Uh oh---anxiety after one week of FIRED!

[Martha]

That study is often misquoted. The unpaid medical bills were not necesarily the cause of the bankruptcy. They just lumped anyone with an unpaid medical bill into that category.

Not that it isn't a major problem for some, but that report throws it all out of wack.

There is much more debunking in the full article.

Oh, it's OK with me if you don't like the 'National Review' - look at the content and see if you disagree with what is reported, rather than where it comes from. It has been reported elsewhere, but it is tough to Google this due to the repetition of the article without the critique.

-ERD50

This all refers to a Harvard study about medical issues and bankruptcy.  The study abstract says:

"In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs average $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick."

A subsequent review through the US Trustee's office of bankruptcy petitions showed 78% of bankruptcy petitions list medical debt of less that $5000. So it is difficult to figure out how much medical bills contribute to bankruptcy.

However, there are plenty of people that have so little that garnishment of wages resulting from a $5000 medical bill can send them into bankruptcy.  Also, even if medical bills are paid by insurance, the medical problems can mean loss of time from work that might not be paid or even the loss of a job.  Also, people live on such tight budgets that the slightest little slip can mean a bankruptcy.  So if you are living on the edge, anything can tip you over.

But of course, this doesn't apply to Tango, who is living far from the edge.

 

[tangomonster]

Thanks everyone (with the exception of Cutthroat, with your lovely comments about my being a troll or mentally ill and beating to death on this topic---with only 44 posts and some on other topics, I didn't think I was posting too much). Just needed that reassurance, but I think I'll be okay. Had lunch with a former co-worker and realized I made the right decision to RE since I wasn't even interested in hearing any of the gosspi or news about work!

Scrooge, your analysis was similar to what I came up with myself, so I really appreciate that. I came to the same conclusions, but didn't know if I was using faulty logic or numbers. And you're right- $500,000 is a lot of money, but so worth it to have 13 years of freedom!

 

[haha]

And you're right-  $500,000 is a lot of money, but so worth it to have 13 years of freedom!

It is also impossible that real medical costs could escalate 20% per year for the next 13 years. While you could pay for it, almost no one else could- and that includes giant corporations that buy it in bulk.

Some time ago I did an analysis that showed that it is mathematically impossible for a service sector which is part of the overall economy to grow markedly faster than the other parts taken in the aggregate.

If I use a 20% rate of increase for healthcare, and 5% for the economy as a whole, healthcare becomes over half the economy in just 10 years or so.

You head it here first-if something can’t happen, it won’t happen.

Ha

 

[Scrooge]

And you're right-  $500,000 is a lot of money, but so worth it to have 13 years of freedom!

Well, it's all relative. $500K is a lot of money to most people with average incomes, which I believe described you as well while you were practicing LBYM. However, it's only 12.5% of your retirement money and you can easily live off 87.5% of what you have. It can be hard to accept that $500K is nothing to worry about, but one way of handling it would be to set it aside and say "OK, from now on we are living off out nest egg of $3.5mil. The rest is earmarked for health care."

Also, if you are a worrier, you may want to get out of any potentially volatile investments now that you are done with the "saving" phase. Inflation-adjusted 1-2% on $3.5mil is $35-70K/year, which should cover your apparently basic needs nicely while preserving your capital.

It is also impossible that real medical costs could escalate 20% per year for the next 13 years. While you could pay for it, almost no one else could- and that includes giant corporations that buy it in bulk.

Although it's true that real medical costs can't realistically rise 20% for everybody for the next 13 years, they may well rise very rapidly for a randomly selected couple depending on its pre-existing conditions and other parameters. And that on top of the fact that rates are generally higher for 64 year olds than for 52 year olds.

 

[tangomonster]

Scrooge, we're not in any volatile investments (our days of individual stocks are over, just mutual funds---don't know if you consider some growth funds volatile, like we have Fidelity Diversified International, but at least it's not in just one country/region). Even though we're risk-averse, we realize that we need to continue to keep half the portfolio in growth even in retirement.

I geuss at some point, as the premiums get up to $100,000 a year, we will need to decide if we want to just self-insure and pay completely out of pocket since our medical expenses would be unlikely to be close to $100,00 (hopefully not!). The issue would be catastrophic events---
We like our umbrella policy under our homeowners policy---for a few hundred dollars a year, we're protected to 4 million. If only we could find a similar health insurance!

