Health insurance is a big, incremental expense for people hoping to retire early from corporate life. Understanding our options and the costs has been an important focus for us as we’ve plotted our upcoming FIRE escape on 4/1/16.
(Please note that the following is our understanding of healthcare insurance options, and that we are not experts in this topic. Please consult an insurance agent to explore your own circumstances)
Our current MegaCorp values our health & dental benefits at $18K a year. We are fortunate enough to have quite a few choices to replace that coverage:
- COBRA – We could continue MegaCorp coverage for eighteen months with COBRA, although this was not recommended due to its relatively high cost and the need to replace it next year. You have 60 days from when you leave your job to get enrolled in COBRA coverage.
- OBAMACARE (ACA) – Everyone qualifies for coverage under our State Exchange, regardless of pre-existing conditions. This makes it a great option for people who might otherwise be tied to corporate coverage. Regardless of your politics, the ACA is clearly a boon to anyone who wants to retire early.
- FORMER MEGACORP – Because I worked at my former company for 24 years and reached “Rule of 70” early retirement status, I could get healthcare coverage from that company until age 55 when I am considered a full retiree. This coverage is still on the pricier side (like COBRA) as the company does not subsidize the premiums between ages 50-55.
- INDIVIDUAL- Many Americans are self-employed and get coverage directly with an insurance company. This seemed a bit foreign and expensive to me before we looked into it, but turned out to be the best option for us of all of these.
Our new plan is almost an exact mirror of what we have had at MegaCorp. We went with a high deductible ($5.6K family/$2.8K individual) HSA plan with a $10K out of pocket maximum. The plan has the broadest network of doctors and allows you to self-refer to specialists. For our family of 3, the monthly premium is $928 in 2016. A solid dental plan adds in another $122.
On an annual basis, this will cost us $12.6K. This is quite a bit less then MegaCorp tells employees their healthcare coverage is worth (-$5.4K). That figures.
It only took a simple stop at an insurance agents office to get signed up (in less than 60 minutes). It felt a lot like signing up for auto insurance. You could also do it online yourself without too much trouble.
As it turns out getting healthcare coverage was a relatively simple task. Like many people, I had a lot about the options that would be available, only to find that it was all very straightforward. We are a healthy family – obviously if you had pre-existing medical conditions could be much more complicated.
What are your plans for health insurance in early retirement?
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