If you're on a FIRE path, what are your plans for healthcare? If you're based in the US or anywhere where you need to contribute wholly or in part to your medical insurance, this is a critical topic. We'd love to hear from you. Be sure to check out the show notes for links to several resources we mentioned: twosidesoffi.com/healthcare/
People make it much more complicated than it really is. Most people work and most employers offer insurance as a benefit with low premiums. As far as Trump goes, employment under his administration was the highest in history for all Americans (especially minorities), meaning most Americans then had employer sponsored health insurance.
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.
Yup exactly. I was considering retiring out of the US and one factor was healthcare costs. This video has absolutely confirmed that I will never retire here just on healthcare alone now.
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.
@@u3vs62cja I'm just issuing a warning to Brits not to rely on the state to look after you when you need looking after in old age. Residential care cost my mum £861 per week in 2018.
Living in the UK doesn't mean you don't have to worry about healthcare. While it is true we don't have to worry about paying for treatment, access to timely treatment for non-urgent procedures (knees, hips, etc) is very poor and you can wait up to 18 months to get your 'free' (not really we pay high taxes for it) treatment. I think private medical insurance, which I and many have through an employer may become an expense one must plan for in retirement. Great video by the way.
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.
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.
Thanks for the comment. They concern us a lot and we suggested that in the show notes as well, and linked the recent John Oliver piece too. We recognize the allure of them and understand why people might think they are sufficient. But they are definitely not something we endorse or recommend.
@@TwoSidesOfFI 100%. Appreciate you and the team handling the conversation responsibly. A few years ago I recall many FI related sites/podcasts recommending them, so it's good to see the conversation around something so important (your health) managed responsibly.
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.
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.
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.
@Neil Stewart Jason here - when I was on a COBRA plan my premium for a Silver tier plan was about $1600 monthly for my family of three. I've now signed up for an ACA Bronze plan for 2022 and based on our income, it seems we will have substantial subsidy available to us dropping that cost to roughly 10% of the prior year.
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.
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.
You estimate your income fir the coming year. When you file taxes for that year, the “true up” occurs. Any overpaid subsidy is deducted from your tax refund, any underpaid subsidy is added to your tax refund.
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.
Geez the prices they started giving for health insurance is more than I pay in taxes a year in Canada. The healthcare system in the US is so confusing.
We don’t disagree. We didn’t get deep into ACA subsidies, but there is some good news. Many families qualify for these and for FIRE adherents, you can manage your income to stay within limits.
@@TwoSidesOfFI Glad to hear that the subsidies are available. But I fear that a lot of people just refuse to deal with it because it's so confusing and just opt out of seeing a doctor because of it. You two are doing a great job, keep it up.
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.
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.
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 😂
Look into if your prescription drugs are offered in Mark Cuban's Cost Plus Pharmacy. I take four daily meds. I am able to get all at Cost Plus. It is very affordable for me. I get all four meds, each a 90 day supply, for under $40 total.
Wow… you may have just saved me a lot of money! I believe we’re eligible for our own, not employer, HSA. Also the part Medicare ABD info was very good. I wish we knew people in real life reaching FI without a pension. We have no one to talk to about this stuff. Thanks. Your my virtual FI friends and I appreciate you. 😘
That's great, Patricia! We're so glad to learn this was useful for you. There certainly is a lot to unpack when it comes to health insurance. Best wishes to you!
24:40 "Go ahead, I'll remember it." Okay, great Jason; I'm glad someone will remember all of this info. 😄 Phew! It's overwhelming. A great episode to watch more than once. Thanks for the content!
This was a fantastic episode and one I listened to twice already. Thank you for the detail and I look forward to the next episode. I use Pocketcast and am not sure how to rate the Podcast there. Great information guys, keep it coming. Very motivating.
Thanks so much, Russ! We really appreciate it. If you have an AppleID you can leave a review at this link. If not, no worries! We appreciate the feedback here. podcasts.apple.com/us/podcast/two-sides-of-fi/id1560745986
Anyone who can retire early by definition has substantial assets. Those assets are at risk without insurance - a cancer diagnosis can cost a quarter million dollars and if you are lucky you get cured. If you are terminal then I guess money won't matter much because the retirement will be very short. Point is, in the USA the insurance industry has a grip on healthcare and it's pretty much mandatory. Self-insurance is only for the very wealthy.
Thank you both, and your guest, on a very informative video. This is very important to anyone on a FI Path. I appreciate the vlogs that you guys produce. Keep up the good work,
Another great discussion. 👍😎👍. Note that the HSA contribution limits are slightly different under COBRA. The limits are prorated for the last partial calendar year that you’re covered under COBRA. For most, COBRA is limited to 18 months. If you left employment in January, the COBRA clock uses 11 months the first year. This means you have 12 months of (11+1) of HSA contribution eligibility the first year. But the second year you only have 7 more months of HSA contribution eligibility and you must limit your contributions accordingly. Check out the IRS rules for clarification. Don’t over contribute as you’ll have to take it back out and the HSA custodian will likely not be helpful. Hope that helps someone.
