Will the new healthcare law make it easier for me to retire early?

[ESRwannabe]

I think that the health care bill will have some great benefits for me. I am 33 and would like to semi-retire in my mid 40s. Specifically I'd like to switch to contract or part-time work in the IT industry.

I think that this new law will make my goal much easier to attain. Working part-time or as a contractor usually requires you to buy your own health insurance. Although I am in perfect health, I am very glad that there will no longer be the possibility of being denied coverage.

Another benefit of this law for those that are older and would like to continue w*rking is that I believe it will greatly diminish age discrimination. Although I have no evidence to back this up my assumption is that most age discrimination is due to employers wanting to avoid paying the higher health care costs. Now that the costs are being spread out, perhaps this won't be an issue anymore.

I frankly have never trusted insurance companies. I have health care, disability, renters, auto, and an umbrella policy, and I have never needed to collect a cent so far *knock on wood*. However, I don't trust the insurance companies to actually pay up. I basically consider insurance companies in the same light as credit card companies. I assume they are going to try and scam me every chance they can. So, I am very glad to see health care brought under the wing of the government. I believe that health care is going to cost more, and be more inefficient, but I will take that over always second guessing whether the insurance will try to scam me when it comes time for them to pay up.

 

[FUEGO]

This may be purely assumption, but I think these plans will allow out of network health care consumption, you just pay more for it (like most plans now). So if the subsidized plans that are available aren't accepted anywhere near you, you may still save money by going out of network and paying the difference in cost (while saving money on premiums due to the subsidy).

Maybe the debate of the future will be to prevent Dr's from discriminating against certain health insurance plans/participants. Although I'm not sure if I want the guy that could be saving my life knowing that I have a buy one get one free coupon paid for out of his taxes!

On a different point, I'll be interested to see how these different metallic branded levels of coverage turn out. Specifically, how the maximum out of pocket costs (based on income level and number in household) will be implemented with the different plans. For example, if my max out of pocket costs are limited to $4000 due to low income, then I may not have any incentive to get better coverage (gold or platinum) if the max out of pocket is capped anyway. And I guess we will still be corralled into bunching semi-elective procedures into one tax year, with perhaps a coincident reduction in income (to keep our out of pocket max as low as possible). You know, get all those knees and hips replaced for everyone at the same time, maybe get some bone cysts removed, and maybe they can throw in some cataract surgery. I mean it is free and I wouldn't be paying for any of it (after my max out of pocket) right?

 

[donheff]

I find this confusing as well. People getting subsidies are not moving from private insurance to public insurance. They remain on private insurance.

From the synopsis at the Kaiser Family Foundation
http://www.kff.org/healthreform/upload/8023-R.pdf

". . .States will create American Health Benefit Exchanges where individuals can purchase insurance . . . Premium and cost-sharing subsidies will be available to
make coverage more affordable....

(post continues with discussion of the FEHB that may serve as the format for the exchanges)

Not sure I see your point. People who use the exchanges will be getting private insurance, not a public option or some sort of "government" program. The FEHB is private insurance (BC/BS, etc). The exchanges will have to offer plans that meet minimum standards but so will employer plans.

 

[Bikerdude]

However, I don't trust the insurance companies to actually pay up. I basically consider insurance companies in the same light as credit card companies. I assume they are going to try and scam me every chance they can. So, I am very glad to see health care brought under the wing of the government. I believe that health care is going to cost more, and be more inefficient, but I will take that over always second guessing whether the insurance will try to scam me when it comes time for them to pay up.

I would venture to say that insurance companies run a distant 2nd in scams when compared to Congress.

 

[Gotadimple]

Not sure I see your point. People who use the exchanges will be getting private insurance, not a public option or some sort of "government" program. The FEHB is private insurance (BC/BS, etc). The exchanges will have to offer plans that meet minimum standards but so will employer plans.

Don,
We will continue to disagree about what kind of coverage will be available in the exchanges. My point is that when the FEHP defines the benefit plans, that is what any health insurer who wants to participate in the Health Exchange must offer.

HOWEVER, that is not what the very same health insurer will offer to those who want to buy coverage outside of the Exchange, such as that provided by an employer for his/her employees, or what an individual who chooses not to use an exchange can buy. Most probably, the benefits will be broader in the non-Exchange version, which is fine for those who can afford it.

And the FEHP is not private insurance. The plans that participate have been qualified based on their ability to meet contract standards, and participate in the required data exchange between OPM and the plan. The health plan merely receives an adminstrative fee for processing the claims, and handling customer service. OPM enrolls the employee and collects the premium, BC gets the claims, processes them and gets reimbursed by the US Treasury. In other words, it's mega-corp's self insured plan administered by large insurance carriers for a fee.

-- Rita.

 

[Youngman]

conservative health insursance premiums.

