The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: NYCMiniBee133 on March 29, 2014, 10:43:58 AM
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I was rereading a particular article on health care costs here on the blog, and wanted to ask for thoughts on how folks who are in their mid to late 40's have processed this:
http://www.mrmoneymustache.com/2011/09/21/i-can-never-retire-because-of-health-insurance-waaah-waaah/
This has definitely been on my mind and my research has led me to believe that while MMM quotees premium costs of 300 or so a month that this can get significantly more expensive once you're older with your two kids.
I ran a search across different fictional ages for a family of four and then for a couple in their late 40′s early 50′s right before medicare kicks in, and the price is $700-800+ for a high deductible plan. That doesn’t include the average deductible you will be paying out because honestly your body is older and will probably need more help despite doing your best to stay active and healthy. This is the place I think most retirement plans fall down. I’d estimate an average year would require $4k of deductible payments. That plus the $800 per month premium that I found on the exchange (for a couple who doesn’t qualify for subsidies) would equate to $13,600 a year of healthcare expenses.
Note: I was looking in Austin and in Bellingham, WA which are two potential retirement destinations for us.
Can anyone who has a family of four and is in their mid to late 40's weigh in on premium costs and average deductible payments as well as roughly where they live? I have a hard time buying the numbers quoted in the blog post and would like to nail down a number I'm more certain of. Thanks!
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I'm probably on the far end of the expense spectrum. I'm in Dallas, married with two kids. I am a high user of medical care due to a chronic condition. We just went through the healthcare search in December. IIRC, one plan was $900 with maybe a 30% coinsurance and the plan with the lowest coinsurance was $1300. In network out of pocket was $6350/individual and $12,700/family. Out of network was double those amounts. Be prepared to pay the out of network costs for certain specialists like anesthesiologists who are not on any networks. They've got you between a rock and a hard place there. Maybe other cities don't have this issue but it's a doozy in Dallas.
These premium amounts are without a subsidy.
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His cost may be so low because I think they are only in their early 30's. You are right as you age it is much more expensive and you have to budget for a lot more. I also think many on these boards are much younger so that again accounts for how they can live on so little $ because their health costs are low.
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Also he quotes e health insurance and what they quote and what they approve for cost is 2 different things. My hubby got a quote for $350.00/month and when it was approved it was $600/month. I immediately cancelled it.
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It was $800/person in California for a 60 year woman with major medical issues for the highest plan on the exchange.
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I'll weigh in. I'm 45, husband is 44, children 7 and 10, we live in the Seattle metro area. All healthy. We buy our own insurance since my husband is a consultant and doesn't get health insurance coverage through his firm. We pay $780 per month for a bronze plan (HSA compatible found through WA state healthplanfinder). We have a $5250 individual deductible, $10,500 family deductible. Our plan includes dental coverage for the kids (required) but does not cover cleanings and preventative dental care for any of us. So in addition to the $780 we pay for our monthly premium, we average $400 per month for prescriptions, dental cleanings and x-rays, regular office visits (I had a mole removed, suspicious looking but thankfully benign, yet a very common procedure for someone my age who has spent time in the sun, and it was almost $1000 for lab tests and the doctor's charges). I also expect our premium will go up when I turn 46, since that is in the next age bracket (46-50). So yes, our health care costs run about $14K per year, as the thread title is named.
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I agree. We expect 15k or more in healthcare expenses in retirement, if not sooner. We might be at that already, actually, if not for our premiums being subsidized by an employer.
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49, 46 and 4 kids(15-8) All healthy. 2k a month with 10k deductible and the so called Affordable Health Care act was more expensive and I couldn't keep my doctor.
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Just popping in to remind people that while these costs may be the norm for the US, some of us live in countries with normal health care plans.
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I was rereading a particular article on health care costs here on the blog, and wanted to ask for thoughts on how folks who are in their mid to late 40's have processed this:
http://www.mrmoneymustache.com/2011/09/21/i-can-never-retire-because-of-health-insurance-waaah-waaah/
This has definitely been on my mind and my research has led me to believe that while MMM quotees premium costs of 300 or so a month that this can get significantly more expensive once you're older with your two kids.
I ran a search across different fictional ages for a family of four and then for a couple in their late 40′s early 50′s right before medicare kicks in, and the price is $700-800+ for a high deductible plan. That doesn’t include the average deductible you will be paying out because honestly your body is older and will probably need more help despite doing your best to stay active and healthy. This is the place I think most retirement plans fall down. I’d estimate an average year would require $4k of deductible payments. That plus the $800 per month premium that I found on the exchange (for a couple who doesn’t qualify for subsidies) would equate to $13,600 a year of healthcare expenses.
Note: I was looking in Austin and in Bellingham, WA which are two potential retirement destinations for us.
Can anyone who has a family of four and is in their mid to late 40's weigh in on premium costs and average deductible payments as well as roughly where they live? I have a hard time buying the numbers quoted in the blog post and would like to nail down a number I'm more certain of. Thanks!
One thing that I haven't seen mentioned in this thread is the likelihood of mustachians being retired and having a low enough income to qualify for subsidies through the ACA once in their mid to late 40s. I plan to be retired with a low income by this age, and thus should have subsidies to offset the age-related increases in health care.
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One thing that I haven't seen mentioned in this thread is the likelihood of mustachians being retired and having a low enough income to qualify for subsidies through the ACA once in their mid to late 40s. I plan to be retired with a low income by this age, and thus should have subsidies to offset the age-related increases in health care.