High income healthy Americans are triple subsiding others. And that isn’t just 3:1. It can be 30:1 or higher. Healthy always subsidize others so that isn’t special for Americans. With intro of ACA, high income subsidizes low income. And while this is slowly changing, Americans subsidize the world on healthcare R&D. It is a no opt out subsidy on a massive scale. This is rarely acknowledged when people express shock or frustration with American healthcare costs.
Add to this subsidy scale that ACA was not truly design to address cost of care, regardless of its fancy title. It was almost entirely focused on coverage of care. So costs continue to scale up and now we cover so many people at low to no contribution. Do the math on what that means to premiums and plan design including OOP max for anyone paying unsubsidized ACA. That is not a political statement but a math one.
Well none of these work for me. 32 years in law enforcement and got great pension, but very expensive health insurance. County give me 600 a month to pay for insurance, but the plans are super expensive. My plan for a family is 2400 a month with a 6000 deduction. Tried Obamacare but I make to much on my pension. Cobra was more then the plans and I would not get the 600 a month if I used Cobra. I do use an HSA to pay for medical stuff and write all the premiums off at end of year so its not so painful. Only choice till 65 is for me to get a job with benefits or just go without medical and use free clinic down the street. Aint America grand!
@@amylee9 got a little good news, the county is moving the retirees back into the county employee pool on Jan 1, 24. This should reduce rates because the risk pool for retirees goes way down. If I let go of the retirees meds I will lose the 700 month that I could put towards Medicare part B and supplemental, thats why I stay on it, have 3 more years till Medicare.
This was a great podcast. Very good info. As side note I just do a plan with my dentist, mange my income to max tax subsidized Obama plan and have been saving in HSA for years
I had a low deductible ($2500) plan this year through my wife's retirement organization. We spent over $13K on premiums and then of course the deductible which I finally hit in October. So out of pocket was $15.5k. Next year I am going for a high deducible plan ($8k) with much lower premiums - worst case spend is still in the $15K range but it's now the worst case instead of the typical case. If I stay healthy I will spend less, if I don't then the maximum out of pocket is about the same as this year. (for context I retired early in 2019 at 57).
Quite litterally, HC costs and how to manage, was the number 1 thing holding me back from leaving my employer and deciding to FIRE. I now have a plan, but it still weighs on both my wife and I. Our plan, my wife has PPO though her teacher pension. I can go on her plan but will have to pay about $700/month as a dependent. Our plan is for me to do 18 Months of COBRA on my current employer plan at about $600/month then move over to her plan when COBRA runs out. Not sure if this is right, but it's what we decided on for now
@@adavid2548 interesting ill have to take a look at our ACA. My cobra ppo is quite good fully covering prescriptions at 100% which is what is making me lean that way near term. My scripts for type 1 diabetes run in about the $15k/ year range without coverage
@@ariefraiser140 $643/month but this is a single premium as my wife is on her own plan with her pension. I think my cobra is likely reasonable rate as my old company is one of the largest in the world. I suspect they’ve been able to negotiate rates down in scale
health care cost and the whole health care insurance industry is sooooo complicated in the US. Providers can rarely tell you how much things cost beforehand because, not only do they not know what procedures may be needed, but they have to go ask the insurance company as it is them that hold half the info. I always believed that (basic) health care should fall into one of the things we should all pay as a society (universal health care or whatever). Mainly because I never liked to tie my health coverage to needing to work. But yeah, from a financial point, things are just going to go up more.
This is the main reason (there are several) why we’re going to retire to a country overseas. Just about every other country has this figured out outside of the US.
One more observation... I live south of Seattle, and the State of Washington just passed a law requiring employers to with-hold a percentage of a person's paycheck for long term care. Many think its a scam, because it only covers you if you retire in the State of Washington. If I was to move to Arizona, or Florida for retirement, I would lose all the benefits.
Then let's make it federal, or let's do universal healthcare with some long-term care options. We're all going to be paying either way, since everyone will need some kind of healthcare eventually.
Indeed. One can only wonder how long it will be before substantive changes comes. ACA was a positive step but there is seemingly much more that can be brought to bear to improve things for all.
By being outside the US for 6 months or more a year “slow traveling” we are able to save over 50% on health care premium costs with a high deductible plan, keep the primary care doc we like in the US, and max out our HSAs with the savings on premiums. We’re not going for another residency in another country at the moment to minimize tax complexity while we do our Roth conversions.
@@amylee9 A global health insurance plan like Cigna Global is a one-year plan. It covers you in the US (any state) up to six months a year and six months overseas.
Curious about Jason’s comment about comparing the non-subsidized premium of the covered California silver plan to Cobra. My understanding is you use Adjusted Gross Income (AGI) when applying for the plan to determine the cost, which for someone in the retirement phase should really just be investment income, I.e. cap gains and dividends. (See the “what counts as income” page on covered California) So hypothetically if you lived on 100k in a given year which you got from the sale of stock for which your basis was 50k - doesn’t that mean your AGI is at 50k? That would be well within the range to get subsidized coverage where the silver plan in CA works out to something like $230 per month. Why are you estimating such a high premium? Am I missing something? Thanks!
Jason here - Great question, Jeremy. I actually had some deferred comp that paid out this year and that meant I would have been non-subsidized under an ACA plan in 2021. Different situation in 2022 when I move to an ACA plan!
