comparing health insurance options

Evaluating Health Insurance Options For Early Retirement

One of the most common concerns I hear from readers is finding health insurance options for early retirement.  Insurance is something most of us have received for years from our employers, and the thought (and expense) of having to replace that on our own is a major reason many people wait until age 65 to retire.

John doesn’t want to wait until age 65 to retire, but his problem is even harder than most folks are facing.

His wife has cancer.

Today, John comes back with his second guest post to share what he’s learned working with an insurance professional to evaluate his health insurance options.

He even shares all the detail on the cost of the various options he’s considering.

If you’re struggling to find health insurance options in early retirement (especially if you have a pre-existing condition) today’s post is a must-read.

John's wife has cancer and he's been evaluating his options for health insurance to support an early retirement. Today, he shares what he's found. Click To Tweet

health insurance for early retirement


Evaluating Health Insurance Options For Early Retirement

Fritz allowed us to tell you our story back in January 2021 in “When Cancer And Retirement Collide (A Reader’s Story).”

My wife is still battling cancer six years after being diagnosed.  It continues to be a challenging cycle of chemotherapy, rest, medical procedures, and more chemotherapy.  She was diagnosed with Stage IV, which means the cancer had already spread.  Considering that diagnosis at the time, we are very thankful for the results to date and for the medical professionals and technology.  While there is no likelihood of a cure currently we remain optimistic.  We have not allowed this to be the center of our life, though we do have to schedule trips around her treatments.

I reached out to Fritz again.  Recently I had a challenging period at work that led me to seriously look into full retirement.  I have been in “pretirement” for about four years now.  Financially we are in excellent shape to retire (even with the 2022 market drop).  However, with my wife’s pre-existing condition, health insurance would be the biggest challenge for us.

I went back to The Retirement Manifesto to re-read what Fritz had posted about health insurance.  In September 2018 he posted “Health Insurance in Retirement: Unsolved.”  He provided an update in August 2021 when he posted “How To Get Health Insurance in Retirement (AKA: What we did when our COBRA expired…).”  At the time, Fritz utilized COBRA health insurance and then moved to a group plan he was able to find through his former employer (the employer stopped paying for retiree plans but he could access a reasonably priced group plan at full cost).


My Thought Process

I knew COBRA insurance was an option but it would only cover 18 months.  The insurance premiums for this will have an extra two (2) percent added on for ‘administrative costs’ and you will pay 100% of the employer cost.   In 2018 when I was impacted by a reduction in force, I utilized COBRA for about six months in between jobs.

I have almost 30 years of health care experience which exposed me to the health insurance world.  I knew it from the inside out on the employer and insurance company side.  However, I had a blind spot on this topic from a consumer perspective.  Prior to my wife being diagnosed with cancer we seldom utilized our health insurance other than for annual checkups.

I started with internet search engines, trying to research options.  I utilized Fritz’s list of resources from his August 2021 post.  I knew the general options of a) ACA Marketplace, b) Private Market and c) Health Sharing Ministries.  However, I really could not find the right details I was looking for to best understand the nuances of the scenario we are in.

Our scenario is this: 

  •  one spouse is relatively healthy,
  • a spouse with a pre-existing condition,
  • one dependent age 23 still on our plan.

Meeting With A Health Insurance Agent

Our neighborhood has a social media group and also another group of neighbors who have their own businesses.  I was looking at that business group more closely and ran across a neighbor who runs a health insurance agency.  I have never called an agent or broker before but I figured now was the time if I was going to be trying to find a serious solution.  I reached out and we set up a time to talk.  I was upfront with him, telling him that this was to research options and no ‘sale’ may come from it.  He then told me that this is why he is here and even if I did not go through him in the end he relies on word-of-mouth positive comments and referrals to drive his business.

I wanted to share our perspective of the process and how a consultant assisted us, including his process of getting to know our unique family situation, our plans and goals, and the details he followed to help us research the best options to consider. He was willing to share his experience and the process he uses when working with clients. 

Below is from the consultant, Travis Lamnek.


Thoughts From “The Expert”

First and foremost, brokers and agents should be working alongside clients at no additional charge.  There is enough commission built-in to all insurance products that will compensate adequately for their time and effort.  Therefore, the hesitation in using a broker or agent should simply be a question of whether or not you believe they have your best interests at heart.  

Brokers and agents both must be licensed in each state they want to present solutions and be appointed by the specific insurance carrier(s) they represent.  The easiest way to explain the difference between an agent and a broker is that an agent typically offers plans from a specific insurance carrier (insurance company), while a broker can offer options from multiple carriers.  A consultant is an agent or broker that establishes partnerships with like-minded, fully vetted, professionals that specialize in what the original agent or broker cannot provide directly.  Unlike an independent agent or broker, the consultant takes his/her specific carriers out of the equation to focus exclusively on what will be the best solution for the client, as their partnerships ensure all available solutions can be brought into the mix.  


A Summary of Health Insurance Options

In reality, there are many categories and solutions available to those seeking the right coverage for themselves and their families – especially when it comes to retiring prior to turning 65 and being eligible for Medicare.  There are so many choices that many people enter a state of “paralysis by analysis” and end up missing the big picture because of all the details.  This is why a licensed professional, such as a consultant, agent or broker can be an invaluable benefit.

