Retiree Medical - ouch?

[pb4uski]

Check healthcare.gov for your official alternatives. You may qualify for a subsidy if you are living off already-taxed investments and keeping your income low.

Healthsherpa is another good source as a first place to start.

 

[jebmke]

Our is about $600 a month for retiree medical. Our employer subsidy is capped so all inflation is passed along to us. I budget about $1,000 a month all in.

Don't forget to budget for things that are not covered by health insurance (e.g. dental and eye exams/glasses). This stuff can add up.

 

[gauss]

Though my Megacorp pension will be not particularly generous when I start to collect at 55 (roughly 20% of my final year's pay after 26 years with the company) they do have a decent retiree medical plan. They subsidize 3.3% for every year of service, so while I won't get the full ride I will get about a 90% subsidy - meaning premiums of $80-95/month for me (or double that if DW quits her job and gets onto my plan).

I believe this subsidy ends when Medicare takes over, but I'll drive off that bridge when I come to it.

Sounds like a nice setup. Hopefully the policy will remain unchanged until you reach Medicare age.

As you likely know, unlike pensions, health care benefits are considered "unprotected" by ERISA and thus companies can change the terms at any time for any reason -- even benefits that appear to accrue yearly.

-gauss

 

[EastWest Gal]

My COBRA will be about $1500/month for two of us and my college student DS. I think my company is probably lying about the premium, since I have a HDHP and HSA. I'm looking into ACA insurance now-I'll save a minimum of $500/month. DS graduates and hopefully will become one of those dispicable public employees (sarcasm) ie a school teacher, with a health plan. I have a friend who ER'd this year from public school teaching and she also needs to buy her own health insurance.

I work in healthcare and I can't even tell you what my organization bills for my work! It's nuts.

 

[Corporateburnout]

My cobra rate will be $940 for the two of us. A silver plan with similar benefits through the ACA will cost us approx $600 after subsidies. I don't have to make a decision for a few months as I'm covered through March 2015.

 

[Huston55]

Must respectfully disagree. Reality is high HI premiums are due to high overall HC costs. Insurers are sometimes a PITA, but they are generally among the lowest profit margin businesses in the US with typical margins from 2-5%.
Health insurer profits not as fat as Dems claim - politics - Health care reform | NBC News
Health Insurance Profits: Not Worth the Outrage? - ABC News
Compare that with typical profit margins of 15-20+% for Big Pharma and 12+% for medical device makers.
Ezra Klein - Health-insurance industry: Still not that profitable
And as we all know, the huge $$$$ we in US spend on drugs, devices, etc. buys us no better outcomes than other developed countries.
With Health Care Costs, the U.S. Is a Huge Outlier | Brookings Institution

Ever rising costs are a problem worldwide, and interestingly US is not among global leaders in HC inflation. Seems other nations are starting to close the HC spending gap.
Middle East, Africa lead rising global health care costs for 2014: Survey | Business Insurance

And I must respectfully disagree with your disagreement.

I will make this brief in the hope that I don't bring out the bacon nor derail the thread.

Focusing on health insurer profits completely misses the point when discussing health care cost. It's like saying your car doesn't go fast enough because it has a bad paint job. See the attached article, Table 3-1 in particular. That's where the "pony" is; all the rest is...well you know.

http://economix.blogs.nytimes.com/2013/09/13/waste-vs-value-in-american-health-care/

 

[Totoro]

How the US manages to spend double or more of what most other countries spend, and with worse outcomes on average, is a very sad achievement.

One example of worse outcomes: infant mortality is at 5.4 out of 1.000 in the US. Japan is at 2.6, Germany at 3.7

 

[eytonxav]

I paid about that amount for both medical and dental for me, DW and kids at a 64% subsidy, although our plan had no deductible, just co-pays.

 

[pb4uski]

And I must respectfully disagree with your disagreement....

Huston, I'm not sure what your point is. I think ERHoosier is correct in that health insurer profits are not a significant contributing cause to the escalation of health insurance premiums, particularly since medical claims cost ratio limits were put in place a couple years ago. Health care costs, which ultimately become health insurance claims are the major cause for the reasons described in the article and summarized in Table 3-1.

 

[bulbar]

+1 I'm thinking the same thing - no way it is 80% subsidized given the pricing of unsubsidized HDHI policies. I wonder if perhaps active employees are 80% subsidized - the $93 a month would seem to fit with that.