Sorry to reply to this old post, but that is not true. The aca income caps for subsidy were eliminated for 2021 and 2022 with passage of the American rescue plan. Unfortunately if one spouse still has work coverage it doesn’t apply but for last year and this year it is based on your magi. Silver Plan coverage will cost no more than 8.5% of magi regardless of income. It was supposed to be made permanent with the build back better but sounds like that may be dead in the water now
It is not based on prior years. It is based on expected earnings for the upcoming year. I underestimated my earning for 2019 and received a $3,600 annual credit. I had to repay this and interest. I'm not sure if it matters, but I am a Georgia resident.
You hit the dreaded reimbursement "cliff" which was in play back in 2019. It was suspended for tax year 2020 (Pandemic) and new reimbursement rules are now in place for tax years 2021/2022 that are much more favorable than 2019 so be sure to check out the new guidelines as you'll probably like them.
ACA is federal so it should apply the same in each state. When you repay the credit it goes to the federal government because that’s where you got the subsidy.
Another great discussion / great video. thank you for putting together all this good info. Jason, I'm interested in your perspective on this question... Now that you are retired, and you have hindsight perspective, do you think it would be worth putting off retirement until a person reaches 65 so they can take full advantage of Medicare and also take the full benefits of employer subsidized Health Care ? Or would you say the benefits of early retirement more than outweigh Medical insurance and other costs ? Also, if I may ask, would you say that your expenses, or " Cost of Living " is higher now that you are retired ?
Jason here - Thanks very much! Great question. For me I wouldn't choose to defer. That would be an additional 18 years beyond when I wanted to (and did) leave the workplace. My initial health insurance costs post-FIRE were higher due to income. They will be lower starting in 2022 and I may well be eligible for subsidy (my application is in process). Irrespective of all that, my FIRE budget assumed no subsidy at all (worst case) so I have planned for this expense. For me, the benefits of early retirement do more than outweigh insurance and other costs. My cost of living is now lower than pre-FIRE, but much of that is driven by my lower housing costs.
0 chance I'm retiring in the US if this complication still exists by the time I"m retiring. I already live outside the US, and not dealing with this healthcare insurance stuff in the US is a top 3 reason why.
For ACA in my state your premiums are based on what your ESTIMATED MAGI is going to be in the coming year. But do not go over it by 1 dollar or you lose all your stipends/tax credits. So for us, every Nov when you sign up/renew, you have to estimate what you will have as MAGI. Now that includes any tax exempt bonds and capital gains on non retirement accounts. So if you have 5000K in a non retirement cap gain ( even if you don't take it out ) you add that in. After that it is strictly what you take off investments or IRAs, etc. so if you claim 40K estimated income next year, you then get a quote of X dollars for whatever plan you want. If you come in under that come tax filing time the following year, great. You owe no tax penalty or pay back. If you actually have 40001 dollars in MAGI you have to pay any stipends back. Big tax hit that year.
Bob, I would like to speak with you directly to learn more. Do you have an email address that I can send to or some other method you prefer? I would appreciate the chance to understand this more fully. I retired last month and I am on cobra now due to some surgery to complete as my deductible is paid for the year.Thank you, Rich
Not true - if your estimate is off and your actual income was higher you only pay the difference in the subsidy between the estimated and actual income. Likewise, if your actual income was lower you get a refund.
@@TwoSidesOfFI We hope! Universal healthcare should be a basic human right. In the meantime, glad that you guys can help make sure people have this covered off.
It depends on your income. Many people qualify for subsidies, sometimes paying little to nothing for premiums. There are calculators on healthcare.gov or it will direct you to your state exchange if you have one.
Jason, just S of you 35 minutes in rural AG. You mentioned you are currently on COBRa. Reached FI a few years back and I’m 18 months from the RE stage and will be 55, how long does CoBRa window stay open for those of us in CA that pull our own parachute cord versus the company pushing us out? I have excellent coverage but want to know how long I can utilize COBRA. It’s confusing when I look online and try to figure CA Cobra vs Fed cobra, volunteer departure versus forced departure etc.
Jason here - Hi Shawn! I believe it's still 18 months unless you have mitigating circumstances in which case it can be extended. You have a limited window in which you can sign up after term date. Memory suggests it's 30 days but your HR department will know. I separated voluntarily as well. Best wishes to you!
Thank you Jason. Enjoying the videos immensely and most of my friends and colleague aren’t in the same position or mindset so I’m operating a bit on an island. Good to know you’re on the same SLO County island as I am and I can benefit from your experience. The FI part is easy since it’s a mathematical calculation, the RE part is actually the bigger challenge since it’s all emotional uncertainty after so many years of focusing on the financial objectives.
exchange in MA was 500/month for 5000 Deductible and 20% copay Im afraid unless you are a govt employee "affordable healthcare plans" all expired Jan 2001
As a European citizen, I live in a different FI universe. My wage is lower; I probably pay more taxes. But hey, my healthcare expenses are close to none.
Jason here - 100% in agreement, Gustav. Yours is the first of a number of comments I expect like this. One of the benefits of my career was having international team members and frequent opportunity to travel + talk with them. That helped me understand clearly what the tradeoffs were when it comes to salary, benefits, and overall lifestyle by country. Like many on a FIRE path, my "where to live" questions are certainly influenced by healthcare cost, quality, and availability. As such we still may well elect to leave the US at some point. Best wishes to you.
