Is healthcare delaying your retirement decision?

[msieweke]

I'm not postponing... I caught the OMY disease for a couple years, but finally gave notice in January and my last day working will be May 5. I'll use COBRA for the following 18 months and then hopefully this HI mess stabilizes. I'm 47 with 2 young kids, so HI will be a big part of my FIRE expenses.

Consider delaying retirement 4 weeks. Your COBRA will end in November, which means you have to sign up for insurance for December and again in January. It's not a big deal, but I wish I had thought of this before I retired last May.

 

[pb4uski]

We have a kid attending college in another state several hundred miles away from where we live. The only insurer we have available on the ACA will not cover dependents in another state. Our only option is an individual policy for DS ($200-$300/mth) in the state where DS attends school. But if we remove DS from our coverage, the ACA subsidy cliff changes from ~$80k to ~$64k. We had a chance of receiving a subsidy at $80k but certainly not at $64k.

I didn't think an insurer issuing ACA plans could refuse to cover dependents no matter where they live... are you sure about that?

The Patient Protection and Affordable Care Act (ACA) mandates that all health insurance carriers in every state that offer coverage to both adults and their dependents must allow dependents to remain on their parents or guardians’ “family” plans until the dependents are 26 years old. The issued regulations state that young adults are eligible for this coverage regardless of any, or a combination of any, of the following factors: financial dependency, residency of the young adult, student status, employment status, or marital status. This applies to all plans in the individual market and to almost all employer plans (small group, large group, including self-funded or so-called ERISA plans) created after March 23, 2010.

Dependent Health Coverage and Age for Healthcare Benefits

 

[daylatedollarshort]

We have a kid attending college in another state several hundred miles away from where we live. The only insurer we have available on the ACA will not cover dependents in another state. Our only option is an individual policy for DS ($200-$300/mth) in the state where DS attends school. But if we remove DS from our coverage, the ACA subsidy cliff changes from ~$80k to ~$64k. We had a chance of receiving a subsidy at $80k but certainly not at $64k.

Our expenses are more than $64K a year, but we took out a HELOC to cover some of the difference. The interest on the HELOC is much less than we get in subsidies so the math works out for us.

 

[MichaelB]

I didn't think an insurer issuing ACA plans could refuse to cover dependents no matter where they live... are you sure about that?

If the insurance plan is an HMO or has a local / regional network, a child on the policy going to an out of state university would be considered "out of network" for everything other than emergency treatment.

 

[pb4uski]

Understood, but Carp said that the insurer would not cover.

 

[street]

For us it was a big ticket item but we had the money to pay for HI so we jumped. I figured about 1200 a month and about 1200 for drugs a year and it has been half of those numbers. It really wasn't something that would of stopped me from retiring. We have 7 years to pay for insurance before Medicare.

 

[Carpediem]

Our expenses are more than $64K a year, but we took out a HELOC to cover some of the difference. The interest on the HELOC is much less than we get in subsidies so the math works out for us.

Taking out a HELOC is part of my retirement plan too. I had the exact same thought about using it as needed to stay under the ACA cliff.

Understood, but Carp said that the insurer would not cover.

pb4uski, Thanks for the ACA info on dependents. I have to admit that I can't remember now if I was talking to BCBS in relation to an ACA plan or about an individual coverage plan. I'll have to follow up with them again. Our only ACA choices here are 5 different flavors of BCBS coverage. (They're not Anthem owned.)

For us it was a big ticket item but we had the money to pay for HI so we jumped. I figured about 1200 a month and about 1200 for drugs a year and it has been half of those numbers. It really wasn't something that would of stopped me from retiring. We have 7 years to pay for insurance before Medicare.

street, How did you come in under your 1200 a month number for prems? Subsidies?

 

[daylatedollarshort]

Taking out a HELOC is part of my retirement plan too. I had the exact same thought about using it as needed to stay under the ACA cliff.

We have a Bronze HSA policy, so the HSA account gives us a bit more headroom on the MAGI, along with writing off some hobby business expenses, like the unsubsidized portion of our health insurance premiums. Nontaxable rewards like frequent flyer miles also help give us a little extra headroom.

 

[Live And Learn]

When I retired I had a plan and a backup plan. The plan was retiree health care. The backup was ACA. Retiree health care plan was cancelled. I actually have 30k / year budgeted for healthcare (premiums plus OOP max) and I don't think that's enough.

