Health Care – Post 1

Like many FIRE folks in the United States, the topic of health care takes a major part of our planning as we look to exit the rat race early. The current plan, as reader’s know, is to retire in 30 months, when Mr. 39 Months will be 56 and Mrs. 39 Months will be 58. Since Medicare doesn’t kick in till age 65, and we aren’t the kind of idiots who try to “chance it” by going without medical during the gap, we need to look for medical coverage to cover us for 7-9 years. Even though the healthcare issue continues to be a political football, we need to start planning. I won’t get into the politics here (thank god) other than to say that, as a “libertarian leaning” individual, I find it distasteful that politics enters into it at all.

Now that that is out-of-the-way, I wanted to go through my initial research on this, and what I found. I expect this will be an ongoing topic, as I update you on my findings and go through my logic as I approach FI and potential early retirement.

First some basic info:

  • Mr. 39 Months is 53, and Mrs.39 Months is 55
  • Overall health is good, though not as good as 20 years ago (i.e. no chronic illnesses, diabetes, injuries, etc.)
  • We have typically had a PPO plan (i.e. it allows us to go outside of our network fairly easy). An HMO plan is typically less expensive, but it is more difficult to seek doctors outside of a prescribed network. We both felt the additional expense was worth it for the flexibility
  • Mr. 39 Months job has typically been the one which has provided our health care (like so many folks in the US). The co-pay cost has gone up a lot over the last ten years, as health care costs and regulations have increased. At this point,  we are currently paying $9,835/year out of our paycheck (not counting co-pays and deductibles).
  • We currently have  a “Silver PPO” plan, which
  • As most folks know, you can’t easily deduct your medical expenses from you income taxes in the US (for 2016’s taxes, you could only deduct anything over 10% of your income – very difficult to hit).

Even though the healthcare issue is a moving target right now, here is what I’ve done.

  1. Figured out generally what we are looking for. The plan is to try to get a similar Silver PPO plan. While I’d like to look into an HSA type, I’m not dedicated to it. We will have to see.
  2. The plan is to live on around $72,000 per year. That is pretty generous (our current base expenditures are around $30,000 year + taxes). The extra is to provide $12K to each of us for an allowance ($1,000/month) for our expenses, $12K for medical, and $6K (just in case). This gets us to $72K. We are thinking of some “geo-arbitrage” in the US to potentially reduce the spending.
  3. With the new US tax law, we can deduct a base $24K from our income as a deductible. This puts us at $48K per year in income – well within the confines of the current US healthcare “assistance” level, based on being under  400% of the US Poverty level (which for 2016 was around $64,080 for 2 people)
  4. Looked for various sites on line to assist. Some of those I found include:
  • Healthcare.gov
  • Ehealthinsurance.com
  • healthsherpa.com

I’ll share what I found in my next healthcare posting.

Some other FIRE blog posts that I have found on the topic that folks might want to look into include:

  1. Our Next Life
  2. Root of Good
  3. The Green Swan
  4. Michael Dinich: Hacking the ACA

Mr. 39 Months

4 thoughts on “Health Care – Post 1”

  1. We hope to reach financial independence and retire early in 3 1/2 years. I feel good about all of our numbers, except for those around potential healthcare. It is such a hot political issue I worry things could change significantly in the future in terms of possible costs, subsidies, exclusions, etc. I look forward to learning more about your research and opinions on the topic in future posts!

  2. I retired two years ago, it will still be several years before wife or self is 65 so I stayed on cobra for 18 months and then had to go to the market. I’m paying over $13k for me and wife on a catastrophic only plan with $6,500 deductible for each of us. It pays zero on anything until we surpass the deductible which means unless you get hit by a truck, actually or metaphorically, you are on your own for all prescriptions and any health care. It does let us have a HSA so that’s good at least. As (bad) luck would have it super healthy distance runner and tennis player me has a newly discovered congentital problem that could kill me if I don’t have major surgery so looks like I’ll blow by my deductibles by a mile in 2018. Anyway I hope you find better coverage for less!

    1. Sorry to hear about your problem, but I am glad that you have insurance. Our plan is to also use Cobra for the first 18 months (unless I can find something cheaper). While healthcare is very expensive, the stoic philosopher in me is saying that the reason that I am paying so much is so that folks like you can get the care you need for your congenital condition.

      We are all in this together – whether we do it the US way (private), or the Canada/Britain way (Public). We all pay in so really sick folks can get the care they need. Good luck with your operation!

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