I think Emily's answer is 100% correct. If I were in that situation, though, I'd be really worried about asset testing for subsidy eligibility. Right now, a family of 4 making $50k can easily get a ~$7k subsidy annually (used zip code 92127 and adult ages of 50 to calculate this). If this family had a $1.25 million portfolio to get that income in retirement, I don't see the political will to keep that subsidy lasting very long. Health insurance subsidies just aren't intended for people who retire decades before the normal retirement age.
If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
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If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
I have to agree with this. This loophole for high net worth folks will almost surely be closed quickly. This year one is able (at least this is true in New York) to plug in a low AGI and get a subsidy even if one's assets are high (this can easily be the case in any give year without fudging the numbers). I have consistently paid about 12K for insurance and other health costs just as an individual. Now married, and my wife and I expect to pay a LOT over the years (I am 55 and she is 47).
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If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
I have to agree with this. This loophole for high net worth folks will almost surely be closed quickly. This year one is able (at least this is true in New York) to plug in a low AGI and get a subsidy even if one's assets are high (this can easily be the case in any give year without fudging the numbers). I have consistently paid about 12K for insurance and other health costs just as an individual. Now married, and my wife and I expect to pay a LOT over the years (I am 55 and she is 47).
It isn't a loophole and it will not be closed quickly or at all. There really are not enough high net worth folks who can or want to adjust their earnings (investment earnings count toward MAGI) such that they can get a subsidy. The cost to do a Domesday Book for everyone in America would far outweigh the few of us who manage to control our MAGI but have a decent net worth. There are so many "unfair" things that don't get fixed for decades or if ever. No political gain in taking away benefits, only in giving them.
I am budgeting $5000 a year for premium + out of pocket when you factor in subsidy and it will probably be much less than that when you factor in out of pocket cost sharing.
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I agree.. The only income my Wife and I will have when we both retire is $15k in rent plus mostly qualified dividends which as long as your in the 15% tax bracket do not count towards your MAGI income anyway.
Then max out our contributions to the Traditional IRAs and on paper we make virtually nothing.. Just sell some of our after-tax stock.. Once again as long as your in the low tax bracket the long term capital gains (up to $75 k I believe) don't count towards income either.
Some of the bronze plans I was seeing were for zero monthly cost with subsidies.
The plan would be to spend down the after tax stash and hopefully not tap the taxable stuff until eligible for medicare which using the Roth IRA conversions should be quite doable.
Frank
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I agree.. The only income my Wife and I will have when we both retire is $15k in rent plus mostly qualified dividends which as long as your in the 15% tax bracket do not count towards your MAGI income anyway.
Then max out our contributions to the Traditional IRAs and on paper we make virtually nothing.. Just sell some of our after-tax stock.. Once again as long as your in the low tax bracket the long term capital gains (up to $75 k I believe) don't count towards income either.
Some of the bronze plans I was seeing were for zero monthly cost with subsidies.
The plan would be to spend down the after tax stash and hopefully not tap the taxable stuff until eligible for medicare which using the Roth IRA conversions should be quite doable.
Frank
Actually not true. Capital gains and dividend interest may be taxed at 0% if your income is low enough but they do still count toward your MAGI when looking at ACA subsidies.
We will have about $700K in tax deferred (401K, Roth, IRA) and $700K in taxable, $300K of which will be new money from sale of our home. Since the $300K will be tax free as it is just a return of our home equity from the sale, we can use it to live on for many years.
If you want the best bang for your buck you need a silver plan. For a married couple with no kids at age 46 a super subsidized silver plan has a monthly premium of $100 and significant cost sharing. Aside from the $1200 in premiums, the max out of pocket per year you would pay after the cost sharing is around $2300. Thus budgeting $5000 is excessive.
If our expenses are $40,000 a year, we can live on the 300K for about 7 years. If it is invested in a CD ladder paying 2% then the $40,000 would keep up with inflation.
Our MAGI would consist of the interest from the $300,000 in 2% CDs plus dividends from our $400,000 stock portfolio in the taxable. Those are also about 2%, so our MAGI would consist of 2% of $700,000 or $14,000 a year.
In order to qualify for a subsidized silver plan we actually need a MAGI of around $22,000 a year. We can obtain this by doing IRA to Roth conversions of $8,000 each year. There will be no tax on these conversions because of our very low reportable income.
After five years we could start taking out those $8,000 Roth conversions with no tax and no adjustment to our MAGI. Thus when our $300,000 cash pile is depleted in 7 or 8 years, we will have another $80,000 or so in free cash available (considering we would have converted more than $8000 as our CDs were depleted and MAGI went down). This would extend us another 2 or 3 years, meaning we may be able to keep a MAGI of $22,000 for up to 11 years while actually living on $40,000. During this whole time our stock market invested 401K and taxable accounts will likely have grown to $1.5 million or so and we will be age 57, reasonably close to real retirement age.
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Thanks Roland,
Your right.. I just pulled my taxes and the AGI does indeed include all divs and capital gains.
Like you we have a bout $75k in cash and about $600k in after tax investments.... So it seems the smart thing to do is live off the cash (plus $15k rent) than convert enough 401k assets to generate $22k of capital gains (minus dividends).
I am assuming contributing to the traditional IRA's still makes sense from a tax perspective?
Frank
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Oh I just checked the Oregon website.. For a MAGI of $21500 the lowest cost silver plan is $37 a month.. rising to $72 a month for $22k. Thats for me at 55 and my Wife at 51 years old... i.e three years from now when she quits.
Frank
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Oh I just checked the Oregon website.. For a MAGI of $21500 the lowest cost silver plan is $37 a month.. rising to $72 a month for $22k. Thats for me at 55 and my Wife at 51 years old... i.e three years from now when she quits.
