If I Woke up Broke - insurance?

[nawhite]

In the woke up broke post, MMM says that he'd keep his $239/month health insurance. I'm not sure thats a good idea. Without any savings or assets, a $10,000 deductible can be extremely distructive. It theoretically could work if you have a $10,000 emergency fund but that is a huge amount of money not earning dividends and a HELOC isn't an option for a family with no assets because they have no equity in their house.

Maybe I'm being complainy-pants-ish but if I had no assets, then a $10000 deductible is not an acceptible option and thus I would have to have more expensive insurance.

Anybody else have thoughts on this?

[sol]

Anybody else have thoughts on this?

My thought on this is that everyone should do what they personally think is best, and spend less time worrying about what someone else says they would do in a hypothetical situation.

Or if you like, we can all spend this entire thread arguing about why some people think this blog post is dumb.  That seems to be the trend recently.  Personally, I'm not interested.

[mpbaker22]

So, because you don’t have an emergency fund of $10K, you would pay more for your insurance?  I know I personally would just take the risk of having to put $10K on the credit card, and my credit card max when I was starting out was $8K so that’s actually feasible.
I think it’s a silly point anyway.  Under his plan, he’d have $10K saved within a few months, so this problem could only exist during that short time frame anyway.  I don’t think the risks are nearly as high as you have lain forth.  Even if he had to carry the cost for 2-3 months, 20% interest on less than $10K for 2-3 months isn't THAT bad for a worst case scenario.

[arebelspy]

So, because you don’t have an emergency fund of $10K, you would pay more for your insurance?  I know I personally would just take the risk of having to put $10K on the credit card, and my credit card max when I was starting out was $8K so that’s actually feasible.
I think it’s a silly point anyway.  Under his plan, he’d have $10K saved within a few months, so this problem could only exist during that short time frame anyway.  I don’t think the risks are nearly as high as you have lain forth.  Even if he had to carry the cost for 2-3 months, 20% interest on less than $10K for 2-3 months isn't THAT bad for a worst case scenario.

Agreed.

And, if it makes you more comfortable, get a plan with a higher premium and lower deductible for a few months until you save up the 10k, then change it.  It'll cost you a little extra in premiums, but if it makes you sleep at night, knock yourself out.

[mpbaker22]

Agreed.

And, if it makes you more comfortable, get a plan with a higher premium and lower deductible for a few months until you save up the 10k, then change it.  It'll cost you a little extra in premiums, but if it makes you sleep at night, knock yourself out.

Yea, I think people see $10K and can't fathom saving that because they never have.  Whereas it's a few months savings for a good portion of people on these forums.

[Rural]

I think it’s a silly point anyway.  Under his plan, he’d have $10K saved within a few months, so this problem could only exist during that short time frame anyway.  I don’t think the risks are nearly as high as you have lain forth.  Even if he had to carry the cost for 2-3 months, 20% interest on less than $10K for 2-3 months isn't THAT bad for a worst case scenario.

In my experience, it takes so long for medical bills to cycle through the insurance company, arrive, and come due, that the credit card option probably wouldn't be needed, anyway. The money would be saved by the time the bills were due and they would not be in one lump sum, and not all at one time, and almost all will do interest-free payment plans, anyway. (I know this because my high deductible plan and I rode to the hospital in an ambulance last winter with completely false alarm chest pains...)

[ChoicesChoices]

nawhite: good question, and the answers you got back were very good reminders to me on alternative ways to assess risks.

sol: at first, reading the comments on the original blog post started to annoy me. But then as they continued to nitpick and whine and puke all over, I just started laughing so hard.  I ended up just happy and relieved that I know how to take what I can use and learn and improve.  And those whiny ones are the ones I will be leaving when I retire in 2 years.

MMM -- I just hope you know that for each whiny one, there's a whole community of us who appreciated it, GOT IT,  and continue our journey to FI.

thanks!

