year of retirement the insurance premiums were $960 for the 2 of us but those have been increasing steadily and rapidly and for 2016 the premiums are $8,364/year.

2010 $3,676
2011 $4,007
2012 $3,793
2013 $7,790
2014 $7,177
2015 $10,909
2016 YTD $12,280 (dental at $3,835 )