Health insurance postwork premedicare

[SecondAttempt]

As I approach 1.5 years from R-day, I'm trying to get my ducks in a row.

My plan is to to use COBRA for 18 months but that is debatable.

But after that I will need about 4 years of fully paid insurance. I am budgeting for the platinum plan, the most expensive option. But I am really not sure how to think about what I actually need or should get.

For example, here are the options from BC/BS Hawaii (HMSA)

Deduct OoP max Coinsur Copay 1 Copay 2
Platinum $0 $7,150 10% $20 $20
Gold I $0 $8,550 30% $40 $40
Gold II $1,000 $8,550 20% $20 $20
Silver I $2,500 $8,550 30% $45 $45
Silver II $2,500 $8,550 30% $45 $45
Bronze I $8,550 $8,550 0% $35 $0
Bronze II $6,900 $6,900 0% $0 $0

Coverage seems to be very similar with the differences being financial.

So how do I pick? I can do the financial what ifs and math but if I am generally healthy, why would I not pick the Bronze II? No copays, no coinsurance if something major happens, etc. Big risk is OoP max for $6900 and the savings over platinum is about $4800 per year.

I can do the math based on my own assumptions. I guess I am just confused because insurance companies are experts at statistics and risk decisions so I don't understand why the math seems so lopsided.

What am I missing?

 

[Irishgirlyc58]

Is the bronze II a hdhp with an hsa?
If so, do you have the funds to cover the $6900 if it becomes necessary?

If you don’t go to the doctor very often it seems like the best choice if you have the funds to cover should you need to.

If something drastic happens one year can’t you then change to the platinum plan for the following year?

 

[Sarah S]

What falls under the deductible? Are office visits fully covered or do you pay the deductible for non well visits until you hit 6900? If the deductible is for everything not wellness based ( labs, scan, er visits, hospital) it still might be a good bet if you are healthy. When I did the math I found that things were fairly similar in cost if I assumed some significant bad luck but of course bronze was a winner if I stayed well. You also should know yourself. Obviously you would go get checked if you thought something was serious no matter whether you had coinsurance or not. Might you hesitate if you weren’t sure due to cost

 

[MBSC]

Big risk is OoP max for $6900 and the savings over platinum is about $4800 per year... I guess I am just confused because insurance companies are experts at statistics and risk decisions so I don't understand why the math seems so lopsided.

What am I missing?

The math is lopsided because BCBS-HI knows healthy people choose their Bronze plans and will have low medical utilization rates. These enrollees have a small chance of meeting the $6900 deductible/MOOP so the premium reflects this. Unhealthy people choose Gold/Platinum plans and the actuaries adjust for it. A healthy person in a Gold plan is paying other people's claims.

You will encounter this again when you enroll in Medicare and choose a Medigap letter plan. Unhealthy people like Plan 'G' and it is reflected in the premium.

Based on the info provided, it appears the Bronze II may be HSA eligible so that could mean additional savings.

 

[PaunchyPirate]

The way I do this (now on my 4th year of purchasing my own insurance) is to just sit down and do the math that is particular to me.

I base my estimates for the NEXT YEAR (done in November each year) based on the medical expenses I had in the previous year -- how many PCP visits, how many specialist visits, what prescription drugs needed, known medical procedures, etc.

I create a spreadsheet each year and review what that set of medical issues would cost me under each of the available insurance plans. Then I compare that to the premiums for those plans. Most of the time, there isn't a huge difference to me in my location. I can either pay higher premiums (Gold plan) and get better coverage of my medical costs or I can pay lower premiums (Bronze plan) and pay more for the out-of-pocket medical expenses. I have been going with Gold plans since the overall dollars spent at the end of the year are likely to be very similar. I go with Gold, mostly because of the lower Maximum Out-of-Pocket I would face in the situation where I have a major medical issue.