Luckily DH did not ER so he may have to work a few more years until HC is resolved.

 

[Carpediem]

When I retired I had a plan and a backup plan. The plan was retiree health care. The backup was ACA. Retiree health care plan was cancelled. I actually have 30k / year budgeted for healthcare (premiums plus OOP max) and I don't think that's enough.

The post above got me thinking about budgeting for HC. How do folks budget for HC? Do you budget for a worst case scenario? Do you budget for annual prems + max OOP?

 

[wmc1000]

Carpediem, we always budgeted annual prems + max OOP and that is why I went PT for the final 3 years to keep employer plan in place. Then we only had 2 yrs to manage under ACA before Medicare

 

[Fermion]

Curious if anyone sees a problem here? People are budgeting more for their healthcare on ER.org per year than 70% of the general public have as their entire net worth. Either you are wrong and grossly overestimating or we (USA) are about to have big big problems.

 

[euro]

Curious if anyone sees a problem here? People are budgeting more for their healthcare on ER.org per year than 70% of the general public have as their entire net worth. Either you are wrong and grossly overestimating or we (USA) are about to have big big problems.

Yes, a pretty stunning and sobering observation!

 

[HillCountry]

As 10% of participants of this forum are one percenter, I am not surprised at people's budget on medical expenses.

And 30k IS a realistic number today without subsidies.

 

[Breedlove]

A question , a very good friend of mine retired earlier then me and explained what he did . He went to each of his doctors and explained he was retired and would pay cash . He bought a very high deductible insurance from the ACA . He keeps a credit card at all time available for the high deductible ( emergency )

Now in February I went for my physical they charged my DW insurance 180.00 . I asked the doctor how much if I pay cash . He told me to talk to his office assistant . It was 84.00 . Now if you do this it seems to reduce the day to day that you pay high insurance premiums for . If I were to buy a 6000.00 deductible ins. from the ACA here it would be around 300.00 per month .

 

[fh2000]

A question , a very good friend of mine retired earlier then me and explained what he did . He went to each of his doctors and explained he was retired and would pay cash . He bought a very high deductible insurance from the ACA . He keeps a credit card at all time available for the high deductible ( emergency )

Now in February I went for my physical they charged my DW insurance 180.00 . I asked the doctor how much if I pay cash . He told me to talk to his office assistant . It was 84.00 . Now if you do this it seems to reduce the day to day that you pay high insurance premiums for . If I were to buy a 6000.00 deductible ins. from the ACA here it would be around 300.00 per month .

Can you clarify how paying cash works for your friend while he has a high deductible health plan? I assume this is Bronze HDHP with HSA perhaps.

Don't all payments need to be submitted to insurance even though you pay the full amount first in order to satisfy the deductible, therefore it is the insurance company amount, not the doctor office' cash amount?

 

[HillCountry]

I think health care just give people excuse to delay retirement. Without this, they just find other excuses.

 

[ivinsfan]

I think health care just give people excuse to delay retirement. Without this, they just find other excuses.

Really I'm curious, how do you pay for your healthcare/insurance and how do you estimate what it will cost you between now and 65?

 

[simple girl]

The post above got me thinking about budgeting for HC. How do folks budget for HC? Do you budget for a worst case scenario? Do you budget for annual prems + max OOP?

We decided to budget for "semi-worst" case scenario. Our budget is for a silver plan without subsidies. We include the full cost of the premium, but only 1/2 of the max OOP - with the theory being it is unlikely to hit your max OOP every single year until Medicare age. Possible, yes - but a 50% target seemed more reasonable to us.

I had budgeted for it to increase by 13% yearly, although based upon some more recent rate increases I have seen, this may very well be entirely too optimistic.

I use Fidelity's RIP tool. It increases healthcare expenses by 5.5%/yr. So, I created a spreadsheet that helped me figure out what number I could put in for our pre-Medicare healthcare insurance that would account for the difference between 5.5% vs 13% annual increase in healthcare costs.

For example:

Our estimate for marketplace insurance was $431/mo/pp in premiums with a yearly max OOP of $6350 pp. Half of the max OOP would be $3175, or $265 pp/mo. So, my baseline per person cost would be $431 + $265 = $696 pp/mo.

