Early retirement while facing unknown health insurance future?

[H2ODude]

This and the many other threads like Rodi's demonstrate just how sad (bad? awful?) the healthcare situation has become in this country. My GP just retired and said his plan was to write a book about the situation (such as his being graded on spending an average of <13 minutes per patient). I look at the whole "industry" as some bizarre crime syndicate; I have always liked the Drs we've had but the "system" seems incredibly wasteful, inefficient, and unfair.

Meanwhile Orcas, I wouldn't give up a known insurance option available until something definitive becomes known, and I'm guessing that may be a while.

 

[rodi]

I lived in WA state for a while and my BFF has lived there for a few decades. She is the poster child for pre-existing conditions and when she got laid off in the dot-com bust she took a job with a large grocery chain in their bakery department part time - just to get benefits. (Her main income came from contract jobs doing software and teaching programming.) After about a year she was invited to join a small startup and was assured they would have health insurance in place before her COBRA from the grocery store gig ran out.

... They lied. Turns out the other employees/owners could all get insurance through their spouses - so they opted not to offer any insurance after all.

Turns out that Washington State had some laws, pre-ACA, that were great as long as you didn't have any lapse in coverage. She was able to continue her COBRA coverage, privately, after the COBRA period ran out. If that hadn't been affordable the state had some plans *as long as there was no lapse in coverage*.

I would investigate whether these laws are still on the books... if so - it might be a plan for you if you do move permanently to that state.

 

[eta2020]

As I said before consider moving to another country until age 65. Country that offers high quality Universal Healthcare.

I understand that such option may be tough without second passport or substantial net worth so one can be granted residency permit. Mexico may be option in such case......

 

[jollystomper]

Our plan is to budget as best we can for health insurance. We know what the COBRA cost thru Megacorp will be if I retire, so that is in the budget for 18 months. Megacorp provides an "discounted" option for retirees to obtain employee type coverage but the annual premium cost is $20-$30K based on the deductible size. Fortunately we can still live our desired life style with this.

If Megacorp ever allowed retirees to again obtain health insurance at the same rate as employees, there would be a stampede of folks retiring. Most of my co-workers who are retirement eligible are trying to hang on until they are eligible for Medicare.

 

[Finance Dave]

We looked at our situation mid last year...were going to FIRE in October. However, DW was concerned about expensive health premiums (we are 55/59) until Medicare...a valid concern. So we agreed to work a bit longer, and save/build enough more wealth to pay for 9/5 years of premium coverage for both of us. I know that seems like a lot, but the math looked like this for us...


Currently paying $200/mo through her Megacorp for coverage
Once she retires, can purchase COBRA for 18 months at $864/mo, so that's an additional $664/mo for those 18 months, or about $12,000
Then she needs about 4 years of coverage on an open market plan or ACA and I need about 7 years on the same...cost about $1,200/mo (we priced ACA bronze). The $1,200/mo would go down once she's on Medicare...to about half of that. Total cost for that would be about $78,000 in very round numbers. Add the $12,000 for COBRA, and that's $90,000 additional.


So we just worked and let our investments ride until that additional $90k was in there...which is this month. As a result, she's now planning to FIRE in May this year, and I'll keep working part time earning $35k/year (no benefits) until late 2018...when I FIRE as well.


If things go south, I could keep working longer...but doubt that will be necessary. Not sure how big your portfolio is...but if it's large...working just 6 months longer can earn you a little safety cushion for those health care costs.

 

[OrcasIslandBound]

I lived in WA state for a while and.......



.......Turns out that Washington State had some laws, pre-ACA, that were great as long as you didn't have any lapse in coverage. She was able to continue her COBRA coverage, privately, after the COBRA period ran out. If that hadn't been affordable the state had some plans *as long as there was no lapse in coverage*.



I would investigate whether these laws are still on the books... if so - it might be a plan for you if you do move permanently to that state.

Thank you for this nice heads up. We did move permanently to WA state, (although someday we might move permanently back to CA).

I'll definitely research about the local health insurance laws here in WA before taking any chance on new health insurance.

I fear that the reality of all this is probably just to keep working for 4 1/2 more years until I can cobra the rest of the way to 65. This isn't exactly a bad plan as I work from home now and only 30 hours a week. Very unstressful work, so 4 1/2 years is fairly tolerable.

It would be great if "they" get decent insurance figured out before then, but unfortunately I'm already hearing news that is not encouraging.

 

[explanade]

We looked at our situation mid last year...were going to FIRE in October. However, DW was concerned about expensive health premiums (we are 55/59) until Medicare...a valid concern. So we agreed to work a bit longer, and save/build enough more wealth to pay for 9/5 years of premium coverage for both of us. I know that seems like a lot, but the math looked like this for us...


Currently paying $200/mo through her Megacorp for coverage
Once she retires, can purchase COBRA for 18 months at $864/mo, so that's an additional $664/mo for those 18 months, or about $12,000
Then she needs about 4 years of coverage on an open market plan or ACA and I need about 7 years on the same...cost about $1,200/mo (we priced ACA bronze). The $1,200/mo would go down once she's on Medicare...to about half of that. Total cost for that would be about $78,000 in very round numbers. Add the $12,000 for COBRA, and that's $90,000 additional.


So we just worked and let our investments ride until that additional $90k was in there...which is this month. As a result, she's now planning to FIRE in May this year, and I'll keep working part time earning $35k/year (no benefits) until late 2018...when I FIRE as well.