However, if you have few medical issues that require attention, then it would likely make sense to use the Bronze plans. I would happily go with a Bronze plan if I were a fully healthy individual. The more medical issues you anticipate the more sense it makes to go with a silver or gold plan. I'm not sure I would ever go with a Platinum plan. I don't think I have even seen one offered in my location.

Your numbers will be different than mine because of your unique medical situation and the price of plans and care in your location. All you can really do is sit down and do the math each year. You can change your plan every year during Open Enrollment if necessary.

By the way, I never used COBRA since I was able to get ACA coverage that was just as good for slightly less money in my location. It's all about how things look in your location. ACA plans vary a great deal around the country.

 

[teej1985]

The math is lopsided because BCBS-HI knows healthy people choose their Bronze plans and will have low medical utilization rates. These enrollees have a small chance of meeting the $6900 deductible/MOOP so the premium reflects this. Sick people choose Gold/Platinum plans and the actuaries adjust for it. A healthy person in a Gold plan is paying other people's claims.

You will encounter this again when you enroll in Medicare and choose a Medigap letter plan. Sick people like Plan 'G' and it is reflected in the premium.

Based on the info provided, it appears the Bronze II may be HSA eligible so that could mean additional savings.

It depends how you are subsidized...the silver plans can be a lot more generous than the bronze.

 

[swakyaby]

Pre-medicare I initially opted for cobra the first year, then signed up for the bronze plan with HSA the following year. The reason I initially chose the more expensive Cobra coverage was that signing up for an ACA plan required me to find new physicians who were in-network with the ACA insurance, and I could find very few primary care physicians in my area who were accepting new patients. But the following year, with a year of leisurely time to research my options, I chose a bronze plan with HSA with a new primary care doc who was in-network. My health and low utilization meant I didn’t come close to meeting the deductible. Also, my prior year of retirement meant my premiums were lower than ever. For healthy people, the bronze plan is a reasonable option.

 

[SecondAttempt]

]
By the way, I never used COBRA since I was able to get ACA coverage that was just as good for slightly less money in my location. It's all about how things look in your location. ACA plans vary a great deal around the country.

That is why COBRA is debateable.

AAnd thank you and everyone else for the comments so far. They are helpfful in shaping my thought process.

 

[erkevin]

With the three-year extension of enhanced subsidies, I would definitely shop healthcare.gov in addition to looking at COBRA

 

[Aerides]

I wouldn't get terribly worked up on the options now, as they will change, every year. Sometime a bit, sometimes a lot.

Prices, providers, plan offers - 4 years is a super long time. If you're over 50, it's also a long time for judging how your health will hold up. "But I'm fit!" isn't what I mean, but one wonky blood test, or one slip in the shower, and you have a whole bunch of tests and meds and surgery and PT and...yeah there you go.

For your budget planning purposes, I suppose pick a number that feels like a good place north of the middle, and go with it.

In our pre-planning, I swagged 1k per month, never imagined I'd look at a Bronze plan but here we are, 4 years in, very happy with it. We have a HD/HSA plan so that we can continue to contribute to our HSA's for other tax benefits. Yes, we have hit our deductible a couple times (see above about over-50 surprises), but our premiums are less than my sister currently pays working to insure a family.

 

[bobandsherry]

As you noted, it comes down to just financial. You either pay immediately with a premium or possibly pay over the year with out of pocket expenses. From my experience, now in my 7th year of post retirement/ ACA life, if you are relatively healthy you will save by paying lower premium and go with the higher out of pocket max of a bronze plan. People in some areas find that a silver plan ends up being cheaper, but depends on the subsidy. Has been the case for me, and doubt in HI you will find that either.

Something else to consider is HSA plan if you have available funds and taxable income. I continue to pay out of pocket and still fully fund my HSA each year. I have built this up and it's my emergency fund should something significant come up medically.

Additionally, I retain the receipts for what I paid out of pocket and can then use those to withdraw my HSA funds tax free should a non-medical emergency come up, or I just want to blow that dough on something. Funds put into an HSA are also tax deductible, and any growth is tax free as well, providing it's to reimburse for medical expenses. So keep those receipts.