@@CT-lo9ot oh I totally agree with you as an American who has lived most of their life in Europe the thought of coming back to the US is financially frightening! I signed up for medicare A and B and the amount I owe the government every month annoys me because I still have to pay a deductible! Why don't you want health care for all is beyond me!
@@TwoSidesOfFI Yes, my mom is Canadian, but I live and work in Sacramento. I have seen a lot of old folks end up homeless in California due to divorce rape, foreclosures, or medical bills. I am saving every penny for FIRE retirement in Vancouver.
I might have missed it, but I'm most curious about how passive income affects ACA plans. For example, I might have 2 million in liquid assets, but if I don't sell anything and only have $40k in dividends as my only source of income, did ACA care about my $2 million? Or do they just see me as having $40k income?
We're not familiar with every state's plan but it's generally income. But this also includes income in investment accounts via dividends, interest, and any gains taken from rebalancing or otherwise.
Where I live you can not make over $59,000 in income. Your total assets do not matter. I think it is line # 27 on your tax return that has to be below $59,000. The further below $59,000 the more subsidy. If the next year you go over $59,000 then you have to pay the subsidy back.
Insurance companies pay the bill. Hospitals generate the bills. How can a simple knee replacement cost $54,000. It's time the hospital's sell insurance . Or it's time insurance companies own their own hospital. Then cost will come down.
If you read the billing statement carefully, you will see a markdown/discount on the billed cost. My broken hip was billed at $30K but the insurance company ended up paying $3K after their discount. That's why you have to get insurance.
The system is screwed. No checks and balances. Zero cost control . Why would they? Hospital charges, insurance covers and you pay. No incentive to keep cost down. The higher the better. In Germany your op would cost 80 % less at better quality .
Stay tuned. We will be doing a follow up episode where we talk more about topics like ACA subsidies. These are often a great way to purchase insurance for a far lower price!
Lifting a line from the free software movement, that use of "free" refers to free as in speech, not free as in beer. That said, healthcare is always paid for somehow, and generally by taxation.
![Math for Game Devs [2022, part 1] • Numbers, Vectors & Dot Product](http://i.ytimg.com/vi/fjOdtSu4Lm4/mqdefault.jpg)
![Math for Game Devs [2022, part 1] • Numbers, Vectors & Dot Product](/img/tr.png)
If you're on a FIRE path, what are your plans for healthcare? If you're based in the US or anywhere where you need to contribute wholly or in part to your medical insurance, this is a critical topic. We'd love to hear from you. Be sure to check out the show notes for links to several resources we mentioned: twosidesoffi.com/healthcare/
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.
Thank God I live in Canada. I love my healthcare. 67 years old and have lived here all my life.
Republican Trump lovers take note 😂
People make it much more complicated than it really is. Most people work and most employers offer insurance as a benefit with low premiums. As far as Trump goes, employment under his administration was the highest in history for all Americans (especially minorities), meaning most Americans then had employer sponsored health insurance.
@@catchristo9406 What was the name of the planet you live on? 🤔
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.
The arbitrage is to make money in the US and retire elsewhere.
No kidding. It's a terrible place to retire.
Yup exactly. I was considering retiring out of the US and one factor was healthcare costs. This video has absolutely confirmed that I will never retire here just on healthcare alone now.
Which is exactly what we are doing. We’re getting out of this corrupt insanity.
Every person who is considering FIRE should support legislation towards universal health care.
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.
No disagreement here with respect to healthcare
I just feel lucky to live in the UK where I don't have to worry at all about healthcare.
My mum and I live in the UK and we had to pay Aviva about £146,000 for an annuity to pay for care fees for my mum for the rest of her life!
@@mikeroyce8926 Ok well that's an annuity, and I'm not sure I'd put caring in exactly the same box as hospital treatment and surgery etc
@@u3vs62cja I'm just issuing a warning to Brits not to rely on the state to look after you when you need looking after in old age. Residential care cost my mum £861 per week in 2018.
Living in the UK doesn't mean you don't have to worry about healthcare. While it is true we don't have to worry about paying for treatment, access to timely treatment for non-urgent procedures (knees, hips, etc) is very poor and you can wait up to 18 months to get your 'free' (not really we pay high taxes for it) treatment. I think private medical insurance, which I and many have through an employer may become an expense one must plan for in retirement. Great video by the way.
@@jcm9356 that’s true. Let’s hope we don’t need it
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.
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.
Thanks for the comment. They concern us a lot and we suggested that in the show notes as well, and linked the recent John Oliver piece too. We recognize the allure of them and understand why people might think they are sufficient. But they are definitely not something we endorse or recommend.
@@TwoSidesOfFI 100%. Appreciate you and the team handling the conversation responsibly. A few years ago I recall many FI related sites/podcasts recommending them, so it's good to see the conversation around something so important (your health) managed responsibly.
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.
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.
Thanks for the tip, Darren. I hadn't heard that before.
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.
