Healthcare reform - a wave of early retirees?

[FinanceGeek]

Have been watching all of the debate about healthcare reform going on in Congress and the media now. As it is often said, one shouldn't examine too closely the way in which legislation - or sausage - is made...

Whether or not we eventually get a single payer system (and whether or not that is a good thing or not), I think won't be clear for quite some time. What is clear is that much of what is being proposed is going to weaken today's strong bond between getting health insurance through one's employment.

It strikes me that many people are tied to working in order to obtain health insurance - especially those whose situation (state of residence, size of family, health conditions, etc) precludes getting insurance through medically underwritten policies. Many of these people might be able to retire if they could get (and afford) insurance outside of an employment relationship.

Do people here expect that healthcare reform likely to lead to a sizeable number of people ER'ing? Anyone want to take a shot at what effects any resulting reduction on labor force participation will have on those remaining in the workforce, the healthcare system, the economy as a whole, etc.?

 

[Martha]

I doubt it will occur to any significant extent. Most people just don't have enough money. I do think it could help small employers and self employed significantly. I know people from my working days that would have started a small business if they could get health insurance for their family. I know many small employers who are having difficulty purchasing health insurance for their employees and some who just can't. This is supported by statistics on increasing numbers of small employers dropping health insurance. Having another option that is affordable could spark job creation in these types of businesses.

Of course, just guesses. Right now I am seriously questioning the resolve of our legislators to do anything that is meaningful. More bandaids and bandaids don't keep costs down.

 

[ziggy29]

I've said repeatedly that there could be a "wave" of this, but to what extent I don't know. Some of the people who might have been able to do this two years ago might not be able to pull it off since their portfolios have been smashed.

One thing I think health insurance reform could do is encourage people to become entrepreneurs. I have little doubt that there are plenty of people with good ideas and the drive to make them succeed, but they are afraid of losing the Megacorp health insurance along the way. I think if nothing else, helping to unleash the entrepreneurial spirit would be a bonus for the economy.

Of course, this assumes that the "sausage" they eventually make is more than just the usual tinkering around the edges.

 

[REWahoo]

Of course, just guesses. Right now I am seriously questioning the resolve of our legislators to do anything that is meaningful. More bandaids and bandaids don't keep costs down.

As bad as the health care situation is today, I fear it will have to get seriously worse before our legislators grow anything resembling a backbone to really deal with the problem. Only after a health care "train wreck" will anything of substance actually get done.

 

[Midpack]

As bad as the health care situation is today, I fear it will have to get seriously worse before our legislators grow anything resembling a backbone to really deal with the problem. Only after a health care "train wreck" will anything of substance actually get done.

Not to exonerate legislators, but special interests and largely clueless mainstream voters pretty much guarantee this is just another episode of talking about a problem. And when it's all over, after his first term Obama et al can say he certainly tried by pointing to all the oratory and then promising to do it in his second term. When it happens, will coincide with the "train wreck," which will come at some point.

 

[Notmuchlonger]

Already, it seems like the effort is losing steam. I hope they don't make it worse than it already is.

 

[Gone4Good]

I'm not sure the plans actually being discussed will help "early retirees" unless you're in a low income group that will benefit from subsidies.

http://www.early-retirement.org/forums/showpost.php?p=827952&postcount=68

 

[ziggy29]

I'm not sure the plans actually being discussed will help "early retirees" unless you're in a low income group that will benefit from subsidies.

So much of this depends on the actual funding mechanism. If it's heavy on payroll taxes, it would be more to the benefit of those who FIRE. If it's an asset-based tax, not so much.

 

[FinanceGeek]

I'm not sure the plans actually being discussed will help "early retirees" unless you're in a low income group that will benefit from subsidies.

My belief is that there are many who remain in a job because they can't get health insurance at a price they can afford outside of the group market. There are also people who live in states that lack the "last resort" coverage promised by HIPAA.

So availability of coverage, rather than subsidies, is what I think may spur quite a few transitions to more entrepreneurial environments and/or early retirements.

 

[Gone4Good]

So much of this depends on the actual funding mechanism. If it's heavy on payroll taxes, it would be more to the benefit of those who FIRE. If it's an asset-based tax, not so much.

