health care between quitting and medicare, how secure? what about bankrupcy?

[mistymoney]

Ok, so I am working my way through planning for various catastrophes, and this is one I am needing some input on.

When I quit I will do cobra for 18 months, and then ACA/private for about 5 years before medicare kicks in. Have seen some stuff on people being decimated in early retirement with a cancer diagnosis and OOP costs for treatment and meds taking away their security.

Worried that ACA will be weakened and could get a policy not renewed in the middle of expensive treatment.

If I got bills in the 100's of thousands, and all my money is in IRAs/401ks, is bankrupcy an option? How would that work when your income number is optional? And you could, theoretically, withdraw all that money and pay the bills? But it would kill the retirement.

What should I look for in a pre-medicare policy to eliminate or minimize high OOP costs? I'm not familiar with this scenario because even with HDHP the costs were capped at like 12k or so OOP in a single year.

[Morning Glory]

I had ACA for two years then spouse got a job with insurance. I figured if something happened to ACA I could get another job if I needed to, and be less burned out after a break. I never did cobra.

ACA plans have deductible and OOP max just like insurance you get from work, just make sure you get one that has some out of network coverage,  especially if you travel a lot.  You can go on the exchange website and see what sorts of plans are available in your area. You can  even type in different income amounts to determine cost after subsidies.

The catastrophe you described could also happen with workplace insurance, and was one of the main reasons for ACA.  People either couldn't afford cobra and just lost all coverage when they become too sick to work, or they lost it when cobra ran out.

[Paul der Krake]

You shouldn't have any non-covered stuff for something as mainstream as a cancer diagnosis in 2025. It's the experimental/unproven stuff that gets denied, and that's true regardless of where you got your insurance from.

[Catbert]

According to my  Google free AI, both IRAs and 401ks are generally exempt from bankruptcy.  I didn't dig further, but you should if this becomes part of your retirement plan.  Personally, I would focus more on how you could pay for medical premiums if they worst happens to the ACA.

[mistymoney]

According to my  Google free AI, both IRAs and 401ks are generally exempt from bankruptcy.  I didn't dig further, but you should if this becomes part of your retirement plan.  Personally, I would focus more on how you could pay for medical premiums if they worst happens to the ACA.

I'm not too worried about the premiums themselves. I mean, I hope they would never be more than 2k/month. What I've seen around for older folks is about 1k/month per person without subsidies. 5k might blow my boat out of the water, but I don't think that range is likely. My concern is more that I couldn't get insurance if a policy wouldn't renew in the middle of health crisis. Like they used to do.

About 20 year ago, I took a job with a big step up in pay, but a small subsidy to buy your own insurance. I thought - fine. Did cobra and then started looking around. But one of my kids couldn't get covered on any policy. For like practically nothing in terms of medical history. Not anything major thing like cancer or diabetes and I ended up needing to pay the full price for medicaid with the state for uncovered children, and deal with all the provider difficulties that entailed.

that was an eye opening experience, and was super stressful as I didn't know about the state option to get medicaid and thought it was just no insurance for you.

Hopefully I could at least get medicaid? But they are chipping away at that too.

[bmjohnson35]

Retired over 5 yrs ago at 50.  That means I have another 10 yrs before medicare, assuming it's still available at 65.  So far ACA has been great.  If subsidies go down or reduce, we have money allocated for that.  If ACA dissolves completely, we will consider leaving the country or I will get a job with coverage. Keep in mind, our future is not guaranteed. You bring up cancer.  What if you do get cancer down the road?  I agree that having reasonable coverage of some type is prudent. If you do get cancer, some other terrible disease or simply die in a car crash, wouldn't it be preferable to have enjoyed the years leading up to that situation? 

[wageslave23]

Retired over 5 yrs ago at 50.  That means I have another 10 yrs before medicare, assuming it's still available at 65.  So far ACA has been great.  If subsidies go down or reduce, we have money allocated for that.  If ACA dissolves completely, we will consider leaving the country or I will get a job with coverage. Keep in mind, our future is not guaranteed. You bring up cancer.  What if you do get cancer down the road?  I agree that having reasonable coverage of some type is prudent. If you do get cancer, some other terrible disease or simply die in a car crash, wouldn't it be preferable to have enjoyed the years leading up to that situation?