Frank
Right, and the max out of pocket you will pay on the silver plan is tons less than a bronze plan because of cost sharing. At a $21500 income you may only need to pay $2000 max out of pocket when you factor in cost sharing.
A couple 55 and 51 paying $3000 a year for healthcare was unheard of before ACA. An amazing deal.
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This is the most grey area of my FI plans. I'm hoping a lot of the dust will settle by the time I have to have a nailed down budget (I'm probably 10 years or more).
That said, both of us will likely work some, potentially enough to get health-insurance through an employer. Or if self-employed, we'd fund it through that.
Slightly off-topic: for expensive one-off procedures, make sure to research medical tourism. I think Thailand is a popular choice, but can't recall the specific hospital. Often procedure+plane ticket is still a small fraction of equivalent quality American hospital.
Chronic conditions are, of course, another story.
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Yes its either that or move back to the UK where I came from and get it for free..:)
The challenge will be to figure out to get as close as possible to $21.5k MAGI before the end of any given tax year.. The price you pay seems extremely sensitive.. i.e another $500 of MAGI doubles your premium
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We are 44,43,18 and 15. Currently $8200 per year. (up 10% per year for the last five) We have a very good out of network option because if someone is really in need of this I want to be able to go to Mayo Clinic or similar. I'm pretty sure it is a $7,500 individual deductible. It is HSA approved so we use an HSA with it. The out of network 'upgrade' cost us around 20% more when we made the choice. We may not be able to get as good a deal now based on the new laws - similar in area new looks like $12k per year.
The kids have had a few bills over the years. A few broken bones, a couple urgent care stitches runs as well. As they got older there were fewer small visits (strep ,ear infections etc) replaced by the once every year or two bigger ones. So probably $1,000 a year that way safely - with a bad bone break at $3k with anesthesia to fix it.
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If I were in that situation, though, I'd be really worried about asset testing for subsidy eligibility. Right now, a family of 4 making $50k can easily get a ~$7k subsidy annually (used zip code 92127 and adult ages of 50 to calculate this). If this family had a $1.25 million portfolio to get that income in retirement, I don't see the political will to keep that subsidy lasting very long. Health insurance subsidies just aren't intended for people who retire decades before the normal retirement age.
If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
I'm really not worried about asset testing for subsidy eligibility being a problem for us. B/c of the inflated expenses middle/upper middle Americans have adjusted to, even if subsidies do get means-tested, I doubt having the $500k or so (in today's dollars) that we plan to have in retirement accounts will have a great affect on otherwise qualifying. I doubt that such a piddly amount will be seen as any significant net worth (Americans can't possibly retire with less than $1 million these, days, don't you know), and that's assuming any means-testing at all ever occurs. And if we do somehow amass $1.25 million by retirement, we will be able to afford to retire without subsides, no problem (who wouldn't?).
Seems to me that this issue, like most, will probably be pretty easily addressed by avoiding lifestyle creep.
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I'm 47, wife is 42, kids 22 and 19. I'm spoiled by having a work subsidized low premium, so our premium costs are low (~$5500/yr for the past few years for BCBS, and ~$2800/yr currently for an Aetna HSA plan). Our actual use of insurance and out of pocket cost has been fairly low; any year without an injury has been in the few hundred $ range.
Our worst year was about three years ago when I crashed on the bike badly and had to have a titanium plate put in my collarbone, and a few weeks later my daughter cut a tendon in her thumb on a broken glass and required a plastic surgeon's help to reattach the tendon, and therapy afterwards. I think I went about $5k out of pocket that year (and we had excellent BCBS insurance).
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There seems to be a lot of faith on here about the ACA being able to keep health care costs low way into the future. Do most of you share the same optimism about Social Security remaining solvent (i.e. getting most of what your current earning would predict you should receive)? To be clear, I really want the ACA to succeed. The idea that something like 50 million Americans lack health insurance is appalling for a "first world" nation. I just think that taking sustained low health care costs for granted is as dangerous as assuming the stock market will always have real returns of 6%-7%.
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Well its like everything else.. if there is enough will things will change..
I'm hoping that it sticks around long enough where people see the advantages then demand real reform if they try to take it away.
If not I'm keeping my UK citizenship for that very reason.
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I hope something comes to fruition as I too think its much needed , but I am not banking it will be as is now.
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If I were in that situation, though, I'd be really worried about asset testing for subsidy eligibility. Right now, a family of 4 making $50k can easily get a ~$7k subsidy annually (used zip code 92127 and adult ages of 50 to calculate this). If this family had a $1.25 million portfolio to get that income in retirement, I don't see the political will to keep that subsidy lasting very long. Health insurance subsidies just aren't intended for people who retire decades before the normal retirement age.
If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
I'm really not worried about asset testing for subsidy eligibility being a problem for us. B/c of the inflated expenses middle/upper middle Americans have adjusted to, even if subsidies do get means-tested, I doubt having the $500k or so (in today's dollars) that we plan to have in retirement accounts will have a great affect on otherwise qualifying. I doubt that such a piddly amount will be seen as any significant net worth (Americans can't possibly retire with less than $1 million these, days, don't you know), and that's assuming any means-testing at all ever occurs. And if we do somehow amass $1.25 million by retirement, we will be able to afford to retire without subsides, no problem (who wouldn't?).
Seems to me that this issue, like most, will probably be pretty easily addressed by avoiding lifestyle creep.
At 500k I probably wouldn't worry either. But at >1 million, I think it's a possibility to plan for. I just don't think the 90% of people who have a lower net worth than that millionaire are going to support subsidies for them in perpetuity.