Yes, the $774/month is at 80% subsidy. I was trying to paste a snapshot of it into this message but I can't. But here is the verbatim of what it says:

75-79 points (80% subsidy)
You, Souse & Child(ren)
Monthly Retiree Cost
$774.00

 

[bulbar]

Thanks everyone for the replies. I guess I don't feel so bad. But it's still a big hit to take in retirement having to shell out an incremental $8,000 a year in premiums. I guess that would be equivalent to maybe $200k more in savings I'd need.

 

[WannabeRetired]

Premiums will likely go up each year. Out-of-pocket costs will need to be accounted for along with the monthly premiums. To me, health care costs make early retirment very scary.

 

[pb4uski]

Yes, the $774/month is at 80% subsidy. I was trying to paste a snapshot of it into this message but I can't. But here is the verbatim of what it says:

75-79 points (80% subsidy)
You, Souse & Child(ren)
Monthly Retiree Cost
$774.00

bulbar, the reason I am skeptical that the $774 is 80% subsidized is because that would mean the unsubsidized premium for a family would be $3,870 a month ($774/(1-80%) and that is way above any family premium available in the marketplace for HDHI coverage that I have ever heard of. As points of reference, my 2012 COBRA which was unsubsidized HDHI would have been $900 a month for a couple and my current HDHI policy is $683. While those are for a couple, family coverage would be a little more but not over 5 times more.

In any event, $774 for family HDHI coverage is pretty good. What would a comparable HDHI policy be according to healthsherpa?

 

[pb4uski]

Thanks everyone for the replies. I guess I don't feel so bad. But it's still a big hit to take in retirement having to shell out an incremental $8,000 a year in premiums. I guess that would be equivalent to maybe $200k more in savings I'd need.

You're right that it is a significant cost but $200k sounds a bit high because it would be for 10 years at most (you'll go on Medicare at 65) and might decline once the kids are off the policy.

 

[aja8888]

Premiums will likely go up each year. Out-of-pocket costs will need to be accounted for along with the monthly premiums. To me, health care costs make early retirment very scary.

They are scary in a normal retirement setting too.

 

[ERhoosier]

And I must respectfully disagree with your disagreement.

I will make this brief in the hope that I don't bring out the bacon nor derail the thread.

Focusing on health insurer profits completely misses the point when discussing health care cost. It's like saying your car doesn't go fast enough because it has a bad paint job. See the attached article, Table 3-1 in particular. That's where the "pony" is; all the rest is...well you know.

http://economix.blogs.nytimes.com/2013/09/13/waste-vs-value-in-american-health-care/

So where's the disagreement? Overall HC costs are too high but this is not mainly due to HI companies. If you go to the IOM source material, most of the "Excess Administrative Costs" are NOT due to the insurance co's but are spread throughout the system. Much of it is at the provider/hospital level (e.g. too many supervisors per doc/nurse/tech actually delivering care), much is due to gov't mandates/unnec regulations, and much is due to just plain silliness (e.g. spending $25 in billing costs to recoup a $2 payment...duh!). And big insurers are on the front lines in the fight against the 3 of the 4 biggest sources of excess costs-"Unnecessary Services", "Inefficiently Delivered Care", and "Excessively High Prices". It's very hard for individual patients to impact these directly, but big insurance (warts and all) has the clout to push back. BTW- I think IOM's definition of "Excessively High Prices" seriously UNDERestimates this factor- particularly with Big Pharma and the medical device makers.

FWIW- I've followed Reinhardt's work for years. Some is "pony" and some is....well you know . But IMHO this is a good synopsis of factors in excess US HC costs. I would love to see a similar analysis of HC overhead in other developed nations.

 

[robertf57]

How the US manages to spend double or more of what most other countries spend, and with worse outcomes on average, is a very sad achievement.

One example of worse outcomes: infant mortality is at 5.4 out of 1.000 in the US. Japan is at 2.6, Germany at 3.7

Unfortunately, Comparisons of this sort are fallacious. This is a confusion of HEALTH and healthCARE. Non-healthcare determinants like motor vehicle accidents, drug addiction, violence, and socioeconomic issues like teenage and unwed pregnancy have strong impacts on indicators like infant mortality and have nothing to do with Healthcare. If one actually examines Healthcare, the USA is outstanding. It should also be noted that the US subsidizes healthcare around the globe by being the center of research in healthcare: the rest of the world takes a free ride.