After applying these numbers to my spreadsheet and increasing costs by 7.5%, I projected that the monthly total expense to enter into Fidelity should be $1240/mo/pp ($14,880 per person annually, so projecting $29,760 total for the two of us per year).

RIP lets you enter a monthly healthcare cost for "x" number of years, then switch to Medicare. So I enter $1240/mo for both my husband and I on separate line items of the budget (2018 to 2029, and 2018 to 2033). I then enter my Medicare projections for us to start at the appropriate year. I do not modify the Medicare amounts because the 5.5% so far appears to be based upon Fidelity's research of how much Medicare is increasing every year.

All this number crunching helps me feel like I am at least making a reasonable effort to plan for something that, unfortunately, is very unpredictable!

Every year that we don't end up spending the amount projected on healthcare will increase our "cushion" for future year's expenses. Hopefully we will not need to meet that max OOP regularly...it is a risk.

My back up plan is:

1) keep working my part-time job the first few years to help defray costs higher than what we project

2) we go back to work full-time for employer sponsored insurance

 

[simple girl]

really I'm curious, how do you pay for your healthcare/insurance and how do you estimate what it will cost you between now and 65?

+1

 

[Alex The Great]

I think health care just give people excuse to delay retirement. Without this, they just find other excuses.

I think, it depends. There are people with serious chronic health issues, which have to be careful about health care cost. The cost is rising day by day and ACA will eventually be changed: I don't think anyone would object it. One opportunity is to live abroad: it is not for everyone, it is for people who either have roots in other countries or those ready to overcome many challenges while they are not that young anymore. I also like idea to pay cash to doctors while signing up for insurance with high deductable. But it would work for healthy people: some procedures can be terribly expensive without insurance. I know some people who live close to Mexican border may come across the border for treatment. There is no single solution for all people. There are some solutions, but most people prefer to delay retirement if no solution fit their situation.

 

[Carpediem]

After applying these numbers to my spreadsheet and increasing costs by 7.5%, I projected that the monthly total expense to enter into Fidelity should be $1240/mo/pp ($14,880 per person annually, so projecting $29,760 total for the two of us per year).

Thank you, simple girl. Those are some sobering figures to digest. I currently have $20k/year estimated for HC expenses when I retire and I'm starting to realize that's probably too low.

Has anyone considered going with a HDHP plan and 'supplementing it' with a Health Share program like Liberty Healthshare? Would that work?

 

[Dreaming of Freedom]

The healthcare mess in the US is delaying our retirement. Having to budget $25,000/year for healthcare when all our other expenses are only $25,000/year is rediculous. I think that amount is fairly accurate though as the premiums for my large group HDHP policy are $17,500 for a couple or family plus another $5,200 for the Max OOP. Unfortunately we cannot stay on the policy past COBRA, and will have to fend for ourselves eventually. Leaving the US to obtain affordable healthcare is one option we will look at. Yes, the US is in trouble with respect to the cost of healthcare and our overall GDP.

 

[iloveyoga]

Curious if anyone sees a problem here? People are budgeting more for their healthcare on ER.org per year than 70% of the general public have as their entire net worth. Either you are wrong and grossly overestimating or we (USA) are about to have big big problems.

I used ACA for 2 years and you are not overestimating. It sent me back to work PT.

 

[Ed B]

The healthcare mess in the US is delaying our retirement. Having to budget $25,000/year for healthcare when all our other expenses are only $25,000/year is rediculous. I think that amount is fairly accurate though as the premiums for my large group HDHP policy are $17,500 for a couple or family plus another $5,200 for the Max OOP. Unfortunately we cannot stay on the policy past COBRA, and will have to fend for ourselves eventually. Leaving the US to obtain affordable healthcare is one option we will look at. Yes, the US is in trouble with respect to the cost of healthcare and our overall GDP.

I feel your pain. My projected HI expenses at ER in early 2019 are $1850 per month for the company retiree helpcare plan. The rest of our expenses including mortgage, electric, and normal recurring expenses plus $1000/mo for food, $600/mo for gasoline and $500/mo hobby expense is $3500/mo for a total of $~5200/mo.

Our HI budget includes premiums and OOP max for the family. Every time i want to cuss about the company retiree health plan i just run a ACA exchange calculation and realize it aint bad in context to what is available to me.