How important is health care for your FIRE status... WWYD?

[Secretly Saving]

Looking for some feedback on early retirement versus a decent sized healthcare perk. 

Background:

Family of four.  Parents: 37 & 36.  Twins age: 7

Basically financially independent, but not retired.  One working parent with a solid job that they like.  Stressful at times (like all jobs), but generally great.  Well paid.  Spouse is SAHP dabbles in various small side hustles as time permits.  Family maxes out all accounts and owns a few rental properties. 

The issue is the health care. 

Current company offers a deal where 100% of health care costs will be covered after 25 years of working there regardless of age.  So in 14 more years, health care for entire family: employee, spouse and dependent children will be covered.  At that point, employee will be 51 and kids will be in final year of college.  Parents could live with fully covered healthcare from age 51-65. (Kids will be out on their own at that point.)  If employee dies, spouse is still covered until 65.   At age 65, Medicare kicks in, but the company also pays a lump sum each year to help cover extra costs.

If employee leaves even one day early before 25 years, all health care benefits are gone.


Thoughts? What would you do?   Would you stay and work for 14 more years until the kids are out of school and the free health care perk can be accessed?

[LaineyAZ]

Don't believe that the health care will always be paid for.

When I started working at the MegaCorp. 22 years ago, they also promised retiree health benefits.  Then, about 6 years ago, they decided to no longer offer that.
So my advice is not to make life plans on the promise of health care benefits that may or may not actually materialize.

[onlykelsey]

Looking for some feedback on early retirement versus a decent sized healthcare perk. 

Background:

Family of four.  Parents: 37 & 36.  Twins age: 7

Basically financially independent, but not retired.  One working parent with a solid job that they like.  Stressful at times (like all jobs), but generally great.  Well paid.  Spouse is SAHP dabbles in various small side hustles as time permits.  Family maxes out all accounts and owns a few rental properties. 

The issue is the health care. 

Current company offers a deal where 100% of health care costs will be covered after 25 years of working there regardless of age.  So in 14 more years, health care for entire family: employee, spouse and dependent children will be covered.  At that point, employee will be 51 and kids will be in final year of college.  Parents could live with fully covered healthcare from age 51-65. (Kids will be out on their own at that point.)  If employee dies, spouse is still covered until 65.   At age 65, Medicare kicks in, but the company also pays a lump sum each year to help cover extra costs.

If employee leaves even one day early before 25 years, all health care benefits are gone.


Thoughts? What would you do?   Would you stay and work for 14 more years until the kids are out of school and the free health care perk can be accessed?

I agree with LaineyAZ.  Do you have an enforceable contract covering the benefits?  Even if you do, you can't squeeze water from a rock if the company goes bellyup.

[Mrs. Pomodoro]

Agree with LaineyAZ and onlykelsey. 14 years is a long time. My MIL got full retirement benefits after working for the same company for 35 years. The company is not as profitable recently and has been cutting benefits by raising copayment and removing dental insurance.

Some thoughts are: is the job so stable you don't foresee potential restructuring in the next 14 years? Have you estimated how much the health benefit is worth in dollar amount and does that number affect your FI status?

[Spork]

A company I used to work for had a similar plan.  Health care was covered after 20 years of service if you were over the age of 50.  (You could quit at 40 after 20 years and the health care benefit would kick in later at 50.)  Also included was a pension plan.  It was disbanded for everyone under the age of 40.  At the time it was disbanded, I was 39.75.

It sounds like an awesome plan.  It might pay out.  It might not.  These types of things can evaporate.  Don't make all of your plans with the idea that this will be there always and forever.  It might.  It might not.  Make a plan you have control over.  If you end up wanting to stay there for 25 years and if it still exists, you'll have overshot, but you'll still be in a good place.

[forummm]

If you have enough money saved that you can pay for your own healthcare expenses (and other life expenses) for the rest of your life, then you don't really need to work 14 more years to get that health insurance. I would just focus on whether you wanted to keep working vs do something else with your life. 14 years is a really long time to trade for something you already have in your possession (or could have by writing checks with extra money you have).