[hybrid]

Health insurance is an accurate term for some people and a misnomer for others.  I rarely lever health insurance (go to the doctor once a year for a physical, maybe one other time a year) but when I do I do it in a big way.  Torn ACL, Achilles, and an emergency room MRI all in the past 11 years.  But I know others with more-or-less chronic conditions (including mental health) and for them it's not insurance against an expensive and rare event at all.  It is a product they leverage early and often, and what their employer provides in the way of health "insurance" is really just a way to offset their fairly predictable and substantial health care costs.

Think of it this way.  Insurance in just about all other areas is something you leverage rarely and hope you never have to.  Whereas the vast majority of people need health care on a fairly regular basis, even if it's just a yearly check-up and the occasional doctor's visit.  That has to be factored in the cost for the "product" whatever you prefer to call it. 

[mpbaker22]

Insurance in just about all other areas is something you leverage rarely and hope you never have to.  Whereas the vast majority of people need health care on a fairly regular basis, even if it's just a yearly check-up and the occasional doctor's visit.  That has to be factored in the cost for the "product" whatever you prefer to call it.

I've been to the doctor once in the last five years.  Why do people NEED to go yearly?  I could see once you hit a certain age, but even then you don't NEED to go, it's just considered to be a good idea.

[nawhite]

I've been to the doctor once in the last five years.  Why do people NEED to go yearly?  I could see once you hit a certain age, but even then you don't NEED to go, it's just considered to be a good idea.

If you take medication for a chronic illness (migraines, blood pressure, cholesterol, hypertension, anemia, diabetes, osteoporosis, mental illness, etc. A lot of people have at least one of these) then it is usually a "need" to see a doctor at least once a year. You need to make sure your body doesn't build up a tolerance to your medication and that you don't become overly influenced by your medication. In either case the doctor will change your dose or change medications.

[iamsoners]

Insurance in just about all other areas is something you leverage rarely and hope you never have to.  Whereas the vast majority of people need health care on a fairly regular basis, even if it's just a yearly check-up and the occasional doctor's visit.  That has to be factored in the cost for the "product" whatever you prefer to call it.

I've been to the doctor once in the last five years.  Why do people NEED to go yearly?  I could see once you hit a certain age, but even then you don't NEED to go, it's just considered to be a good idea.

If you're a woman in the US and interested in oral birth control, you have to go yearly to get your prescription renewed.  And until recently, a yearly pap was highly recommended. They've changed to 3-5 years now.

[grantmeaname]

But I know others with more-or-less chronic conditions (including mental health) and for them it's not insurance against an expensive and rare event at all.  It is a product they leverage early and often, and what their employer provides in the way of health "insurance" is really just a way to offset their fairly predictable and substantial health care costs.

Most of my family's in this group. To the healthy person, it's easy to look and say "shit, that's where my premiums are going". It's harder to say what alternative people with chronic illness have. But you're right, it certainly factors into the cost, no matter the system (private insurance, single-payer, large government programs like Medicare), and it's certainly not cheap.

I've been to the doctor once in the last five years.  Why do people NEED to go yearly?  I could see once you hit a certain age, but even then you don't NEED to go, it's just considered to be a good idea.

It's hard for me to begrudge people their annual visits given how much cheaper prevention is -- it only takes a few early detections and treatments of expensive diseases like cancer to make up for the costs of screening a population. I can't find good statistics on the balance, exactly, for disease taken as a whole, but my gut tells me it's pretty far towards the screening side of the lever.

[mpbaker22]

If you take medication for a chronic illness (migraines, blood pressure, cholesterol, hypertension, anemia, diabetes, osteoporosis, mental illness, etc. A lot of people have at least one of these) then it is usually a "need" to see a doctor at least once a year. You need to make sure your body doesn't build up a tolerance to your medication and that you don't become overly influenced by your medication. In either case the doctor will change your dose or change medications.

If you're a woman in the US and interested in oral birth control, you have to go yearly to get your prescription renewed.  And until recently, a yearly pap was highly recommended. They've changed to 3-5 years now.

