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If you've ever talked to anyone that has done FIRE or just retired a few years early, it's always health insurance. The current US system of healthcare via your

If you've ever talked to anyone that has done FIRE or just retired a few years early, it's always health insurance. The current US system of healthcare via your employer is a huge blocker to any kind of alternative lifestyle. Have to wait until 65 (or like 68 by the time most of us can retire)

lotsofpulp 5y ago
The current system is not healthcare via employer. Anyone can go to healthcare.gov and get the same insurance plans. The main benefit of employer purchased health insurance is that you buy with pre tax dollars.
- jorblumesea 5y ago
  Sorry, affordable healthcare. Sure, public plans exist, but most state exchanges are 2k a month. It's not the same, because the insurance pools are different. Check the coverage plans: https://www.wahbexchange.org/new-customers/coverage-basics/plans/#2021 https://www.wahbexchange.org/new-customers/coverage-basics/p... Except for a few situations, it's mostly bottom tier insurance pools. Meanwhile, my insurance PPO ranged from $0.0 month (high deductible) to max ~$50.
  - lotsofpulp 5y ago
    They are not that different in my experience. The same metal level plan on healthcare.gov are pretty similar to what employers will be offered by the insurance companies. There might be some savings for those working at white collar firms with younger employees like tech and finance and law, but that will not apply to most people in the US. Your portion of the insurance premium was $0 to $50 per pay period via your employer, but the cost of your insurance was still much higher, probably the same as healthcare.gov. Check code DD in box 12 of your W2 to see how much your employer paid, and you can compare the actual price of your health insurance. Edit: NJ puts out a nice document that anyone can estimate their premium for based on metal level and age. Note that $2k per month would be for family coverage of 2 old people, but for young people it would be a third. Also note that prices for young people are extra high due to subsidizing old people due to stipulations in ACA limiting premiums for old people to be 3x those of young people. See “age rating factors” box at bottom of pdf. https://www.nj.gov/dobi/division_insurance/ihcseh/ihcrates2021.pdf https://www.nj.gov/dobi/division_insurance/ihcseh/ihcrates20...
    - jorblumesea 5y ago
      They are significantly different if you see the plans and the network you're in. Just look at the costs for the plans I linked above. It's really not the same, or even close. Let's take one of the more popular plans on the exchange for Washington state. https://www.insurance.wa.gov/rates/bridgespan-health-company-2021-premiums https://www.insurance.wa.gov/rates/bridgespan-health-company... https://www.insurance.wa.gov/sites/default/files/2020-09/bridgespan-individual-health-rates-2021.pdf https://www.insurance.wa.gov/sites/default/files/2020-09/bri...
      - lotsofpulp 5y ago
        Those premiums look the same as those for employer sponsored health insurance: https://www.statista.com/statistics/632151/premiums-for-employer-sponsored-health-insurance-in-us-by-state/ https://www.statista.com/statistics/632151/premiums-for-empl... https://www.commonwealthfund.org/sites/default/files/2020-11/Collins_state_premium_trends_2020_Tables.pdf https://www.commonwealthfund.org/sites/default/files/2020-11... https://files.kff.org/attachment/Summary-of-Findings-Employer-Health-Benefits-2019 https://files.kff.org/attachment/Summary-of-Findings-Employe...
        jorblumesea 5y ago
        Those premiums are significantly above what corporate employees pay. My premiums at my current and last job were way below those figures. Keep in mind "private employers" is a huge bucket and would encompass a wide range of companies, including smaller companies with likely small budgets. It is not reflective of many of the benefits many SWEs would get.
        lotsofpulp 5y ago
        Again, I am talking about the total cost of insurance, not just the portion of the cost of insurance that an employer asks an employee to pay. Just because an employer is paying for $18k out of $20k of your annual health insurance premiums (again, check code DD box 12 of your W2), does not mean that health insurance costs (meaningfully) less for an employer. It is simply a portion of your total compensation, which both employer and employee prefer to go via the employer due to the ability to purchase it with pre tax money, hence an immediate savings of 30% on the insurance premium portion of one’s expenses. To go back to the root of this conversation, my purpose was to clarify that “healthcare via employer” is simply an artifact of the tax code and results in savings of tax rate * annual health insurance premiums.
- BeetleB 5y ago
  > The main benefit of employer purchased health insurance is that you buy with pre tax dollars. The main benefit is that my employer pays most of the premiums. As an example, I have a high deductible plan. The deductible is only about $3750/year. I pay 0 in premiums. The equivalent health plan from healthcare.gov is easily over $10K in premiums.
  - lotsofpulp 5y ago
    I understood the context of the discussion to be a comparison of obtaining healthcare with and without an employer, in which case an employer paying for it reduces to compensating you for working, which is obvious and not notable when discussing whether or not one can retire. You can get the same healthcare, the only distinction is do you have enough money saved up to buy it from your savings or do you need to continue working to afford it, just like everything else in retirement.
neogodless 5y ago
With the current options for health insurance plans, this depends largely on your other expenses. To explain, your "income" in early retirement is a combination of money you're converting from an IRA to a Roth IRA, capital gains (as you sell investments to cover expenses) and dividends on your taxable brokerage account. If your expenses are in the $40-50k range annually, you might only be paying on conversion income, and relatively low taxes on long-term capital gains. Overall, you can qualify for health insurance subsidies at this level of taxation, and get a pretty good plan without a lot of out of pocket expenses. Here's one example of an article going into the details: https://rpgplanner.com/aca-tax-credits/ https://rpgplanner.com/aca-tax-credits/
2sk21 5y ago
This is not a problem any more - with the ACA, you can get excellent health insurance plans nowadays.
person22 5y ago
I just entered my data and for my family of 7 insurance costs are $1792 per month via healthcare.gov I'm not sure what it covers.
guiomie 5y ago
I was reading about this the other day, but wouldnt using the Advanced Premium Tax Credit help lower dramatically your healthcare costs?