 

[Buckeye]

This is slightly off topic but, if you are a veteran, VA healthcare is another option for healthcare. Or use it in conjunction with insurance (like my DH does with Medicare) to save some money. I served 10 years in the military so I am not retired from the military. I quit working at 52 and the VA has been my healthcare provider for the last 11 years.

 

[COcheesehead]

The way we decided was to look at cost of the plan, cost of likely co pays, cost of co insurance and then the yearly deductible limits. We went with a gold plan. One medical event and it pays for the extra premium. We rarely have gone a year without something unexpected happening.
There may also be tax benefits associated with your insurance premiums.

 

[Scuba]

DH and I have been buying our own insurance since retiring in 2016. Until this year, we never met our deductibles, let alone our OOP max. Although we had been deemed very healthy by our PCP year after year, DH had an unexpected heart attack followed by emergency quadruple bypass surgery this year, and I had shoulder surgery to repair a torn rotator cuff. We will blow away our OOP maximums this year.

Point of this story is that you never know what might happen. All those years I thought our health insurance was kind of a ripoff. Boy was I wrong. This year we’ve gotten it all back and more with what they’ve paid out for us.

 

[grayv]

heart attack followed by emergency quadruple bypass surgery this year

if you don't mind, what was the cost of this?

 

[EastWest Gal]

I would ask for three numbers:
What the hospital and doctors charged.
What the insurance paid.
Your out of pocket cost.

Also, surprise bills are now illegal.

https://www.cms.gov/nosurprises/Ending-Surprise-Medical-Bills

Keep an eye on all of these numbers. Hospital systems and insurance companies rely on confused consumers to overpay.

It’s an eye opener to see how much is charged and how insurance companies handle it. My aunt got a $3000 bill for a “holding room” and the insurance company paid $30.

 

[jim584672]

Personally I would avoid COBRA since it is always very expensive. Don't know how much income you are going to have but the ACA is generous especially at lower income levels. And through 2025 no income limit cut off.

 

[Scuba]

if you don't mind, what was the cost of this?

Total billed was almost $650K. Amount insurance paid was around $165K.

 

[blueskyk]

If something drastic happens one year can’t you then change to the platinum plan for the following year?

This is a great feature of the ACA - the fact you can choose a different plan each year and if you move to another state.

I delayed surgery (non life threatening) until Jan 1 after I switched to a Gold plan and had almost no deductible or OOP. Then we moved to another state 3 months later and I went back to HD Bronze plan.

Even if you have a bunch of deductible/OOP one year, you can change it for the following year.

DH and I never had any serious health issues until we did - last year he had two unrelated cancers (one discovered in a scan to check for metastasis of the original). We had just switched to Medicare and had Plan G also so we were OOP about $300 for chemo & rad and all that goes with that…a big lesson we learned is that there are still lots of expenses associated with cancer treatment support that are not covered (dietary, OTC meds, etc).

Depending on age an family history and the hard cold fact of bodies wearing out and being mortal, I would choose better plans as I got older.

 

[SecondAttempt]

Total billed was almost $650K. Amount insurance paid was around $165K.

I'm sorry but I am stupid on health insurance. Can you explain what this means?

So you have insurance with some deductible and some out of pocket maximum.

Let's say deductible is $5,000 and OOPM is $10,000 just for round numbers.

My understanding is that you would have paid $15,000 maximum (or maybe $10,000). You say the insurance company paid $165k. Did the doctors and hospital get stiffed for the rest ($470k)?

I apologize if this sounds like a stupid question. But I really do not know how this works. It is clearly an area I need to get smart on. I have been healthy all my life and rarely used health insurance for anything but dental. Obviously that will change at some point as it does for everyone so I should educate myself.

I know what a deductible is, a copay, and so forth. I understand the idea of an out of pocket maximum but don't understand the specifics.

Is it that the hospital bills you at its public rates but has a network deal with your insurance company?

