Guide for Insurance after early retirement?

[dresden]

Hello,

I was planning to retire at 55, but will be retiring a little over 3 years earlier than planned due to a combination of persistent headaches ever since I was in a car accident Feb 2017 and had a concussion/multiple fractured vertebrae and my company's demand for overtime which is 30% minimum required each year but much more seemingly expected based on the unreasonable workloads we are given. 

So I am giving my notice on 10/1, not quite ready for FIRE based on the numbers but I have a 60k pension starting at 60, another 12k starting at 62, 1 million in retirement accounts and 500k in post tax unprotected money but with a 280k mortgage on a 400k house.  So my sub-optimal plan is to live off the 500k for 8 years which is do-able but tight in our current home.  If our spending isn't lining up after a few years we can downsize and even relocate to a lower cost area after our son finishes school in spring 2020.

My income per 1120 will be maybe 10-15k in interest and gains since my 500k post tax money is mostly in very conservative funds, cd ladders, etc. as it's only an 8 year window and we are seemingly late in the bull market. 

So I am trying to navigate medical options.  Is there an optimal approach towards what I choose for healthcare?  My family takes no medications and sees a doctor sparingly, which of course can change in a hurry.  I am counting my 20k HSA as part of the 500k assuming it will cover my medical expenses if neither of us get cancer or some other expensive illness.  Would it be better to go with a high deducible or low deductible plan assuming we will qualify for some sort of subsidy due to income.  Are dental cards a good deal or is it better to pay as you go with a dentist that will give a discount to people without insurance?  I am also thinking of getting an umbrella policy at least fora few years to protect the 500k.  My current umbrella is paid for by my employer so I don't think I can take it with me when I leave. 

I always had insurance through my employer and am not finding a good guide on the internet to figure out the best option.  Any help would be appreciated.  Thank you.

[wordnerd]

I don't have specific advice, but this thread may help you understand ACA related options: https://forum.mrmoneymustache.com/ask-a-mustachian/information-on-the-affordable-care-act-with-a-focus-on-early-retirees/

ETA: depending on whether your state expanded Medicaid, you may qualify for that based on your income.

[Patrick584]

I can offer some tidbits:
ACA subsidies are tricky because they phase out with income at ~20% marginal rate. Including this with taxes and other income dependent benefits like student financial aid, and there is a great incentive to keep income low in early retirement. Two exceptions to this marginal rate are the 4x poverty line cliff as well as how states handle Medicaid at or below poverty line. If you are in a state with good Medicaid you can get very low cost insurance if you keep your income near the poverty line.

Unless you are certain you will meet the deductible, you should probably have a high deductible plan. The increase in premiums are almost a one to one offset of the decrease in deductible/out of pocket max. This is because people that go for low deductible plans have known high expenses. Subsidies are fixed based on income and a couple personal attributes and as long as the subsidy doesn’t exceed the premiums, the subsidy is not impacted by plan.

Advice on HSA. This plan should be invested like other assets. HSAs are great because expenses can be reimbursed many years after they are paid. A suggestion would be to pay bills with non HSA funds, save receipts, and let HSA dollars grow tax free.

Dentist do offer trivial discounts to uninsured. I would recommend keeping teeth healthy and paying out of pocket for a yearly check up. Umbrella policies are cheap and don’t cover very much, so I probably wouldn’t worry either way. They typically cost a few hundred a year to cover liabilities in addition to other policies. I would guess individuals being found liable for large amounts is quite rare <1per1000 people per year.

You can live a frugal lifestyle in a HCOL area.

[dresden]

Thanks for the help!  I think I understand now- since I live in a state without expanded Medicaid I want to aim for just over 100% of the poverty level which should be no problem for now.

My company offered me part time work when I gave notice Friday, but I am skeptical it would work and the place is so stressful.