I agree. What are the odds that ACA gets repealed? 25%? Probably less since they aren't even talking about it.  What are the odds that you develop a severe cancer thats eatable but expensive between now and 65? 1 in 20? Less, since you are presumably healthy? So we're talking about a 1-2% chance that you would need to figure out some other type of coverage, go broke but live, or die. I wouldn't worry about it.  Nothing is guaranteed, my dad's healthy friend just had a stroke and died a week later. Shit happens.

[jim555]

Sounds like fear mongering to me.  Things change you adapt.  There will always be a solution somehow.

[Fru-Gal]

I don’t know why you would do COBRA. Incredibly expensive way to go, at least last I checked. Just do ACA. Or do you “have” to do COBRA if it’s offered? BTW, you can also choose ACA if the alternative offered is too expensive or not enough coverage. This may vary by state, not sure.

Look, if it all falls apart I would go back to my old method of being either uninsured and using fee-for-service clinics and docs, or get catastrophic insurance. That would cover you till Medicare.

Also for detail on all this I believe there are insurance brokers (including for ACA) who manage all these kinds of questions all the time.

[mistymoney]

Retired over 5 yrs ago at 50.  That means I have another 10 yrs before medicare, assuming it's still available at 65.  So far ACA has been great.  If subsidies go down or reduce, we have money allocated for that.  If ACA dissolves completely, we will consider leaving the country or I will get a job with coverage. Keep in mind, our future is not guaranteed. You bring up cancer.  What if you do get cancer down the road?  I agree that having reasonable coverage of some type is prudent. If you do get cancer, some other terrible disease or simply die in a car crash, wouldn't it be preferable to have enjoyed the years leading up to that situation?

yes - I am not going to push out my retirement date any further, just going through all the big bads I can to either strategize what I can, or be at peace with what I can't prevent/ameliorate beforehand so I don't waste time with useless worries or recriminations, and have something of a plan in place - even if that is something like 2 years without insurance before medicare kicks. Oh - and I think there are a few conditions where you can get medicare earlier than 65, and then if you are disabled can get on sooner, so that might be something.

Trying to puzzle this out:

The number of work credits you need to be eligible for disability benefits depends on your age when your disability begins. Generally, you need 40 credits, 20 of which were earned in the last 10 years ending with the year your disability begins. This is called the 20/40 Rule.

https://www.ssa.gov/benefits/disability/qualify.html

So if I keep up on my side biz and earn 2 credits per year which is less than 4k earned per calendar year, then I would continuously be eligible for social security disability, but then it is 2 years until you can get medicare?

Filing that under unfair andunfortunate!

[Wintergreen78]

I believe the details vary state-by-state. When I quit working for three years a while back, I qualified for Medi-Cal (California’s implementation of Medicaid). At first I tried to purchase a plan through California’s health insurance marketplace, but found out I didn’t qualify for subsidies because my regular monthly income was zero and would have to pay the full amount of any plan premiums.

So, for me insurance ended up being free for those three years. It might be worthwhile going through your state’s insurance marketplace and/or county public assistance office to figure out your specific situation.

[mistymoney]

I don’t know why you would do COBRA. Incredibly expensive way to go, at least last I checked. Just do ACA. Or do you “have” to do COBRA if it’s offered? BTW, you can also choose ACA if the alternative offered is too expensive or not enough coverage. This may vary by state, not sure.

Look, if it all falls apart I would go back to my old method of being either uninsured and using fee-for-service clinics and docs, or get catastrophic insurance. That would cover you till Medicare.

Also for detail on all this I believe there are insurance brokers (including for ACA) who manage all these kinds of questions all the time.

My thinking was that it was at least guaranteed to be there for 18 months. I don't think i have to, but I like my insurance and don't think it is super expensive. Think it might be 600/month without employer contribution.

I am also going to do a lot of medical checks before quiting just in case and will have already done all my deductibles, etc. so seems like finishing out the year would be best. Of course I can shop around on the ACA too for 2026. If something is a better plan or value can make the move. Trying to move a lot of pieces around right now in my final months of work and that was something I felt I could put off a bit. At least to EOY. And maybe for 18 months.

If all my checks look good before quitting, just catastrophic would be a good option for me.


One other thing! my current plan has HSA account, so if I cobra, can I make those HSA contributions? Can you get HDHP on ACA, or just private insurance? Not sure how that might work.

