In my previous post, Don’t Quit Your Job to Follow Your Dream, I put health care first in the post and it was not a coincidence. Health care is one of my biggest concerns about quitting corporate America. The cost of health care keeps increasing every year, and it is outpacing inflation by a wide margin. Sometimes I wonder if my investments can keep up with rising health care costs! I’m only 38 and I won’t qualify for Medicare until I’m 65. Medical insurance can be very expensive and difficult to obtain if you have any pre-existing condition. This is a huge HUGE problem for early retirees, the unemployed, and the self employed. Here are some health care options:
If you leave a job with a group health insurance plan, the Consolidated Omnibus Budget Reconciliation Act allows you to continue using the same health care plan for a limited amount of time if you are willing to pay the whole cost. This means you will have to pay any amount your employer used to cover plus administrative expenses. The good thing about COBRA is that you benefit from the group rate and continued coverage. However, the cost can be a bit shocking to employees who formerly paid only a part of the cost. COBRA coverage generally lasts for up to 18 months, so if you are 63 and a half, this might be the way to go until you qualify for Medicare. This is not a good option for me because I have 27 years left before I hit 65.
If you have a working spouse whose employer offers a family health care plan, this is another way to fill in the health insurance gap. The premium is generally much less than buying insurance privately. I just checked Mrs. RB40’s plan and we’ll have to pay an additional $160/month extra to cover me and the RB40 kid. This is a good option until Mrs. RB40 retires, and I’m planning to go with this. $165 per month is not trivial, but it is affordable.
A part-time job might provide the health insurance you need until you are old enough to qualify for Medicare. Costco, Starbucks, and Trader Joe’s are some of the companies that provide health care benefits to their part-time employees. However, there is a qualifying period before part-timers can sign up for the health care plan, which could vary from a few months to a year or more. I won’t be able to take any part time job until the RB40 kid goes off to school, but it could be an option for the future if I need to. This would be my last option though because I’d rather work for myself.
This is a very costly option because you will not receive any group discounts. The insurance provider will usually decline your application if you have pre-existing conditions. Your state may have a group plan that you can join if you’ve been turned down by a private insurer. Your state may also subsidize a portion of the health care premium if your income is below a certain level. However, low income plans have many requirements and a long wait time to join. This cost and the difficulties with pre-existing conditions are why so many self employed people do not have adequate healthcare coverage. You can get a quote from eHealthInsurance to see how much it would cost.
On demand health care
This might be a good option if you are young and relatively healthy. On demand health care clinics offer an affordable option for everyday health problems. For example, each visit at ZoomCare costs $99, which may be a good short-term solution if you don’t have a chronic illness. But this is not a good option for older folks because long-term illnesses will inevitably show up.
Move to a country with more affordable health care?
My parents live in Thailand and they have access to basic healthcare for a minimal cost. I tried to find insurance for my mom in the US, but she kept getting turned down due to pre-existing conditions. The wait time for elective surgeries such as a cataract operation is a few months long, but it is available at a cost that regular folks can afford. If you have more money, you can always buy top notch care at private hospital.
Finding affordable health care in the U.S. is a big problem for early retirees, and there is no easy way to avoid the high price. Perhaps we will have more options when the health insurance exchanges become operational, but I will have to see it to believe it. Until then, we just have to take care of our health as much as possible and minimize our health care costs through better living.