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At 500k I probably wouldn't worry either. But at >1 million, I think it's a possibility to plan for. I just don't think the 90% of people who have a lower net worth than that millionaire are going to support subsidies for them in perpetuity.
You see similar things in public pensions. 90% of the people don't have one and yet there is nothing done to change them or lower them even when cities and states start struggling. It is impossibly hard to take benefits away from any group once given.
ACA is here to stay, along with the subsidies. Plan for it or not, it will be there for those who know how to work the system.
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At 500k I probably wouldn't worry either. But at >1 million, I think it's a possibility to plan for. I just don't think the 90% of people who have a lower net worth than that millionaire are going to support subsidies for them in perpetuity.
You see similar things in public pensions. 90% of the people don't have one and yet there is nothing done to change them or lower them even when cities and states start struggling. It is impossibly hard to take benefits away from any group once given.
ACA is here to stay, along with the subsidies. Plan for it or not, it will be there for those who know how to work the system.
I don't think a benefit of a particular job is a good analogy for an attempt at a universal health care system. I think a better analogy for possible future changes in ACA subsidies is Social Security, the benefits of which started off tax-free but eventually became partially taxable depending on your income– first in 1983, then more in 1993. Or Medicaid Estate Recovery, made mandatory in 1993.
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I don't think a benefit of a particular job is a good analogy for an attempt at a universal health care system. I think a better analogy for possible future changes in ACA subsidies is Social Security, the benefits of which started off tax-free but eventually became partially taxable depending on your income– first in 1983, then more in 1993. Or Medicaid Estate Recovery, made mandatory in 1993.
Yes, note how very gradual those changes were...decades. Thus you can plan for ACA subsidies with the warning that the system could change a little over the years but very likely would not change drastically.
It is not like one day in SS you were going to get $30,000 a year at age 65 then the next year they changed it and said you were only getting $5,000 and had to wait until 72.
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... If this family had a $1.25 million portfolio to get that income in retirement, I don't see the political will to keep that subsidy lasting very long. Health insurance subsidies just aren't intended for people who retire decades before the normal retirement age.
If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
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All it's gotta last is for a coupla years until the Golden Ticket, Medicare. For me anyways. :)
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... If this family had a $1.25 million portfolio to get that income in retirement, I don't see the political will to keep that subsidy lasting very long. Health insurance subsidies just aren't intended for people who retire decades before the normal retirement age.
If I were planning, I'd plan that the subsidies at that level won't last for the duration of my retirement.
All it's gotta last is for a coupla years until the Golden Ticket, Medicare. For me anyways. :)
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I don't think a benefit of a particular job is a good analogy for an attempt at a universal health care system. I think a better analogy for possible future changes in ACA subsidies is Social Security, the benefits of which started off tax-free but eventually became partially taxable depending on your income– first in 1983, then more in 1993. Or Medicaid Estate Recovery, made mandatory in 1993.
Yes, note how very gradual those changes were...decades. Thus you can plan for ACA subsidies with the warning that the system could change a little over the years but very likely would not change drastically.
It is not like one day in SS you were going to get $30,000 a year at age 65 then the next year they changed it and said you were only getting $5,000 and had to wait until 72.
Oh, I absolutely agree that the changes I'm talking about could take decades. But I'm arguing not how long it'll take, but with your description that it's "impossibly hard" to take away benefits. But in our discussion, someone planning for $7k in annual insurance premium subsidies for 20+ years in retirement could very easily see that go to zero over a decade if it becomes means-tested. That's a significant change, even if it occurs gradually.
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Oh, I absolutely agree that the changes I'm talking about could take decades. But I'm arguing not how long it'll take, but with your description that it's "impossibly hard" to take away benefits. But in our discussion, someone planning for $7k in annual insurance premium subsidies for 20+ years in retirement could very easily see that go to zero over a decade if it becomes means-tested. That's a significant change, even if it occurs gradually.
Well anything *could* happen. If they did somehow manage to pass an amendment that dictated means testing it is very likely a loophole would exist to move money around to again qualify for the subsidy. Maybe 401K balances would be exempt (I can't see pensions being counted as assets during the years before you reach retirement age, so how could they justify counting the pension replacement 401K?). Maybe home value would be exempt so you might put your money into your home to reduce expenses. Actually it would bring up a very good point on owning vs renting. How could you deny healthcare coverage to someone who rented and had $500,000 in the bank with a $25,000 income but give subsidized coverage to someone who owned a $500,000 apartment in NYC and had a $30,000 income?
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Oh, I absolutely agree that the changes I'm talking about could take decades. But I'm arguing not how long it'll take, but with your description that it's "impossibly hard" to take away benefits. But in our discussion, someone planning for $7k in annual insurance premium subsidies for 20+ years in retirement could very easily see that go to zero over a decade if it becomes means-tested. That's a significant change, even if it occurs gradually.
Well anything *could* happen. If they did somehow manage to pass an amendment that dictated means testing it is very likely a loophole would exist to move money around to again qualify for the subsidy. Maybe 401K balances would be exempt (I can't see pensions being counted as assets during the years before you reach retirement age, so how could they justify counting the pension replacement 401K?). Maybe home value would be exempt so you might put your money into your home to reduce expenses. Actually it would bring up a very good point on owning vs renting. How could you deny healthcare coverage to someone who rented and had $500,000 in the bank with a $25,000 income but give subsidized coverage to someone who owned a $500,000 apartment in NYC and had a $30,000 income?
In many states if you want aid like food stamps you can own your home but only have $2000 in assets outside of retirement. I would not doubt that outside retirement assets may sometime count whereas a house may not.