Currently have 45k in my HSA and would love to gt to 50k before I can't contribute anymore.

[jim555]

I think anyone who thinks going uninsured for any amount of time is crazy.  Only if you are super fat fire, then maybe.

[bmjohnson35]

I think anyone who thinks going uninsured for any amount of time is crazy.  Only if you are super fat fire, then maybe.

Agreed, if you can afford it. Over 20 million people in the US lack health insurance.  I know family members and friends that fall in that group, all of which are employed.  Some of which can't afford it others who gamble to save the high cost. 

[BlueSkyyes]

I don’t know why you would do COBRA. Incredibly expensive way to go, at least last I checked. Just do ACA. Or do you “have” to do COBRA if it’s offered? BTW, you can also choose ACA if the alternative offered is too expensive or not enough coverage. This may vary by state, not sure.

Look, if it all falls apart I would go back to my old method of being either uninsured and using fee-for-service clinics and docs, or get catastrophic insurance. That would cover you till Medicare.

Also for detail on all this I believe there are insurance brokers (including for ACA) who manage all these kinds of questions all the time.

My thinking was that it was at least guaranteed to be there for 18 months. I don't think i have to, but I like my insurance and don't think it is super expensive. Think it might be 600/month without employer contribution.

I am also going to do a lot of medical checks before quiting just in case and will have already done all my deductibles, etc. so seems like finishing out the year would be best. Of course I can shop around on the ACA too for 2026. If something is a better plan or value can make the move. Trying to move a lot of pieces around right now in my final months of work and that was something I felt I could put off a bit. At least to EOY. And maybe for 18 months.

If all my checks look good before quitting, just catastrophic would be a good option for me.


One other thing! my current plan has HSA account, so if I cobra, can I make those HSA contributions? Can you get HDHP on ACA, or just private insurance? Not sure how that might work.

Currently have 45k in my HSA and would love to gt to 50k before I can't contribute anymore.

I will be using COBRA to cover my first 18 months as well.  Why?  The coverage I get through work is superior to what I can get via ACA.  It's also cheaper.  And I already maxed out my out-of-pocket for the year so it'd be really stupid to start over with a new plan from ACA.  It's an easy decision for me and if I could pay to keep that coverage longer than 18 months, I would.  Sadly, it isn't an option.  COBRA is a great option for many situations and reasons.

I already maxed out my HSA contributions for this year, but plan to also contribute to it next year as well.  Beyond that, I'll have to see what plan is available via ACA that seems like it will work the best for me as to whether I'll continue keeping a plan with an HSA.

[Paul der Krake]

Sounds like fear mongering to me.  Things change you adapt.  There will always be a solution somehow.

That's exactly right. Early retirees have definitionally proven they are high agency, adept at cutting through the noise, and adaptable. OP is going to be just fine.

[seattlecyclone]

COBRA is a great option for many situations and reasons.

Agreed. ACA marketplace plan premiums are higher for older people than younger people, so someone retiring less on the "early" side of the spectrum may very well find that COBRA has better premiums and better coverage than their options on the local ACA exchange, especially if their MAGI isn't low enough to qualify for significant subsidies. Also COBRA lets you continue your existing coverage without resetting your deductible and potentially switching to entirely different physician networks mid-year. Can give some breathing room to look into the ACA marketplace options and find a good solution for whatever care needs you have.

[mistymoney]

COBRA is a great option for many situations and reasons.

Thanks for adding this piece. Yes I am in the older than young category!

Agreed. ACA marketplace plan premiums are higher for older people than younger people, so someone retiring less on the "early" side of the spectrum may very well find that COBRA has better premiums and better coverage than their options on the local ACA exchange, especially if their MAGI isn't low enough to qualify for significant subsidies. Also COBRA lets you continue your existing coverage without resetting your deductible and potentially switching to entirely different physician networks mid-year. Can give some breathing room to look into the ACA marketplace options and find a good solution for whatever care needs you have.

[YHD]

The best feature of the ACA is guaranteed issue.  Meaning you can’t get denied coverage.

The favorable subsidies are gravy.

Stuck it out at a j*b that was less than ideal until eligible to buy into the health plan until 62, when the full health benefit kicked in.

Cobra would have been my other choice if I didn’t already have another j*b lined up.