I agree the devil will be in the details. On the specifics, I doubt we'll see any kind of asset-based tax. But portfolios and pensions throw off taxable income. I strongly suspect that the free ride folks have been enjoying on their qualified dividends is probably going to come to an end at some point. That won't necessarily happen as a direct result of health care reform, but it seems like low hanging fruit for a government in desperate need of more revenue.

I also see a lot of hand wringing in Congress about the estimated cost of health care reform. Lower cost means lower subsidies. It seems highly unlikely they will find a way to extend subsidies to the middle class and come up with a bill that is even remotely affordable. The way this debate is going I worry that we may end up with a bill that actually increases the cost of health insurance for healthy people who aren't truly poor.

 

[mf15]

My son has a small business, he can get group health insurance through the local chamber of commerce. It cost about 225 a year to join the chamber, this is in the
philly burbs.

Old Mike

 

[Stevewc]

I'm watching the news on this daily.
The health care issues and the price of plans at the end will make a significant difference of whether I take the leap into FIRE or not. I'm one of the ones on the edge of this thing. One thing I've already learned (as some on this board pointed out) is I need to be careful what I wish for. Meaning this could be worse at the end that it was originally. At first I was dreaming that I would have all this great coverage at a cheap price. Now I'm more "if it's to good to be true" it probably is. I guess time will tell but I'm watching and hoping for something good out of all this. My State has an AHIP plan but it is supper expensive, I guess because it is a high risk pool. If the legislation just makes my AHIP plan at a better price it will help me.
We are a healthy family and could probably get a private policy. The draw back for me on private coverage is I would lose a benefit offered from my job if I go that route. I just recently learned if a person has a private policy in my State, your company (job) cannot legally help with your premiums. At retirement I'm entitled to a partial premium payment but it seems I have to go to the AHIP plan to get it. It appears to me at this point, I'm not given any other choice from my employer. Which is crazy in my opinion. It's as though you've worked 30 years for the benefits but the trick is you'll never be able use it. The AHIP plan will cost me more, including the benefit, than I can buy private coverage without the benefit, I think? Not sure if they planned it that way but sure looks like it. I've been writing my representatives about this all year. Not that I think it will do any good but makes me feel better anyway. So if the legislation just opens new doors or price breaks, I could possibly slip through the cracks and escape.
Steve

 

[CuppaJoe]

I've said repeatedly that there could be a "wave" of this, but to what extent I don't know. Some of the people who might have been able to do this two years ago might not be able to pull it off since their portfolios have been smashed....

I think most people will always find a reason not to RE and when you ask them, they will have a socially acceptable reason, like I'm waiting to get the kids thru H.S. or college, or I need the health insurance, or I'm waiting for the DOW to get back to 10,000, or got forbid, I love my job. I feel like a bit of a contrarian for deciding I would pay my own premiums in order to get out earlier.

My son has a small business, he can get group health insurance through the local chamber of commerce. It cost about 225 a year to join the chamber....

My employer had group insurance though an arts organization; he gave me membership so that I could sign up for their inexpensive plan. A couple of years later my HMO cancelled all of those group plans and my employer paid the full individual amount for the remaining years I worked for him. I was lucky that the plan was portable so that when I retired I pay the premiums, no re-enrollment needed.

 

[Notmuchlonger]

Not being able to afford health insurance. Sounds like a pretty reasonable reason for not retiring. Socially acceptable or not

 

[dex]

If the cost of ins. cost is an issue the person* should not ER.
https://express.rwsol.com/roi/getCCRecommendations.do?productLineId=141&productLine=Medical

A BCBS GA PPO ranges in cost from 120 to 276/mo for a single, 50 y/o male. A person should not ER if 1,400 to 3,000 can not be afforded.

Go to their Smart Quote to play with other options.




*healthy - i.e. no chronic health problems

 

[Bimmerbill]

My aunt would have retired years ago, but is waiting til age 65 for medicare. She always did the LBYM thing and lives in a small well built house thats paid for.

My mom worked a few years after my dads death to qualify for health insurance thru her county job. 10 years was the minimum, and she retired soon after hitting the 10 year mark.

 

[TromboneAl]

I still haven't heard any predictions about whether health insurance would become cheaper with the plans being considered. This is asked from the perspective of someone who pays $225/month for a $3,500 deductible HSA.

