Author Topic: Should I drop my US Medical Insurance?  (Read 2967 times)

lovesasa

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Should I drop my US Medical Insurance?
« on: December 07, 2014, 10:04:34 PM »
Hi there! I'm new here but I've read MMM on and off for a while, and am ready to take my Mustache to the next level.

I am an American citizen, and have been living in China for the last year and a half. I'm currently saving about 2/3 of my income here (so about US$1500/month) but I have about $500/month in expenses in the US I am trying to cut back on. I have about $10,000 left in student loans from my fancy liberal arts education so my goal is to pay those off by the end of 2015.

US Expenses:
Roth IRA: $50/month
Life Insurance: $100/month (this is one of those plans that, if I don't die, I can start pulling the equity out of in retirement. In hindsight not the best investment but I have it and I'd like to keep it, so my family has something in case I fall off a mountain in Tibet or something)
Student Loans: $86 minimum payment
Health Insurance: $165 soon to be $190

Other Random Expenses Charged to my US account:
VPN: $8/month
Online Chinese Classes: $21/month
Netflix: $8/month
Audible: $15/month
Kindle Subscriptions: $15/month (might cut China Daily at $5/month)
Shopping (gifts, kindle books, apps, random expenses): ~$50-70/month

Total: ~$500/month, usually a bit less.

If I drop my Health Insurance this would fall down to ~$340/month which would stretch my US savings a lot further between (very complicated) bank transfers and would enable me to throw a bigger chunk of each transfer towards my student loan principle.

I know I could probably cut back a bit here but for now having access to the open internet and English books is keeping me sane. I just bought a bunch of Audible books in their most recent sale so I might cancel that subscription if I don't lose my stockpiled credits.

Last year I wasn't sure if I would stay in China for longer than a year but now I've decided to stay at least another year and a half, and possibly head to Germany afterwards to pursue graduate school. Last year my employer did not provide insurance and I wasn't sure if I wanted to stay, so I maintained my US insurance policy and a separate international policy. My current employer provides local domestic insurance (China only) so I let the international policy lapse.

My US policy is a bit of a bare minimum policy grandfathered in from before ObamaCare (I was already in China when that passed, so the marketplace is a whole can of worms I don't even begin to understand). I have a $5,000 deductible before which I pay 100% of any medical visits, vaccinations, prescriptions, etc. The main benefit when I was in the US was that I often was able to pay the insurance negotiated rate rather than the "no insurance" out of pocket rate. Now I've only been back once in the past year and a half, and got an annual physical to renew my prescriptions and purchased 1 year of prescriptions out of pocket. I have to get a full physical every year in China to maintain my work visa, so this was a bit redundant.

I currently pay $165/month and was notified last month that my premiums will increase again to $190/month. Since I don't plan to return to the US in the near future, even if I did it would only be for a couple of weeks, I am not required to maintain insurance under Obamacare. Is there any downside to me cancelling my US policy? I was diagnosed with an Anxiety disorder (now controlled and not requiring medication) while on the policy, so would this disqualify my in the future if I decide to move back to the US and get coverage?

Most expats here don't bother with insurance, which is a bit too ballsy for me, but I am considering cutting back to my employer's plan and only purchasing an international travel plan for the rare occasions I leave China. The medical care here can be sketchy if you're not careful about where you go, but it's fairly affordable and I've come to the realization that even if something bad does happen I'd probably just fly to Thailand or Taiwan instead of all the way back to the US.

I'm 25, healthy non-smoking female. I was a bit overweight when I came to China but I've lost the excess weight and have a healthy BMI now too. No pre-existing conditions except for anxiety which isn't much of an issue the last couple of years. I eat pretty healthily though I do drink beer. I had PRK corrective eye surgery two years ago so I don't need glasses or contacts and I have an IUD so no need for birth control for the next 3 years. My only other prescription is a topical acne product that is more of a cosmetic want than a *need* and my insurance doesn't cover it anyway. Am I missing something?

Given that my entire living expenses in China are about $700 a month, plus $500 costs in the US... This would bring my total costs down from ~$1200-1230 to about $1050 a month total and would thus give me an extra $150-$200 I could be throwing towards my student loans.