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In many states if you want aid like food stamps you can own your home but only have $2000 in assets outside of retirement. I would not doubt that outside retirement assets may sometime count whereas a house may not.
And there you have a loophole. Assets inside retirement accounts don't count for food stamp means testing. We will have over a million dollars (eventually) inside of 401K/IRA/Roth and it is not hard to get access to some of that money for early retirement. There will always be a way to work around any means testing even for the extreme remote chance they implement it.
What they have implemented already is income testing, which for the majority of people *is* means testing. Even if he wanted to do so, there is no way Bill Gates could get his gross income below $22,000 a year. If you have $3,000,000 invested in taxable accounts, just your dividends will be $60,000 a year on average.
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At the moment my healthcare costs for a family of 4 is vastly below the 13 to 14k level courtesy of ACA subsidies. Will those subsidies persist? Your guess is as good as mine. I expect that ACA as a whole will change over time, but I have no way to predict how that change will evolve. Subsidies could certainly get scaled back for the likes of me or disappear entirely, although I would imagine it would take at least 5 years for significant change to what is in place to happen. For all I know we will be in a single payor environment in 5 or 10 years. In the meantime I expect to maximize what I am eligible for, get on with life, and plan to adapt to whatever change comes down the pike.
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Since we have this lively conversation - did anyone researched how 401k deductions and traditional IRA contributions counted in MAGI? i.e. a person working part time for 30k salary and contributing something to 401k/403b plan, would that lower the MAGI?
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http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf
Looks like 401k and tIRA contributions are not included in MAGI. Someone yell if I didn't read this correctly.
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Contributions to the IRA and 401k will lower your MAGI. Any tax-exempt interest or foreign income/housing subsidy you get will be included in your MAGI, though.
A gold plan in Illinois for two adults in their late 20s and one infant comes to $8000/yr in premiums. Co-pays are low enough that even if everyone saw a primary doctor 4 times a year, a specialist twice a year, and someone ended up in the ER without admission ($400 copay + 20% deductible - hospital charges about $2000 total from my experience), costs would be about $8000 + $1500 = $9500 per year. This is without any subsidies.
*ERROR - meant $8000/yr in premiums, not $6000. Updated. *
Silver plan: $6800/yr premiums, same costs for office and ED.
Bronze plan: $5000/yr premiums, costs for office and ED are likely more than for gold or silver (% of total charge rather than flat fee co-insurance).
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A gold plan in Illinois for two adults in their late 20s and one infant comes to $6000/yr in premiums. Co-pays are low enough that even if everyone saw a primary doctor 4 times a year, a specialist twice a year, and someone ended up in the ER without admission ($400 copay + 20% deductible - hospital charges about $2000 total from my experience), costs would be about $6000 + $1500 = $7500 per year. This is without any subsidies.
I was wondering why you wrote this then I re-read the OP. So, I'll chime in with some unsubsidized numbers from Southern CA:
Family of four, adults are both 29, the cheapest plans are:
Catastrophic: 512
Bronze: 639
Silver: 745
Gold: 843
Platinum: 941
Family of four, adults are both 40:
about $70-100/month more than the previous case, but no availability for catastrophic
Two 64 year old adults:
Bronze: 1092
Silver: 1275
Gold: 1441
Platinum: 1626
If eligible for a hardship exemption, catastrophic would be $875/month
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i guess my retiree of $740/month is starting to look good to me:))
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Also he quotes e health insurance and what they quote and what they approve for cost is 2 different things. My hubby got a quote for $350.00/month and when it was approved it was $600/month. I immediately cancelled it.
Was this pre-2014 enrollment? Under the current laws your health insurance company is only able to rate you based on four factors: 1. Age, 2. Smoking status, 3. Zip code, 4. Family size. Unless this is a grandfathered plan (a plan that hasn't changed materially since 2010), the quote on e-health should be identical to your final plan as long as you input your information correctly.
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No actually this was in Feb, 2014. I was really shocked.
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Hey OP.
There is probably a difference between typical annual healthcare spending and a bad year. I think it's smart that you're looking at actual costs.
Our calculation looks something like this (no kids though)
ACA Premiums for 2 Adults (Seattle, midmthirties): $6,396
Preventative annual exams: covered
Specialist exam and blood test (1x annually): $350.00
Prescriptions (annually) $60.00
This is based on our historical healthcare usage. So $6,396 + $450.00 in a typical year. We also need to get the non-insurance rates for teeth cleaning and eye exams. That is our "baseline" health budget. Only $450.00 counts towards the out of pocket max.
But then there is that 10k out of pocket max, and there will be years when we get sicker than usual, things like colonoscopies and cataracts, and so on....
So our real formula looks like:
$6396 + $450 + teeth cleaning + eye exams (baseline expenses)
Up to 10k in variable expenses. (minus the $450.00)
Then take this whole formula and grow it for inflation, probably even faster.
So how do you budget for all this?
We're budgeting for "typical" expenses, but making sure there is enough fluff in our ER budget to,cover the out of pocket max every single year if need be. Basically our travel budget doubles as healthcare overflow. If we get sick, we pull back on travel, or pick up side income to cover of we want both.
If we end up getting ACA subsidies that is fine, but I'm not counting on it. And all this financial planning is motivating us to get in more walks and a better diet. Some health care issues you can't prevent, but we're trying to stack the deck in our favor.
My hunch is for many people in their 60s and 70s, it's not hard to hit the out of pocket max every year.
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So how do you budget for all this?
We're budgeting for "typical" expenses, but making sure there is enough fluff in our ER budget to,cover the out of pocket max every single year if need be. Basically our travel budget doubles as healthcare overflow. If we get sick, we pull back on travel, or pick up side income to cover of we want both.
