A Little Insight on Post Retirement Insurance

[Fishindude77]

Most everyone here understands that health insurance coverage post retirement and pre Medicare can be quite costly. Just got my Medicare figured out today, so I'll kind of share our health insurance cost journey.

Retired at end of 2017, age 57. Utilized COBRA to extend our company health insurance for the 18 months allowed by law. This was good insurance w/ some dental and optical coverage and it costs us around $850 per month for those 18 months.
Got on an ACA plan with spouse when COBRA ran out and purchased a rather high deductible plan with no optical or dental. First year of that plan it was income based and if you made over +/- $70k you didn't get any discounts, cost us around $1,800 per month.
A year or so further into this journey when Covid showed up, they raised the allowable income thresholds significantly so up to $250k income you got some discounts. That got us down to about $1400 per month.
It has progressively gotten a little cheaper and in my final year of the plan we are paying around $800 per month for ACA coverage for the both of us.

Enter the Medicare era.
I'll go on Medicare in a couple months so I have elected to pay for a part B coverage plan as well as a supplement plan which will result in very little out of pocket for myself. Total costs of these in addition to part A coverage is around $260 per month.

My spouse stays on the ACA plan and rather than it go down since it's just covering one, it now in fact increases in price. This plan will now run roughly $840 per month for spouse only.
So we are looking at approx. $1100 per month for myself on Medicare and spouse on ACA.

So the light at the end of the tunnel is that spouse will also go on Medicare in a couple years and probably have costs pretty similar to mine, roughly $260 per month or $520 for two of us. Chances are, with inflation that will increase a bit?

The only thing I shared above were premium costs. With the ACA plans there were some significant out of pocket costs a couple times before getting to what they covered.


Anyway, just thought I'd share our experiences.
Health coverage post retirement can easily eat up $1,000 to $2,000 per month, so you need to plan for this if approaching retirement pre Medicare age and you're still going to have rather significant health insurance expenses with Medicare.
There's no free lunch with health insurance.

[disneysteve]

I can share here as well. As I've said before, if not for the ACA, there's no way many early retirees would have been able to do so.

I dropped to per diem at my job in August 2022 which made me ineligible for insurance but I could get on COBRA. We did that but COBRA is super expensive because you pay both the employee share and the share previously covered by the employer, so were paying right around $2,000/month.

As of 1/1/2024 we switched to an ACA plan. Now our premium is half of COBRA, just under $1,000/month - way more affordable. As Fishindude77 said, that does come with higher out of pocket costs but even accounting for that, we'll still come out thousands of dollars ahead each year with the ACA plan. And our actual premium may turn out to be even cheaper once we know our actual 2024 income. The premium is based on what I estimated we'd earn, but I'm pretty sure we'll come in under that. If so, we'll get back some of that money as a tax refund when we file our 2024 taxes next spring.

So ACA is half the price of COBRA, does have higher out of pocket costs (which obviously depends on your usage), and in our case at least identical coverage to what we had through my employer. It's literally the same plan - Aetna Whole Health - so we didn't need to change any providers or facilities that we were already using. I have absolutely zero complaints thus far. DW is 4.5 years from Medicare and 5.0 years for me so we'll stick with the ACA plan until then. I am very grateful that the ACA exists so that I was able to retire at 59 and have good affordable coverage.

[kork13]

Being in the military, I have no concept of health insurance costs (for now) ... But $1k-$2k/mo for insurance is considered "normal" or even "affordable"?!? That's a house payment! Those numbers sound bonkers to me, though I have no frame of reference & am blissfully ignorant... Those numbers make it alot easier to understand why people would feel strapped to an employer that covers some of the insurance costs.

[disneysteve]

Bring in the military, I have no concept of health insurance costs (for now) ... But $1k-$2k/mo for insurance is considered "normal" or even "affordable"?!? That's a house payment! Those numbers sound bonkers to me, though I have no frame of reference & am blissfully ignorant... Those numbers make it alot easier to understand why people would feel strapped to an employer that covers some of the insurance costs.

Keep in mind that ACA premiums are income-based. We pay $1,000/month on an estimated annual income of $150,000. Folks earning more modest incomes can pay considerably less.

[disneysteve]

Being in the military, I have no concept of health insurance costs (for now) ... But $1k-$2k/mo for insurance is considered "normal" or even "affordable"?!? That's a house payment! Those numbers sound bonkers to me, though I have no frame of reference & am blissfully ignorant... Those numbers make it alot easier to understand why people would feel strapped to an employer that covers some of the insurance costs.

Thankfully the ACA has made it possible for people to not be as tied to dead end jobs. They can switch jobs knowing that affordable coverage is readily available if needed.

When my daughter left her job a couple of years ago, thanks to the ACA she was able to get insurance for free until she found a job and was eligible for coverage through their plan.