I'm more questioning of how these two groups add up to a "vast majority"

[grantmeaname]

You don't think that migraines, blood pressure, cholesterol, hypertension, anemia, diabetes, osteoporosis, mental illness, and birth control combined could affect more than half of adult Americans?

[mpbaker22]

You don't think that migraines, blood pressure, cholesterol, hypertension, anemia, diabetes, osteoporosis, mental illness, and birth control combined could affect more than half of adult Americans?

more than half still wouldn't be a vast majority, and many of those aren't necessary reasons to visit a doctor - at least not necessary except as the result of poor lifestyle choices.

[Joet]

also I'm curious how an engineer 10-yrs out of the field jumps back in more or less immediately at/above their former salary. Magic trick?

[arebelspy]

also I'm curious how an engineer 10-yrs out of the field jumps back in more or less immediately at/above their former salary. Magic trick?

Uhhh, they didn't.   He said he'd do construction at 80k, and she'd do something (I forget but go read the article yourself) at 60k.

That's significantly less than both of them made before.

[Joet]

That's not what he said, and your point doesn't refute mine. He clearly mentions it to be a possibility. Indeed I'm sure it is possible (if unlikely) hence my question.

Referring to the primary source:

Mrs. MM and I both value financial independence, so we would probably both take full-time jobs in order to rebuild our savings as quickly as possible. But in this parenting stage, careers would still come second. So instead of going back into engineering ($100-$150k/year), I would probably just be re-open my general contracting business ($80,000/year) instead.

returning to engineering is at the very least then, listed as a possibility.

The reason it matters is because I am not the only hiring manager in the world that would be hesitant given such a hiring hypothetical, and to some degree it matters in the choice of work one does post FI. I can't be the only one that suspects that returning to FT employment in a technical field is probably going to require at least PT work in it to remain employable. There are always exceptions, of course, hence my disclaimer.

edit: my point here looks pretty self-explanatory. It really isn't possible. Using the word "networking" as a catch-all is indeed probably the best route--even still this won't afford a salary at/above the one you left IMO, and it is a bit of a stretch. 5% chance would be my guess of leaving a technical field for a decade and finding employment in it at/above the level you left 10 years later. That's probably being optimistic.

The other 95% obviously implies: not gonna happen.

[arebelspy]

Sure, it's unlikely.

He clearly mentions it to be a possibility.  Indeed I'm sure it is possible

Okay, so unless you are claiming it to be impossible (which it seems you aren't based on the latter half of this quote), then you agree with him that it is a possibility.

Given that:

also I'm curious how an engineer 10-yrs out of the field jumps back in more or less immediately at/above their former salary. Magic trick?

Well, if you agree it is a possibility, you should be able to figure out how/why it is so.  One simple answer: networking.

I guess I just don't understand the point of your post.  Please elaborate what you mean, since you agree it's possible... you just don't understand how it's possible?  Or what?

[grantmeaname]

more than half still wouldn't be a vast majority, and many of those aren't necessary reasons to visit a doctor - at least not necessary except as the result of poor lifestyle choices.

You're moving the goalposts. And you're also wrong.

[mpbaker22]

more than half still wouldn't be a vast majority, and many of those aren't necessary reasons to visit a doctor - at least not necessary except as the result of poor lifestyle choices.

You're moving the goalposts. And you're also wrong.

Yea, sure.  keep telling yourself that.

[grantmeaname]

Most women use birth control, and most birth control users use the pill. Many of the alternative methods are no less medical and supervised than the pill, like IUDs that last 5 years but require much more medical attention initially. 26% of adults have hypertension globally, 24% in the US. 13% of adults have hypercholestrolemia. Anemia affects 2-4.7% in the US and dramatically more overseas. Fully one in three Americans is obese. Mental illness affects 46% of Americans, with anxiety disorders accounting for 29% by themselves. Osteoporosis affects 55% of Americans 50 or over, who make up about 40% of the population. Nearly one American in ten is diabetic. One in eight gets migraines. Few people alive at any one time have cancer, because it's so fatal, but 40% of the population get it at some point. Add on the thousands of chronic diseases like mine that affect one in ten thousand and require attentive management, and you shouldn't be surprised that 83% of adults and 93% of kids go to the doctor at least once a year. It's absolutely super for you that you're such a pillar of health that you don't need regular screening for testicular cancer, and that you have no chronic conditions that require professional help in their management, but you are absolutely in a tiny minority.

