What’s the true cost of healthcare in early retirement and can it break your budget? In this episode, Jason shares his experiences with Eric after three years on an ACA health insurance plan. Topics discussed include selecting and evaluating plans, how to estimate your income, premium tax credits, and why 2023 was Jason’s worst year for healthcare expenses to date.
Be sure to check out the show notes below the video!
- As mentioned in this episode, we have covered healthcare as a central topic in two prior episodes. Both go into details not discussed here, and are a key add-on to this episode:
- In Healthcare is my Second Highest Cost in Early Retirement, we invited a retirement benefits professional to answer our questions through the lens of those seeking financial independence and early retirement. We discuss how to choose a plan, ACA subsidies, differences by state, and other alternative options.
- This was followed by Don’t Let the Cost of Healthcare Break Your Early Retirement Plan. Here we learned about Jason’s experience with his first full year using the California ACA Exchange and learn how Eric arrived at his budget of $350K, his worst case scenario.
- How do healthcare expenses fit into the bigger budget picture? This was an important topic in Retiring With $2M: Here’s How We’d Spend It. No budget line items exist in a vacuum, so understanding the broader context is essential.
- It was no surprise that healthcare also came up in Jason’s recent AMA, Ask an Early Retiree Anything! Live Q&A with Jason from Two Sides of FI. There’s no better episode for an unfiltered look at Jason’s first three years after leaving his career behind.
- In this episode, Eric asked about the merit of holding cash. We talked at length about our thoughts on this topic in FIRE and Holding Cash – What We’re Doing.
COBRA can be 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.
Choosing a metal tier is an essential part of selecting an ACA plan. This chart from healthcare.gov explains the details of the Bronze, Silver, Gold, and Platinum options available. Importantly, the plan categories are based on how you and your plan split the costs of your health care; they have nothing to do with quality of care.
ACA plan subsidies (premium tax credits) are a topic we spent some time on in the 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.
Obamacare Optimization in Early Retirement is a great Go Curry Cracker article that goes into extensive details on ACA optimization, for those ready for a deeper dive. It’s worth noting that this is just one of a number of good ACA-related articles on GCC, which you can access via this tag.
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.
Have you checked out the Two Sides of FI Discord server? If you’re not familiar, this is an instant messaging social network. Ours is meant to be a community for viewers of our show, as well as a space to discuss all things relation to FIRE. It’s totally open, free of charge, and is anonymous as you’d like. This makes it a safe space to talk about financial topics you might otherwise be sensitive about sharing. Come check it out and see if it fits your interests! There are both desktop and mobile apps available.
Did you know Jason resumed blogging? To be notified of his future posts, please consider subscribing here. He’s also archived his old blog, which documents the first two years after he retired from his career, and started even before Two Sides of FI began. Get more information on those archived posts here.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.