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

[Zaphod]

AZdoc68 wrote:

As I was saying regarding healthcare “coverage” and costs, reality intervenes once again.

http://www.sacbee.com/news/politics-government/capitol-alert/article157974029.html

http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-assembly-speaker-calls-single-payer-1498261105-htmlstory.html

https://www.washingtonpost.com/opinions/single-payer-health-care-would-have-an-astonishingly-high-price-tag/2017/06/18/9c70dae6-52d2-11e7-be25-3a519335381c_story.html?utm_term=.fc7e36eb5b73

And this in one of the richest and most liberal, one-party states in the country.

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California is not only the richest state in the country but the 5th/6th (thanks Brexit!) largest economy in the world. However, you simply cannot just take the current system and boom! make it single payer, that just increases all costs insanely and is just dumb. Also, like guns and everything else, with differing laws between states you expose the system to gaming which it would definitely suffer from. Can you imagine the influx of people for this reason alone? It would be a total failure.

People need to come to grips with reality first, and decide whats important and how best to compromise within our given finite resources. The other larger problem is a single state cant single handedly and has limited legislative authority to change markets (insurance/devices/pharma) to make this idea work, which lends to failure of a spectacular nature. That has to be federal, no two ways about it.

[CM]

PhysicianOnFIRE wrote:

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

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I recommend the June 29, 9:33 a.m. post by AntsOnTheMarch. It's a long post but begins with:

"Generally speaking (not addressing anyone in particular), I see a lot of whistling past the graveyard on early retirement and medical issues. If you have 5, 10m you'll be fine. Then again, with high enough net worth you'll be fine (financially speaking) with anything short of world economic meltdown. But if your net worth is 2m and you're a long way from Medicare, maybe you should read this:"

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=213839&newpost=3428004&start=150

[AZdoc68]

CM wrote:

PhysicianOnFIRE wrote:

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

Click to expand…

I recommend the June 29, 9:33 a.m. post by AntsOnTheMarch. It’s a long post but begins with:

“Generally speaking (not addressing anyone in particular), I see a lot of whistling past the graveyard on early retirement and medical issues. If you have 5, 10m you’ll be fine. Then again, with high enough net worth you’ll be fine (financially speaking) with anything short of world economic meltdown. But if your net worth is 2m and you’re a long way from Medicare, maybe you should read this:”

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=213839&newpost=3428004&start=150

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I read it and it's a good post. As doctors, we often have the ability to mitigate healthcare costs for ourselves somewhat but the overall point is valid IMO.  That's why I'm skeptical of some of the more aggressive FIRE scenarios out there such as retiring at 45 on a modest budget & savings.

Unless your spouse is working and has employer coverage options, you're looking at 20 some years on the individual market or self-insuring.  That's a tall order.

[VagabondMD]

CM wrote:

PhysicianOnFIRE wrote:

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

Click to expand…

I recommend the June 29, 9:33 a.m. post by AntsOnTheMarch. It’s a long post but begins with:

“Generally speaking (not addressing anyone in particular), I see a lot of whistling past the graveyard on early retirement and medical issues. If you have 5, 10m you’ll be fine. Then again, with high enough net worth you’ll be fine (financially speaking) with anything short of world economic meltdown. But if your net worth is 2m and you’re a long way from Medicare, maybe you should read this:”

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=213839&newpost=3428004&start=150

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Great discussion there. Thanks for linking it. In WCI's latest podcast, he took up this issue and oversimplified the solution, IMO. It's not something that just having a little more money in your checking or investment account solves, QED.

[Live Free MD]

I believe the United States will eventually transition to a single-payer government run health care program with cost controls, rationed care, and higher taxes.

Until then, and if I decide to retire before age 65, I'll either take advantage of the much lower costs of a healthcare sharing ministry, or if I develop a costly pre-existing condition, I'll budget around $20k per year for health insurance on the individual marketplace for me and my wife.

If costs on the individual marketplace exceed this or I can't afford health insurance in early retirement, I'll work 20 hours per week at REI (a fun low stress gig) and get full health insurance benefits (https://www.rei.com/stewardship/report/2013/workplace/employee-pay-benefits.html).

If REI decides to stop offering health insurance, that means the whole system has collapsed and a single payer system is imminent.

 

 

 

[CM]

Live Free MD wrote:

I believe the United States will eventually transition to a single-payer government run health care program with cost controls, rationed care, and higher taxes.

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I also think this is likely, but when? Might be with next administration or might be 20+ years away.