If things go south, I could keep working longer...but doubt that will be necessary. Not sure how big your portfolio is...but if it's large...working just 6 months longer can earn you a little safety cushion for those health care costs.

That's assuming Medicare will be intact 5 or 9 years from now.

 

[eta2020]

When I hear sums of money some of you can pay I have a feeling you are rich enough to get for example Portuguese residency and with it good health care.

It is way more interesting and rewarding to learn Portuguese and another culture then slobber in work another 5-10 years.

BTW that residency can include 10 years tax free for right people.

 

[RetireAge50]

There are lots of unknowns but for me I have always planned on paying for my own health care and/or health insurance. I never expected the government to provide this and if they do it is a bonus!

I live in WA and non-subsidized group health plans are $606.29/mo. for my wife and I.

 

[explanade]

There are lots of unknowns but for me I have always planned on paying for my own health care and/or health insurance. I never expected the government to provide this and if they do it is a bonus!

I live in WA and non-subsidized group health plans are $606.29/mo. for my wife and I.

What kind of group plans?

Deductible? Out of pocket max?

 

[jim584672]

The real question is what about all those people who already retired and are on the ACA plan? Are you going to have to go back to work to get health insurance? Are you going to wait and see what happens? Is it possible that your health insurance will be cancelled? Are you a bit nervous about this future?

I am on the ACA right now. I have a few options in mind:

1. Move to England, cover with NHS. Come back in 9-10 years for Medicare, if it still exists.
2. Retirement visa to Thailand, get a travel health policy. Very low COL, but I hate hot and humid.
3. Hope my state works something out and pay whatever it is.
4. Go back to work.

The problem is I don't know if I can even get a policy due to pre-existing conditions. If the price is exorbitant it makes sense to move. Hopefully they delay for 2-3 years so I can adjust my life.

 

[RetireAge50]

What kind of group plans?



Deductible? Out of pocket max?

Group Health is the insurance company. Deductible/Max is $7,150 for each person.

This was for 50 year old. 60 year old is $923.25/ mo same coverage.

 

[OrcasIslandBound]

There are lots of unknowns but for me I have always planned on paying for my own health care and/or health insurance. I never expected the government to provide this and if they do it is a bonus!

I live in WA and non-subsidized group health plans are $606.29/mo. for my wife and I.

If I thought I could get health insurance for this price, and if it was relatively OK, this could have a big influence on our retirement timing. Was that price for each of you? $1212 per month total?

 

[joesxm3]

The part of ACA that guaranteed the ability to purchase health insurance was a major factor in my decision to ER last August. I am on COBRA, but they increased the deductible and annual out of pocket max this month. I looked at ACA for 2017 but it seemed that COBRA was better, but a little more expensive. I was planning to do ACA for 2018 and the four or so years until Medicare.

I can probably afford to buy some plan on the open market, assuming they will take me, but it is unnerving to have to wait for the changes.

My projections are probably much too conservative, or maybe my asset allocation needs to be more aggressive, but after five months of ER I am trying to tighten my budget. I made a spending spreadsheet and it seems that I am pretty much bare bones already due to my LBYM lifestyle.

My fixed cost of property tax, health insurance, house, car and umbrella insurance, electricity, oil is pretty much $20K. If my health insurance were to double, it would be painful.

I probably am in the scared and frugal stage or ER, but given that I am pretty well off and feel this way, I find it hard to imagine how people with no savings are going to survive. I guess I should be thankful for what I have and trust that things will work out.

 

[RetireAge50]

If I thought I could get health insurance for this price, and if it was relatively OK, this could have a big influence on our retirement timing. Was that price for each of you? $1212 per month total?

No not each of us. $606 total/mo for both of us.

 

[explanade]

When I hear sums of money some of you can pay I have a feeling you are rich enough to get for example Portuguese residency and with it good health care.

It is way more interesting and rewarding to learn Portuguese and another culture then slobber in work another 5-10 years.

BTW that residency can include 10 years tax free for right people.

Portugal does come up on the top 10 lists of places to retire abroad:

10 Best Countries to Retire to in 2017 | Investopedia

https://internationalliving.com/2017/01/the-best-places-to-retire/


However, one of the ideas being considered right now is that the only way to get coverage for pre-existing conditions under whatever they replace the ACA with would be to maintain continuous coverage.

If you drop coverage for any reason, such as living abroad, insurers may be able to price-discriminate against you and still not cover preexisting conditions. In fact, the penalty or higher premium is expected to be worse than the ACA penalty for not getting insurance.

 

[mh]

You can be confident of one thing. They are businesses whose objective is not your health but their profit.

Well my health care is with Kaiser Permanente which is non profit ( for what it's worth )

 

[Mango1956]

The real question is what about all those people who already retired and are on the ACA plan? Are you going to have to go back to work to get health insurance? Are you going to wait and see what happens? Is it possible that your health insurance will be cancelled? Are you a bit nervous about this future?

We retired last year at age 60, and have a Bronze plan with a high deductible (around 6500 apiece) Without the subsidy, it would cost 19,504 a year for premiums for the two of us. So if we lose the subsidy, we would probably go without insurance or one of us would have to go back to work. It's nervous time for sure...

 

[eta2020]

Well my health care is with Kaiser Permanente which is non profit ( for what it's worth )

I like to be a CEO of this non profit Kaiser and get 8 million USD annual pay And when you call 911 you are driven in non profit ambulance to non profit hospital.

Sounds like Munich Germany.

 

[W2R]

Thanks for the interesting discussion.