Healthcare is my Second Highest Cost in Early Retirement

Health insurance may not be top of mind in early retirement when you're young and healthy, but it should be. In the US, healthcare costs are a significant line item in our budget. To help us decode what you need to know, we've invited a retirement benefits expert to answer our questions through the lens of those seeking financial independence and early retirement.
To protect against astronomical expenses resulting from unexpected medical issues, it's prudent to carry insurance. If you're retiring before 65 (when Medicare kicks in) you'll be responsible for covering those costs. What do you need to consider? What ARE the costs involved? What insurance shouldn't you purchase? Are there other options for coverage? What about long term care insurance? These are just a few of the topics we cover in this hour-long episode.

Our sincere thanks to Amy Manning for sharing her time, knowledge and expertise with us!

Timestamps:
00:00 Healthcare is my second highest cost in early retirement
03:38 So many health insurance options. How to choose?
07:01 What are common misunderstandings about health insurance?
12:30 ACA ("Obamacare") and insurance options for early retirees
16:40 When might private health insurance make sense?
20:20 The cost of health insurance - premiums, deductions, and more
24:55 Where do HSAs (Health Savings Accounts) fit in?
29:53 Looking ahead - 65+ and things to consider
32:02 What is COBRA coverage and why you might consider it after RE?
35:50 Why an expert thinks you shouldn't buy Long Term Care insurance
41:53 Healthcare sharing ministries: be careful + do your homework
43:54 What options exist for insurance for long term + frequent travelers?
47:41 Opportunities for healthcare cost savings
50:01 Cost + coverage considerations for prescription drug coverage
53:50 Should I consider dental or vision insurance in early retirement?

#twosidesoffi #financialindependence #firemovement

@30X40 Design Workshop ​

[maxpayne]

I live in Canada and these costs blow me away. And the complexity is insane. I’m glad I don’t have to worry about this.

[monicaambs]

Thank God I live in Canada. I love my healthcare. 67 years old and have lived here all my life.

[adoxographer]

This is making me very grateful that I don't live in the US. Here in Australia when my son needed a rare and complicated surgical procedure...total cost was 0. I even got reimbursed for the cost of parking my car. I still have health insurance for certain options (eg choice of a private hospital, cheaper dental), and it costs $70 per week for my whole family assuming zero subsidy. If I FIRE it will become cheaper.

[patienceisalpha]

The arbitrage is to make money in the US and retire elsewhere.

[vivekh]

RE to Italy or France where private insurance on top of government subsidized insurance is only $1400 per year, approximately, last time I checked for Italy. France and Italy are the top two countries in terms of health care. The USA is backwards compared to the rest of the developed countries of the world.

[uvscja]

I just feel lucky to live in the UK where I don't have to worry at all about healthcare.

[peruvian]

Every person who is considering FIRE should support legislation towards universal health care.

[dopolla]

This is a big part of why we're looking at moving to Spain. For us, any increase in taxes is more than made up by the lower medical expenses.

[rewsky]

Health Share's are not a viable alternative IMO and it always shocks me when people talk about them as if they are. They aren't regulated in the same way as insurance and don't have the same protections - which I'm glad the crew touched on. They are not obligated to pay out in the same way an insurance company is - so the risk is wayyy too high and only viable for people that are using it minimally, if at all.

[newcreation]

This is a super useful conversation! I love that you're talking with an actual expert about this.

My general healthcare plan post-FI is ACA subsidized insurance.

[darrenmatthews]

For those deciding to retire and and use "loss of coverage" as the event to get on ACA early, you will need documentation from your employer stating they are dropping you to give to the insurance company within 30 days of applying for coverage. I just went through this and it was a mess and ended up doing COBRA through to the open enrollment instead and cancelled the ACA insurance until the end of the year.

[rayanderson]

This alone was reason enough to stay until 55 for retiree healthcare. It is a huge cost and I understand not everyone has access to employer covered healthcare in retirement, but it did make us wait until 55 because of the cost in spite of being able to walk away at 50. 16 months to go.

[RandyBertrand]

It is possible to get free ACA health care premiums if you have the right assets. Distributions from Roth accounts when you reach 59 1/2 years old, to avoid penalties, are not considered income. This allows you to create your taxable income number and get 100% ACA premium subsidies.

[ktsterlin]

They really need Part A and B…and D- she is not joking. The most common scenario I ran into selling insurance was that people chose not to get B and D because they are relatively healthy and wanted to save a little bit of money…then they’d need a medication that would be $400 since the didn’t have insurance. Most times, even with the penalties, the medications were significantly more affordable or I’d find out they qualify for assistance.

I want to retire early with my husband but I feel like I might keep a part time librarian position for the insurance 😂

[donnaallgaier-lamberti]

Yes, my husbands and my healthcare (*$10, 000 per year for Functional Medicine, Supplements, the two of us) our organic food ($1, 000 a month) and our mortgage ($888.00 a month) are our three biggest costs on our retirement.

[tamib]

Insurance is the reason why my husband doesn't want to retire early. We live in the US, but buy one of his prescriptions in Canada using Northwest Pharmacy. We save over $1K a year by doing this. Being informed is the best way to use your savings efficiently.

[Matthew-itqd]

I really liked the way you tackled this topic. Your guest was terrific, very informative. I watched this with my wife, we have deliberated on the impact of healthcare in our plan and this video addressed all our questions (and a few more that we hadn't considered). Also loved her answer to FI, she is planning for an exit even if it's not in her control.

[michaelfriedman]

ACA subsidy income criteria is based on current tax year not prior. You estimate your income when you sign up and then there is a true up that occurs. I am not sure how that works exactly.

[kcfd]

This is one of the best shows you have done. Very good summary and a very good guest. Maybe you could do another show (possibly with this guest or someone else) talking about how the ACA subsidies work.

[prudenaustin]

That sigh at the 23 minute mark is all of us. This is ridiculous. Lol. Seriously though; this was a great conversation.