Thanks, Katherine! We're so glad you found it helpful. Best wishes to you
@Neil Stewart Jason here - when I was on a COBRA plan my premium for a Silver tier plan was about $1600 monthly for my family of three. I've now signed up for an ACA Bronze plan for 2022 and based on our income, it seems we will have substantial subsidy available to us dropping that cost to roughly 10% of the prior year.
Thank you so much for this excellent information! If you guys keep producing quality like this your channel is going to be huge!
Thank you, Carol! We really appreciate your optimism and support for our little channel.
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.
Thanks, Matthew! We appreciate the feedback. We totally agree - Amy is great and so knowledgable. Best wishes to you.
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.
You estimate your income fir the coming year. When you file taxes for that year, the “true up” occurs. Any overpaid subsidy is deducted from your tax refund, any underpaid subsidy is added to your tax refund.
@@tobirates916 This is correct Tobi; did a bunch of research into this last year.
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.
Geez the prices they started giving for health insurance is more than I pay in taxes a year in Canada. The healthcare system in the US is so confusing.
We don’t disagree. We didn’t get deep into ACA subsidies, but there is some good news. Many families qualify for these and for FIRE adherents, you can manage your income to stay within limits.
@@TwoSidesOfFI Glad to hear that the subsidies are available. But I fear that a lot of people just refuse to deal with it because it's so confusing and just opt out of seeing a doctor because of it. You two are doing a great job, keep it up.
@@madman3891 I think that's a valid fear. Thanks very much!
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.
Thanks very much, Jim! We really appreciate the feedback and your excellent suggestion.
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.
Another excellent episode and your guest is fantastic.
Amazing episode! So informative and an important topic that I sadly hadn't learned enough about yet!
Thank you, Cyrus
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 😂
The insurance companies are loving you guys!
Look into if your prescription drugs are offered in Mark Cuban's Cost Plus Pharmacy. I take four daily meds. I am able to get all at Cost Plus. It is very affordable for me. I get all four meds, each a 90 day supply, for under $40 total.
Thanks for sharing, Steve! Glad to hear you found something that works well for you
Wow… you may have just saved me a lot of money! I believe we’re eligible for our own, not employer, HSA. Also the part Medicare ABD info was very good. I wish we knew people in real life reaching FI without a pension. We have no one to talk to about this stuff. Thanks. Your my virtual FI friends and I appreciate you. 😘
That's great, Patricia! We're so glad to learn this was useful for you. There certainly is a lot to unpack when it comes to health insurance. Best wishes to you!
24:40 "Go ahead, I'll remember it."
Okay, great Jason; I'm glad someone will remember all of this info. 😄 Phew! It's overwhelming. A great episode to watch more than once. Thanks for the content!
Thanks very much, Karla! Stay tuned as we're going to be doing a healthcare follow up ep before too long...
This was a fantastic episode and one I listened to twice already. Thank you for the detail and I look forward to the next episode. I use Pocketcast and am not sure how to rate the Podcast there. Great information guys, keep it coming. Very motivating.
Thanks so much, Russ! We really appreciate it. If you have an AppleID you can leave a review at this link. If not, no worries! We appreciate the feedback here. podcasts.apple.com/us/podcast/two-sides-of-fi/id1560745986
Anyone who can retire early by definition has substantial assets. Those assets are at risk without insurance - a cancer diagnosis can cost a quarter million dollars and if you are lucky you get cured. If you are terminal then I guess money won't matter much because the retirement will be very short. Point is, in the USA the insurance industry has a grip on healthcare and it's pretty much mandatory. Self-insurance is only for the very wealthy.
It will matter for a surviving spouse.
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.
That sigh at the 23 minute mark is all of us. This is ridiculous. Lol. Seriously though; this was a great conversation.
Yep! Thanks, glad you enjoyed it.
Thank you both, and your guest, on a very informative video. This is very important to anyone on a FI Path.
I appreciate the vlogs that you guys produce. Keep up the good work,
Thank you, Glenn! It's our pleasure. We're really glad that you find out content useful.
Another great discussion. 👍😎👍. Note that the HSA contribution limits are slightly different under COBRA. The limits are prorated for the last partial calendar year that you’re covered under COBRA. For most, COBRA is limited to 18 months. If you left employment in January, the COBRA clock uses 11 months the first year. This means you have 12 months of (11+1) of HSA contribution eligibility the first year. But the second year you only have 7 more months of HSA contribution eligibility and you must limit your contributions accordingly. Check out the IRS rules for clarification. Don’t over contribute as you’ll have to take it back out and the HSA custodian will likely not be helpful. Hope that helps someone.
Thanks for sharing that, Joel!
High income healthy Americans are triple subsiding others. And that isn’t just 3:1. It can be 30:1 or higher. Healthy always subsidize others so that isn’t special for Americans. With intro of ACA, high income subsidizes low income. And while this is slowly changing, Americans subsidize the world on healthcare R&D. It is a no opt out subsidy on a massive scale. This is rarely acknowledged when people express shock or frustration with American healthcare costs.
Add to this subsidy scale that ACA was not truly design to address cost of care, regardless of its fancy title. It was almost entirely focused on coverage of care. So costs continue to scale up and now we cover so many people at low to no contribution. Do the math on what that means to premiums and plan design including OOP max for anyone paying unsubsidized ACA. That is not a political statement but a math one.