 

[daylatedollarshort]

If one actually examines Healthcare, the USA is outstanding.

It depends on what metrics you are looking at. If you are looking at costs compared to other countries for the same procedures and number of uninsured, I agree, those statistics show we are outstanding in these two areas.

In 2013 we had more uninsured than the entire population of Canada.

 

[Totoro]

If one actually examines Healthcare, the USA is outstanding. It should also be noted that the US subsidizes healthcare around the globe by being the center of research in healthcare: the rest of the world takes a free ride.

Do you have a source that marks the USA as outstanding in overall healthcare?

Here is one study of many describing it's not
MMS: Error

I won't dispute that the best healthcare in the world for many ailments can be found in the USA, if you can afford it. Most (99%) of its citizens however, can't. They are getting a bad deal, paying twice as much for poorer outcomes vs. other developed countries. That said, don't underestimate countries like Singapore. I'd much rather have a medical emergency there than in any US city.

In terms of research the USA also have the edge overall, although certainly not in all areas. More importantly however, the total amount spent on research in the US is nowhere near 3.500 USD per person (or >1 Trillion USD, yes with a "T"), which is what you are spending more than the average OECD country (adjusted for purchasing power) annually.

List of countries by total health expenditure (PPP) per capita - Wikipedia, the free encyclopedia

All the facts i've seen point to a system that's too expensive for what it delivers. Would love to find out if my perspective should change though!

 

[GTFan]

Wow, I'm really not understanding why folks have a hard time staying under 2-300% FPL to get the generous ACA subsidies (and cost-sharing). If you're living off savings and investments as I plan to do, where is the high income that would take you past the subsidy range? Are y'all just living in high expense areas and declaring a lot more income than we are planning?

For example, our current expenses are around $36k a year. If I draw that much from savings/investments (or less, since wife is earning around $15k doing a little part time work and we'll have cap gains and dividend distros anyway), I can easily see us staying below 200% FPL and getting very generous subsidies and cost sharing for Silver plans. I did a quick look recently and we can get plans for $150/mo. or so with $4500 max family out of pocket for the year.

 

[Alan]

Wow, I'm really not understanding why folks have a hard time staying under 2-300% FPL to get the generous ACA subsidies (and cost-sharing). If you're living off savings and investments as I plan to do, where is the high income that would take you past the subsidy range? Are y'all all just living in high expense areas and declaring a lot more income than we are planning?
.

Lots of us dinosaurs and retired government employees with pensions can't manage our incomes down to subsidy levels.

 

[WannabeRetired]

Can the government afford to continue such large ACA subsidies? Can I really count on them throughout early retirement until reading Medicare age? Maybe in a decade or two out-of-pocket costs for Medicare will be just as high as current ACA plans. Also, maybe it makes more sense to forego the ACA subsidies now and instead do Roth conversions from traditional IRA accounts?

 

[Live And Learn]

Wow, I'm really not understanding why folks have a hard time staying under 2-300% FPL to get the generous ACA subsidies (and cost-sharing). If you're living off savings and investments as I plan to do, where is the high income that would take you past the subsidy range? Are y'all just living in high expense areas and declaring a lot more income than we are planning?.

Under current law, with current spending, assuming most from post-tax account we will be under 400% FPL (and prob below 300% FPL). BUT I don't feel it is prudent (for me) to count on the subsidies because I don't know how the laws will change until we are eligible for Medicare in 15 years. I'm the type that hopes for the best but plans for the worst. If I get the subsidy I can always figure out a pleasant way to spend it.

 

[GTFan]

The law isn't going to change anytime soon especially with the intransigent crowd we have running the place now. You go with what you have, not what might happen in 5-10 years. What if Medicare and SS get whacked? Same deal, you just don't know. But I've got to plan on them being there just like you do.

 

[MichaelB]

CBO projects total gross spending for Medicaid, CHIP and all ACA exchange related subsidies and exchange based assistance to cost around $2T between 2015-2024. (here) The tax break given to employer provided health care over the same timeframe will be around $3T, or 50% more (here). Of the total $5T in tax breaks and subsidies, around $4T was already in place before the ACA.