If we end up getting ACA subsidies that is fine, but I'm not counting on it. And all this financial planning is motivating us to get in more walks and a better diet. Some health care issues you can't prevent, but we're trying to stack the deck in our favor.
My hunch is for many people in their 60s and 70s, it's not hard to hit the out of pocket max every year.
ShortInSeattle,
I think you have summed this up nicely. It's what I was trying to get at in a prior post but more specific in terms of how you think about budgeting for health care. My guess is that you are not counting on Social Security either, correct? And that you assume a conservative expected rate of return on investments?
I am trying to not count on anything extraordinarily good regarding the three categories above (ACA, SS & ROR). So, with that in mind, I am shooting for a higher retirement number than many on this forum. Then again, I am often accused of over thinking things.
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Why so many people make the statement "I am not counting on SS" when they have paid hundreds of thousands of dollars into the program boggles my mind.
To me it is like saying "I own my home but am not counting on the USA to be able to defend the borders and prevent Russia from taking it from me"
If we could somehow bet, I would give you 10 to 1 odds on SS being there for you when you retire, and I would make a bundle off of you because I would bet big.
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ROG,
I guess an important thing to consider is the age of the poster who is making the "I'm not counting on SS" statement. I am 55 so closer than many on this forum to actually being able to collect it.
I just figure that current levels of debt are unsustainable (dangerously high), and that big cuts will have to be made to Medicare, SS and the military. I realize it's political suicide to make major changes to any of those (cutting the military would be the easiest politically IMO).
I do expect SS to be there in some form when I am old enough to collect it, though my best guess is that it will be available at a later age and in a lesser amount.
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I do expect SS to be there in some form when I am old enough to collect it, though my best guess is that it will be available at a later age and in a lesser amount.
And rather than try to guess what amount I'll actually receive, I just discount it completely and hope for the best. Maybe there'll be enough there for me when I start collecting that it'll pay for some of my Medicare supplemental insurance.
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Well, you guys can do that. I guess your portfolio is much much larger than ours. We figure getting $4000 a month from our portfolio with a 3% to 3.5% SWR and the current SS website projection for our SS benefit if we quit working next year (age 46) and collect at age 62 is over $2500 combined. $2500 is a significant amount of money compared to the $4000 we will be living on before SS.
I guess if I had $10,000 a month with a 3.5% SWR I wouldn't count on SS either.
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I am on the cusp of FIRE and have been looking at ACA healthcare pretty closely. Here in CO the cheapest Bronze plan for my situation is $885/month. (Two people 57 & 50, non-smokers, no health issues). We generally visit the doctor 1-2 times a year.
I am budgeting a minimum of $1,000 per month or $12K per year just for health care!
Keep in mind that this does not cover dental or vision at all! Dental in particular can be very expensive.
ACA needs to allow a catastrophic only policy with a $10K or higher deductible.
And/or ACA policies that include coverage for Dental and Vision.
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I am on the cusp of FIRE and have been looking at ACA healthcare pretty closely. Here in CO the cheapest Bronze plan for my situation is $885/month. (Two people 57 & 50, non-smokers, no health issues). We generally visit the doctor 1-2 times a year.
I am budgeting a minimum of $1,000 per month or $12K per year just for health care!
Keep in mind that this does not cover dental or vision at all! Dental in particular can be very expensive.
ACA needs to allow a catastrophic only policy with a $10K or higher deductible.
And/or ACA policies that include coverage for Dental and Vision.
Is your income too high for a subsidy? I get $9,930 per year for the both of you in Denver on a silver plan (bronze is cheaper) and $4,750 per year after a subsidy if your MAGI is $50,000.
$4,750 is only $400 a month which really is not too bad.
If you have a high income though, $9,930 is pretty steep.
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Quote from Roland of Gilead
Well, you guys can do that. I guess your portfolio is much much larger than ours. We figure getting $4000 a month from our portfolio with a 3% to 3.5% SWR and the current SS website projection for our SS benefit if we quit working next year (age 46) and collect at age 62 is over $2500 combined. $2500 is a significant amount of money compared to the $4000 we will be living on before SS.
I guess if I had $10,000 a month with a 3.5% SWR I wouldn't count on SS either.
ROG, why are you making the jump from "not expecting much from SS" to "your portfolio must be large." I would LOVE it if you are correct about SS. We would be looking at a monthly SWR number that is similar to yours but a considerably lower SS payout.
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ROG, why are you making the jump from "not expecting much from SS" to "your portfolio must be large." I would LOVE it if you are correct about SS. We would be looking at a monthly SWR number that is similar to yours but a considerably lower SS payout.
I am making the jump because you guys do not seem to care about the money you have paid into SS, which is not a welfare program, thus I assumed you had so much cash it really didn't matter.
I feel the same way about my future SS payment that someone with a pension might feel if there was talk about cutting it drastically. The most you ever hear about with pensions is maybe a limit on benefits for future hires and even that is usually fought tooth and nail. I am not going to give up on getting my fair share so easily as to just say "I am not counting on SS".
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I am on the cusp of FIRE and have been looking at ACA healthcare pretty closely. Here in CO the cheapest Bronze plan for my situation is $885/month. (Two people 57 & 50, non-smokers, no health issues). We generally visit the doctor 1-2 times a year.
I am budgeting a minimum of $1,000 per month or $12K per year just for health care!
Keep in mind that this does not cover dental or vision at all! Dental in particular can be very expensive.
ACA needs to allow a catastrophic only policy with a $10K or higher deductible.
And/or ACA policies that include coverage for Dental and Vision.