[Secretly Saving]

Thanks, everyone.  Your responses are EXACTLY how I'm feeling about things.  (I intentionally tried to leave my opinions out of the first post.)  I'm ready to make a run for it and fully FIRE.  I think we can make it work if we made a few little changes.  Problem is spouse is the one working at the "enjoyable" and lucrative job... Thinks we need "more, more, more" likes to spend AND likes safety nets like the medical. Me, I'd be happy living anywhere and don't need a lot of "stuff."

Ironically we watched FIL (spouse's father) get totally screwed by his long standing company who had promised a big pension and he was not grandfathered in... So I keep saying that the medical isn't a guarantee!

[SimplyMarvie]

Before you pull that lever, make sure that you have a good handle on what your health care costs are going to be in that 50-65 bracket. My mom is an early retiree, and her health care costs were $1200 a month in premium for a plan that covered nothing until she spent $5000 every year. Luckily, ACA has mostly taken those plans off the market, so you'd get some essential services covered, but age-base underwriting is still permitted in some plans, and that age band is the most expensive to ensure because insurance companies know that you're starting to enter a period where you're likely to have large claims, but they are not yet offset by Medicare. In my mom's case it was a chunk of change that she hadn't anticipated and she had to reconsider her spending during those years (for her, that meant less fancy vacations. I'm sure we all weep...) Her Medicare Birthday was a big enough deal that she threw a huge party with some of the money she wasn't spending anymore on health care. :)

[Spork]

Before you pull that lever, make sure that you have a good handle on what your health care costs are going to be in that 50-65 bracket. My mom is an early retiree, and her health care costs were $1200 a month in premium for a plan that covered nothing until she spent $5000 every year. Luckily, ACA has mostly taken those plans off the market, so you'd get some essential services covered, but age-base underwriting is still permitted in some plans, and that age band is the most expensive to ensure because insurance companies know that you're starting to enter a period where you're likely to have large claims, but they are not yet offset by Medicare. In my mom's case it was a chunk of change that she hadn't anticipated and she had to reconsider her spending during those years (for her, that meant less fancy vacations. I'm sure we all weep...) Her Medicare Birthday was a big enough deal that she threw a huge party with some of the money she wasn't spending anymore on health care. :)

A few things incorrect here...
1) ACA has not gotten rid of plans that have $5000 deductibles.  They did make the maximum deductible $6,600 (individual) and $13,200 (family)
2) As a healthy early retiree these are exactly the plans you should be looking for!  You have the stash to pay for little things.  A $5000 illness would be a pain in the ass, but wouldn't break you.  But very few of us can pay for unexpected cancer treatments or some other catastrophic illness/injury.  (Now, if you already have some sort of condition that puts you in the catastrophic category... this may not be true for you.)  In short:  if you want a smaller deductible, it costs more money. 

[Trudie]

Don't believe that the health care will always be paid for.

When I started working at the MegaCorp. 22 years ago, they also promised retiree health benefits.  Then, about 6 years ago, they decided to no longer offer that.
So my advice is not to make life plans on the promise of health care benefits that may or may not actually materialize.

+1

[Secretly Saving]

I'm certain that we won't qualify for any ACA subsidies. I'll have to check to see all the details with ACA and where we'd stand.

[Spork]

I'm certain that we won't qualify for any ACA subsidies. I'll have to check to see all the details with ACA and where we'd stand.

I don't know your situation... but don't be too sure.  *IF* you are retiring, it is possible that your income becomes a sort of fake, engineered number.  You may very well have multiple sources of income that are just too high... or you may not. 

Read seattlecyclone's overview.  I have probably read it 10 times... each time understanding a little more:
https://seattlecyclone.com/optimizing-the-affordable-care-act/

With a family of 4, you can still get subsidies up to an AGI of $97k.  The more you can engineer that number downwards, the more your subsidy.  If you get a plan that is HSA compatible, you can put $6750 in a year and subtract that number from your AGI.  That takes the max subsidy limit up to $103,750.