I am in a similar situation, being in my 50's and retired with health care insurance. However, my premiums have been rising about 33% per year since I retired (2007). At that rate my premium will be around 7400/month and some change when I hit 65. So expecting health insurance premiums to rise from 1000 to 2500 in the next 8 to 10 years is a little on the low side. I do believe, however, there will be some kind of intervention before I hit 65 that will alter the growth rate of my insureance premiums.

 

[MichaelB]

We will continue to disagree about what kind of coverage will be available in the exchanges. My point is that when the FEHP defines the benefit plans, that is what any health insurer who wants to participate in the Health Exchange must offer.

HOWEVER, that is not what the very same health insurer will offer to those who want to buy coverage outside of the Exchange, such as that provided by an employer for his/her employees, or what an individual who chooses not to use an exchange can buy. Most probably, the benefits will be broader in the non-Exchange version, which is fine for those who can afford it.

And the FEHP is not private insurance. The plans that participate have been qualified based on their ability to meet contract standards, and participate in the required data exchange between OPM and the plan. The health plan merely receives an adminstrative fee for processing the claims, and handling customer service. OPM enrolls the employee and collects the premium, BC gets the claims, processes them and gets reimbursed by the US Treasury. In other words, it's mega-corp's self insured plan administered by large insurance carriers for a fee.

My understanding is that the OMP does not define plans today or in this bill. They set standards, define categories and establish minimum requirements, then invite private insurance companies to offer specific plans. They also do not set rates, the rates are set by the insurance companies. The federal gov’t pays part of the premium. Very similar to mega-corp.

I also understand (but cannot source) that once the exchanges are enabled the FEHP will be sourced through the exchanges as well. There is no doubt (IMHO) that the intention is clearly to have private policy offerings that compete in scope and price with the better FE and mega-corp offerings available.

 

[midlifeguy]

Great comments, everyone. I for one wish that this law had created a public option because truthfully I think that's the only thing that would have seriously reduced costs over the long-run. Also, considering I am healthy, I would like to have the choice between low-cost, long-lines, bureacratic health coverage (which I would happily choose to purchase)versus high-cost premium coverage, but right now it seems my only options are high-cost. At least here in New York, there is nonexistent consumer choice. I do think the public option would have helped with that, and I predict that we'll get that option within five to ten years once people realize that this new law was insufficient.

 

[TromboneAl]

HI Premiums are deductible if you itemize your deductions on Schedule A and your out-of-pocket medical expenses exceed 7.5% of your AGI.

Our AGI in 2009 was only $8750, and our health insurance premiums totaled $5,581. So I guess I could have deducted much of that. It wouldn't have made a difference this year, but I will use that next year, allowing me to move convert more $ to Roth without paying tax on it. Thanks scrabbler.

 

[PaulVerizer]

Hi all:

I did more research and and found out that most states do not have asset test for Medicaid and CHIP eligibility. California for example do not asset test.

Can anyone confirm this?

OK I found the Medicaid handbook online for my state (Wisconsin). Wisconsin does have an very low asset limit, but apparently does not consider an IRA conversion or distribution as income, just an asset transfer. Supposedly though the feds will prohibit states from having asset tests now, so this could get interesting. I suppose anything can change in the next few years. I'm not sure but I think New York used to not have an asset test, but there was some flack and now they do. Many states supposedly claim they don't want asset tests because they want people to be able to save their way out of poverty. Also there are some cases that draw sympathy such as someone who receives a large settlement for some lifelong injury etc. So I think the best place to look for info is your state's Medicaid handbook.

 

[swampwiz]

Hi all:

I did more research and and found out that most states do not have asset test for Medicaid and CHIP eligibility. California for example do not asset test.

Can anyone confirm this?

Well, I just got approved for Food Stamps in Louisiana, where there is a strict $2K limit on assets, even though I have about 100x that in my retirement accounts.

I would think that even when there is an asset test, a distinction must be made between retirement and non-retirement.

 

[donheff]

I would think that even when there is an asset test, a distinction must be made between retirement and non-retirement.

If that is correct it is an important distinction for long term care purposes. I always understood that old folks could only qualify for Medicaid's LTC benefits if they burned up all their assets. I thought that even included homes. Are 401ks/IRA's homes, pension income excluded?

 

[citrine]

Just heard that the new bill will cost big pharmaceutical companies $90 billion. Any ideas on where the next blockbuster drugs will come from that take billions to develop and get clinical trials on?

Hopefully from the inflated salaries that the CEO's and higher management have....the pharma company can afford the $90 billion.

 

[Ken11]

Well, IM retiring this weekl.
I have employer subsidized HC between now and Medicaire.
However, the new law causes megacorp to give up the tax deduction that had applied to this expense.
So, a few firms are now taking write offs and threatening to reduce retiree HC benefits. Wonderful.
I'm not even retired yet an my benefoits are at risk cause of the new bill.