lotsofpulp 5y ago

The current system is not healthcare via employer. Anyone can go to healthcare.gov and get the same insurance plans. The main benefit of employer purchased health insurance is that you buy with pre tax dollars.

jorblumesea 5y ago
Sorry, affordable healthcare. Sure, public plans exist, but most state exchanges are 2k a month. It's not the same, because the insurance pools are different. Check the coverage plans: https://www.wahbexchange.org/new-customers/coverage-basics/plans/#2021 https://www.wahbexchange.org/new-customers/coverage-basics/p... Except for a few situations, it's mostly bottom tier insurance pools. Meanwhile, my insurance PPO ranged from $0.0 month (high deductible) to max ~$50.
- lotsofpulp 5y ago
  They are not that different in my experience. The same metal level plan on healthcare.gov are pretty similar to what employers will be offered by the insurance companies. There might be some savings for those working at white collar firms with younger employees like tech and finance and law, but that will not apply to most people in the US. Your portion of the insurance premium was $0 to $50 per pay period via your employer, but the cost of your insurance was still much higher, probably the same as healthcare.gov. Check code DD in box 12 of your W2 to see how much your employer paid, and you can compare the actual price of your health insurance. Edit: NJ puts out a nice document that anyone can estimate their premium for based on metal level and age. Note that $2k per month would be for family coverage of 2 old people, but for young people it would be a third. Also note that prices for young people are extra high due to subsidizing old people due to stipulations in ACA limiting premiums for old people to be 3x those of young people. See “age rating factors” box at bottom of pdf. https://www.nj.gov/dobi/division_insurance/ihcseh/ihcrates2021.pdf https://www.nj.gov/dobi/division_insurance/ihcseh/ihcrates20...
  - jorblumesea 5y ago
    They are significantly different if you see the plans and the network you're in. Just look at the costs for the plans I linked above. It's really not the same, or even close. Let's take one of the more popular plans on the exchange for Washington state. https://www.insurance.wa.gov/rates/bridgespan-health-company-2021-premiums https://www.insurance.wa.gov/rates/bridgespan-health-company... https://www.insurance.wa.gov/sites/default/files/2020-09/bridgespan-individual-health-rates-2021.pdf https://www.insurance.wa.gov/sites/default/files/2020-09/bri...
    - lotsofpulp 5y ago
      Those premiums look the same as those for employer sponsored health insurance: https://www.statista.com/statistics/632151/premiums-for-employer-sponsored-health-insurance-in-us-by-state/ https://www.statista.com/statistics/632151/premiums-for-empl... https://www.commonwealthfund.org/sites/default/files/2020-11/Collins_state_premium_trends_2020_Tables.pdf https://www.commonwealthfund.org/sites/default/files/2020-11... https://files.kff.org/attachment/Summary-of-Findings-Employer-Health-Benefits-2019 https://files.kff.org/attachment/Summary-of-Findings-Employe...
      - jorblumesea 5y ago
        Those premiums are significantly above what corporate employees pay. My premiums at my current and last job were way below those figures. Keep in mind "private employers" is a huge bucket and would encompass a wide range of companies, including smaller companies with likely small budgets. It is not reflective of many of the benefits many SWEs would get.
        lotsofpulp 5y ago
        Again, I am talking about the total cost of insurance, not just the portion of the cost of insurance that an employer asks an employee to pay. Just because an employer is paying for $18k out of $20k of your annual health insurance premiums (again, check code DD box 12 of your W2), does not mean that health insurance costs (meaningfully) less for an employer. It is simply a portion of your total compensation, which both employer and employee prefer to go via the employer due to the ability to purchase it with pre tax money, hence an immediate savings of 30% on the insurance premium portion of one’s expenses. To go back to the root of this conversation, my purpose was to clarify that “healthcare via employer” is simply an artifact of the tax code and results in savings of tax rate * annual health insurance premiums.
BeetleB 5y ago
> The main benefit of employer purchased health insurance is that you buy with pre tax dollars. The main benefit is that my employer pays most of the premiums. As an example, I have a high deductible plan. The deductible is only about $3750/year. I pay 0 in premiums. The equivalent health plan from healthcare.gov is easily over $10K in premiums.
- lotsofpulp 5y ago
  I understood the context of the discussion to be a comparison of obtaining healthcare with and without an employer, in which case an employer paying for it reduces to compensating you for working, which is obvious and not notable when discussing whether or not one can retire. You can get the same healthcare, the only distinction is do you have enough money saved up to buy it from your savings or do you need to continue working to afford it, just like everything else in retirement.

neogodless 5y ago

With the current options for health insurance plans, this depends largely on your other expenses. To explain, your "income" in early retirement is a combination of money you're converting from an IRA to a Roth IRA, capital gains (as you sell investments to cover expenses) and dividends on your taxable brokerage account. If your expenses are in the $40-50k range annually, you might only be paying on conversion income, and relatively low taxes on long-term capital gains. Overall, you can qualify for health insurance subsidies at this level of taxation, and get a pretty good plan without a lot of out of pocket expenses. Here's one example of an article going into the details: https://rpgplanner.com/aca-tax-credits/ https://rpgplanner.com/aca-tax-credits/

2sk21 5y ago

This is not a problem any more - with the ACA, you can get excellent health insurance plans nowadays.

person22 5y ago

I just entered my data and for my family of 7 insurance costs are $1792 per month via healthcare.gov I'm not sure what it covers.

guiomie 5y ago

I was reading about this the other day, but wouldnt using the Advanced Premium Tax Credit help lower dramatically your healthcare costs?