Health Care Costs in 5-7 years?

[LRDave]

(Mods: Please move if in the wrong forum.)

Are you expecting evolutionary (inflation rate plus) or revolutionary (exponentially higher costs, single payer options, etc.) changes in the cost of health care in 5-7 years?

DW has a health care retirement benefit in her current benefit plan, but who knows if it will still be there in 5-7 years?

It is not too hard to put together budget for the best-case scenario, but what would you guess the worst-case scenario might be like?

Thanks in advance for any insights or opinions.

LRDave

 

[MichaelB]

Hi LRDave, welcome to the forum. Why not stop by here and tell us al little about yourself.

(Mods: Please move if in the wrong forum.)

Are you expecting evolutionary (inflation rate plus) or revolutionary (exponentially higher costs, single payer options, etc.) changes in the cost of health care in 5-7 years?

DW has a health care retirement benefit in her current benefit plan, but who knows if it will still be there in 5-7 years?

It is not too hard to put together budget for the best-case scenario, but what would you guess the worst-case scenario might be like?

Thanks in advance for any insights or opinions.

LRDave

Worst case scenario. How can anyone judge that? An inflationary repeat of the past 5 years over the next 5 would be pretty bad.

 

[rescueme]

Your question got me to thinking of what increases we actually had year over year, since my retiring in early 2007 along with what we will pay (based upon 2012 stated rates) for 2013, when we both will be on Medicare.

Here's the % increases, year over year:

2007 - first year of retirement
2008 - 0.87% increase
2009 - 1.72% increase
2010 - 0.00% increase (same rate as 2009)
2011 - 14.38% increase
2012 - 14.42% increase
2013 - Anticipated -64.14% decrease from published 2012 rate, due to start of Medicare (calculated on 2012 actual stated rates from company for Medicare eligible folks).

That's just an FYI, from our little corner of the world. Also, rates depend on how many years you had with the company, on three tiers.

What does it all mean? I have no idea. The only concern I would have as a new employee with my former company is the fact that they have not offered any retirement health "benefits" (e.g. you pay, at group rates) for new employees for a few years before I retired.

I can't wait till January 1, 2013 (when I go on Medicare - DW, a few months later) for a "raise" ...

 

[tightasadrum]

I can't wait till January 1, 2013 (when I go on Medicare - DW, a few months later) for a "raise" ...

Well, that's what I thought too. My "raise" turned out to be less than I hoped. I opted for the company's Advantage plan + Medicare Parts A&B. Savings for me was a 20% reduction. Add in DW's continued coverage on former plan, the savings is closer to 10%. Better than a stick in the eye, but barely enough to take DW out to dinner...Tight

 

[Koolau]

LRDave, my Megacorp sponsored retiree health insurance "coordinates" with Medicare. i.e., it's sort of like buying one of the Medigap insurance plans. I'm sure, due to some subtle differences, it won't be exactly the same, but, the idea is that we should see little difference in total health care outlay before and after Medicare kicks in. (That's Megacorp's line anyway.) For instance, our monthly insurance premiums go down, but, then again, we have to pay Medicare. That's not quite a wash, but close. Then, whatever Medicare doesn't pay, Megacorp retiree insurance steps in and makes it the "same" as if we were still on just Megacorp insurance. So, "out of pocket" should not change (yeah, right, heh, heh).

All of this is great, except this year we will have paid $10K (NOT including our LTC insurance) for healthcare. That's monthly premiums and out of pocket (co-pays, non-covered expenses, etc., etc.)

How bad could it get? Well, to start with, Megacorp reserves the right to discontinue the plan at anytime and/or raise the premiums (about 15% to 20% most years so far). Worse would be Medicare "means testing" on steroids. Now, Medicare does means test, but it's based on income. What if they decide to means test based on assets? It's clear that Medicare MUST change. Everyone worries about SS, but Medicare is the real 800 pound gorilla in the room. Without changes, Medcare will make our $15 Tril. debt seem small within a few years. I honestly have no idea what will happen, but it will not be pretty (or cheap). I have built in several contingencies to my FIRE plan to cover what I can only guess will be as much as a doubling of our health care costs. Naturally, YMMV.

 

[LRDave]

LRDave, my Megacorp sponsored retiree health insurance "coordinates" with Medicare. i.e., it's sort of like buying one of the Medigap insurance plans. I'm sure, due to some subtle differences, it won't be exactly the same, but, the idea is that we should see little difference in total health care outlay before and after Medicare kicks in. (That's Megacorp's line anyway.) For instance, our monthly insurance premiums go down, but, then again, we have to pay Medicare. That's not quite a wash, but close. Then, whatever Medicare doesn't pay, Megacorp retiree insurance steps in and makes it the "same" as if we were still on just Megacorp insurance. So, "out of pocket" should not change (yeah, right, heh, heh).

All of this is great, except this year we will have paid $10K (NOT including our LTC insurance) for healthcare. That's monthly premiums and out of pocket (co-pays, non-covered expenses, etc., etc.)

How bad could it get? Well, to start with, Megacorp reserves the right to discontinue the plan at anytime and/or raise the premiums (about 15% to 20% most years so far). Worse would be Medicare "means testing" on steroids. Now, Medicare does means test, but it's based on income. What if they decide to means test based on assets? It's clear that Medicare MUST change. Everyone worries about SS, but Medicare is the real 800 pound gorilla in the room. Without changes, Medcare will make our $15 Tril. debt seem small within a few years. I honestly have no idea what will happen, but it will not be pretty (or cheap). I have built in several contingencies to my FIRE plan to cover what I can only guess will be as much as a doubling of our health care costs. Naturally, YMMV.

Thank you so much for the response - very helpful.

$10K - given your coverage? You are starting to talk about real money....

Doubling? That would've been my guess as well.

I think there will be a revolutionary (not evolutionary) change by my 5-7 year horizon. I am guessing some flavor of single-payer option (or requirement...). For today, I am only guessing this and not budgeting for this.

Thanks again for the input and more comments are welcome and appreciated.

LRDave

 

[ziggy29]

I keep telling myself that trees can't grow infinitely to the sky, but it sure looks like health care costs can.

 

[pb4uski]

...I think there will be a revolutionary (not evolutionary) change by my 5-7 year horizon. I am guessing some flavor of single-payer option (or requirement...)......

I think/hope that you are right that there will be some sort of revolutionary change. Something needs to happen because the current situation is unacceptable.