Author Topic: Health insurance in retirement  (Read 2750 times)

FerrumB5

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Health insurance in retirement
« on: June 07, 2016, 09:28:25 PM »
Hi Folks!

I'm very far from FIRE, but just probing some grounds. A lot of you say you live on 20-30k/year. What kind of health insurance do you have - carrier, type (PPO, HMO, other), typical premium. It looks like premiums for non-catastrophic plans for a family start at 900+/mo, so I'm not sure how 25k/year budget is realistic, unless insurance is not included in there. (also property tax, which is 8500/year in my area).
Share your insurance details - it will help me and others to plan FIRE date accordingly. Thanks

Altons Bobs

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Re: Health insurance in retirement
« Reply #1 on: June 07, 2016, 11:06:54 PM »
I can't live on 20-30k/year, but good for those who can.  My health insurance alone is $12k/year, and property tax is $15k/year.  I'm okay with these amounts and do not want to move or cut anything.

You can lower your costs by moving to a lower COL area, move to a smaller home, cut everything, and get a health care sharing plan instead of health insurance, then it's easier to get to the 20-30k number.

FerrumB5

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Re: Health insurance in retirement
« Reply #2 on: June 08, 2016, 08:03:40 AM »
I can't live on 20-30k/year, but good for those who can.  My health insurance alone is $12k/year, and property tax is $15k/year.  I'm okay with these amounts and do not want to move or cut anything.

You can lower your costs by moving to a lower COL area, move to a smaller home, cut everything, and get a health care sharing plan instead of health insurance, then it's easier to get to the 20-30k number.

Who is the provider and what is the plan name? Family or single or 1+spouse?

seattlecyclone

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Re: Health insurance in retirement
« Reply #3 on: June 08, 2016, 08:06:13 AM »
$900/month is just the sticker price for the plan. The net price will be much lower if your income is in the $30k/year range. See https://seattlecyclone.com/optimizing-the-affordable-care-act/ for more information about how the various subsidies work.

Beriberi

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Re: Health insurance in retirement
« Reply #4 on: June 08, 2016, 09:06:48 AM »
@seattlecyclone - that was a really informative post. I'm chugging along with employer provided coverage (and nervous about the potential repeal of Obamacare) - but I'm glad to have a better understanding of how the subsidies currently work.


Altons Bobs

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Re: Health insurance in retirement
« Reply #5 on: June 08, 2016, 01:33:25 PM »
I can't live on 20-30k/year, but good for those who can.  My health insurance alone is $12k/year, and property tax is $15k/year.  I'm okay with these amounts and do not want to move or cut anything.

You can lower your costs by moving to a lower COL area, move to a smaller home, cut everything, and get a health care sharing plan instead of health insurance, then it's easier to get to the 20-30k number.

Who is the provider and what is the plan name? Family or single or 1+spouse?

You mean the health care sharing plan?

Fishindude

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Re: Health insurance in retirement
« Reply #6 on: June 08, 2016, 02:58:51 PM »
I think to live that cheap you would have to have some sort of pension or early retirement buy out program that guarantees health insurance coverage no charge (or very little charge) until you get to medicare coverage age.   For myself and spouse we would be looking at about $12-14K for decent insurance with a fairly high deductible.

ltt

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Re: Health insurance in retirement
« Reply #7 on: June 08, 2016, 05:51:51 PM »
I'm not sure how people do it either, but understand if your income drops way down.  If we retired now, pre-age 62, we'd pay for premiums of around $1k per month, and max O_O_P of around $12k per year.  Of course, we're in our 50s and have 4 children to cover.


seattlecyclone

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Re: Health insurance in retirement
« Reply #8 on: June 08, 2016, 06:08:07 PM »
I'm not sure how people do it either, but understand if your income drops way down.  If we retired now, pre-age 62, we'd pay for premiums of around $1k per month, and max O_O_P of around $12k per year.  Of course, we're in our 50s and have 4 children to cover.

Once again, the price you are seeing is the cost prior to subsidies. As an example, I just looked up quotes on my state's marketplace for a family of six: married 50-year-old couple with four college-aged kids. The second-cheapest silver plan was pretty similar to the plan you're talking about: $5,500/11,000 individual/family deductible, $6,500/13,000 out-of-pocket maximum, $973 monthly premium. Super expensive, right?

But if you report an income of $60,000 (just under 200% of the poverty line for a family that size), you get a $674/month tax credit, bringing the premium cost down to $299/month. Also this income is low enough for the cost-sharing subsidies, which drop the deductibles all the way down to $350/700 and the out-of-pocket maximum down to $2,250/4,500. This is a much more manageable cost, and all you have to do is get your taxable income down a bit.

Even if you don't think you will be able to spend less than $60k before your kids leave the house, it's entirely possible that your retirement income will be less than this. Note that HSA withdrawals and the principal portion of taxable investment withdrawals and most Roth withdrawals don't count as income for this purpose.

geekette

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Re: Health insurance in retirement
« Reply #9 on: June 08, 2016, 06:36:43 PM »
Plans vary HUGELY, but just as a useless example, the two of us, both mid 50's, pay $1250/month and have an $1100 OOP max each.  However, subsidies drop it down to $200/month. 

Higher income means lower subsidies.  We don't spend much, so we don't need much income.

Cassie

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Re: Health insurance in retirement
« Reply #10 on: June 08, 2016, 06:48:05 PM »
WE get insurance through our former employer and it costs us almost 900/month. It is a big expense.