How much to budget for health insurance/expenses in early retirement?

[AZdoc68]

PhysicianOnFIRE wrote:

Kamban wrote:

Only $20K per year for 4 people is wildly optimistic 

Click to expand…

Depends on age. That’s about what our good HDHP plus out of pocket expenses (with kids’ surgeries) has been in recent years. We’ve also got some HSA money set aside to cover expenses in early retirement.

While not for everyone, with the most expensive healthcare sharing plan option, costs for a healthy family could be under $10,000.

Click to expand...

POF, you're in your early 40s.  Someone who's looking to retire at 50 or 55 will likely face much higher costs in the individual market.  And these costs are rising faster than inflation as you know.

[Hatton]

Yes when I was in my 30s and 40s I did not understand why people were complaining about health insurance costs.

[VagabondMD]

PhysicianOnFIRE wrote:

Kamban wrote:

Only $20K per year for 4 people is wildly optimistic 

Click to expand…

Depends on age. That’s about what our good HDHP plus out of pocket expenses (with kids’ surgeries) has been in recent years. We’ve also got some HSA money set aside to cover expenses in early retirement.

While not for everyone, with the most expensive healthcare sharing plan option, costs for a healthy family could be under $10,000.

Click to expand...

I would be concerned about extrapolation of relatively low cost of insuring a young family too far into the future, much the same as I would not extrapolate your 10k time too far into the future.

 

[VagabondMD]

hatton1 wrote:

Yes when I was in my 30s and 40s I did not understand why people were complaining about health insurance costs.

Click to expand...

Yes, I also did not understand why many runners quit running in their 50's. I thought that they were slackers or lazy. Now, I know the truth. Their knees hurt.

Medical baggage piles up over time, even when you are doing all you can to stay healthy. Not to trivialize or overly finaicialize it, but I have three good friends (two from residency/fellowship) who were dead by 50, after long struggles with cancer and two friends in their early 50's battling aggressive prostate CA.

[PhysicianOnFIRE]

Vagabond MD wrote:

Medical baggage piles up over time, even when you are doing all you can to stay healthy.

Click to expand...

All the more reason to give early retirement a shot. Although part-time is a pretty good way to enjoy life while still young.

If a guy with a net worth of $3M can't retire (and I know that's low compared to several commenters on this thread), what does that mean for the rest of the population?

"For the insurance" just isn't a compelling enough reason to convince me to work in medicine for another 20 years. Many people are finding a way to make it work on so much less.

[AZdoc68]

hatton1 wrote:

Yes when I was in my 30s and 40s I did not understand why people were complaining about health insurance costs.

Click to expand...

Yeah, that's why I call into question some of these more aggressive FIRE scenarios where someone is retiring 20+ years before Medicare eligibility and budgeting $60K/yr for "comfortable" expenses ($30K in MMM's case).

[PhysicianOnFIRE]

AZdoc68 wrote:

Yeah, that’s why I call into question some of these more aggressive FIRE scenarios where someone is retiring 20+ years before Medicare eligibility and budgeting $60K/yr for “comfortable” expenses ($30K in MMM’s case).

Click to expand...

One of the current tactics for most of these young millionaires is to be income-poor. They've paid lots in taxes to get to where they are, and are getting a little slice of that back in the form of an ACA subsidy.

That is obviously in jeopardy and it's got many people anxious.

I think we'll have some sort of "solution" eventually. As WCI pointed out in the comments on my recent guest post there, 40% increases can't go on year after year. If insurance costs $100,000 a year, the whole system collapses.

Maybe I could move to Canada. It's only a few hours away

[VagabondMD]

PhysicianOnFIRE wrote:

Vagabond MD wrote:

Medical baggage piles up over time, even when you are doing all you can to stay healthy. 

Click to expand…

All the more reason to give early retirement a shot. Although part-time is a pretty good way to enjoy life while still young.

If a guy with a net worth of $3M can’t retire (and I know that’s low compared to several commenters on this thread), what does that mean for the rest of the population?

“For the insurance” just isn’t a compelling enough reason to convince me to work in medicine for another 20 years. Many people are finding a way to make it work on so much less.

Click to expand...

I think that early retirement is a worthy goal. My only concern is that of underestimating the expenses, which are different at age 55 than they are at age 35 such that extrapolating age 35 expenses to age 55 just might not be realistic.

[Dr.V. Investor]

I have always believed health issues can drain you- physically and financially.   It is optimistic to be young and healthy.  My brother is a small business owner that spends over 25k for health insurance for 4, with crappy coverage. Maybe in some areas, it is good to have health ministries available.  Direct patient care is also an option.  Healthcare costs are outrageous.  I have been in ER once and stayed for 4 hours, got labs and Ct scan to rule out appendicitis, no meds.   the bill was 10k.  I can see myself continuously working until retirement- maybe cutting down on time but I need health coverage, for me and my family.  I also think about worst case scenario.  What if I or any of my family get disabled in the future?  I'd rather keep accumulating wealth with my job that is secure than enjoy it too early and need to go back to work. Health, high income potential are gifts that I plan to take advantage of as long as I can.