 

[SecondAttempt]

I have a PhD in a technical field and an MBA in finance. The answers here have my head spinning, not because I don't appreciate them but because you all are showing me how ignorant I am on health insurance.

I will limit the stupid questions I ask here and try to educate myself better on my own.

But I have a couple of followup comments/questions that I will ask:

I am not a veteran so that option is off the table. I have great respect for veterans but I took a different path. Thye should get better healthcare!

My selected retirement date is mid year (2024). I will have 6 months high income and 6 months of company paid insurance. It looks like COBRA will be the best option for the second half of that year. My company's plan is decent and lower cost than the available individual plans from the same insurer. My income for half the year will make me ineligible for ACA (I think).

The following few years I plan to be making withdrawals from taxable accounts. That would make me eligible for Medicaid I think (also possibly food stamps but I won't go there) since I will have little or no taxable income - I keep dividends in IRAs to the extent possible. Am I correct that Medicaid should not be an option I should even consider? I will have substantial assets so that may make me ineligible anyway, just ... ignorance on my part. I did not even consider it until I started researching ACA options and when I put in my expected income levels the sites all say I should be eligible for Medicaid.

 

[skyking1]

RE Scuba's DH bills:
It is quite complicated and I won't take this discussion off topic about it, but basically the insurance companies negotiate rates for every little bit of those bills, and the 165K is what those little bits add up to.
Each physicians group, anesthesiologists, the various labs, the radiologists, the hospital itself negotiate these rates.

 

[PaunchyPirate]

I'm sorry but I am stupid on health insurance. Can you explain what this means?

So you have insurance with some deductible and some out of pocket maximum.

Let's say deductible is $5,000 and OOPM is $10,000 just for round numbers.

My understanding is that you would have paid $15,000 maximum (or maybe $10,000). You say the insurance company paid $165k. Did the doctors and hospital get stiffed for the rest ($470k)?

I apologize if this sounds like a stupid question. But I really do not know how this works. It is clearly an area I need to get smart on. I have been healthy all my life and rarely used health insurance for anything but dental. Obviously that will change at some point as it does for everyone so I should educate myself.

I know what a deductible is, a copay, and so forth. I understand the idea of an out of pocket maximum but don't understand the specifics.

Is it that the hospital bills you at its public rates but has a network deal with your insurance company?

I'm not Scuba, but here's how it works...

Medical provider (Doctor/Hospital/etc.) has a "list price" of what they charge for services and supplies. It is a rather fictitious amount. Say $100,000.

The Medical provider also has a contract with the insurance company that they will only charge certain amounts for those same services and supplies. This amount is not always the same with all insurance companies. And this price is not always the same from all providers who accept the same insurance company. Let's say the medical provider has a contractual agreement to only charge $15,000 for the services and supplies.

So as a customer, you will see on your claims that the provider "billed" $100,000 but the insurance company only "agrees to pay" $15,000. The rest is just written off by the provider. I'm not sure if they get a tax advantage for the difference or what. It just goes away.

Of that $15,000 due to the provider, you may have to pay some of your deductible and/or a co-pay. Let's say you had a $100 copay for that service + you had $2000 left in your deductible. You would pay your $2100. The insurance company would then pay the provider the remaining $12,900.

If you had already paid your full deductible and also reached your OOPM, you would not have to pay anything and the insurance would pay $15,000.

 

[Aerides]

It's quite simple:

Retail price for the medical expense: $500k
Agreed rates that the insurer pays the provider per their contract: $150k
Amount Consumer ends up paying: Deductible/copay
(this is how all HI works in the US and has since forever)

This is not any different than any other big pre-arranged discount. You know how you go to UPS and want to ship a 5lb package across the country and they tell you it's going to be $28? Amazon does that with them and it's $4.

 

[COcheesehead]

There is also co insurance. So the individual pays the co pay, the co insurance and the deductible all up to the limits of the policy. And try getting a price on a procedure beforehand hahahahahaha.