The following is a quick overview of health coverage options available in most areas:

finding insurance in retirement

All of these options have solutions where licensed agents and brokers can be found directly with the carrier and accessible through the site.  However, they will most likely be biased toward the carrier they are representing directly.  A consultant, independent agent, or broker may be a better starting point to understand the direct impact of any of these on you and your specific circumstances.


Factors To Consider Using John’s Scenario

Not every situation is the same.  In fact, I cannot think of any two situations that I have come across that were identically the same.  Finding the right health insurance solution is really finding the best match between the person(s) with the need and the available options, and there are no perfect or “one-size-fits-all” solutions out there.  Everyone has a different risk profile regarding accidents, illnesses, diseases, wellness, mental health, and more.  These are determined by your genes, family, living environment, hobbies, profession, community involvement, geographic location, income level, health history, relationship history, accidents, injuries, and more.  Although people are similar, and two individuals may benefit from the same plan in similar ways, there are no two situations that are identical.  

In order to determine the right solution for John, we had a simple discussion that took less than 30 minutes.  He shared his current needs and desires for a health coverage plan, while I asked more questions to uncover what he may not know to share.  As suggested by the many variables listed above, some of the questions that will lead to the best solution are as follows:

  • Where do you live (residential zip code)?
  • Who needs to be included in the coverage (spouse, children, employees, etc.)?
  • How often do you typically go to the doctor?
  • Why do you typically go to the doctor?
  • Are there any ongoing health issues that need to remain covered?
  • Are there any concerns that we should ensure get covered?
  • Are there any major historical health issues (cancer, heart issues, hospitalizations, or the like)?
  • What medications are you currently taking?  
  • What primary medications have been prescribed in the past 5-7 years?
  • What specific doctors do you want In-Network?
  • What hospital would you go to in case of an emergency? 
  • What is your annual household taxable income?

This is not an exhaustive list, but it does give us a good starting point to determine what will lead us to the best solution.  There are pros and cons to every available solution, and each available health coverage option will correspond to these variables.

For example, if someone is unemployed with little residual income for the tax year, they may benefit from the subsidies available from the government on the ACA (Affordable Care Act) marketplace or with Medicaid through the Department of Health and Human Services from their independent state.

If a family member is actively fighting cancer, then private coverage is not the best solution, as these have limited coverage for pre-existing conditions.  And before you get upset about the “pre-existing” terminology, please note that only ACA-compliant plans must waive these.  Underwritten private coverage will decline these applicants, and guaranteed issue plans through private carriers will not have any coverage for the first calendar year on the plan. 

Note that Short-Term, Limited Duration Insurance (STLDI) health care plans and Health Shares (aka. “Cost Shares” or “Health-Share Ministries”) will provide no coverage for these pre-existing conditions, either.  Only ACA-compliant plans – mainly those through the ACA marketplace or through group coverage (what most people reference as “Major Medical”) cover the conditions that were in place prior to the policy being issued.  


Evaluating The Pros And Cons

There are pros and cons to every plan.  None are perfect, but there is definitely one that will be a better fit for each specific case than the others.  In John’s case, he needed to ensure his wife, who is battling cancer, has her treatment covered by her preferred doctor at her preferred facility.  When the people we love are sick or hurt, it affects our whole lives.  The goal became ensuring that a plan was available to solve these primary concerns, ensure she was enrolled at the proper time, and then address some of the minor concerns from what remained.  

According to the laws of the state of his residence, John’s son was still a dependent at the time of this search.  Neither John nor his son had the same needs as his wife.  It made financial sense to split them into different options, but the plan for her would also suit their needs for the time being.  It was easier on the family focus to keep them together.  

In their case, they are currently on a high deductible/H.S.A. eligible group plan through his employer. In our conversation, he mentioned he was considering retiring early.  If he makes the decision to do so, then COBRA makes his current plan available for another 18 months at his expense.  Otherwise, retirement is considered a qualifying event that will allow him and his family to enroll in an ACA marketplace plan.  One particular insurance carrier on the ACA marketplace, available in his zip code, grants his wife the ability to go where she wants with the doctors she wants.  Therefore, there are options for John and his family.  Not everyone is so lucky regarding their coverage search, as many require more research and effort to find the best plan.

Just remember, what makes sense as the best solution today does not mean it will be the best solution the next month, year, or decade.  I tell my clients that is a good practice to review your policy every 6-12 months to ensure you still have the best solution in place.  And if you are willing, splitting the family into multiple different plans may be a huge benefit financially, as well as from the needed benefits of each.

Find yourself a good broker or agent to work with you.  A consultant, like myself, takes carriers out of the equation and focuses exclusively on what will be the best solution for the client.  There are many categories and solutions available to those seeking the right coverage for their specific circumstances, needs, and budget.  The right licensed professional will provide peace of mind, along with the recommended coverage, which is an invaluable benefit.  