Time Magazine a couple of months ago had an article about medical tourism. Looks pretty tempting and a lot of companies are beginning to arrange it. An example was cardiac surgery in India for a total of $9,000---would have been more like $60,000 here! Supposedly many of the doctors are US and UK trained (and 25% of doctors practicing in the US are not US trained). Could be worth considering....

 

[Scrooge]

Scrooge, we're not in any volatile investments (our days of individual stocks are over, just mutual funds---don't know if you consider some growth funds volatile, like we have Fidelity Diversified International, but at least it's not in just one country/region).

We are talking about http://personal.fidelity.com/products/funds/mfl_frame.shtml?315910802 , right? If so, it's an international stock fund and can be volatile. Nothing wrong with that, just something to keep in mind when balancing volatility, risk aversion, long temr returns, etc.

Even though we're risk-averse, we realize that we need to continue to keep half the portfolio in growth even in retirement.

The good thing about your situation is that you probably don't need to any more. You could put all your money in 4 week T-bills and still be fine. Whether that's what you want to do is up to you to decide

I geuss at some point, as the premiums get up to $100,000 a year, we will need to decide if we want to just self-insure and pay completely out of pocket since our medical expenses would be unlikely to be close to $100,00 (hopefully not!).

I would be very careful with self-insurance. To quote SteveR:

Hospital bill for two visits; one visit for surgery and a four day stay.
Second visit a few days later due to a complication for and additional 6 days.
$97,500

Surgeon fee $17,800

 

[crazy connie]

Novel idea time... Head into the local mega non-profit hospital facility (i.e. university med school type) and ask to meet with the philantrophy department. I bet you could strike a deal to create a lifetime healthcare plan in return for a healthy non-revocable testamentary trust. Would be great if you could get them to provide services to FIRE'd only! Also, might be very advantagous tax wise if structured with annual donations? I leave that to the tax pros to discuss/debate. Just one of many novel thoughts from my mind!

 

[Rich_by_the_Bay]

Novel idea time... Head into the local mega non-profit hospital facility (i.e. university med school type) and ask to meet with the philantrophy department. I bet you could strike a deal to create a lifetime healthcare plan in return for a healthy non-revocable testamentary trust. Would be great if you could get them to provide services to FIRE'd only! Also, might be very advantagous tax wise if structured with annual donations? I leave that to the tax pros to discuss/debate. Just one of many novel thoughts from my mind!

Connie,

It's an admirable thought and they would be glad to take your money, and you might even get VIP treatment. But hospitals are pretty stretched financially, too, and besides they only handle one aspect of health care. Lots are out of their control: professional fees, outside labs, etc.

And remember that even a single catastrophic illness can end up costing half a million bucks.

Still, I like the way you thing... .

 

[REWahoo]

Still, I like the way you thing... .

C'mon, Doc. Get a room...

 

[crazy connie]

C'mon, Doc.  Get a room...

Nahhhhhhhhh he can save his money. I have not the desire to play with anothers spouse. Now when I find a single FIRE man... Paint your own picture!!!

 

[Rich_by_the_Bay]

C'mon, Doc. Get a room...

Hey, I'm up to my a#$ in blood and guts, here. Every try typing with one hand while you're doing CPR with the other? Huh?

PS: actually, it was one of those days with wall-to-wall meetings and paperwork, and almost no patient care. Can't wait til tomorrow when I can return to stomping out illness.

 

[brewer12345]

Every try typing with one hand

What kind of medicine do you practice? O0

 

[justin]

Rich actually has his medical transcriptionist typing up his "notes" into the forum. Problem is, he's got that messy Dr. handwriting that no one can read! Hence all the misspellings...

 

[audreyh1]

How could premiums get up to $100,000 a year and yet medical expenses be less than that?

If premiums were $100,000 a year - no one could afford it!

I think you need to rachet down the worst case scenario here and then set aside funds.

Really 13 years to medicare ain't that long.

Now long term care could cost $100,000 a year - but since you wouldn't be spending much on anything else, maybe that is no big deal. Might put a pinch on the spouse though!

There you go - worry about your potential long term care costs.

Audrey

 

[Scrooge]

How could premiums get up to $100,000 a year and yet medical expenses be less than that?

