The Hidden Cost of Retiring Early

[nun]

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Originally Posted by marko We figured out (roughly) that between commute, lunches, clothes, "soft expense"(paying someone for minor repairs you could do yourself...if you were home), that DW and I saved about $10K each when we RE'd. Makes HI costs a wash.

I was an MA state worker and as I retired before 55 I had the option to continue my state health insurance at the full premium. My monthly costs went from $100 to $450, but that is for excellent coverage, I pay the first $250 of tests and have no other deductible if I stay in network. I'm 80% covered out of network and have an out of pocket annual max of $5k.

My monthly premium should go back to $100 when I get to 55, but Gov. Patrick is proposing new legislation that will remove my retiree healthcare. Luckily it looks like it won't pass the MA House or Senate. So many people in the military, state workers, and private employees are having retirement benefit contracts broken by employers.

Should the type of work those people do affect whether employers are required to fulfill employment and retiree benefit contracts? Why should we be outraged at VA benefit cuts, but not a reductions to the contractual benefits of teachers or IBM retiree. Retroactive changing of any contract by one party seems un-American to me.

[photoguy]

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Originally Posted by nun Should the type of work those people do affect whether employers are required to fulfill employment and retiree benefit contracts? Why should we be outraged at VA benefit cuts, but not a reductions to the contractual benefits of teachers or IBM retiree. Retroactive changing of any contract by one party seems un-American to me.

As a side question, are the benefits explicitly spelled-out in your employment contract? All of the places I've worked had some kind of retirement benefits but I don't recall this being stated directly in my contract (only salary, equity, bonus eligibility). Usually my contract would cover things like prior IP, solicitation of employees, etc. I would also receive HR documents (at the time of job offer) stating available benefits that would include healthcare, retirement plans but this document was clearly not part of the contract (I would assume these benefits to be expected but not guaranteed).

In general the contract also had explicit penalties for breaking various terms.

However, I've never worked at a government or union employer -- I can see in these cases the individual contract might be constrained by other legal agreements.

[nun]

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Originally Posted by photoguy As a side question, are the benefits explicitly spelled-out in your employment contract? All of the places I've worked had some kind of retirement benefits but I don't recall this being stated directly in my contract (only salary, equity, bonus eligibility). Usually my contract would cover things like prior IP, solicitation of employees, etc. I would also receive HR documents (at the time of job offer) stating available benefits that would include healthcare, retirement plans but this document was clearly not part of the contract (I would assume these benefits to be expected but not guaranteed). In general the contract also had explicit penalties for breaking various terms. However, I've never worked at a government or union employer -- I can see in these cases the individual contract might be constrained by other legal agreements.

My retirement benefits are dictated by state legislation. When I was hired, and currently, the legislation requires the state to provide health insurance to retirees at the same premium as current employees. Of course the law can be rewritten......the question is should it be for current employees. I can see an argument for changing the rules for new employees...or recruits...but retrospective changing of retiree benefits is hard to justify in my mind. This is where I think anyone who wants to protect VA benefits for current military should fight equally hard for the pensions and healthcare of state workers and Megacorp retirees.

[travelover]

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Originally Posted by nun My retirement benefits are dictated by state legislation. ........

Public pensions are guaranteed by the Michigan state constitution. Tell that to the City of Detroit pensioners that lost their COLA, lost their health care and will soon take a cut in their pensions.

[Chuckanut]

My view has been that if the state can retroactively change its contract with its former employees, it should be able to also do that for other contracts, for example, road repair.

Dear Acme Road Repair Company, 10 years ago we paid you 5 million dollars to fix the state highway near Plainville. We now realize we paid you to much. We really could not afford to pay that amount. Please refund us one million dollars by the end of the year, or we will be forced to take legal action to seize your property and sell it. Yours truly, the State of Confusion.

Now that will never happen. What we really need is for retirement payments to be made to an individual's personally owned retirement account, controlled completely by the individual, and hopefully tax deferred or tax free. Otherwise, retirment money will always tempt politicians to be irresponsible in some way.

[Mulligan]

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Originally Posted by aja8888 Mulligan, as an example: Last year I applied for VA medical benefis since I am a Vietnam era veteran who was rated as combat status. I served four years. I have an Honorable Discharge. Guess what? I didn't qualify based on the income amount and I have a legitimate medical claim, even though it was a long time ago. If I was doused with Agent Orange, I would have been considered, I suppose. Actually, just using our SS income put me out. My BIL, who served the same time I did, but is jobless, ended up with medical benefits, free prescriptions, and a pair of $5,000 hearing aids. Good for him, he needs all they can give him for help. I'm not crying sour grapes here, just showing how the system is unfair to veterans in some cases. I really don't care that much about not qualifying for VA benefits as I can handle my own costs and have Medicare and other insurance.

I'm with you, Aja. I would have never guessed means testing was used. Back to your Bum comment concerning access to healthcare. I kind of feel bad that I think this way, and a national healthcare system would eliminate my present thinking on this, but....If your truly a bum, not working and don't feel the need to be responsible to have insurance, I don't have a problem with a hospital throwing them out on their butt. As an elderly alcoholic man who used to buy me my beer before I was 21 would always say..."You live that life, you pay that price...And I'm paying that price".