Doctors insurance is the biggest cost driver as Americans sue like there is no tomorrow and get millions awarded
Well none of these work for me. 32 years in law enforcement and got great pension, but very expensive health insurance. County give me 600 a month to pay for insurance, but the plans are super expensive. My plan for a family is 2400 a month with a 6000 deduction. Tried Obamacare but I make to much on my pension. Cobra was more then the plans and I would not get the 600 a month if I used Cobra. I do use an HSA to pay for medical stuff and write all the premiums off at end of year so its not so painful. Only choice till 65 is for me to get a job with benefits or just go without medical and use free clinic down the street. Aint America grand!
Here's to hoping our options improve, Robert! Best wishes to you
I feel for you. Same for us....but don't go without medical. A car accident or a cancer diagnosis and your entire life savings will vanish.
@@amylee9 got a little good news, the county is moving the retirees back into the county employee pool on Jan 1, 24. This should reduce rates because the risk pool for retirees goes way down. If I let go of the retirees meds I will lose the 700 month that I could put towards Medicare part B and supplemental, thats why I stay on it, have 3 more years till Medicare.
This was a great podcast. Very good info. As side note I just do a plan with my dentist, mange my income to max tax subsidized Obama plan and have been saving in HSA for years
Thank you! So glad you liked it.
I had a low deductible ($2500) plan this year through my wife's retirement organization. We spent over $13K on premiums and then of course the deductible which I finally hit in October. So out of pocket was $15.5k. Next year I am going for a high deducible plan ($8k) with much lower premiums - worst case spend is still in the $15K range but it's now the worst case instead of the typical case. If I stay healthy I will spend less, if I don't then the maximum out of pocket is about the same as this year. (for context I retired early in 2019 at 57).
Quite litterally, HC costs and how to manage, was the number 1 thing holding me back from leaving my employer and deciding to FIRE. I now have a plan, but it still weighs on both my wife and I. Our plan, my wife has PPO though her teacher pension. I can go on her plan but will have to pay about $700/month as a dependent. Our plan is for me to do 18 Months of COBRA on my current employer plan at about $600/month then move over to her plan when COBRA runs out. Not sure if this is right, but it's what we decided on for now
Wow. ACA in my state with zero subsidies (dont qualify) platinum PPO is $560 per person
@@adavid2548 interesting ill have to take a look at our ACA. My cobra ppo is quite good fully covering prescriptions at 100% which is what is making me lean that way near term. My scripts for type 1 diabetes run in about the $15k/ year range without coverage
I'm thinking Cobra will be significantly more than $600/month. Likely double that.
@@ariefraiser140 $643/month but this is a single premium as my wife is on her own plan with her pension. I think my cobra is likely reasonable rate as my old company is one of the largest in the world. I suspect they’ve been able to negotiate rates down in scale
Great topic- thanks for doing this. Very informative.
health care cost and the whole health care insurance industry is sooooo complicated in the US. Providers can rarely tell you how much things cost beforehand because, not only do they not know what procedures may be needed, but they have to go ask the insurance company as it is them that hold half the info. I always believed that (basic) health care should fall into one of the things we should all pay as a society (universal health care or whatever). Mainly because I never liked to tie my health coverage to needing to work. But yeah, from a financial point, things are just going to go up more.
All good observations, Alan...updated episode coming soon where we discuss ACA and FIRE topics...
Cheers!
This is the main reason (there are several) why we’re going to retire to a country overseas. Just about every other country has this figured out outside of the US.
do you recommend a country to go to?
One more observation... I live south of Seattle, and the State of Washington just passed a law requiring employers to with-hold a percentage of a person's paycheck for long term care. Many think its a scam, because it only covers you if you retire in the State of Washington. If I was to move to Arizona, or Florida for retirement, I would lose all the benefits.
If New York did that I would probably move out of state.
Then let's make it federal, or let's do universal healthcare with some long-term care options. We're all going to be paying either way, since everyone will need some kind of healthcare eventually.
This was great. Thank you.
Our health insurance system is so broken. The costs are just so ridiculous and the companies will fight covering everything.
Indeed. One can only wonder how long it will be before substantive changes comes. ACA was a positive step but there is seemingly much more that can be brought to bear to improve things for all.
By being outside the US for 6 months or more a year “slow traveling” we are able to save over 50% on health care premium costs with a high deductible plan, keep the primary care doc we like in the US, and max out our HSAs with the savings on premiums. We’re not going for another residency in another country at the moment to minimize tax complexity while we do our Roth conversions.
how do you pick a plan for only 6 months in the US? most plans run for the year....
@@amylee9 A global health insurance plan like Cigna Global is a one-year plan. It covers you in the US (any state) up to six months a year and six months overseas.
Curious about Jason’s comment about comparing the non-subsidized premium of the covered California silver plan to Cobra. My understanding is you use Adjusted Gross Income (AGI) when applying for the plan to determine the cost, which for someone in the retirement phase should really just be investment income, I.e. cap gains and dividends. (See the “what counts as income” page on covered California) So hypothetically if you lived on 100k in a given year which you got from the sale of stock for which your basis was 50k - doesn’t that mean your AGI is at 50k? That would be well within the range to get subsidized coverage where the silver plan in CA works out to something like $230 per month. Why are you estimating such a high premium? Am I missing something? Thanks!