Premiums reflect your insurance company's likely future expenses. Since the OP's DH has had some medical problems, including cancer and neurofibromatosis, their insurance company estimates that these expenses can be significant and structures its premiums/benefits accordingly.

If premiums were $100,000 a year - no one could afford it!

Well, it's not like everybody's premiums will be $100K/y 13 years from now. However, if you have pre-existing conditions that make it likely that your health care expenses will be significant, then the money to pay for them will have to come from somewhere, either from your own premiums or from other people's premiums.

There are "guaranteed issue" and "community rating" states where the law generally mandates equal premiums regardless of pre-existing conditions, which is a good deal for people who have them. If the OP had less money in the bank, then moving to one of these states might be worth considering. However, laws change all the time, so it wouldn't be a 100% guarantee and, besides, the OP should be able to absorb the extra cost.

 

[Aaron]

Tango

My guess is 90% of the people on this board would happily trade places with you financially.  Four million is a lot of money and others have done it on at least 5 – 10 times less. 

Maybe you should force yourself to take a month long vacation and do a few things you wouldn’t normally do.   

Also, just because you live into your 90’s or beyond, doesn’t mean you’ll be spending or doing the same things you can enjoy now.  I don’t think you’ll be spending even half of 160K/year in your 80s and 90s, so at least enjoy it now while you have the opportunity. 

Lastly, and I mean this in a nice way, so please don’t take offense, but maybe seeking professional help for anxiety.  From what I understand anxiety disorders are pretty common, but can be treated. 

 

[tangomonster]

Audrey, I know it seems ridiculous that we could eventually be paying $100,000 a year for health insurance premiums
and yet have minimal actual expenses and need for health care, but we are already paying $700 a month for insurance, just for DH---and he only sees an internist twice a year, a cardiologist twice a year, and takes meds that total about $300 a month. I don't know what our breaking point will be in terms of forgoing the insurance and completely self-insuring---possibly when the premiums hit 100K!

And surprisingly, long-term care is not something we worry about! My father did need assisted living for about a year,
but some policies don't even cover this. Maybe the thought of needing a facility is just too horrible to handle. Can torture ourselves with what-ifs and worse case scenarios, but somehow this seems like something we would never need or not need until we were in our nineties. We just laugh when we receive ads about LTC insurance and throw them away. We have State Farm insurance for homeowner's, umbrella, and cars. They offer health insurance but wouldn't cover DH. Yet they would be happy to sell us a LTC policy. That leads me to believe that LTC policies must be very lucrative for the insurance companies, whereas health insurance must not be. Obviously the
actuarial odds must look very good to insurers for LTC,
unlike health insurance. So we never directly think about LTC per se, but just want to make sure that our money doesn't run out (my parents lived to 89 and 93).

Aaron, you were very tactful about suggesting help for anxiety. Possibly it could have been helpful during my working years. But now, my only stressor is some concern about money, but not enough to prevent me from RE!
And I think I will get better about this as time goes on and with the help of you all. I'm able to handle the ups and downs of the market, even with 50% of our net worth in it.
(DH checks the market every day, but I could care less about daily fluctuations).

 

[Kitty]

I had to resist the temptation to jump on this poster and yell at the top of my voice GET OVER IT

However my nice side came to fore and I can see where someone can feel stress over medical coverage. Health coverage is a murky mire, full of what makes the grass grow and we ain't talk'n water here. I have relatives that spend a lot of time worried about their health care insurance costs. No amount of talking will calm their fears. There really isn't much that they can do now. They are on medicare and have an insurance policy they spend a lot of money on. However they won't go to the doctor anyway they wait until their annual physical, it just does not occur to them to use what they have.

I also had a former co-worker who has several million in assets and won't retire says he needs the health insurance coverag. BA-LONE-EEEEE, he needs some place to go everyday or his wife will throw his butt out the door. I like him like a brother and miss his wray smile but when he said that I raised may hand as high as I could and yelled "Save your watch to late for your shoes!"

Sigh, some folks have to have something to worry about, we pick our poison. With four million in assets and with an alleged modest life style go self insured and resolve to take care of your own problems. Also the money four million dollars is there for you to use not to sit on and admire, IMHO.

My goal is to live the life I want and to die broke.
The rest takes care of it's self.

Kitty

 

[Rich_by_the_Bay]

With four million in assets and with an alleged modest life style go self insured and resolve to take care of your own problems.

