Q: I’ve read your last few columns about readers who want to retire much sooner than planned. Well, count me in. I’m fairly sure I have enough savings to pay for all my expenses, with one notable exception: Healthcare. I’m 58 and I plan to work until I’m 65 not because I need the money, but because I need the health insurance. What do people who retire early do about health insurance? What options are there?
A: This is a great question. Unfortunately, the US is one of the few developed countries in the world that relies on employers to provide their citizens with health insurance. We are used to this reality, but when you stop and think of it, it’s absolutely nuts. This started around WWII and I’ve written about the economic reasons that caused it. But it still makes no sense. Moving on, this is our lot.
So, the Financial Independence (FI) community has given this a lot of thought and here are some of the ideas they offer:
Buy ACA in the open marketplace exchange, with subsidies – most people who retire early, tend to have smaller incomes because they have reduced their consumerism, lowered or eliminated their debt and know exactly where to spend money to bring them the most satisfaction. Smaller incomes (lower than 400% the federal poverty line) means you qualify for subsidies. But, even without subsidies, ACA is an option.
Direct Primary Care – This was new to me, but it seems popular with the FI crowd, especially the younger ones. It’s a subscription model like Netflix, you pay a monthly amount “about the amount of your cell phone bill”, and you have unlimited access to a primary care physician.
Wait to see if lowering the Medicare eligibility age to 60 gains traction and approval. This is a very popular proposal by President Biden that’s widely supported by Americans regardless of party. Analysts say it would save employer’s money because it’d take older workers off their private insurance. I also think many people in their early 60s (similar to you) would retire if they had access to Medicare thus making room in the ranks for younger workers to move up.
There’s a lot more out there, “Medical Tourism” anyone? But these three are a good start.
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