If you feel any pressure or uneasiness from any of these professionals, then just remember that they work for you.  Interview one or three, and make sure you are comfortable with their knowledge, process, and personality before moving forward.  Your journey with this professional should not end when you sign on the bottom line.  You want to be sure they will continue to be available and guide you when you need to use the specified benefits, as well.


The Cost Of The Health Insurance Options:

Travis has been a big help in explaining and better understanding our health insurance options.  I now know with better clarity what options are available to us.

Right now I am planning to remain employed and continue with the employer-sponsored group plan.  It is a high deductible plan which allows us to put money into a health savings account. I am currently paying $6,558 for health insurance through my employer.  I am also deferring $7,260 a year, my employer also provides a matching HSA contribution ($1,040 a year), which along with the catch-up provisions ($1,000 for me and $1,000 for my wife), has us reaching the maximum allowable annual contributions for a family ($9,300 a year).

There is an option Travis presented to me that we are considering.  The option to remove our 23-year-old son from my group plan and find him other insurance coverage, which will lead to an overall decrease in costs of health insurance premiums. I am currently paying $6,558 a year for health insurance through my employer.  If we take my son off my coverage, leaving just myself and my wife, then I would pay $3,700 a year.  The estimated cost of a private PPO plan for our son would be $2,812 a year.  Overall, we would reduce costs by $46. This is purely a financial thing as our son is currently healthy.  I have not acted on this as of yet.

Remember to factor in deductibles and out-of-pocket costs for your health plan.  Our current deductible has an Individual deductible limit of $6,350 ($12,500 family) and an Individual out-of-pocket of $6,900 ($13,800 family).  This is on top of the premiums I pay.  NOTE – I could pay for deductible/out-of-pocket from our HSA deferrals, however, we have chosen to pay directly and let the HSA investments grow tax-free.

As for retirement – when I do get to that point, I know with more clarity what the options are.  Depending on my wife’s health care needs, we may use the COBRA option for 18 months.  That will provide continuity for a while as we explore in depth our options on the ACA marketplace. The cost of COBRA coverage through my employer would be $19,038 a year (if we keep our son on our plan). If I cover just me and my wife that drops to $12,692 and with the cost of a private PPO Plan for our son estimated at $2,812, total costs would be $15,504. Note – The costs for COBRA coverage is 100% of the employer cost plus a two (2) percent fee charged (allowable by law) to keep the coverage through my employer.

One note on this that is important for everyone to understand – ACA Marketplace plans are zip code dependent.  If you are retiring and moving then you need to find a plan with specific coverage available in that area.  An agent or qualified marketplace site will be helpful for this.

When we choose to retire before age 65, we will need to find ACA Marketplace coverage that covers pre-existing conditions for my wife.  If we remain in our current zip code, the estimated cost for the family would be $14,520.  If we put me and my wife on an ACA plan and our son on a private PPO plan the estimated cost would be $14,468.  If we put my wife on the ACA plan and myself and our son both on a private PPO plan the estimated cost would be $21,588.  NOTE – The ACA plan costs depend on assumptions of income levels – in our case we used an annual income level of $100,000 to start somewhere.  We know we do not want to remain where we are currently and we know that finding a retirement location with access to decent health insurance and good health care will be a big challenge we need to address.


A Cost Comparison Table

cost of health insurance options


Conclusion

I appreciate John sharing what he’s learned during his evaluation of health insurance options for early retirement.  I can’t imagine the strain that cancer puts on the insurance decision, which is already harder than it needs to be, and sincerely wish the best to John and his wife.  I empathize with the many who find themselves dealing with the same work frustration/pre-retirement mindset that John is facing, and hope the overview of what he is learning is helpful to all of you who are trying to understand your health insurance options.

John, I’d love to have you come back with a third guest post when you make your decision to retire.  I’d love to hear the follow-up on what you decide to do in this difficult area of retirement planning.

Related Posts:


Your Turn: Have you experienced the challenge of finding health insurance options if you retired early?  Have you run into the extra challenges of having a pre-existing condition?  If so, how did you address it?

72 comments

  1. Wishing best of luck to John!
    My wife and I both have pre-existing conditions, total thyroidectomy for both of us, in addition to me having diabetes. After being separated from my employer at the beginning of the pandemic, I became self-employed as a real estate agent. I exhausted COBRA benefits, then was able to get an ACA plan that, with subsidies, is only costing me $147 a month for coverage on my whole family, including my 15 & 17 year old daughters.
    I know that as my real estate business grows, the subsidies will go away, so I really like the idea of splitting off the children onto separate insurance if it can provide overall cost savings.
    Thanks!

    1. Clint, thank you. Until I spoke with Travis I never considered having our youngest son on his own policy. With open enrollment right around the corner I plan to definitely follow up on this option.

    2. Howdy Clint. You are correct – as your business grows, your subsidies will start reducing. As stated in the article, there are pros and cons to everything. Splitting plans makes the most sense whenever there are different medical needs involved, or like me, have a kid away at college in a different area. All variables will slightly change circumstances, making the ideal solution a bit different for everyone. I am happy to hear this article at least opened up one new concept for you. Let me know if I can be of any further assistance.
      Travis

    3. John,
      Thank you for mentioning pre existing conditions. You made me think about my situation and questions to ask my and my wife’s employer. Never thought to inquire about that considering we’re planning on retiring in the next few years with employer funded and partially funded retirement medical insurance. Currently we’re covered by the employer approved ACA version, which you kindly described as not a concern with pre existing conditions. Though, I don’t know if our employers retirement healthcare coverage will deny coverage for pre existing conditions. I say this because my wife has an autoimmune disease that translates to being a high medical user of very expensive treatment.