 

[Stevewc]

I still haven't heard any predictions about whether health insurance would become cheaper with the plans being considered. This is asked from the perspective of someone who pays $225/month for a $3,500 deductible HSA.

My company is telling me (with my benefit package) my part for family policy would be over $1000 a month. I really need to do a lot better than this before jumping ship.
This should explain my hesitation to FIRE. There wouldn't be many dollars left after making insurance payments like that every month. I know I can get a better deal than that some where but am just riding things out to see what materializes.
Steve

 

[dex]

My company is telling me (with my benefit package) my part for family policy would be over $1000 a month. I really need to do a lot better than this before jumping ship.
This should explain my hesitation to FIRE. There wouldn't be many dollars left after making insurance payments like that every month. I know I can get a better deal than that some where but am just riding things out to see what materializes.
Steve

Research BCBS for your family and various deductible options.
You don't know how the company computed that price.

 

[Stevewc]

Your right Dex. I'm not sure how or why they are directing all retiree's in the direction of this high risk pool. The pool is the (AHIP) Alabama health insurance plan. This coverage has to take anyone and everyone that applies. It is actually a BCBS administered policy. The thing is we are being sent to this plan even if we are healthy, no pre-existing conditions. Maybe they went with this plan so anyone leaving the company would be guaranteed coverage and could not be turned down. As I understand it, we are not given any other choice. I hate to leave a benefit on the table but may have to if I find I can get coverage at a better price some other way. Kind of a bad deal to be offered a dollar amount toward your insurance but the only way to get it is take the highest priced (high risk pool) coverage in the State. Other wise you lose the benefit. A bit unfair I think. Oh, one more point. I would have to go the entire 18 months on cobra before I qualify for the AHIP plan also. But they will help pay a fraction of cost. Seems to me the company is doing everything possible to run me away from taking them up on the benefit, doesn't it?
Steve

 

[dex]

SteveWC,
I'm guessing Cobra is even higher than what you can get with a BCBS plan.

 

[Martha]

Steve, you might want to talk to an independent agent to see what your options are for a lower cost plan. You might find a far better deal if you are healthy than the employer subsidized risk pool. Also, I see that the Alabama BCBS plan has lifetime limits of a million dollars. Not horrible, but not the best. There is a managed care option which doesn't have that limit. http://www.healthinsuranceinfo.net/statecoverageguides/AlabamaHealthInsuranceGuide.pdf

Seems to me the company is doing everything possible to run me away from taking them up on the benefit, doesn't it?
Steve

Or it is trying to help those who can't afford to buy the expensive insurance and are not eligible for the cheaper plan. Maybe better than having people who are unhealthy running the employer's costs up.

 

[huusom]

Don't know about others but I will if they can bring the premium down to about $500/mo for the 2 of us.

 

[Stevewc]

Steve, you might want to talk to an independent agent to see what your options are for a lower cost plan. You might find a far better deal if you are healthy than the employer subsidized risk pool. Also, I see that the Alabama BCBS plan has lifetime limits of a million dollars. Not horrible, but not the best. There is a managed care option which doesn't have that limit. http://www.healthinsuranceinfo.net/statecoverageguides/AlabamaHealthInsuranceGuide.pdf


Or it is trying to help those who can't afford to buy the expensive insurance and are not eligible for the cheaper plan. Maybe better than having people who are unhealthy running the employer's costs up.

I know I need to be careful what I wish for once again. Since no one seems to know what the " if's,and's, and buts " will be when the legislation is finished. It is possible that the risk pool thingy will disappear and everyone will be thrown into the same price range. That could be a plus in my situation. But I suppose it could also raise the current price for others. Seems to be a Damn if you do and Damn if you don't thing.
So will anyone win
Steve

 

[Gone4Good]

I still haven't heard any predictions about whether health insurance would become cheaper with the plans being considered. This is asked from the perspective of someone who pays $225/month for a $3,500 deductible HSA.

I think the math gets pretty simple if you assume that everyone has to get insurance and no one can be excluded. Under that set of assumptions, individual health insurance should cost a little more than our per capital health care spending (less any government subsidies). Right now we spend about $4,300 per person. So a plan that covers one person with a $3,500 deductible for $2,700 per year might have a little room to come down (on average).