I am titling this post “Part 1” as I am expecting the challenge of organizing our health care coverage for 2017 to be a multi-part personal finance adventure. I explained how we were approaching health insurance in early retirement this past spring, but it seems that all of the cards are up in the air again and we are likely looking at a 33%-50% increase in our bill next year.
Many states are struggling with the affordability of the individual payer market (as opposed to corporate or Medicare) as the highest cost, highest risk individuals have been pushed off the previous government program and into this relatively small pool of insurees. In Minnesota, there are only 250,000 people with individual policies and they are being hugely impacted by the cost increases.
The Minneapolis Star Tribune notes that Minnesota once had a nation-leading program for helping the uninsurable, but “Obamacare eliminated the successful program that helped Minnesotans with pre-existing conditions.” For early retirees that leverage individual insurance, the system “has been brought to the brink of collapse” and our Governor – long a proponent of the ACA – has now commented that “the Affordable Care Act is no longer affordable.”
A quick bit of background: There are three of us in our family. All of us are fortunately in great health. My wife and I will be 50 at the start of next year and our son will be 19. We are currently covered under a $6.5K deductible individual plan with a cost of $11.4K for the year. Nothing in our family situation or medical history has changed in the last year.
The estimate I received from our current insurer is $3.6K more than what we paid this year (33% more) with a similar deductible ($6.7K). Unfortunately, the coverage now has a significantly smaller network and it doesn’t include our preferred clinic and long-time doctors. Additionally, in-network coverage only covers clinics in our metro area – if we are traveling, we are out of network. That is a big change to us as we travel more. Lastly, prescriptions are now 20% of the actual cost after the deductible instead of a $20 copay (I imagine that has to be hundreds of dollars more a year).
In another strange twist, the State of MN is allowing insurers to ‘cap’ the enrollment in the plans. This means that you better enroll quickly (starting on 11/1) or you won’t be able to get in the best plans. It’s an ‘exploding offer’ – if you wait, you’ll end up in a much higher cost plan. How much more no one knows. That only gives me this week to figure everything out. One company offered to send me materials in the mail, but I probably don’t have time to wait for snail mail.
As a result of the massive potential price hike, I’ve started to look at some other plans and size them up. Ideally, we could find a plan that allows us to stay at our own clinic. Unfortunately, those seem to come at a much higher price. Instead of a 33% increase, we are probably looking at a 55% premium increase ($6K). I’ve seen some comparable plans in the state exchange that run even 75% higher ($9K)!
These more expensive plans might still even have a significantly higher deductible. I’ve looked at plans where the deductibles run as high as $13K and still result in a 33% premium increase.
We have a few options more to investigate (including buying through the MegaCorp I retired from), but I’m guessing when all is said and done, we are going to pay somewhere between $3.5K-$6.0K more for health care coverage next year. I would note that we are not eligible for any state subsidies for ACA coverage. We will be paying full freight for our coverage which means under the ACA we are being called upon to subsidize our less-healthy fellow citizens. You could call it ‘forced charitable giving’ of sorts. Or, something nasty could happen to us health-wise and others will be subsidizing us next year.
That’s all for ‘part one’ of this topic. I’ll let you know how things develop over the next couple weeks. While the health insurance market is very dynamic right now, one of the best things happening for early retirees is that everyone is guaranteed coverage (at some price) under the ACA. Without that, many would be forced to work for risk of not having any coverage at all, until they reached corporate retirement or Medicare age.
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