 

[samclem]

I would think that even when there is an asset test, a distinction must be made between retirement and non-retirement.

Ultimately, it will depend on what the voters think. It's a good thing to encourage folks to save for retirement, so excluding retirement accounts makes sense from that perspective. On the other hand, the public as a whole get restless when they are barely getting by, can barely afford shoes for the kids, and are paying taxes so that people with $500K in the bank can get public assistance.
My guess is that all assets (including retirement assets and property/real estate) will probably be assessed as income-equivalent under some type of "expected annual distribution" calculation. From the taxpayer's perspective, I think that's fair, though it might end up hurting me personally.
Our policy should be that public assistance is for those who can't help themselves. On the other hand, I think everyone who qualifies under the present rules should take every penny available.

 

[donheff]

My guess is that all assets (including retirement assets and property/real estate) will probably be assessed as income-equivalent under some type of "expected annual distribution" calculation. From the taxpayer's perspective, I think that's fair, though it might end up hurting me personally.
Our policy should be that public assistance is for those who can't help themselves. On the other hand, I think everyone who qualifies under the present rules should take every penny available.

+1 Yeah, even though we rightly look out for number one, at the same time we should be concerned with what is the best public policy. Whether we agree with this legislation or not, it is probably here to stay. We will soon begin years of fixing the fixes. Maybe how best to do that can become a new thread after the November election when things (hopefully) settle down a bit.

 

[chinaco]

Well, IM retiring this weekl.
I have employer subsidized HC between now and Medicaire.
However, the new law causes megacorp to give up the tax deduction that had applied to this expense.
So, a few firms are now taking write offs and threatening to reduce retiree HC benefits. Wonderful.
I'm not even retired yet an my benefoits are at risk cause of the new bill.

I am in the same situation.

The govt will provide temporary reinsurance to encourage companies to not drop HC coverage for early retirees for the next 4 years until the state HC exchanges are available. Unless companies wind up in really bad shape, they probably will not drop their HC retirement plans before the exchanges open. It is bad publicity and breeds mistrust with current employees. It would also kill any chances of having an near-term ER programs to encourage older/higher paid employees to ER and off the payroll.

However, this legislation is a game changer. It would not surprise me to see employers shift early retirees off to the exchanges over time once they have determined how to manage the transition. There could be several outcomes:

1. Continue with status quo. I doubt this will happen over the long haul. This new program offers a number of new possibilities for employers to get the expense of their balance sheet. But, if some employers can do it cost effectively and provide a better benefit to employees, they may see it as an opportunity to attract better employees.
2. Cut ER health care benefits all together so people wind up using the state HC exchange program.
3. Shift to providing Corporate HC benefits by giving an ER a subsidy (or employer match) to cover premium cost of using the HC exchange.
4. Shift to providing Corporate HC benefits by rebating Out of Pocket expenses of ER and Full Retirees.
5. Combination of 2 and 3
6. Provide supplemental insurance to fill certain gaps.

One thing this bill does is help people to better understand their worst case scenario (in terms of premium cost and perhaps HC cost burden) and therefore manage their personal risk. While HC inflation will continue, you can move forward with much less risk of losing coverage altogether because an employer drops their plan or due to some set of health circumstances causing you to be denied coverage by an insurance company or paying massive premiums that are completely unaffordable. It also seems to ban the old practice of just denying claims.

You can bet companies are doing their analysis.

This is a few months old, but still fairly close.
http://www.ebri.org/pdf/briefspdf/EBRI_IB_01-2010_No338_RetHlth1.pdf

 

[snodog]

This is for the person who asked about what the insurance would cost with various numbers of people in your household. What does the health-care law mean to me? (washingtonpost.com)

 

[samclem]

However, this legislation is a game changer. It would not surprise me to see employers shift early retirees off to the exchanges over time once they have determined how to manage the transition. There could be several outcomes:

1. Continue with status quo. I doubt this will happen over the long haul. This new program offers a number of new possibilities for employers to get the expense of their balance sheet. But, if some employers can do it cost effectively and provide a better benefit to employees, they may see it as an opportunity to attract better employees.

(Italics added) This is another unintended consequence to watch for. It's important to remember that, as much as employers (rightly) complain about the high cost of medical insurance for employees--they don't have to pay it. There's never been a law requiring employers to provide health insurance. They only do it because it helps attract employees, and because they have a "special situation" (tax breaks and the ability to buy group coverage) that allows them to buy insurance more cheaply than consumers can buy it themselves. It really is an (unfair?) advantage that allows employers to attract good employees at lower cost.

Now, if (as many believe) the exchanges become the health care ghetto where care is substandard and waits are long, employers will still retain the advantage they have today. It probably won't be worth it for them to cover retirees, but to get the best employees they might sweeten the pot with better coverage (or supplemental insurance that lifts people out of the need to rely on getting all care through the exchanges).