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[photoguy]

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Originally Posted by nun My retirement benefits are dictated by state legislation. When I was hired, and currently, the legislation requires the state to provide health insurance to retirees at the same premium as current employees. Of course the law can be rewritten......the question is should it be for current employees. I can see an argument for changing the rules for new employees...or recruits...but retrospective changing of retiree benefits is hard to justify in my mind.

Thanks for clarifying. I think ideally the rules shouldn't change but it seems like some pension systems are so poorly funded that it is like a kobayashi maru situation.

[nun]

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Originally Posted by Mulligan Back to your Bum comment concerning access to healthcare. I kind of feel bad that I think this way, and a national healthcare system would eliminate my present thinking on this, but....If your truly a bum, not working and don't feel the need to be responsible to have insurance, I don't have a problem with a hospital throwing them out on their butt. As an elderly alcoholic man who used to buy me my beer before I was 21 would always say..."You live that life, you pay that price...And I'm paying that price".

I can't agree with this approach and belief. It goes against the Hypocratic oath and the way I believe we should treat our fellow man.

[daylatedollarshort]

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Originally Posted by Mulligan If your truly a bum, not working and don't feel the need to be responsible to have insurance, I don't have a problem with a hospital throwing them out on their butt. As an elderly alcoholic man who used to buy me my beer before I was 21 would always say..."You live that life, you pay that price...And I'm paying that price".

Don't many "bums" have treatable mental health issues? Isn't alcoholism defined as a mental illness?

Do they also not deserve police or fire protection or be allowed to use the library, or other public services? You don't see the homeless and think there but for the grace of God go I?

[Mulligan]

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Originally Posted by daylatedollarshort Don't many "bums" have treatable mental health issues? Isn't alcoholism defined as a mental illness? Do they also not deserve police or fire protection or be allowed to use the library, or other public services? You don't see the homeless and think there but for the grace of God go I?

There are no "public hospitals" around here so I can't compare them to actual public services. I never said I was right or even championing my viewpoint as I said I do in a way feel bad my thoughts are in that direction. I guess I was raised with too much Hammurabi in me and not enough Hippocrates. I would certainly support national health insurance through a VAT that hit everything. I am sure this would cost me way more than I am presently paying. And I definitely don't want to say what I think about should happen to people who drive vehicles without car insurance and cause a wreck!


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[Spanky]

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Originally Posted by ERhoosier And keep in mind that most vets are not even able to enroll in VA system to begin waiting for care. Enrollment is based on a strict Priority system (e.g. service-connected disability, ex-POW's, low-income/low net worth, etc.). VA Health Care Eligibility | Military.com

I am a Vietnam vet but not eligible to enroll because of not meeting the requirement of income/net worth.

[nun]

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Originally Posted by Mulligan T I would certainly support national health insurance through a VAT that hit everything. I am sure this would cost me way more than I am presently paying. And I definitely don't want to say what I think about should happen to people who drive vehicles without car insurance and cause a wreck!

One approach to insurance is to leave it to the individual to buy, another is to mandate it and a final one is for the Government to provide it and pay for it through taxation.

In the UK the Government gives everyone heath care and pays for it through taxation, but car insurance is mandated and left up to the individual to buy. This means that there are some idiots driving illegally without insurance...just like in the US...which obviously leads to some nasty consequences when those idiots have accidents. So how about the Government pays for car insurance so that everyone is covered? It's an interesting argument with some obvious flaws like how you'd deal with insurance for terrible drivers, teenagers and the owners of very expensive cars. You could make the same cost arguments against Government paid for health insurance too.

[Spanky]

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Originally Posted by Chuckanut My view has been that if the state can retroactively change its contract with its former employees, it should be able to also do that for other contracts, for example, road repair. Dear Acme Road Repair Company, 10 years ago we paid you 5 million dollars to fix the state highway near Plainville. We now realize we paid you to much. We really could not afford to pay that amount. Please refund us one million dollars by the end of the year, or we will be forced to take legal action to seize your property and sell it. Yours truly, the State of Confusion. Now that will never happen. What we really need is for retirement payments to be made to an individual's personally owned retirement account, controlled completely by the individual, and hopefully tax deferred or tax free. Otherwise, retirment money will always tempt politicians to be irresponsible in some way.

Asking for a refund and suspending current/future payments is not the same.

[daylatedollarshort]

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Originally Posted by Mulligan I would certainly support national health insurance through a VAT that hit everything. I am sure this would cost me way more than I am presently paying.

I think Nun's point various threads on this topic is that health care actually costs less per capita in countries with universal care type systems:

In a 2010 report by the nonprofit Commonwealth Fund, the United States, despite spending twice as much on healthcare, came in dead last compared with six peers - Britain, Canada, Germany, Netherlands, Australia and New Zealand.