      1. Mine, I am glad to hear the post got you thinking ahead of time. Always good to know answers to questions before you retire and then find out later a condition is not covered.

  2. Fritz, thank you again for the opportunity to write a Guest Post follow up. I hope that others find this information helpful. I want to also thank Travis the health insurance consultant who worked closely with me on our situation and also who contributed greatly to this post.

    1. John, I appreciate you and Travis writing the guest post. Finding health insurance is a major issue for everyone considering early retirement, and it’s great to have insights from others who are trying to solve the same puzzle. Thanks again for being so transparent with your story, my thoughts and prayers are with you, your wife and your family.

      1. Thank you for the opportunity to share and help, Fritz.
        and John, thank you for including me and allowing me to shed some light on your options and hopefully provide the right guidance for you and your family.

  3. Fritz we are in an unusual situation, i have worked for an airline for 33 years and will retire soon. i wonder what the international options for medical would be.

    Dave

    1. This is one of the main reasons I started looking at leaving the US for retirement. Health insurance overseas is significantly less expensive. I’ve chatted with several people about this living abroad and all of them only paid about $120-150 a month for two people. This is private health insurance with little to no deductible. I was floored. Why is it that the US is one of the only countries that hasn’t figured this out? Oh I know, it’s money, it’s a rhetorical question.

      1. Rick,
        My follow up question about low cost international medical coverage is what is covered and how long will it take to get treatment. In most other countries socialized medicine rules. This translates to rationing medical care when you need it most. Also, the time to treatment or medical procedures can take years. The main point of this article is medical coverage in retirement with a pre existing condition. Many from other countries who have the means travel here to the US to get the best care available.

        1. Please don’t make generalized comments about international health insurance and healthcare unless you have actually lived it. Many people have excellent healthcare in countries, all over the world, with both public AND private options at much less cost than the US – no rationing. I perceive your statement as a sound bite that is often circulated in the US to justify what we have and take the focus away from how bad it really is for many people in the US. I was looking at Geo Blue international travel health insurance as I just used them this summer during a 6 week trip to Europe. For reference, I can get a 6-month Voyager Essential plan for a 55 year old man, with $0 deductible and $1M in coverage for a total price (for 6 months) = $720.72! This is just a travel plan. There are many options for expats that plan to live internationally much longer at a fraction of the cost of any plan in the US.

    2. My best and prays to John and his family. The article was insightful, well thought out and thorough. I retired at 59 and currently on my wife’s plan but she plans to retire in 3 years so this analysis is helpful as I look ahead to alternatives.

      Thank you John and Fritz

      All the best, Mitch

      1. Hopefully, there will be some changes to simplify the system before your wife retires, Mitch. There is currently way too much for most people to keep up with. It definitely keeps me on my toes! Good luck to you both.

        1. Travis, how does one find a local, good consultant/broker? I looked at the ACA last year and made the mistake of filling forms that I thought were legit brokers and before I know it, I was flooded with sketchy sounding calls.

          John, thanks for sharing your experience, I found this to be very informative. Best of luck

          1. That is a GREAT question! Consultants are few and far-between. The old marketing director in me says – do your research. Check out local brokers and agents, read reviews and pay attention to the focus of those reviews. If the focus is all about price, then they are focused on low premiums and not necessarily the cost to use. A good agent, broker, or consultant will focus on your specific situation and need, and the reviews should represent that. I have a pretty big network. If you want to connect directly, I may be able to recommend a starting point. Regardless, make sure you interview a few to see which ones feel like they have your best interest in mind. Hope this helps.

      2. Mitch, thank you for your kind word and prayers. Glad to hear that this post was beneficial to you.

    3. Howdy Dave. International is a big word – and it really does depend on where you plan to hang your hat. Each country is a bit different. There are localized plans, as well as US-based international plans. The best option will depend on where you go, how long you stay, and what is available in that area.
      Good luck to you, either way!
      Travis

  4. $46 would not be enough of a savings for me to have to learn to deal with another insurance system. Once on COBRA? That would be another story. Thanks to both John and Travis for sharing this information. It no longer applies to me, but I will remember this post and forward it as I learn of people who are making these decisions.

    1. Vicki, short term I agree that the minimal savings is not worth the hassle of knowing another insurance plan. There is another option of having our son sign up on an ACA plan and with his income level, he would be eligible for significant savings if we go that route. The savings of $46 is if we move our son to a commercial PPO plan and not an ACA plan – Sorry if I was unclear on that part.

    2. Thank you for the feedback, Vicki. Unfortunately, John’s son will age out in a few years and be responsible for his own plan, anyway. The $46 premium savings by switching him is just the start. That policy will have many more long-term benefits and keep his out-of-pocket costs lower, as well. As mentioned above, there is not a single solution that is perfect for all. There are pros and cons to everything. Finding the best balance is going to provide the best long-term fit.

