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 and 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!
In this episode we mentioned a number of useful resources primarily for US residents seeking healthcare that we’d like to share with you. Note that many apply whether you are on a FIRE path or traditional retirement age.
COBRA is an important bridge strategy for health insurance for many people in the US, just as it was for Jason. The linked page is a great starting point and points to a variety of other sources that you will find helpful. Please note that some states have additional information available, and may even have further extension coverage offered beyond the federal requirements. As one tip – the best time to research COBRA is before leaving your employer. Your HR benefits partner or healthcare plan administrator is an ideal starting point to gather more information about your company’s plan and coverage options.
Healthcare.gov is the best starting point when it comes to information about Affordable care Act (ACA or “Obamacare”) plans. In many cases, you will be directed to a state-run plan with its own website, but this is not always the case. Presently, a number of states have federally-run, state-federal partnership, or federally-supported plans. Where there isn’t a state exchange, you’ll see options and apply for coverage directly from healthcare.gov.
ACA plan subsidies are a topic worth a deeper dive than our time allowed in this episode. Many on a FIRE path plan on having incomes well within the limits where cost-reducing subsidies apply. Typically, as long as your household income is below 400% of the Federal Poverty Limit (FPL), these apply. When you investigate ACA coverage options, information will be provided on your eligibility for these based on the income information you supply. Importantly, in 2021 and 2022, provisions of the American Rescue Plan (ARP) legislation made further improvements to eligibility, eliminating so-called “subsidy cliffs”.
Healthcare Sharing Ministries (HSMs) are an option of interest to many. However, neither of us are experts on the topic. We’ve looked into HSMs and decided they weren’t for us, as they’re not bound by the same requirements as true insurance plans. That said, this page seems to be a reasonable starting point for high level information on a number of options available. If you have interest in these plans, be sure to dig deeper. Many user stories are available online via Reddit and other sources. For information on the potential downsides of HSMs, we found this recent John Oliver segment very eye-opening. Caveat emptor, friends.
GoodRx and RxSaver are convenient tools to find out where you can get your prescriptions filled for the lowest cost via coupon discounts. A related tip for diagnostic testing + labwork is that for many insurance companies, it’s easy to use their website to confirm your options for in-network testing. Don’t be surprised by higher bills that come from using labs that are out-of-network! A few minutes of work is well worth it to ensure you’re getting the lowest cost options available to you.
Medicare.gov should be your starting point for researching healthcare coverage options for US retirees once they reach 65 years of age. It’s never too early to understand what this will look like for you even though it may seem far in the future. If you’re new to the topic, easy to digest summary information is available on this page. As you develop your retirement budget, this site will be a useful source of information to estimate those future costs.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.