[QuarterMillionMan]

I work for big government and after 10 years they'd pay 40% of the medical plan premium. For each year beyond 10 years an additional 4% of the medical plan premium is paid up to 100% after 25 years. Currently I'm vested at 21 years so if I had to leave my employer today they'd pay 84% of my medical plan premium so if let's say my medical insurance costs $1000 a month big government would pay $840 month and I'd have to pay $160 a month. But I'm hoping to reach 25 years and retire at 62 with 100% medical premium paid by my employer. Then at 65, I'd pay the Medicare premium of $260 as Fishingdude mentioned and the supplemental Medicare would be 100% covered which looks to be about $200 a month currently which I would not have to pay.

[disneysteve]

That’s a sweet deal QMM. Folks in the private sector don’t have that sort of coverage. We’re on our own when we retire.

[Drake3287]

When I read stories like this it only makes me realize how lucky I've been with medical costs my entire adult life. Up until I turned 65 a couple of months ago my employer paid 100% of our families medical and dental insurance. This also carried on after I retired years ago with spousal coverage. For the first time ever I now pay the required $174. per month for Medicare Part B. My Medicare supplemental plan is luckily still covered by my old employer for both of us. Not sure how the average guy deals with these costs.

[srblanco7]

Most everyone here understands that health insurance coverage post retirement and pre Medicare can be quite costly. Just got my Medicare figured out today, so I'll kind of share our health insurance cost journey.

Retired at end of 2017, age 57. Utilized COBRA to extend our company health insurance for the 18 months allowed by law. This was good insurance w/ some dental and optical coverage and it costs us around $850 per month for those 18 months.
Got on an ACA plan with spouse when COBRA ran out and purchased a rather high deductible plan with no optical or dental. First year of that plan it was income based and if you made over +/- $70k you didn't get any discounts, cost us around $1,800 per month.
A year or so further into this journey when Covid showed up, they raised the allowable income thresholds significantly so up to $250k income you got some discounts. That got us down to about $1400 per month.
It has progressively gotten a little cheaper and in my final year of the plan we are paying around $800 per month for ACA coverage for the both of us.

Enter the Medicare era.
I'll go on Medicare in a couple months so I have elected to pay for a part B coverage plan as well as a supplement plan which will result in very little out of pocket for myself. Total costs of these in addition to part A coverage is around $260 per month.

My spouse stays on the ACA plan and rather than it go down since it's just covering one, it now in fact increases in price. This plan will now run roughly $840 per month for spouse only.
So we are looking at approx. $1100 per month for myself on Medicare and spouse on ACA.

So the light at the end of the tunnel is that spouse will also go on Medicare in a couple years and probably have costs pretty similar to mine, roughly $260 per month or $520 for two of us. Chances are, with inflation that will increase a bit?

The only thing I shared above were premium costs. With the ACA plans there were some significant out of pocket costs a couple times before getting to what they covered.


Anyway, just thought I'd share our experiences.
Health coverage post retirement can easily eat up $1,000 to $2,000 per month, so you need to plan for this if approaching retirement pre Medicare age and you're still going to have rather significant health insurance expenses with Medicare.
There's no free lunch with health insurance.

Very much appreciate you sharing your history FD. We'll be in a similar boat with regard to having to obtain health insurance via an ACA provider once we fully retire (around ages 56-57) and therefore will have multiple years on the ACA (family coverage) before we make it to Medicare eligible age.

[disneysteve]

Very much appreciate you sharing your history FD. We'll be in a similar boat with regard to having to obtain health insurance via an ACA provider once we fully retire (around ages 56-57) and therefore will have multiple years on the ACA (family coverage) before we make it to Medicare eligible age.

Same here. 5+ years on ACA before Medicare age. As I said, very grateful that the ACA exists and allowed me to retire at 59 and still have affordable coverage. The ACA has been a huge boon to the FIRE community.

[QuarterMillionMan]

I stand corrected on my $1000 a month medical premium estimate. United Health is $1381 a month (left side), very expensive. The right side is for Medicare advantage supplemental. At 58, if I left my employer today w/21 years I would have to pay $281 a month for United Health, not bad but I'm shooting for 25 years and $0. (correction $6.88, which is a bargain).

[crazyliblady]

Being in the military, I have no concept of health insurance costs (for now) ... But $1k-$2k/mo for insurance is considered "normal" or even "affordable"?!? That's a house payment! Those numbers sound bonkers to me, though I have no frame of reference & am blissfully ignorant... Those numbers make it alot easier to understand why people would feel strapped to an employer that covers s$123.69ome of the insurance costs.

Those numbers are bonkers. I pay $15.20 twice a month for a high deductible health plan with an HSA. That is affordable to me, but adding a spouse suddenly makes the amount $123.69. With children and no spouse, it is $65.20 or a whole family for $208.33. That is approaching a car payment for some people.