  5. So the best plan is, Just Keep Working! Great.
    Of course one can also buy Bronze or Silver level ACA insurance at considerably lower cost than the Gold level cited above.

    1. No, Al. The best plan is going to depend on specific circumstances. There are pros and cons to everything – including Keep Working! Many small business employers are dropping coverage lately because of the escalating costs everywhere else, which puts those employees on their own, as well… There is just not a one-size-fits-all solution.

    2. I sense the sarcasm, Al. Unappreciated, to be honest. But, since you’ve made the point, the reality is that many folks have no option but to continue working due to the health insurance issue. I hear it a LOT. And yes, Bronze and Silver may have lower premiums, but if your wife were the one facing the costs of extensive cancer treatments, would you want to be the one responsible for the significantly increased deductible required? Health insurance is one area that must be looked at holistically, and the right answer is driven by each individual circumstance. I encourage you to find some empathy.

    3. Actually no, that is not the plan. I continue to weigh my options, with a focus on what is best for my wife’s healthcare needs. If that means I continue working to maintain the healthcare insurance coverage I am used to then that is what I will do. This process has opened my eyes up to different options I never considered before talking with a health insurance consultant (Travis). Hopefully by sharing the post it can help others. Have a blessed day Al.

  6. Bronze level ACA insurance was literally a lifesaver for me before Medicare, and with the rebate it was much less expensive than COBRA or any private plan. The takeaway? Vote Democrat. The Republican plan was, and is, no plan; “get a job or go hang”.

  7. Great information! And John, thank you for sharing your story and all the best to you and your family.

    I retired just before my 52nd birthday, took the 18 months of COBRA followed by an ACA plan.

    Now, my longer term plan has kicked in – I’ve just moved to Portugal. In addition to the ease of European travel that it offers, one of the biggest drivers was this exact issue.

    I’m currently evaluating private health insurance options and find it so much less stressful – for a health system rated higher than that in the US no less.

    1. Vicki, I’m hearing a lot of good things about Portugal. A co-worker of mine recently retired there, as well. And yes, it’s shocking how much more affordable health care is in most countries of the world. If you’re willing to live in a foreign land, it’s certainly a viable option. Thanks for adding value to the discussion.

    2. Vicki, thank you for the kind words. Retiring to another country is not something we would do but I am glad to hear that is a great option for you and possibly others. Lesson here – Look at all options so you can make an informed decision!

      1. It’s sad that it even has to be an option. Honestly, the whole healthcare issue is the reason we even started thinking about moving. Of course, as you point out, it’s not an option for everybody, and who knows how long it’ll be an option for us. Good luck with the choices you’re debating between and I do look forward to hearing your updates in the future. I wonder if you were to take a sabbatical from work (if that’s even an option), if that might buy you some more personal time for now, while not jeopardizing your health care needs. Just a thought. ♥

  8. This was immensely helpful. We’ve been considering early retirement for awhile, but the cost of health insurance has made my husband feel “trapped” into continuing work just so we won’t have that exorbitant cost of insurance to cover ourselves.

    1. This is more common than you might think, Rachel. Hopefully, the inclusions and chart provide a good starting point for you and your husband. I’m happy to chat further if you have specific questions.

    2. Glad you found this helpful. I continue to have that feeling of being “trapped” in work to maintain health insurance. The discussion I had with Travis opened my eyes to other options. Granted these options are different than my current employer sponsored health insurance but I have a good reference point now that helps me know my options in a more clear manner.

      1. Thanks John and Travis for sharing this insightful information. Having recently taken the plunge into retirement, I had to navigate this mine field we call health care coverage.
        John,
        Best to your family!

  9. I guess I am confused. The family currently has the employer’s insurance which is a high deductible HSA plan. After retirement, the COBRA (good for 18 mos) is the same plan. Why no comparison to an ACA Bronze HSA plan? It would be close to apples to apples comparable to the COBRA. Why the comparison to a Gold ACA plan?

    If you are looking to change coverage, gold level coverage is an option. Does the employer offer a “gold” level plan? Then compare the employer gold plan to an ACA gold plan.

    You might also find that a bronze plan plus paying the out of pocket is less expensive than the gold plan.

    1. Howdy Patient Cash. The “Current Employer Plan” in the above situation is actually the COBRA rate if he chose to retire early. Also, sometimes the bronze is better than gold, but with the cancer situation, the lower deductible was a much more viable option. If the health situation was different, a private plan (like what is suggested for the son) could be the best option. However, as I state in the article, it all depends on the variables and circumstances of each person / family.

  10. Consulting with an insurance expert like Travis can be extremely helpful, especially for complex family situations like the one described. Also, sometimes consulting with a tax accountant can also be helpful, especially for the self-employed. For example, someone who is self-employed, relatively healthy, and in a high income tax bracket may decide to select a high deductible plan linked to an HSA. They may actually be better off using HSA dollars to pay any out-of-pocket costs, saving only any excess not needed for qualified medical expenses, rather than using after-tax dollars for them.