So are you going to go ahead and move the goalpost to thirty yards behind the endzone, now?

[mpbaker22]

Most women use birth control, and most birth control users use the pill. Many of the alternative methods are no less medical and supervised than the pill, like IUDs that last 5 years but require much more medical attention initially. 26% of adults have hypertension globally, 24% in the US. 13% of adults have hypercholestrolemia. Anemia affects 2-4.7% in the US and dramatically more overseas. Fully one in three Americans is obese. Mental illness affects 46% of Americans, with anxiety disorders accounting for 29% by themselves. Osteoporosis affects 55% of Americans 50 or over, who make up about 40% of the population. Nearly one American in ten is diabetic. One in eight gets migraines. Few people alive at any one time have cancer, because it's so fatal, but 40% of the population get it at some point. Add on the thousands of chronic diseases like mine that affect one in ten thousand and require attentive management, and you shouldn't be surprised that 83% of adults and 93% of kids go to the doctor at least once a year. It's absolutely super for you that you're such a pillar of health that you don't need regular screening for testicular cancer, and that you have no chronic conditions that require professional help in their management, but you are absolutely in a tiny minority.

So are you going to go ahead and move the goalpost to thirty yards behind the endzone, now?

and many of those aren't necessary reasons to visit a doctor - at least not necessary except as the result of poor lifestyle choices.  Notice how nearly all of the 'conditions' you pointed out ARE resulting from the lifestyle, and the ones that aren't have small percentages attached to them.
Just looking at the list of these we get
Anemia - between 2 and 4.7%
Osteoporosis - doesn't require regular visits for the length of a life
migraines - doesn't necessarily require regular visits for life and only 12.5%
Cancer - doesn't require regular visits for life


And if you'd stop trying to prove that 83% of adults go to the doctor and instead focus on the fact that most people don't NEED to go to the doctor, we could have a real argument.

[arebelspy]

focus on the fact that most people don't NEED to go to the doctor

Can you actually back that claim up with anything, or are you just saying words?

Who determines that, and how is it determined?

[grantmeaname]

Mental illness results from poor lifestyle choices in mpbakerworld? Type one diabetes, and every single case of type 2 diabetes? Familial hypercholesterolemia? Every form of cancer? Genetic hypertension? The thousands of rare diseases I mentioned?

Thank god you're just a talking head on the internet and not my primary care physician.

And that's even accepting your idiotic premise that people who get diseases that could have been ameliorated by different lifestyle choices should change their lifestyles and magically stop having diseases, and those who have not don't deserve medical treatment.

[mpbaker22]

Mental illness results from poor lifestyle choices in mpbakerworld? Type one diabetes, and every single case of type 2 diabetes? Familial hypercholesterolemia? Every form of cancer? Genetic hypertension? The thousands of rare diseases I mentioned?

Thank god you're just a talking head on the internet and not my primary care physician.

And that's even accepting your idiotic premise that people who get diseases that could have been ameliorated by different lifestyle choices should change their lifestyles and magically stop having diseases, and those who have not don't deserve medical treatment.

Another strawman I see.  I didn't say cancer  is from lifestyle (though I suppose some are, like lung cancer from smoking).  I didn't say any of the rare diseases are from lifestyle, I said they are rare.

Again most hypertension and hypercholesterolemia ARE, IN FACT, Lifestyle related.  Those that aren't lifestyle related, are NOT very common.  Again, Type 1 Diabetes is about .035% of the population - not very common.  I can only find studies of women with type 2 diabetes, but 90% of Type 2 Diabetes in women is a result of lifestyle.