Jason here - Great question, Jeremy. I actually had some deferred comp that paid out this year and that meant I would have been non-subsidized under an ACA plan in 2021. Different situation in 2022 when I move to an ACA plan!
Sorry to reply to this old post, but that is not true. The aca income caps for subsidy were eliminated for 2021 and 2022 with passage of the American rescue plan. Unfortunately if one spouse still has work coverage it doesn’t apply but for last year and this year it is based on your magi. Silver
Plan coverage will cost no more than 8.5% of magi regardless of income. It was supposed to be made permanent with the build back better but sounds like that may be dead in the water now
@@johnwunderlin4067 Now it's through 2025
Wow, I can't believe those HC costs. Thankfully I have the VA
It is not based on prior years. It is based on expected earnings for the upcoming year. I underestimated my earning for 2019 and received a $3,600 annual credit. I had to repay this and interest. I'm not sure if it matters, but I am a Georgia resident.
Thanks for sharing.It’s the same in CA as well. Also not sure if it varies by state exchange but it’s good to have another confirmation.
You hit the dreaded reimbursement "cliff" which was in play back in 2019. It was suspended for tax year 2020 (Pandemic) and new reimbursement rules are now in place for tax years 2021/2022 that are much more favorable than 2019 so be sure to check out the new guidelines as you'll probably like them.
ACA is federal so it should apply the same in each state. When you repay the credit it goes to the federal government because that’s where you got the subsidy.
Gracias por compartir su experiencia!
Another great discussion / great video. thank you for putting together all this good info. Jason, I'm interested in your perspective on this question... Now that you are retired, and you have hindsight perspective, do you think it would be worth putting off retirement until a person reaches 65 so they can take full advantage of Medicare and also take the full benefits of employer subsidized Health Care ? Or would you say the benefits of early retirement more than outweigh Medical insurance and other costs ? Also, if I may ask, would you say that your expenses, or " Cost of Living " is higher now that you are retired ?
Jason here - Thanks very much! Great question. For me I wouldn't choose to defer. That would be an additional 18 years beyond when I wanted to (and did) leave the workplace. My initial health insurance costs post-FIRE were higher due to income. They will be lower starting in 2022 and I may well be eligible for subsidy (my application is in process). Irrespective of all that, my FIRE budget assumed no subsidy at all (worst case) so I have planned for this expense. For me, the benefits of early retirement do more than outweigh insurance and other costs. My cost of living is now lower than pre-FIRE, but much of that is driven by my lower housing costs.
0 chance I'm retiring in the US if this complication still exists by the time I"m retiring. I already live outside the US, and not dealing with this healthcare insurance stuff in the US is a top 3 reason why.
For ACA in my state your premiums are based on what your ESTIMATED MAGI is going to be in the coming year. But do not go over it by 1 dollar or you lose all your stipends/tax credits. So for us, every Nov when you sign up/renew, you have to estimate what you will have as MAGI. Now that includes any tax exempt bonds and capital gains on non retirement accounts. So if you have 5000K in a non retirement cap gain ( even if you don't take it out ) you add that in. After that it is strictly what you take off investments or IRAs, etc. so if you claim 40K estimated income next year, you then get a quote of X dollars for whatever plan you want. If you come in under that come tax filing time the following year, great. You owe no tax penalty or pay back. If you actually have 40001 dollars in MAGI you have to pay any stipends back. Big tax hit that year.
Great guidance, Bob. Thanks for sharing.
Bob, I would like to speak with you directly to learn more. Do you have an email address that I can send to or some other method you prefer? I would appreciate the chance to understand this more fully. I retired last month and I am on cobra now due to some surgery to complete as my deductible is paid for the year.Thank you, Rich
I don't believe you.
Not true. You just have to pay back the excess subsidy that you received.
Not true - if your estimate is off and your actual income was higher you only pay the difference in the subsidy between the estimated and actual income. Likewise, if your actual income was lower you get a refund.
+1 for not having to worry about this in Canada
Absolutely! Someday we’ll get onboard here…someday
@@TwoSidesOfFI We hope! Universal healthcare should be a basic human right. In the meantime, glad that you guys can help make sure people have this covered off.
I have healthcare through my small business. I’m 33 and my wife is 28. I pay about $430. Sounds like I’m going to get wrecked later
It depends on your income. Many people qualify for subsidies, sometimes paying little to nothing for premiums. There are calculators on healthcare.gov or it will direct you to your state exchange if you have one.
Great subject. Super relevant.
Thank you, Christopher!
Jason, just S of you 35 minutes in rural AG. You mentioned you are currently on COBRa. Reached FI a few years back and I’m 18 months from the RE stage and will be 55, how long does CoBRa window stay open for those of us in CA that pull our own parachute cord versus the company pushing us out? I have excellent coverage but want to know how long I can utilize COBRA. It’s confusing when I look online and try to figure CA Cobra vs Fed cobra, volunteer departure versus forced departure etc.
Jason here - Hi Shawn! I believe it's still 18 months unless you have mitigating circumstances in which case it can be extended. You have a limited window in which you can sign up after term date. Memory suggests it's 30 days but your HR department will know. I separated voluntarily as well. Best wishes to you!