I guess my family has been pressuring me to keep the insurance, which has made me nervous that I might be making a mistake cancelling it. Should I just cancel it completely and keep the China-only insurance? Should I get an international plan in addition (these usually exclude the US)?

Shade00

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Re: Should I drop my US Medical Insurance?
« Reply #1 on: December 07, 2014, 10:33:54 PM »
You live in China full time and have no plans to return to the US in the near future. So you're willing to pay the health insurance cost $2000 or more next year for... What exactly?

Cut it, and then cut that whole life policy. You are not building equity in a whole life policy. You do not need whole life. Whole life is not a retirement plan, nor is it an investment. Immediately cancel the policy and put all that cash toward the student loans.

mxt0133

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Re: Should I drop my US Medical Insurance?
« Reply #2 on: December 07, 2014, 10:53:39 PM »
Yes drop the insurance and no you do not have to pay a penalty for not having insurance since you are living out of the country. You cannot be denied insurance for a pre-existing condition under Obamacare.

Regarding the life insurance, who is financially dependent on you?  If the answer is no one, then drop the life insurance.  You say you want your family to have something in case you pass, I would rather take some of the money you are saving from the life insurance and buy them a lottery tickets.

lovesasa

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Re: Should I drop my US Medical Insurance?
« Reply #3 on: December 08, 2014, 01:47:08 AM »
Thanks for the facepunch. :P

I just got the ball rolling on cancelling the health insurance and now I'm definitely rethinking the Whole Life Policy. I thought I had done a lot of research and understood it well but now I'm realizing maybe I don't. My dad used to be Whole Life salesperson (he's not who I bought the policy from) so maybe his "advice" was a bit skewed by that.

No one is directly dependent on me, but both of my parents just retired and are fully dependent on very sparse income and Social Security. I don't know their exact savings, but I know it's pretty low/possibly non-existent. I know that's not necessarily my responsibility, but they have supported me a lot and I anticipate they will need my help in the future. They are only in their late 60s so I don't foresee the future being very rosy.

I guess witnessing their bad financial decisions is making me want to put a lot away. I'm really bummed now that the Whole Life thing wasn't what I thought... I really thought I was being good about putting money into that and the Roth for the last year and a half. :(

Can anyone recommend some good informative sources about how Whole Life policies really work? It was my impression that I could pull money out of the account and that it was growing at interest inside of the policy, minus premium costs.
« Last Edit: December 08, 2014, 01:49:52 AM by lovesasa »

ltt

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Re: Should I drop my US Medical Insurance?
« Reply #4 on: December 08, 2014, 05:20:48 AM »
Life insurance is not an investment.  You should have a term life insurance policy.  They do not cost very much.

Gin1984

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Re: Should I drop my US Medical Insurance?
« Reply #5 on: December 08, 2014, 07:21:29 AM »
Life insurance is not an investment.  You should have a term life insurance policy.  They do not cost very much.
Agreed, though if you do not have dependents I don't know why you have the insurance at all.

Cococola

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Re: Should I drop my US Medical Insurance?
« Reply #6 on: December 08, 2014, 08:55:38 AM »
Whole life insurance has pros and cons like term insurance and other financial products, depends on your life needs and your financial situation, you can decide after researching further.

Good luck!

Gin1984

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Re: Should I drop my US Medical Insurance?
« Reply #7 on: December 08, 2014, 09:37:20 AM »
Whole life insurance has pros and cons like term insurance and other financial products, depends on your life needs and your financial situation, you can decide after researching further.

Good luck!
Whole life is not good for the majority of the populous.  And given the OP's financial situation (with SLs), he or she is unlikely to be among the few where whole life is useful.

mxt0133

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Re: Should I drop my US Medical Insurance?
« Reply #8 on: December 08, 2014, 12:07:08 PM »
Here are some references on whole life insurance vs investing:

http://www.forbes.com/sites/financialfinesse/2011/07/19/should-you-use-life-insurance-as-an-investment-3-things-to-consider/2/

http://whitecoatinvestor.com/8-reasons-to-avoid-whole-life-insurance-and-4-reasons-to-consider-it/

In general using whole/universal (variable or not) life insurance usually only makes sense for wealthy individuals that have maxed out all tax sheltered accounts and intend to use them for estate planning purposes, they by bass the estate taxes to heirs.  For the other 99%ers they are of little to no use.