Many mental illnesses only exist as a result of unnecessary stress and lack of natural relief, so yes.

focus on the fact that most people don't NEED to go to the doctor

Can you actually back that claim up with anything, or are you just saying words?

Who determines that, and how is it determined?

That's what I've been doing.  People mostly go to the doctor for unnecessary reasons or for preventable reasons.

[arebelspy]

focus on the fact that most people don't NEED to go to the doctor

Can you actually back that claim up with anything, or are you just saying words?

Who determines that, and how is it determined?

That's what I've been doing.  People mostly go to the doctor for unnecessary reasons or for preventable reasons.

According to WHO?

And for what reasons are they saying that?

Cause it seems to me the answer is "According to me, and because my gut says so," when you actually have no idea who needs to go to the doctor and why, you just sort of feel that it's unnecessary.

Can you actually back up the claim with anything substantial that "most people don't need to go to the doctor"?

[mpbaker22]

focus on the fact that most people don't NEED to go to the doctor

Can you actually back that claim up with anything, or are you just saying words?

Who determines that, and how is it determined?

That's what I've been doing.  People mostly go to the doctor for unnecessary reasons or for preventable reasons.

According to WHO?

And for what reasons are they saying that?

Cause it seems to me the answer is "According to me, and because my gut says so," when you actually have no idea who needs to go to the doctor and why, you just sort of feel that it's unnecessary.

Can you actually back up the claim with anything substantial that "most people don't need to go to the doctor"?

Would you agree that at least a fair amount of the difference in healthcare spending in the US vs. other countries is a result of lifestyle?

It doesn't take a lot to connect the two.

If you look at the most common reasons that people go to the doctor, many of them are unnecessary or for life-style related issues.

[matchewed]

focus on the fact that most people don't NEED to go to the doctor

Can you actually back that claim up with anything, or are you just saying words?

Who determines that, and how is it determined?

That's what I've been doing.  People mostly go to the doctor for unnecessary reasons or for preventable reasons.

According to WHO?

And for what reasons are they saying that?

Cause it seems to me the answer is "According to me, and because my gut says so," when you actually have no idea who needs to go to the doctor and why, you just sort of feel that it's unnecessary.

Can you actually back up the claim with anything substantial that "most people don't need to go to the doctor"?

Would you agree that at least a fair amount of the difference in healthcare spending in the US vs. other countries is a result of lifestyle?

It doesn't take a lot to connect the two.

If you look at the most common reasons that people go to the doctor, many of them are unnecessary or for life-style related issues.

A large amount of the difference in spending is just how healthcare is treated in the US. Which is regardless of the lifestyle.

http://www.oecd.org/unitedstates/49084355.pdf

[cluelessnnc]

Pardon me, new to the board.  I'm surprised at how much animosity there is toward those questioning the proposed budget but I hope the discussion continues because I enjoy hearing a variety of opinions. 

I'm going through this analysis right now, trying to find the absolute lowest amount we need to live somewhat comfortably.  I'm willing to admit that I can lower my food budget and my utility expenses.  However, I already have a bare bones health insurance policy and there are additional expenses to consider for our healthy family of four.  My two kids need check ups and immunizations (or are those considered frivolous?).  All four of us have our teeth cleaned.  No cavities or extra expenses.  $400.  I wear contacts.  I guess those are frivolous but even if you don't consider that expense, many adults find that their eyesight deteriorates as they age so visits to the optometrist don't seem like a needless luxury.  I expect to spend $4,000 this year in health care expenses, including premiums.  That's a big addition to the ~$21k. 

Another category missing from the budget seems to be home improvements.  Saving for a new roof, changing air filters, new caulk for the kitchen sink.  Even a new house will need some amount of work and a well maintained house will prevent costly emergencies. 

I'm not complaining.  Just interested in a discussion that can help me lower my expenses as much as possible. 