Thank you Jason. Enjoying the videos immensely and most of my friends and colleague aren’t in the same position or mindset so I’m operating a bit on an island. Good to know you’re on the same SLO County island as I am and I can benefit from your experience. The FI part is easy since it’s a mathematical calculation, the RE part is actually the bigger challenge since it’s all emotional uncertainty after so many years of focusing on the financial objectives.
exchange in MA was 500/month for 5000 Deductible and 20% copay
Im afraid unless you are a govt employee "affordable healthcare plans" all expired Jan 2001
Is that unsubsidized?
@@TwoSidesOfFI Unsubsidised if you make > 26,400 / year
@@martingainty9623 I don't think this is correct. Even before the cliff was eliminated, anyone earning
As a European citizen, I live in a different FI universe.
My wage is lower; I probably pay more taxes. But hey, my healthcare expenses are close to none.
Jason here - 100% in agreement, Gustav. Yours is the first of a number of comments I expect like this. One of the benefits of my career was having international team members and frequent opportunity to travel + talk with them. That helped me understand clearly what the tradeoffs were when it comes to salary, benefits, and overall lifestyle by country. Like many on a FIRE path, my "where to live" questions are certainly influenced by healthcare cost, quality, and availability. As such we still may well elect to leave the US at some point. Best wishes to you.
This is why we need universal healthcare. I don’t know why so many Americans are against it.
@@CT-lo9ot oh I totally agree with you as an American who has lived most of their life in Europe the thought of coming back to the US is financially frightening! I signed up for medicare A and B and the amount I owe the government every month annoys me because I still have to pay a deductible! Why don't you want health care for all is beyond me!
1600 a month plus a 7000 deductible?! I'm going to look at how I can move to another country.
I'll retire in Vancouver. American health care is horrible.
This country doesn't treat the old folks well, so I'm gonna spend my nest egg in Canada.
Do you have citizenship or will you be seeking another path to qualify for healthcare benefits in Canada?
@@TwoSidesOfFI Yes, my mom is Canadian, but I live and work in Sacramento. I have seen a lot of old folks end up homeless in California due to divorce rape, foreclosures, or medical bills. I am saving every penny for FIRE retirement in Vancouver.
I bet our Doctors and nurses make more money.
Yep. And single payer would solve this whole problem. Glad I get to use the VA.
No disagreement here
I might have missed it, but I'm most curious about how passive income affects ACA plans. For example, I might have 2 million in liquid assets, but if I don't sell anything and only have $40k in dividends as my only source of income, did ACA care about my $2 million? Or do they just see me as having $40k income?
The ACA will use your "MAGI" (modified adjusted gross income) for that tax year. Your net worth does not come into play.
We're not familiar with every state's plan but it's generally income. But this also includes income in investment accounts via dividends, interest, and any gains taken from rebalancing or otherwise.
ACA eligibility does not vary by state. It is based on federal MAGI, adjusted gross income, slightly (for most) modified particularly for the ACA.
Where I live you can not make over $59,000 in income. Your total assets do not matter. I think it is line # 27 on your tax return that has to be below $59,000. The further below $59,000 the more subsidy. If the next year you go over $59,000 then you have to pay the subsidy back.
@@dannypowers4995 are you saying your state doesn't follow the
What if you change states in the middle of it or the covered persons live in 2 different states?
Great question! I’m not sure but my guess would be that usual residency rules come into play as with taxes. But it may differ by plan.
US Healthcare is crazy expensive 😳 Come to Australia..Mostly free
Indeed it is. Sounds good! But I don’t think it’s terribly easy for an American to live long term in Australia post-retirement, is it?
After watching this, I am so glad I live in Australia with our universal free healthcare. Geez
This chart....those figures are monthly???
Can you share a time stamp? There are a few different times where we show data in this episode. Thanks
That’s why I moved to Malaysia. Health care is nothing compared to the US , much better service.
Insurance companies pay the bill. Hospitals generate the bills. How can a simple knee replacement cost $54,000. It's time the hospital's sell insurance . Or it's time insurance companies own their own hospital. Then cost will come down.
That exists in some parts of the country. Typically it's an HMO. Kaiser Permanente is an example
If you read the billing statement carefully, you will see a markdown/discount on the billed cost. My broken hip was billed at $30K but the insurance company ended up paying $3K after their discount. That's why you have to get insurance.
The system is screwed. No checks and balances. Zero cost control . Why would they? Hospital charges, insurance covers and you pay. No incentive to keep cost down. The higher the better. In Germany your op would cost 80 % less at better quality .
Its a Non issue in CANADA Universal Health care BAMM!!!!!!!!!!!!!!!!!
ACA = Affordable Care Act
not
America Cares Act
Correct
Sounds like we have to work until 65
Stay tuned. We will be doing a follow up episode where we talk more about topics like ACA subsidies. These are often a great way to purchase insurance for a far lower price!
Land of the free 😂😂🤣🤣......NOT!
Lifting a line from the free software movement, that use of "free" refers to free as in speech, not free as in beer. That said, healthcare is always paid for somehow, and generally by taxation.