U.S. health 'mediocre' compared to other wealthy countries despite spending the most of any nation on Earth | Mail Online

For all we spend on health care here, life expectancy is less than other developed nations:

"US life expectancy in 2011 ranked below that of every Western European country in the study, and hovered just above Chile, the Czech Republic, Poland, Estonia, the Slovak Republic, Hungary and Turkey. It was below Greece, Portugal, South Korea and Slovenia."

We spend more and yet get poorer results.

"The high per capita health care spending in the US is not resulting in dramatically improved health care services, but rather in higher profits for the private insurers, giant hospital chains and drug companies."

OECD report: US life expectancy below international average - World Socialist Web Site

[nun]

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Originally Posted by daylatedollarshort I think Nun's point various threads on this topic is that health care actually costs less per capita in countries with universal care type systems

The vast majority of other developed nations have some form of universal healthcare and how ever they are financed they are all less expensive per capita than in the US and generally provide as good or better results. But that's not my point. I'm not making an economic argument, more a moral one.

[nun]

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Originally Posted by Spanky Asking for a refund and suspending current/future payments is not the same.

This is a good point. The question is whether the promise or contract to pay someone in the future can be changed by one party over the objections of the other.....obviously in the US today it can be done as has been proved in Detroit and with numerous Magacorps. This is unsettling to me as it seems to go against some of the founding principles of America, particularly as it is always individuals who seem to come off worse and large political or commercial organizations see the benefits.

[daylatedollarshort]

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Originally Posted by nun The vast majority of other developed nations have some form of universal healthcare and how ever they are financed they are all less expensive per capita than in the US and generally provide as good or better results. But that's not my point. I'm not making an economic argument, more a moral one.

I get that that is your point in this thread. I posted the part about "various" threads on this topic because of this posts like this you have made in other threads:

"I'd never claim that healthcare is free and if I neglected to say things like "free at point of service" or "no out of pocket costs or premiums" I'm sorry. UK healthcare will cost the average person half that of the average US person and there's never a worry about being covered. The thing that saddens me is that many Americans with health insurance aren't more outraged that they pay twice as much as people in other countries for poorer coverage. "

http://www.early-retirement.org/foru...t-63797-3.html

I think you have good points from both a moral and a cost standpoint in quite a few threads on this forum.

[Mulligan]

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Originally Posted by nun One approach to insurance is to leave it to the individual to buy, another is to mandate it and a final one is for the Government to provide it and pay for it through taxation. In the UK the Government gives everyone heath care and pays for it through taxation, but car insurance is mandated and left up to the individual to buy. This means that there are some idiots driving illegally without insurance...just like in the US...which obviously leads to some nasty consequences when those idiots have accidents. So how about the Government pays for car insurance so that everyone is covered? It's an interesting argument with some obvious flaws like how you'd deal with insurance for terrible drivers, teenagers and the owners of very expensive cars. You could make the same cost arguments against Government paid for health insurance too.

I agree with all your points, Nun. No perfect solutions. I guess my possibly flawed thinking comes from "skin in the game". I would rather pay $75 for something and the other guy pay $25, than I pay $50 and he $0 for the same service. The car issue definitely has no simple solution, though one local officer trained in dispensing on site "Singapore Caning" would maybe convince the next guy to sell his car if he can't afford the insurance!


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[nun]

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Originally Posted by Mulligan I agree with all your points, Nun. No perfect solutions. I guess my possibly flawed thinking comes from "skin in the game". I would rather pay $75 for something and the other guy pay $25, than I pay $50 and he $0 for the same service. The car issue definitely has no simple solution, though one local officer trained in dispensing on site "Singapore Caning" would maybe convince the next guy to sell his car if he can't afford the insurance! Sent from my iPad using Tapatalk

Insurance requires a pool of those insured to spread the risk. How we define that pool will change the risk and premiums. Being a socialist I see the pool as the entire population. I'm a single man with no current girlfriend, but I'm ok having pregnancy care in my plan because it makes the premiums for pregnant women more affordable and I feel that having healthy mothers and babies is a good thing for society as a whole and so for me too.

Also I'm in my 50s so I expect my use of health care to go up so I will be benefiting from the payments of younger healthier folks soon.

Biasing the risk pools by al a carte coverage choices or excluding the already sick is good for the insurance companies and in the short term for those lucky enough to be already "under the umbrella". But I'd argue that it leads to unnecessary social divisions and reduces the health of the country. Obamacare is a highly flawed attempt to get insurance to more people, but those flaws are largely because it works in the existing structure of US healthcare.

[Alan]

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Originally Posted by daylatedollarshort "US life expectancy in 2011 ranked below that of every Western European country in the study, and hovered just above Chile, the Czech Republic, Poland, Estonia, the Slovak Republic, Hungary and Turkey. It was below Greece, Portugal, South Korea and Slovenia."

Whenever I see comparisons like this, whether it is healthcare, water quality or whatever, I always feel sorry for the countries ranked just above the USA, because the report is in effect saying, "Just look at how bad we are, even xxxx is better than us"