COBRA is only allowed to cost about 2% (administrative fee) above what you paid for your plan when you were employed.It really depends on where you live and what plans are offered. I live in Central TX and went off COBRA at the end of December and on to an ACA plan. I retired last summer at age 62. Here's how I went about my decision.DW and I, both in our mid-50s, are contemplating an early retirement soon before we hit 60. We have savings of about 30X estimated annual expenses, including budget for healthcare costs (premiums, copays, and deductibles up to the maximum out-of-pocket limit), based on information sourced from the ACA Health Insurance Marketplace available at https://www.healthcare.gov, for a PPO Gold plan with a family total out-of-pocket maximum of $13,000.
As we've been planning, I've watched numerous retirement-related YouTube videos, where the comment sections often echo a recurring concern: healthcare stands out as the primary hurdle for those contemplating early retirement before the age of 65.
While I currently benefit from comprehensive PPO healthcare coverage provided by my employer, I understand that once both DW and I retire, we'll need to switch to healthcare plans sourced from the marketplace until we become eligible for Medicare. This prospect has left me feeling apprehensive about potentially overlooking crucial aspects in our healthcare budgeting, or even the feasibility of retiring before 60. Therefore, I'm eager to seek advice from individuals who have retired before 65 and navigated the landscape of ACA health insurance from the marketplace.
1. From your experience, do you find that health insurance plans available through the ACA marketplace, such as a PPO gold plan, offer comparable coverage, accessibility, and acceptance rates to those typically provided by employers?
2. Have you encountered any concerns or real-life experiences that lead you to believe that ACA health insurance might pose a greater financial risk compared to employer-sponsored health insurance, potentially leading to reduced coverage or benefits that could strain finances or even result in bankruptcy?
Thanks in advance for any insights or advice you can offer. Your input is greatly appreciated.
I'm a retired engineer so I started off with a spreadsheet. Because one option I had was to continue COBRA for 1 more year, I used it as a baseline to compare everything to. It was an HDHP PPO plan, fairly expensive, but with nationwide coverage. Every doc we've ever seen (that we liked) was in network. Finding a plan on ACA with all of those features - well, that simply didn't exist.
- The first thing is that most plans had coverage in our county and a number of surrounding counties. Only 1 had statewide coverage.
- I had a good idea what our Premium Tax credits would be and I set a budget for premiums.
- The next thing to note is that all plans have an out of pocket maximum. That plus 12 months of premiums should be the most you expect to pay in a given year. If that number is something you can afford to happen once or twice before you get to medicare, then you've met the first bar which is to prevent a retirement wreck due to medical costs. Most plans I cared about were in a fairly narrow range.
- I then looked at all docs that we liked: our primary care docs and any specialists that we've used to note which are in network. That narrowed things down quite a bit.
- I then went through other types of specialists that one might ever need to use (things like cardio, gastro, derm, etc) The thing was to find out how many providers of a particular specialist there were within, say, 25, 50 or even 100 miles from my address. Having only a few 1's of providers in a rather common specialty won't do you much good if you can never get an appointment or if all of the providers have poor reviews, for example.
- Only a couple of potential plans were HDHP, but they were among the worst plans in most other areas.
- We ultimately narrowed things down to a single insurer with a couple of different plans. The insurer is affiliated with a very large medical practice in our area and runs several of the better hospitals in the area. The practice that our PCP's are in, which is also a fairly large practice with a bunch of specialists, was in network. At the end of the day, we ended up choosing a Bronze $0 deductible EPO plan. As the name implies, the plan is a $0 deductible for healthcare. But there is a deductible for prescriptions. But for the lowest 2 tiers, the deductible is waived. I've already had 2 name brand prescriptions this year which weren't on the formulary, but in both cases the drug manufacturer had a discount available on their website. In one case there was $0 copay and in the other it was a $65 copay. The absolute cost for most things is already known in advance (PCP visits, specialist visits, x-rays, labs, etc) and the percentage coverage for others is known in advance (hospital stays, etc). It's early March and we've both used our insurance a number of times already, including my 10 year colonoscopy, with no complaints.
Ultimately our premiums are about 50% of what COBRA was, but about 2X what we paid when I was still employed.
Your mileage will vary.
Cheers.
Your cost was hidden by having your employer pay for some of it on your behalf.
I agree with you that it is very location dependent. If this is something that is important to someone, they could do the research and choose a retirement location that has better plan options.
Where we retired, we are lucky to have a Nationwide PPO plan (same as sold on the open market and to many large employers in the state) that is HSA-eligible. The deductibles are a bit high, but with tax credits (without having to play games managing income) our premiums are quite low. Our state also has legislation in place to provide ACA-like protections in case the ACA is repealed.
Statistics: Posted by marcopolo — Mon Mar 04, 2024 5:42 pm — Replies 50 — Views 4081