 

[chinaco]

...
Now, if (as many believe) the exchanges become the health care ghetto where care is substandard and waits are long, employers will still retain the advantage they have today...

The current incarnation uses health insurance companies and the existing system. I doubt that will occur. Longer waits could occur if supply cannot meet demand.

I suspect there will be some sort of program (incentive) to attract more graduates to medical school. The govt took over the student loan program. They will loan funds to MD students at special rates (and possibly forgive the loan if they sign up for work in certain areas of the country).

Also, the US is still a very attractive country for foreigners. We are more likely to siphon off doctors from other countries.... especially if the government or health care providers create some sort of incentives.

I believe you are looking at the next job boom (over the next 20 years)... health care.

A huge number of jobs will be created in health care directly. Those jobs will give people spending money that will cause other jobs to be created in local towns (i.,e local economies).

It will be somewhat similar to the IT/Internet boom in the 1990's

With the IT technology, Internet, video streaming, and electronics available today, this change is likely to a big boost for health care delivery innovation. IMO we are getting ready to see new industry offshoots emerge... America is good at innovating.

 

[TromboneAl]

This is for the person who asked about what the insurance would cost with various numbers of people in your household. What does the health-care law mean to me? (washingtonpost.com)

Thanks. When it says "Your maximum out-of-pocket costs for deductibles and co-payments would be capped at 27% of the total cost." what does "total cost" refer to?

 

[samclem]

IMO we are getting ready to see new industry offshoots emerge... America is good at innovating.

I'd say that America's private sector is good at innovating. Companies don't innovate for fun, they do it to increase profits, and everyone benefits. Insurance companies operating within the exchanges are best viewed as "semi-private", much more like public utility companies than fully private ones. Has your electric company done much "innovating?" The government will tell the health insurance companies how much they must spend on providing services vs investing in new ideas and enhanced efficiency. They tell them what must be in their product. With the government subsidizing most of their customers, you can bet there will be caps and restrictions. Don't look for any innovation in an environment like this. The lines will grow longer and the insurance companies will keep collecting their mandated 20% to administer things for the government.

A huge number of jobs will be created in health care directly. Those jobs will give people spending money that will cause other jobs to be created in local towns (i.,e local economies).

Maybe, but only if health care costs rise. They are sure to rise under the new law (as everyone admits we've increased demand without increasing supply). So, this will increase the % of GDP we spend on health care (which was supposed to be addressed under reform, but somehow it wasn't dome). All the new money being spent on health care is coming from somewhere else, and if it comes from the government (for the newly expanded Medicaid or subsidies provided to those buying insurance through the exchanges) then it was taken out of the productive private sector via taxes (largely from those with a proven record of productively using captital). It's a spiral down, as Europe has learned.

 

[winger]

Maybe, but only if health care costs rise. They are sure to rise under the new law (as everyone admits we've increased demand without increasing supply). So, this will increase the % of GDP we spend on health care (which was supposed to be addressed under reform, but somehow it wasn't dome).

How much costs rise remains to be seen. We are adding insurance/coverage, but most already receive health care in some way. Unfortunately, it is usually inefficient and expensive.

The 35 million uninsured isn't a static list. People are in and out of insurance coverage depending on their job, family situation, age, and even where they live.

 

[Martha]

If that is correct it is an important distinction for long term care purposes. I always understood that old folks could only qualify for Medicaid's LTC benefits if they burned up all their assets. I thought that even included homes. Are 401ks/IRA's homes, pension income excluded?

Under the way the law has been they don't necessarily have to sell their home but there will be a medicaid lien on it which will have to be paid before the house is sold or after the second spouse dies. 401k and pensions effected eligibility for medicaid, both on an income and asset basis.

 

[Martha]

(Italics added) This is another unintended consequence to watch for. It's important to remember that, as much as employers (rightly) complain about the high cost of medical insurance for employees--they don't have to pay it. There's never been a law requiring employers to provide health insurance. They only do it because it helps attract employees, and because they have a "special situation" (tax breaks and the ability to buy group coverage) that allows them to buy insurance more cheaply than consumers can buy it themselves. It really is an (unfair?) advantage that allows employers to attract good employees at lower cost.

Now, if (as many believe) the exchanges become the health care ghetto where care is substandard and waits are long, employers will still retain the advantage they have today. It probably won't be worth it for them to cover retirees, but to get the best employees they might sweeten the pot with better coverage (or supplemental insurance that lifts people out of the need to rely on getting all care through the exchanges).

This will contribute to continue to make individual health insurance very expensive and I continue to question the stability of that market given the big benefits given employer based insurance. People will continue to run towards employer based insurance if they can. It was outrageous to me that the law makes it even harder to deduct individual heath premiums (raising the threshold to over 10% AGI from 7.5%).