Is your income too high for a subsidy? I get $9,930 per year for the both of you in Denver on a silver plan (bronze is cheaper) and $4,750 per year after a subsidy if your MAGI is $50,000.
$4,750 is only $400 a month which really is not too bad.
If you have a high income though, $9,930 is pretty steep.
Those numbers do not include a subsidy. I do not qualify while I am working and, like others in this thread am concerned that the subsidy rules will be "adjusted" to exclude people who have large savings accounts.
We live in an era where the majority of "have not's" have learned that they can vote to take from the minority "haves". Currently the taking mentality is focused on earnings. I expect that savings are next, first IRA and 401k accounts, then taxable accounts.
The taker's logic follows these lines: "Why should you have more than me? I don't care how you got it, I don't have it so you should be forced to give it to me." All wrapped in nice words like fairness, for the children, help the needy, etc etc.
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Quote from Roland Of Gilead
I am making the jump because you guys do not seem to care about the money you have paid into SS, which is not a welfare program, thus I assumed you had so much cash it really didn't matter.
I feel the same way about my future SS payment that someone with a pension might feel if there was talk about cutting it drastically. The most you ever hear about with pensions is maybe a limit on benefits for future hires and even that is usually fought tooth and nail. I am not going to give up on getting my fair share so easily as to just say "I am not counting on SS".
Got it. Thanks for responding. So you don't take it for granted that your SS monies will all be there but you are not going to be voting for politicians who are trying to take it away (my interpretation of what you are saying). Fair enough.
Tone is not always easy to guess at correctly online but, yeah, I guess my attitude is, shall we say, less feisty than yours.
Also I agree that it is not a handout but I do think that substantial changes (cuts) will be phased in over time just because SS is not sustainable as currently configured. Just basing that claim on all the charts I see on our debt levels.
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Those numbers do not include a subsidy. I do not qualify while I am working and, like others in this thread am concerned that the subsidy rules will be "adjusted" to exclude people who have large savings accounts.
We live in an era where the majority of "have not's" have learned that they can vote to take from the minority "haves". Currently the taking mentality is focused on earnings. I expect that savings are next, first IRA and 401k accounts, then taxable accounts.
The taker's logic follows these lines: "Why should you have more than me? I don't care how you got it, I don't have it so you should be forced to give it to me." All wrapped in nice words like fairness, for the children, help the needy, etc etc.
I agree with you 100%. We grossed over $250,000 this year and paid over $70,000 in various taxes and SS payments, plus even a little bonus $65 in extra ACA tax for high wage income! I am definitely a have but I see the takers all around.
Instead of continuing to work until I am 60 and have so much money that I can afford to let them take half of it, I am going to bail early and become a taker myself. It is the American way!
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Those of you worried about Social Security - are you also completely discounting ever receiving Medicare benefits? Because Social Security, as funded, is completely solvent until 2037, at which point it will pay out 73-76% in promised benefits in perpetuity without any changes to the system (http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html). But Medicare has a current and future funding shortfall of about 50% (http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/).
It doesn't make any sense to me to not count Social Security benefits in retirement planning but to count Medicare as a sure thing.
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Those of you worried about Social Security - are you also completely discounting ever receiving Medicare benefits? Because Social Security, as funded, is completely solvent until 2037, at which point it will pay out 73-76% in promised benefits in perpetuity without any changes to the system (http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html). But Medicare has a current and future funding shortfall of about 50% (http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/).
It doesn't make any sense to me to not count Social Security benefits in retirement planning but to count Medicare as a sure thing.
I assume my SS will pay for the cost of my health insurance from 65 and above so I can ignore both. :)
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Those of you worried about Social Security - are you also completely discounting ever receiving Medicare benefits? Because Social Security, as funded, is completely solvent until 2037, at which point it will pay out 73-76% in promised benefits in perpetuity without any changes to the system (http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html). But Medicare has a current and future funding shortfall of about 50% (http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/).
It doesn't make any sense to me to not count Social Security benefits in retirement planning but to count Medicare as a sure thing.
I do not include any allowance for medicare in my expense planning. This shocked my MIL (retired private banker) a few days ago. She was commenting that her medical premium was $3K per year. I told her my post-retirement premium would be around $12K per year and she was astounded.
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Why so many people make the statement "I am not counting on SS" when they have paid hundreds of thousands of dollars into the program boggles my mind.
To me it is like saying "I own my home but am not counting on the USA to be able to defend the borders and prevent Russia from taking it from me"
If we could somehow bet, I would give you 10 to 1 odds on SS being there for you when you retire, and I would make a bundle off of you because I would bet big.
My FIRE plans are not dependent on SS. In practical terms, this means we have to save even more than we would otherwise. I do consider it likely that we'll get some SS back and I agree it is an accrued benefit that we are entitled to.
But basically I don't trust the government over the long term - a lot can happen in 30 years, and I have no intention of retiring on the assumption that all will be well and end up getting f-ed and needing to work as a Walmart greeter in my golden years.
I hope you are right and that I'm just pessimistic. Then I can spend my SS on blackjack and whiskey and feel foolish for those extra years I worked to double-cover my butt. :)
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Why so many people make the statement "I am not counting on SS" when they have paid hundreds of thousands of dollars into the program boggles my mind.
To me it is like saying "I own my home but am not counting on the USA to be able to defend the borders and prevent Russia from taking it from me"
If we could somehow bet, I would give you 10 to 1 odds on SS being there for you when you retire, and I would make a bundle off of you because I would bet big.
My FIRE plans are not dependent on SS. In practical terms, this means we have to save even more than we would otherwise. I do consider it likely that we'll get some SS back and I agree it is an accrued benefit that we are entitled to.