    1. Good suggestion, Sabine. Not all states offer plans that are able to link with HSAs. HRAs (Health Reimbursable Arrangements) are another tax-reducing option, as they allow you to deduct medical expenses from your taxes, instead of using pre-tax dollars. The same type of medical expenses that can be paid by HSAs are deductible through HRAs. However, there are only specific circumstances when those are available, as well. Knowing the available options is the first step. Understanding which one will work best for you is the second.

  11. Thanks so much for sharing this very important issue, particularly for all those FIRE folks who have great intentions but cannot really measure the lifetime cost of a health issue on your retirement plans. John, I truly feel for you as my wife and I lived with stage IV breast cancer for 12 mostly great years. For many it can be longer, and I hope that medical advances make that possible for your wife. The other part of our family story concerns my 38 year old son, who literally had never been ill and over an 18 month period was diagnosed with an uncommon kidney disorder that caused his kidneys to fail. He required dialysis and then was lucky enough to get a transplant. He had been working in the “gig” economy and always had to search for coverage. Many years he complained to his doctor dad (me) about why he was spending so much on his health insurance when he never went to the doctor. We had that discussion literally 90 days before his kidney diagnosis and he relented and found a silver level plan on the ACA. That plan saved him from what would have been a medical bankruptcy. His out of pocket was 600.00 per year. But the ACA is so spotty now, as your article mentioned, due to the fact that policymakers cannot decide what to do, and those that don’t like the ACA are weakening it whenever they can. This is leading to more uninsured and driving up the cost for all of us and may kill the ACA. If there is something better, we need to put that in place before we ditch any type of health insurance strategy. Its a mess for families right now. Best of luck.

    1. Quentin, thank you for your kind words. Living with cancer is exactly what my wife is doing. We are managing through it, taking it step by step, day by day.

  12. Quentin, I am very glad your son stayed on his plan when he needed it. I hear too many horror stories about people switching to save a few dollars per month when in reality, those few dollars provide an invaluable level of protection. Many people don’t know this, but health insurance is actually controlled at the state level. National policies are attempted, but it will take a huge effort to get this changed. That being said, where you live will have a tremendous impact on what your best situation could look like. Best of luck to you and your family, sir.

  13. John, thank you for sharing your story and god bless you and your family. Thank you Gil for this very important guest post. I am a long-time reader of this wonderful blog. This is the first time to leave a comment.

    I was exactly in the same situation as John. My wife used to work earlier, but stopped working due to her cancer. My work insurance covers my wife and son. She applied and got approval for Social security disability(SSD). Some cancers are qualified for SSD. SSD automatically qualifies for medicare irrespective of age. Here is my plan. When I leave work, I will move my wife to medicare and I will use CORBA & ACA until my medicare. I will move my son to his work insurance.

    John, did you try SSD for your wife?

    1. Satya – My wife worked all her life – as Chief Education Officer for our two boys (now grown men). I will look at SSD but I do not think she will be eligible because she did not “work” in the eyes of the government. Thanks for the idea to look so I can confirm.

  14. One important reminder: ACA is based upon your annual income, not your portfolio/net worth.

    I retired at age 57 in January 2021. For reference, I was a public school teacher for 30 years – so definitely not “high income” – and am single. ACA has been the right choice for me for these 2 years. I am almost embarrassed to say that I am paying only $21/month in premiums. Yes, $21. (Started at $120/mo, Biden reduced the costs as part of the American Recovery Act in May ’21 and I changed companies the second year.) This is for a plan with a $1700 deductible AND max out-of-pocket. I am eligible because my only income is a poverty-level teacher’s pension, which I am supplementing with Roth withdrawals. My retirement savings are not counted. While the cost will surely increase for next year and going forward, it has been fantastic for getting me closer to Medicare.

    1. D King – Absolutely yes – ACA is based on current income and not net worth. While I was working with Travis I worked up various scenarios based on income. PS – You should not feel embarassed about anything – You are following the rules as they are written and getting what comes to eligable individuals. As Travis mentions, we know we have a “decent” option for an ACA plan in our current zip code where we live. The challenge is the unknown of whether that ACA plan coverage will authorize her chemotherapy and multiple special prescriptions that go with it. Additionally, some, but not all, of her medical providers are in network with this ACA plan option. Everyone has unique health insurance needs so I encourage all to visit with a health insurance broker/consultant to make sure you fully understand the options.

    2. D King,
      This is a very important option for people looking for transitional health insurance that many may be unaware of! If you are able to keep your ADJUSTED GROSS INCOME low, you can take advantage of the ACA subsidies. My wife and I need 3 years of health insurance before we become Medicare eligible. We worked with a local Health Care Store to set up our health insurance. The Silver Plan we have through the ACA has a $1000 max deductible each, it’s a good plan. I am NOT embarrassed to say that we pay $0 per month for our health insurance, our subsidy this year is $1805 per month. The KEY to being able to do this IS supplementing your income with Roth Withdrawals and/or cash accounts you currently have. Not everyone can do this. We are delaying our Social Security until we are both 65. We are both retired from our jobs as of Jan.2022, so we don’t have earned income. It’s also important not to cash in any taxable Mutual funds and/or 401K accounts before we turn 65, because that will increase the all important Adjusted Gross Income amount on your taxes { which is how they calculate your ACA subsidy}. This has been our Golden Goose allowing us to retire early with good and affordable health insurance.
      Pudge H.