[SimplyMarvie]

Before you pull that lever, make sure that you have a good handle on what your health care costs are going to be in that 50-65 bracket. My mom is an early retiree, and her health care costs were $1200 a month in premium for a plan that covered nothing until she spent $5000 every year. Luckily, ACA has mostly taken those plans off the market, so you'd get some essential services covered, but age-base underwriting is still permitted in some plans, and that age band is the most expensive to ensure because insurance companies know that you're starting to enter a period where you're likely to have large claims, but they are not yet offset by Medicare. In my mom's case it was a chunk of change that she hadn't anticipated and she had to reconsider her spending during those years (for her, that meant less fancy vacations. I'm sure we all weep...) Her Medicare Birthday was a big enough deal that she threw a huge party with some of the money she wasn't spending anymore on health care. :)

A few things incorrect here...
1) ACA has not gotten rid of plans that have $5000 deductibles.  They did make the maximum deductible $6,600 (individual) and $13,200 (family)
2) As a healthy early retiree these are exactly the plans you should be looking for!  You have the stash to pay for little things.  A $5000 illness would be a pain in the ass, but wouldn't break you.  But very few of us can pay for unexpected cancer treatments or some other catastrophic illness/injury.  (Now, if you already have some sort of condition that puts you in the catastrophic category... this may not be true for you.)  In short:  if you want a smaller deductible, it costs more money.

Right, but you missed the actual point of my post because it was in the line before and after the bit you bolded -- first, that under ACA even a high deductible plan is required to cover essential health care services before the deductible is met (meaning things like preventative screenings, mammograms, etc. are covered, even with a high deductible plan, which they were NOT for my mom, and involved a significant chunk of spending) and that she was paying $1200 a month in PREMIUM for that HDHP, due to her age as an underwriting factor.

[Spork]

Before you pull that lever, make sure that you have a good handle on what your health care costs are going to be in that 50-65 bracket. My mom is an early retiree, and her health care costs were $1200 a month in premium for a plan that covered nothing until she spent $5000 every year. Luckily, ACA has mostly taken those plans off the market, so you'd get some essential services covered, but age-base underwriting is still permitted in some plans, and that age band is the most expensive to ensure because insurance companies know that you're starting to enter a period where you're likely to have large claims, but they are not yet offset by Medicare. In my mom's case it was a chunk of change that she hadn't anticipated and she had to reconsider her spending during those years (for her, that meant less fancy vacations. I'm sure we all weep...) Her Medicare Birthday was a big enough deal that she threw a huge party with some of the money she wasn't spending anymore on health care. :)

A few things incorrect here...
1) ACA has not gotten rid of plans that have $5000 deductibles.  They did make the maximum deductible $6,600 (individual) and $13,200 (family)
2) As a healthy early retiree these are exactly the plans you should be looking for!  You have the stash to pay for little things.  A $5000 illness would be a pain in the ass, but wouldn't break you.  But very few of us can pay for unexpected cancer treatments or some other catastrophic illness/injury.  (Now, if you already have some sort of condition that puts you in the catastrophic category... this may not be true for you.)  In short:  if you want a smaller deductible, it costs more money.

Right, but you missed the actual point of my post because it was in the line before and after the bit you bolded -- first, that under ACA even a high deductible plan is required to cover essential health care services before the deductible is met (meaning things like preventative screenings, mammograms, etc. are covered, even with a high deductible plan, which they were NOT for my mom, and involved a significant chunk of spending) and that she was paying $1200 a month in PREMIUM for that HDHP, due to her age as an underwriting factor.

Ah, okay.  I see what you mean.

It seems ill conceived to have a health care plan that pays for something that is done on regular intervals that is relatively inexpensive.  All that means is the cost is pre-charged to you in your premium (plus a little extra for overhead). 

[FIRE me]

One more cautionary tale...

My neighbor retired early from General Electric. All his health insurance was supposed to be paid for, forever. GE decided that it cost too much, and so their word meant less than nothing.