Author Topic: Medical insurance and early retirement  (Read 3522 times)

agentT

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Medical insurance and early retirement
« on: February 18, 2015, 05:24:11 PM »
Hi Mustache people,

I'm new here but could not find a thread about this issue.

Mr money mustache and others in other blogs or vlogs say they live on 25-27K a year, and I think it is possible without much trouble.
I'm not an expert on medical insurance but from what I know, any plan worth it's existence starts from around 1K a month, in my case, I think I have a pretty good plan through my employer, and it by itself cost around 25K a year. So if you retire early, and don't get medical insurance through an employer or VA or some other way, isn't it impossible to have a decent insurance and still live on under 30K a year if a decent insurance costs 15-25K on its own?
I know it's possible to get a plan for 200-400$ a month too but as far as I understand they don't cover much and can still leave you bankrupt.

I know some folks take the risk and just don't buy medical insurance or buy a cheap one, for me personally it just won't work, too much to lose, you can easily lose everything with a sudden 1 mil $ surgery, hospital stay and recovery costs (I know perfectly healthy people with 7 figure medical bills, and they had insurance, or at least they thought they had).

From what I've found in other communities like motorhome life, off the grid folks, there is no solution and people just ignore the risks and they say they live a healthy life so they should be fine, they are their own MD, and so on, which obviously doesn't work, even healthy people get cancer or have kids with medical issues.


Is there a way for a cheap, but good, medical insurance I'm missing?

sol

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Re: Medical insurance and early retirement
« Reply #1 on: February 18, 2015, 05:32:24 PM »
There are many ways.  The easiest is to live in a country with socialized medicine.

Second best is to live in America and utilize subsidized private insurance through the ACA.

JoJo

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Re: Medical insurance and early retirement
« Reply #2 on: February 18, 2015, 05:47:52 PM »
Ugh.  Is it just me or do others think it's wrong to accept ACA subsidies when you're able to work and make a decent income, but just choose not to?


seattlecyclone

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Re: Medical insurance and early retirement
« Reply #3 on: February 18, 2015, 06:53:26 PM »
Ugh.  Is it just me or do others think it's wrong to accept ACA subsidies when you're able to work and make a decent income, but just choose not to?

I have no problem with it. The law says you'll have a certain tax rate based on your income. The law says you'll have a certain social security benefit based on your past income. The law says you'll have a certain ACA subsidy based on your income. Why should I feel guilty about using the ACA to my benefit but not the others? It's not written in the Constitution that you have a moral obligation to work and earn as much as possible.

The voters, through their representatives in Congress, have decided that income is the best way to decide who gets subsidies. I plan to do the best for myself as possible given the system in which we actually live, instead of voluntarily tying one hand behind my back in cases where I might have voted for a slightly different system.

firewalker

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Re: Medical insurance and early retirement
« Reply #4 on: February 18, 2015, 07:22:21 PM »
Pretty solid argument, seattlecyclone. Impressive response.

Emilyngh

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Re: Medical insurance and early retirement
« Reply #5 on: February 18, 2015, 07:27:40 PM »
Ugh.  Is it just me or do others think it's wrong to accept ACA subsidies when you're able to work and make a decent income, but just choose not to?

Just you.

Or at least not me.   Subsidies are income-based tax credits.   I don't think that one is required to work as much as humanly possible purely out of an obligation to minimize the tax credits that they are eligible for.   I doubt many do.

simplified

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Re: Medical insurance and early retirement
« Reply #6 on: February 18, 2015, 07:33:11 PM »
Ugh.  Is it just me or do others think it's wrong to accept ACA subsidies when you're able to work and make a decent income, but just choose not to?

Healthcare in this country is a scam. Health insurance is more expensive than housing costs in the majority of the country. I have many solutions to this problem. One of it is to work the system and take unfair advantage so that the system gets changed eventually. Also, if getting health insurance is not mandatory and catastrophic plans are available for people like me who can afford to pay high deductibles when needed, I may not need to work the system.

sol

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Re: Medical insurance and early retirement
« Reply #7 on: February 18, 2015, 07:34:54 PM »
Is it just me or do others think it's wrong to accept ACA subsidies when you're able to work and make a decent income, but just choose not to?

Is it also wrong to only earn $25k/yr as a park ranger when you could instead earn $50k as a teacher?

Is it also wrong to only earn $50k/yr as a teacher when you could instead earn $100k/yr as a programmer? 

And so on ad infinitum?  What's your cutoff threshold for "earning a decent income" above which you are not allowed to receive any tax breaks?  I sure hope it's above the $110,000/yr child tax credit phase out limit, because everyone below that is just getting a free subsidy they don't really need.  I sure hope it's above the $193,000/yr Roth IRA income phase out, because everyone below that is just getting a free subsidy they don't really need. 

Maybe I'm being too subtle for you, so I'll spell it out.  You appear to be judging a person's worth based on their ability to earn income, while hypocritically denigrating them for living under the exact same tax system that you do. 

If you really think it is everyone's moral obligation to work as much as they can, then you must not only hate the idea of early retirement, you must hate the idea of retirement at all.  Is it everyone's moral duty to work as hard as they can until they drop dead?
« Last Edit: February 18, 2015, 07:45:42 PM by sol »

Eric

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Re: Medical insurance and early retirement
« Reply #8 on: February 18, 2015, 07:41:36 PM »
agentT -- have you actually priced plans through the ACA exchange in your state?  If not, start there.  There are plenty of good plans that cost nowhere near $15K per year, but of course the actual plans offered vary by location.  All plans have an out of pocket maximum (per year) to help you plan.  None of those maximums are even close to 6 figures, let alone 7, so I think your worries are not grounded in reality.

As far the question as to the "ethics" of it, well, I don't see how it's any different than taking a tax credit for having kids, a mortgage interest deduction, or any other deduction that no one even questions (or more correctly, feel entitled to and would be steaming mad if it went away).

sol

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Re: Medical insurance and early retirement
« Reply #9 on: February 18, 2015, 07:54:20 PM »
agentT -- have you actually priced plans through the ACA exchange in your state?  If not, start there.  There are plenty of good plans that cost nowhere near $15K per year

Just as an example, my state's healthcare exchange says that my family of five people can make $50k/yr and still qualify for so much subsidy that silver plans would cost less than $400/month with a $1k deductible and $2.5k out of pocket maximum.  Do the math, that works out to $7300/year as the maximum you could pay between costs and premiums.

Lower income people get larger subsidies.  If your income is only $35k/yr instead of 50k, then the premiums for the same plan drop to less than $200/month, meaning a maximum annual healthcare bill even in a catastrophic year would be less than $5000.

If you're planning to show earned income above about $70k/year in retirement (why are you earning income in retirement?) then the subsidies don't help so much.  But for the kinds of budgets most people around here are planning, with some of their expenses coming from a Roth or a taxable account (and thus not showing up as income) then the subsidies are quite generous. 

Not like Europe generous, but better than we're used to seeing from Uncle Sam.