      1. Howdy Pudge. Thank you for the input. I’m very happy to hear you found a group that guided you correctly. Finding the sweet spot regarding taxable income is not as easy as it sounds. Lower premiums are available based on income level and subsidies from the government on ACA plans. Another challenge is the networks available based on your state of residence. TN is POS only, TX is HMO and EPO, so on and so forth. Most do not have PPO plans available, which makes it difficult to ensure you preferred providers (doctors and hospitals) are in-network. It’s a maze, determining which variables are most important to you.

      2. And I thought my plan was awesome! Good for you. Yes, I am very thankful for my Roth and for some wise financial advice. I have not yet had to touch my 401K and had to suffer its impact on my AGI/taxes/ACA eligibility. Two years down, 5 to go until Medicare! I know there will be changes ahead – perhaps even paying full price for a private plan for a year or two – but my family needed me, so I needed to retire and the ACA has certainly helped make it possible.

  15. The “Quick Comparison” table/image should probably be adjusted to match the information provided later in the article. Specifically, ACA plans are highly dependent on location. For example, the cons listed aren’t applicable in my location. Most major insurance companies in the state offer plans that range from regional HMO to national PPO, low deductible to high deductible, and my premium (pre-subsidy) for the same plan is lower than it was 2 years ago with lower out-of-pocket costs.

    On the other hand, a friend in another state had only two ACA options; a low deductible HMO or a high deductible HMO at the local hospital.

    1. Hello Steve. I appreciate the comment, but the quick comparison table is in general – not specific to John’s situation or location. It is also why I added the disclaimer at the bottom of the image. The stated questions that I ask people to help determine which solution will be the best fit are very much in line with your comment (where do you live / zip code being top of the list). As mentioned in other responses, each state governs insurance for itself, and there are differences. If you want to chat offline, I have a good network of agents that have expertise all over and may be able to connect you to one – if you are in a state that I do not support directly.
      https://www.lucidhealthinsurance.com/about

      1. I understand that the table is generalized; it just feels too specific and negative RE: ACA plans. Location is a critical part of ACA, but not mentioned in the table.

        My neighbor and his siblings all have their own insurance brokerages in central PA. All stopped offering health care plans for individuals when the ACA came along and the insurance companies dropped their commission to “next to nothing.” I’m doing well with the ACA!

  16. Fritz, John, and Travis–

    Thank you so much for this. Very relevant and timely to the situation my wife and I are now in. I’ve been thinking about the same considerations and the multitude of variables and not really making much headway. I didn’t know health insurance consultants existed, but it sure seems like a service that would greatly benefit a lot of folks.

    Prayers for you and your wife, John.

    1. Consultants are few and far between, Mark. Brokers and agents are more readily available. I suggest connecting with a few and interviewing each to see which will give you the most faith and trust. Of course, I would love the opportunity, as well : ).

    2. Mark, thank you for the prayers. I echo Travis’ comment – interview several brokers to see who you are comfortable working with.

  17. Hey John sorry to hear about your wife, my prayers go out to you! I hope you are able to find the right coverage you need, and the best coverage situation for your son. This post make me grateful to work for an employer who provides a good group plan.

    1. Howdy Jim. Yes, group plans provide the least risk. The down side is that you have to keep working! Without the cancer issue, a private PPO would work best for John. Since it is there, these are what we have to work with. The main point of all my input is that every situation is different.

    2. Jim, thank you for the prayers. I am thankful for the employer sponsored plan I have currently – though not as good as when I worked for a large employer. Travis has been very helpful in navigating the various health insurance options.

  18. Good stuff everyone. My situation is perhaps not as common as most, but I would suggest there are many others out there like me trying to solve the bridge to Medicare.

    I have been self-employed for most of my career so have been accustomed to shopping health ins annually. I made a decision to go with a health share plan almost 4 years ago and have had a very good experience so far. At age 58 and recently fully retired, my wife and I made the decision based on a number of factors: ease and ability for US to choose medical providers, costs and business model, and responsive service provider representatives. I realize health share programs are not for everyone. In our case, both my wife and I entered the program pretty healthy with very few pre-existing conditions. Also, we have enough assets to fund most catastrophe events in the event the health share plan does not cover all represented expenses. I realize there are risks here as health share is not insurance.

    Travis – the ACA site lists qualifying events which would allow you to join ACA prior to normal enrollment period. One safe-gap measure I have always wondered about was could we be eligible to join ACA in the event a major medical cost occurred? Are there options to jump on a traditional medical insurance plan in the event the worst case scenario occurs, at least until we are eligible for Medicare (7 years)?

