When you ER, how do you plan to get medical coverage?

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Brianeboatman

Recycles dryer sheets
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I plan to ER at age 50, in about 12 years. At that time, I'll have a pension that pays about $60k per year. The pension does NOT include any medical benefit. I won't be able to claim Medicare until 65, so I'm wondering what people do is these situations. I'm saving in retirement accounts and will have "extra" money beyond my pension, but the pension income should cover our basic needs. What are some of you planning to do regarding that time between ER and Medicare?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
 
I would not worry about it excessively at this point in time. ACA, in some form, will survive. To me, it is a big deal that folks will be able to buy health insurance, regardless of pre-existing conditions. We are still in the first years of implementation, and there is a lot of political yammering back and forth. I expect this to settle down such that expenses will be more predictable by the time you get closer to retiring.

Hopefully in 10 years it will look more like a predictable expense, and you can plan for it in the same manner that you plan for other fixed expenses.
 
I retire at 56. I will use my VA benefits as much as I can, and buy a bronze policy.

I will not have any ACA subsidy as my income will be too high and my VA healthcare rules it out.
 
I won't have VA benefits. I understand just holding tight to see what happens with the ACA, but what are people who ER now doing for health coverage? Are folks just spending a ton on private health insurance policies?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
 
ACA is my plan.

Also, I've been maxing out my HSA account at work each year since I have one that rolls over and goes with me, pre-tax savings. It's a nice little egg that will help cover the transition expenses.
 
You can go to the health care marketplace or ehealthinsurance.com to see for yourself what health insurance might run. I retired before ACA but got a pretty reasonable private policy. Now I can get the same deal private or via ACA. No subsidy so it doesn't matter. I think for some reason the insurance agent I went through suggested private, but I can't recall why. An agent can help find you the best deal, at no extra cost to you.
 
Health insurance was one of the puzzle pieces that was hard to figure out when I first started planning. In early stages of planning I looked at the COBRA costs from my employer - figured that was paying full freight - and used that for spending projections. This was pre-ACA with it's premium tax credits for folks below the 400% of Poverty line. I did, however, worry that pre-existing conditions would prevent me from getting any insurance at all after COBRA ran out. Thankfully the ACA took care of that.
 
I ERed in late 2008, before the ACA went into effect. From 2009-2013, I had 2 different individual plans. The first was a comprehensive plan but whose rates rose 50% in 2 years so I had to drop it and switch to a bare-bones plan which left me rather underinsured. But that was in the middle of 2011 so all I had to was hang in there until the start of 2014 when I could buy myself a broad plan at an affordable price under the ACA exchange. This proved crucial because I had some health issues in 2015 but was adequately although not superbly covered (I hit my max OOP of just over $6,000).


My income is just below the cutoff to get a premium subsidy although that subsidy is not very high, not more than $500 per year. It helps, though.
 
Scrabbler, what's the income cutoff?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
 
Brianeboatman said:
I won't have VA benefits. I understand just holding tight to see what happens with the ACA, but what are people who ER now doing for health coverage? Are folks just spending a ton on private health insurance policies?
Click to expand...

Yes, most folks who ERd now get private individual health insurance. It is expensive, because health care in the U.S. is expensive. Right now you can get part of the premium subsidized if your family income is less than 400% of the federal poverty level. I tell my children that they should plan on paying the full price. If there is a subsidy and they qualify, good for them, but they should not plan on that 10-15 years down the road.
 
Brianeboatman said:
Scrabbler, what's the income cutoff?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
Click to expand...

For me, single with no kids, the income cutoff for 2015 is $46,680 which is 400% of FPL for someone who lives in one of the 48 contiguous states (i.e. not Alaska or Hawaii).
 
Do they base the ACA premiums on what you spend each year or is it calculated on your net worth, or both?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
 
Brianeboatman said:
Do they base the ACA premiums on what you spend each year or is it calculated on your net worth, or both?
Click to expand...
Health insurance is offered by private insurers. The policy options and prices depend on your location. This website can tell you what is available in your zip code https://www.healthsherpa.com/
 
I retired at 56. First year COBRA then two years of ACA. Without the provisions the law brings I couldn't buy insurance due to pre-existing conditions.

ACA works based on income no means testing of assets. Assuming it's still that way it's good to have a pile of post tax dollars to live from between retirement and Medicare.
 
At age 48, I receive APTC for an exchange plan but not CSR. I have a healthy 60 yr old cousin who is using 6 month short-term plans as a bridge to Medicare. The ST plan is not ACA compliant so he has to pay the penalty. His penalty and premium combined is within $30 per month of my subsidized premium.
 
OP, you really need to start at https://www.healthcare.gov/ and pull down the Get Answers Tab and select the First Time links. This will give you a basic background on what ACA is and what your options are. Educate yourself and then come back and ask questions where you still have them. The questions you are asking seem to indicate that you do not have a good understanding of what it is, and I don't think asking scattershot questions is the best way to get you up to speed. There is the insurance itself, and there is the subsidy, and it's not clear which you are asking about or if you even get that there is a difference. People are giving conflicting answers because some are talking about the insurance and some the subsidy.


If anyone has a better place to start, chime in.
 
I agree with RunningBum, that's the best place to start and every state is different...your medical history will impact which plans you want to choose and your own tax situation. We buy on and off the exchange depending on taxes situation and expected income levels in any given year.
 
DH and I have been buying our own insurance for the past 3 years. Ehealthinsurance.com is a great starting point to get quick pricing and plan options. We get the cheapest bronze plan for DD and DH (they are super healthy). I have a gold plan for myself due to some chronic health issues.
 
Thank you. I will be doing some homework.


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
 
Brianeboatman said:
Do they base the ACA premiums on what you spend each year or is it calculated on your net worth, or both?


I better not die right after retiring! I've saved for years to be able to enjoy the money and time. (This is one of my fears)
Click to expand...


Subsidy is based on income (MAGI), not net worth, fortunately.


Sent from my iPhone using Early Retirement Forum
 
My plan is to use the obamacare website and find something with a high deductible. Like $10,000 a year, maybe more. I'd also make use of a health savings account.

I have never used my health insurance so far... I just have allergies and get a cold every now and then. *knock on wood*
 
ESRwannabe said:
My plan is to use the obamacare website and find something with a high deductible. Like $10,000 a year, maybe more. I'd also make use of a health savings account.

I have never used my health insurance so far... I just have allergies and get a cold every now and then. *knock on wood*
Click to expand...

better knock really hard.. never used mine.. retired. went to the ER in Nov and then again in Jan.. paid the max out of pocket 2 years in a row. GRRRRRR seriously could not believe my luck. ironically because I didn't have the huge income I'm use to, I actually hit that medical tax credit which no one ever qualifies ... oops... good thing its based on income, not assets.
 
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