[q-school]

Zaphod wrote:

Agree that healthcare costs cannot go up as they have been, it is unsustainable and if continued at this pace will be more than 100% of our economy, and a time after, greater than the world gdp. This is what Crixus is talking about, since humans think linearly we have big problems with seeing these kinds of things.

It simply cannot go on and believe it will be more reasonable in the future than it is today, we will try everything else first and have some sort of crisis of course.

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yes but one of the ways they will try to bend the curve will be to reduce physician incomes.  

when that fails, since physician incomes are such a small part of overall expenditures, they will reduce them further.

 

[jfoxcpacfp]

I just read about this report "2017 Retirement Health Care Costs Data Report©" in Financial Advisor Magazine and thought of you - lot of good stuff. Here's the original article: Health-Care Burden to Top $400,000 For Retirees.

[WendellDunn]

It's great to be a part of such helpful community.

[Physician Finance Basics]

Vagabond MD wrote:

This is a question for early retirees and aspiring early retirees. Health insurance is a turbulent marketplace with ever-changing rules and ever-rising prices. How much are you budgeting for health insurance (and, more generally, health expenses, like deductibles and copays, dental work, vision, etc.), how did you arrive at this number, and how confident are you in your projections?

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Digging up this old post- since it remains relevant as ever. Though not addressing early retirement specifically, here is a little bit about Healthcare Costs in Retirement: Part 1 and Part 2.

Hope it helps.

[jz]

At age 61 each, our total premium and OOP costs were $11,000 last year, using husband's state retiree insurance. He continues part-time at the shop, but resigned from the state instructor role. Most of the cost was forfeiting an annuity in exchange for access to  insurance, premiums, and dentistry.

[EntrepreneurMD]

Not only do you need to account for premiums and current estimated health care expenses, but it would be wise to factor in a worst case scenario - where you have a diagnosis that year over year means you max out your deductible/co-payments and coinsurance such as a treatable late stage malignancy. I've seen it as high as $15K/year plus premiums. I've seen patients shell out $20-25K annually. So $200K-$250K in reserves if you retire 10 years early is more than safe, and if not spent it could offset costs in your Medicare years.

[snowcanyon]

AZdoc68 wrote:

hatton1 wrote:

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

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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).

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I love MMM, but he has no understanding of medicine and sickness. He actually posted awhile back that he didn't realize people got sick if they had healthy habits. Insane. I've challenged him multiple times about this on his site, and he just can't answer, because there isn't an answer. His plan, I'm sure, even if he  won't mention it, would be to go back to Canada.

Living abroad would be a reasonable answer, I suppose, as long as you are comfortable with the quality and culture of care. I know people like the health-sharing ministries, but am I the only one bothered by the lack of actuarial standards and regulation?

[jfoxcpacfp]

snowcanyon wrote:

I love MMM, but he has no understanding of medicine and sickness. He actually posted awhile back that he didn’t realize people got sick if they had healthy habits. Insane. I’ve challenged him multiple times about this on his site, and he just can’t answer, because there isn’t an answer. His plan, I’m sure, even if he  won’t mention it, would be to go back to Canada.

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Ask if he knows how that worked out for Steve Jobs.

[q-school]

AZdoc68 wrote:

CM wrote:

PhysicianOnFIRE wrote:

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

Click to expand…

I recommend the June 29, 9:33 a.m. post by AntsOnTheMarch. It’s a long post but begins with:

“Generally speaking (not addressing anyone in particular), I see a lot of whistling past the graveyard on early retirement and medical issues. If you have 5, 10m you’ll be fine. Then again, with high enough net worth you’ll be fine (financially speaking) with anything short of world economic meltdown. But if your net worth is 2m and you’re a long way from Medicare, maybe you should read this:”

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=213839&newpost=3428004&start=150

Click to expand…

I read it and it’s a good post. As doctors, we often have the ability to mitigate healthcare costs for ourselves somewhat but the overall point is valid IMO.  That’s why I’m skeptical of some of the more aggressive FIRE scenarios out there such as retiring at 45 on a modest budget & savings.

Unless your spouse is working and has employer coverage options, you’re looking at 20 some years on the individual market or self-insuring.  That’s a tall order.

Click to expand...

or at least relies on luck and chance as much as planning.  some people will be lucky.  some people will pass younger than they should and not 'test' the plan.  others will have lost the opportunity to pad their healthcare savings, but some people don't look at life with those kind of regrets.  truthfully, if you make a lot less, the numbers are so daunting you kind of have to rely on the system to write off most of your bills (at least the inflated amounts, if not more) anyways.