But basically I don't trust the government over the long term - a lot can happen in 30 years, and I have no intention of retiring on the assumption that all will be well and end up getting f-ed and needing to work as a Walmart greeter in my golden years.
I hope you are right and that I'm just pessimistic. Then I can spend my SS on blackjack and whiskey and feel foolish for those extra years I worked to double-cover my butt. :)
+1 except replace the blackjack and whiskey with travel and massages.
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Cleveland Clinic CEO reports on ACA
http://cleveland.cbslocal.com/2014/03/31/cleveland-clinic-ceo-three-quarters-of-americans-who-signed-up-for-obamacare-now-have-higher-premiums/#.Uzq0FtBZjPo.twitter
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Those numbers do not include a subsidy. I do not qualify while I am working and, like others in this thread am concerned that the subsidy rules will be "adjusted" to exclude people who have large savings accounts.
We live in an era where the majority of "have not's" have learned that they can vote to take from the minority "haves". Currently the taking mentality is focused on earnings. I expect that savings are next, first IRA and 401k accounts, then taxable accounts.
The taker's logic follows these lines: "Why should you have more than me? I don't care how you got it, I don't have it so you should be forced to give it to me." All wrapped in nice words like fairness, for the children, help the needy, etc etc.
I agree with you 100%. We grossed over $250,000 this year and paid over $70,000 in various taxes and SS payments, plus even a little bonus $65 in extra ACA tax for high wage income! I am definitely a have but I see the takers all around.
Instead of continuing to work until I am 60 and have so much money that I can afford to let them take half of it, I am going to bail early and become a taker myself. It is the American way!
I just don't see this really happening. Those with money are still in control and will be for the foreseeable future. Honestly it just sounds like complaining to me. You are upset about 70k in taxes but that is 28% based on the 250 you made. Why is that so awful to you? It sounds like the old argument that the rich pay most of the taxes. Well of course they do. That doesn't mean they pay a higher or the highest percentage. I mean I would rather have have 5% of 10mil than 100% of a 100 bucks.
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I just don't see this really happening. Those with money are still in control and will be for the foreseeable future. Honestly it just sounds like complaining to me. You are upset about 70k in taxes but that is 28% based on the 250 you made. Why is that so awful to you? It sounds like the old argument that the rich pay most of the taxes. Well of course they do. That doesn't mean they pay a higher or the highest percentage. I mean I would rather have have 5% of 10mil than 100% of a 100 bucks.
If I put it to you that you could have 5% of 10mil in exchange for 5 years of your life, would you still make that choice?
In some other thread there is talk of a person who makes $90,000 and pays zero taxes. Making $250,000 and paying $70,000 in taxes does leave you with $180,000 but at the cost of a year of your life. I would rather have the $90,000 and zero tax than the $250,000 and 28% tax if I get that year of life too.
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I agree with you 100%. We grossed over $250,000 this year and paid over $70,000 in various taxes and SS payments, plus even a little bonus $65 in extra ACA tax for high wage income! I am definitely a have but I see the takers all around.
Instead of continuing to work until I am 60 and have so much money that I can afford to let them take half of it, I am going to bail early and become a taker myself. It is the American way!
I just don't see this really happening. Those with money are still in control and will be for the foreseeable future. Honestly it just sounds like complaining to me. You are upset about 70k in taxes but that is 28% based on the 250 you made. Why is that so awful to you? It sounds like the old argument that the rich pay most of the taxes. Well of course they do. That doesn't mean they pay a higher or the highest percentage. I mean I would rather have have 5% of 10mil than 100% of a 100 bucks.
Oh no, you had to pay an extra $65. The horror! Life is so unfair and the gubmit is to blame.
rtrnow, I always laugh when people complain about how the poor don't pay very much in taxes. Duh, they don't have any money! You can't tax something that doesn't exist.
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Oh no, you had to pay an extra $65. The horror! Life is so unfair and the gubmit is to blame.
rtrnow, I always laugh when people complain about how the poor don't pay very much in taxes. Duh, they don't have any money! You can't tax something that doesn't exist.
The extra $65 of course made very little difference, it was just a added little bonus when doing taxes that popped up at the end (hey! you get to pay $65 more this year on top of your other taxes).
I wasn't complaining about how the poor don't pay very much in taxes, I was saying I want to join the middle class early retirees who pay very little in taxes. If you are working at walmart and pulling in $25,000 a year, you should not be paying any tax. If you are pulling in $70,000 a year from your investments and paying zero tax, that is quite wrong, but it is legal and I want to join you there.
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I just don't see this really happening. Those with money are still in control and will be for the foreseeable future. Honestly it just sounds like complaining to me. You are upset about 70k in taxes but that is 28% based on the 250 you made. Why is that so awful to you? It sounds like the old argument that the rich pay most of the taxes. Well of course they do. That doesn't mean they pay a higher or the highest percentage. I mean I would rather have have 5% of 10mil than 100% of a 100 bucks.
If I put it to you that you could have 5% of 10mil in exchange for 5 years of your life, would you still make that choice?
In some other thread there is talk of a person who makes $90,000 and pays zero taxes. Making $250,000 and paying $70,000 in taxes does leave you with $180,000 but at the cost of a year of your life. I would rather have the $90,000 and zero tax than the $250,000 and 28% tax if I get that year of life too.
Its a free country: go right ahead and reduce your income and tax burden. This is a choice every one of us must make, since we cannot change the tax code and I will presume adherence to the law. I chose to do so. I went from a 6 figure income and paying significant taxes in 2013 to a sub 50k income and a tax liability of approximately zero. Its up to you.