[Kamban]

PhysicianOnFIRE wrote:

Depends on age. That’s about what our good HDHP plus out of pocket expenses (with kids’ surgeries) has been in recent years. We’ve also got some HSA money set aside to cover expenses in early retirement. While not for everyone, with the most expensive healthcare sharing plan option, costs for a healthy family could be under $10,000.

Click to expand...

Not only age but the era too.

I was 40 once but in the blink of an eye I am now 59. I hate to say that but so will you. And at 40 my premium, even if I had decided to pay it all on my own, was < $4K a year with no copay or deductibles. How times have changed. Such a plan cannot be dreamed off now.

The biggest problem is the uncertainty and the assumptions made on what is happening today and projecting it 10 or 20 years later. With all the talk of repealing Obamacare or replacing it with nothing or TrumpCare or God knows what, no one has a clue what the health care insurance market will be for people who have to purchase their own insurance in the open market in 2018 or 2019. All the ACA people have almost left my state and is next to impossible to get decent insurance in my state with a panel of doctors and hospitals and urgent care centers who will accept it.

Being healthy at 40 will not mean one will be healthy at 50 or 60, even with a good lifestyle. Also an emergency ( like a MVA my wife had in Feb ) can cost huge amounts. She is Ok but the cost of that ER visit and scans were $12K. If she had been admitted or required surgery that could easily be $50-100 K. I am shocked how outrageous the hospital bills are. Looks like they are playing with monopoly money.

Anyway, I want to protect my wife and kids from a medical / financial issue arising from poor insurance and found that working at reduced hours is the best option for me, rather than retire early and face uncertainty.

[PhysicianOnFIRE]

If the ACA goes away, the individual mandate goes away, too. If that happens, we will once again be able to buy non-qualifying health plans without being subject to the penalty.

I haven't looked into the options much since a lot can and probably will change before I need to make a decision, but all I really want is coverage that will ensure a giant hospital bill doesn't wipe out a big chunk of my life savings (think 6-figure or 7-figure bill). I don't mind paying out of pocket for the "small stuff." Catastrophic coverage combined with an HSA would be fine by me.

[PhysicianOnFIRE]

There's a current Bogleheads thread on this exact topic, FYI.

[AZdoc68]

PhysicianOnFIRE wrote:

If the ACA goes away, the individual mandate goes away, too. If that happens, we will once again be able to buy non-qualifying health plans without being subject to the penalty.

I haven’t looked into the options much since a lot can and probably will change before I need to make a decision, but all I really want is coverage that will ensure a giant hospital bill doesn’t wipe out a big chunk of my life savings (think 6-figure or 7-figure bill). I don’t mind paying out of pocket for the “small stuff.” Catastrophic coverage combined with an HSA would be fine by me.

I'm sure most of us are fine with the HDHP/HSA setup ("catastrophic coverage") only.  In fact, that's the only arrangement that truly constitutes insurance in the healthcare market.  Insurance, after all, is a product you buy to protect yourself financially against a high-impact/low-probability event, such a serious injury or illness that could devastate one's savings.

The "small stuff" are just routine, common medical expenses that ALL of us should pay out of pocket.  As doctors, we can often get these things taken care of more cheaply anyway.

I agree that the ACA has wrecked the individual insurance market and its repeal might once again mean that a couple in their 50s can buy their own insurance without having to pay for others' guaranteed issue rating and unneeded coverages (infertility, maternity, etc).

 

[CM]

PhysicianOnFIRE wrote:

I think we’ll have some sort of “solution” eventually. As WCI pointed out in the comments on my recent guest post there, 40% increases can’t go on year after year. If insurance costs $100,000 a year, the whole system collapses.

Click to expand...

Those increases are in the individual market, and they can go on until that market collapses. There will still be Medicare and group plans through employers, plus whatever is left of Medicaid.

There is no natural law that will protect the individual market from collapse or ensure that you will be able to obtain a decent insurance policy in the place where you want to live.

[CM]

AZdoc68 wrote:

PhysicianOnFIRE wrote:

If the ACA goes away, the individual mandate goes away, too. If that happens, we will once again be able to buy non-qualifying health plans without being subject to the penalty.

I haven’t looked into the options much since a lot can and probably will change before I need to make a decision, but all I really want is coverage that will ensure a giant hospital bill doesn’t wipe out a big chunk of my life savings (think 6-figure or 7-figure bill). I don’t mind paying out of pocket for the “small stuff.” Catastrophic coverage combined with an HSA would be fine by me.

I’m sure most of us are fine with the HDHP/HSA setup (“catastrophic coverage”) only.  In fact, that’s the only arrangement that truly constitutes insurance in the healthcare market.  Insurance, after all, is a product you buy to protect yourself financially against a high-impact/low-probability event, such a serious injury or illness that could devastate one’s savings.

The “small stuff” are just routine, common medical expenses that ALL of us should pay out of pocket.  As doctors, we can often get these things taken care of more cheaply anyway.

I agree that the ACA has wrecked the individual insurance market and its repeal might once again mean that a couple in their 50s can buy their own insurance without having to pay for others’ guaranteed issue rating and unneeded coverages (infertility, maternity, etc).

 

Click to expand...

For many couples in their 50s, at least one spouse/partner will have a pre-existing condition, currently or eventually. Without the ACA (or similar substitute), they probably won't be able to purchase insurance at all. They will be dropped.