    1. Dave – your question 2 – options to jump on a traditional medical insurance plan. Solution 1) ACA plans are available for you during the OEP (Open Enrollment Period) Nov 1 – Dec 15 every year for the following calendar year (most popular). Solution 2) Private plans are available in all states, but not all of them are close to “major medical.” Depending on your state of residence, some great options could be available. There are great ones and awful ones, which is why there is a range in the quick reference chart included in the article. Most of these are PPO options that allow access to most choice providers and facilities. Solution 3) Group plans are available for small businesses. Depending on the state of residence, the requirements are 2-3 employees, including owners. In TX, you need a group of 2, which can be related. An example of one of my clients is a couple that likes to go antiquing and sells some things on eBay. Because they utilize an S-Corp as a co-owned business as that couple, they qualify for group coverage as just the two of them. They are on a Blue Cross Blue Shield PPO and quite happy.

    2. Dave – I feel compelled to respond to a question that you didn’t ask… Your situation with the health share is not uncommon. Many people feel more comfortable paying those low monthly membership costs instead of higher insurance premiums, especially if they have a bit of savings to cover some major issues. However, my research (not to mention the personal experience stories that clients share) suggests that health shares are too high of a risk. A couple of facts: 1) ACA plans are required to have a claim payout to premium received ratio of 85%. That means that 85 cents of every dollar received in premiums must be paid out in claims. The reason these plans continue to increase in cost every year is that the insurance carriers are paying higher than that due to the rising cost of health care. 2) The average health share pays out less than 20% in claims compared to membership fees received. This is almost the exact opposite of the ACA. However, if you never need any service, then the lower monthly fees seem very reasonable. There are 2 categories of people that I talk to regarding Health Shares (even those that are religious-based) A) those who have been burned by them and will never trust them again, and B) those that have not had a large claim and have saved a significant amount over the years in monthly fees. All of that to say – my suggestion is to proceed with caution, if at all. These are the highest risk of all available options.

  19. Good questions, Dave. I will separate the different ones in separate comments for clarity. Unfortunately, experiencing a major medical cost is NOT a qualifying event to get on an ACA plan. In general, the two most common qualifying events are 1) if you lose coverage (loss of job, changing residence locations where you old plan doesn’t work) and 2) if your family grows (birth, adoption, marriage, etc.) or shrinks (death, divorce, dependents aging out) thereby affecting your responsibilities.

    1. I thought perhaps “loss of job” aka retirement might be one qualifier :). Was also wondering if “loss of health ins” (since technically health share is not insurance) might qualify. So if that is the case, then the risk is riding out until regular enrollment? Would ACA insurance then pick up the medical bills as of enrollment?

      Thanks for the feedback.

      1. Yes – loss of job, including retirement fits that first category. Losing a private plan or a health share will not qualify, as they do not meet the government’s definition of “insurance.” The ACA does not have any pre-existing requirements, but it will not cover any expenses incurred before the start date. For instance, if you have a heart attack this Dec 30, then any expenses (ambulance, ER, operating room, hospital fees, surgeons, nursing staff, anesthesia, etc.) will not be covered on the ACA plan for the 2023 calendar year. If you are still in the hospital from that when the new year rolls over, then any costs from midnight, Jan 1 will be covered on the new plan, but the expenses before that period will not be covered. The key here is the difference between “enrollment date” and “in-force date.” Even if you enroll on November 1, there will be no coverage until January 1.

        1. One exclusion and one note to mention… deciding that your COBRA is too expensive after a few months and want to drop off is NOT a qualifying event.

          NOTE: there is a 60 day window to sign up for an ACA plan based on a qualifying event. When that window closes (and I had one that missed it by a single day recently), the ACA is not available until Open Enrollment Period (OEP). Short Term plans and Private plans are the options to get you to the next OEP – if an ACA plan is the best solution for you based on your situation.

  20. Dave – your question 2 – options to jump on a traditional medical insurance plan. Solution 1) ACA plans are available for you during the OEP (Open Enrollment Period) Nov 1 – Dec 15 every year for the following calendar year (most popular). Solution 2) Private plans are available in all states, but not all of them are close to “major medical.” Depending on your state of residence, some great options could be available. There are great ones and awful ones, which is why there is a range in the quick reference chart included in the article. Most of these are PPO options that allow access to most choice providers and facilities. Solution 3) Group plans are available for small businesses. Depending on the state of residence, the requirements are 2-3 employees, including owners. In TX, you need a group of 2, which can be related. An example of one of my clients is a couple that likes to go antiquing and sells some things on eBay. Because they utilize an S-Corp as a co-owned business as that couple, they qualify for group coverage as just the two of them. They are on a Blue Cross Blue Shield PPO and quite happy.

  21. This is for me one of the best discussions on the site. It is instructive to share just how hard and confusing health care coverage can be. Folks arguably spend much more time working through the nuances of when and how to get to day 1 of retirement. As a doctor, I was always saddened to see how the insurance maze that Travis is explaining was trapping so many families. Our family was fortunate, but the complexity of health coverage seems to keep us worried as we never know when something will “change”. This worry will never go away until policymakers come up with a workable solution to cover heath as a right, not a luxury.

    1. Howdy Quentin. The complexity of health coverage seems to be getting worse instead of better. Even the ACA plans are getting more and more specific in order to try to manage their premiums within the governmental guidelines. We do need change, but I have found that we need to be careful what we wish for… not all change is good change. Thank you for your input.

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