I was with you all the way on this one, Kitty, until that statement. A fancy illness requiring state-of-the art treatment can eat up a million bucks in a year. And uninsured patients with assets pay more than insurance companies with volume contracts. Then there are nursing home and rehab bills, home oxygen or other care. One of the few contexts where a million bucks is not all that much money.

II'd say go with as high a deductible as you can (they can afford it) but probably wouldn't self insure on the health thing.

 

[Cut-Throat]

I was with you all the way on this one, Kitty, until that statement. A fancy illness requiring state-of-the art treatment can eat up a million bucks in a year. And uninsured patients with assets pay more than insurance companies with volume contracts. Then there are nursing home and rehab bills, home oxygen or other care. One of the few contexts where a million bucks is not all that much money.

II'd say go with as high a deductible as you can (they can afford it) but probably wouldn't self insure on the health thing.

Rich,

You probably know better than anyone else that paying for an illness is the least of your problems. It's dealing with an illness that has no treatment that is the real problem. I'd gladly let go of a 1/4 $Million to get rid of allergies.

 

[laurence]

Do you have allergies or are you making an analogy? I had the worst allergies, truly diminished my quality of life, I would sneeze until my ribs hurt. Claritin comes on the scene and I've spent a decade without an attack or even a symptom. Big Pharma has plenty of warts, but some drugs are really worth their weight in gold.

 

[Rich_by_the_Bay]

You probably know better than anyone else that paying for an illness is the least of your problems. It's dealing with an illness that has no treatment that is the real problem. I'd gladly let go of a 1/4 $Million to get rid of allergies.

Of course, no argument on that point.

You'll probably agree that dealing with an illness AND dealing with inability to pay for care is even worse, sometimes especially for the loved ones.

 

[REWahoo]

24 x 7 x 365 with symptoms like seasickness (Or the Flu) that only good wine can alleviate. Hence the wine cellar. 8)

Hey, every alcoholic needs a good reason to drink...

 

[laurence]

No I have them, and Clariton is minor league stuff.  Sneezing would be a welcome symptom. I go to the Mayo Clinic in Rochester Minnesota (ever heard of it?) and let them tell me that there is nothing that they can do.

24 x 7 x 52  with symptoms like seasickness (Or the Flu) that only good wine can alleviate. Hence the wine cellar. 8)

When it comes to allergies, most doctors are clueless and most Allergists know how to hand out pills and the honest ones will tell you that modern medicine does not know how to treat the tough cases.

Dang, that sucks! Have you been able to identify what you are allergic to? My step-mom has severe allergies to dust mite droppings, runs an air filter in the bedroom 24-7, plastic cover on the mattress, no carpet in the house etc. She also carries some shot with her because cigarrette smoke can cause a severe attack. She's also allergic to wheat and a couple other foods. I remember when she was getting everything identified, she did the diet restriction thing, yadda yadda, took a couple years to get everything identified.

You've probably already gone down this road, and the Mayo clinic is the best (DW coordinated a study with them and her company), but what did they tell you about your inner ear? Your symptoms ring a bell about disfunctions there...

 

[Cut-Throat]

Dang, that sucks! Have you been able to identify what you are allergic to? My step-mom has severe allergies to dust mite droppings, runs an air filter in the bedroom 24-7, plastic cover on the mattress, no carpet in the house etc. She also carries some shot with her because cigarrette smoke can cause a severe attack. She's also allergic to wheat and a couple other foods. I remember when she was getting everything identified, she did the diet restriction thing, yadda yadda, took a couple years to get everything identified.

You've probably already gone down this road, and the Mayo clinic is the best (DW coordinated a study with them and her company), but what did they tell you about your inner ear? Your symptoms ring a bell about disfunctions there...

I'm allergic to a lot of stuff, molds, pollen, some foods - etc. No severe reactions (life threating) but it makes you ill and want to lay around - (One of the reasons for my early retirement) - I don't dwell on this though and have never mentioned it on this forum until now. I choose to ignore it and 'go for the gusto'

- The inner ear stuff is mostly because I have small, sensitive eustachian tubes. Tough for Scuba diving and prone to seasickness and swelling due to allergies. I don't have an inner ear disorder, but any reaction due to allergies affects this area for me.

Everyone has their own cross to bear.