[grantmeaname]

If you look at the most common reasons that people go to the doctor, many of them are unnecessary

Maybe if you keep repeating it it'll be true! Why are you the arbiter of necessity?

or for life-style related issues.

If someone has diabetes because they didn't eat right when younger, they don't deserve medical treatment? They shouldn't go to the doctor if there's a chance their condition could have been prevented or ameliorated somewhat by making different lifestyle choices in the preceding decades? How does the cause of the disease relate to the discussion at all?

Many mental illnesses only exist as a result of unnecessary stress and lack of natural relief, so yes.

[citation needed]

[FrugalZony]

Whereas I think it's an interesting topic and worthwhile excersice, I think there's nothing wrong with pointing
out what readers consider oversight from their perspective.
Different people have different priorities and I know, health insurance would be an issue for us as well.

One other thing I found contradictory is the deferred car purchase in view of the fall back jobs they plan to go back to.
I know they can get by fine without a car. They proove it every day.

But as a realtor who needs to show houses and a contractor, who needs to shlepp around tools,
not having a car seems cumbersume.

MMM could maybe wing it by bringing his tools in bike trailer or something, but a realtor who shows houses without
their own car has to get real creative.

Not saying it can't be done, but I think it would be difficult or would limit your scope (and your earning potential) quite a bit
if you did not have a car from the get go.

And I second cluelessnnc. I am all for questioning the "it can't be done" attitude, but why has it get to be so hostile.
Different people have different priorities and a friendly "let's agree to disagree" goes further than flaming someone
because they have a different opinion.

[Frankies Girl]

If you're a woman in the US and interested in oral birth control, you have to go yearly to get your prescription renewed.  And until recently, a yearly pap was highly recommended. They've changed to 3-5 years now.

My gyno said she would never advise a woman to go to 3-5 years; that's too much time for something to get going. While many types of cervical cancer are slow growing, allowing it to go for that long is just inviting a more advanced case and it's so very easy to diagnose early and treat. I've worked with a woman that died of cervical cancer. She put off going for years, and then finally did go in and was diagnosed and died within a  few months' time. Such a stupid waste for something so easy to find and treat.

If you have a history of cancer in your family, you definitely should not skip the yearly cancer(s) screenings.

My paps are free every since the health care bill - no copay or anything. I was told that many preventive medical checkups and tests may now be free or at no cost to the patient (may be billed back to insurance but you don't pay out of pocket). 

I think the idea of never going to the doctor for preventive care is kind of sad and a bit alarming. A once a year checkup and bloodwork/testing can catch all manner of early diseases that could become pretty scary and expensive down the road. It's kind of like saying I don't need to do routine maintenance on the car like getting the oil changed or the tires rotated since it has been just fine for the past year... but that can cost you so much more than money in the long run.  "An ounce of prevention is worth a pound of cure."

[Freckles]

Yea, I think people see $10K and can't fathom saving that because they never have.  Whereas it's a few months savings for a good portion of people on these forums.

I've never saved 10K.  I've never saved ANYTHING.*  I needed MMM like woah!  This comment should be in the Wall of Shame category, I think.

*I do have some money in a 403B and my PERS.  It's just hard to count it as savings since I didn't really save it so much as not get it in my take-home pay to spend it. 

[clarkfan1979]

If you don't have enough money for a $5000 or $10000 deductible for a home insurance policy then you get penalized and have to buy a more expensive policy with a lower deductible.

[Left]

I don't think $10k deductible is that high myself, my own plan is at $5k (only covering myself) but I keep $30k in bank as an emergency fund, it's 1 year's living expensive for me. Do I expect that I'd lose my job/can't work for a year? Not really, but that's the amount that I feel comfortable having "liquid" and I don't plan on changing this. So the deductible can come out of the emergency fund

Anyways, having a deductible isn't that big of a deal if it's a one time thing. If I get a chronic condition after the first year, I'd switch plan so I wouldn't be hit with the full deductible every year.