If you’re an American, looking for a quick answer to the problem of health care in early retirement, you’re out of luck. There is no easy answer. But, there is hope, as many people have made it work. People who probably aren’t any smarter, or better looking than you and me. 😉 Below is an over view of the current landscape of the health care for people looking to step away from work for any variety of reasons, such as early retirement.
The Health Care Problem:
Health Care is largely tied to employment in America. Going without health coverage is not very responsible. It could destroy your financial life….if not cost you your literal life.
If you don’t want to work anymore, like say, take an extended sabbatical, or even retire, then you’re left to figure out health coverage on your own.
One Solution doesn’t Fit All, Not for All Time
The reality is you will always have to actively manage your health coverage. There will be no ‘I decided what I’m going to do about it’ and you’re done moment. You will have to re-evaluate your solution and options often, probably yearly. You will likely have to do a mix and match approach.
The Affordable Care Act (ACA)
The ACA is probably the single greatest thing to happen to people seeking to step away from traditional employment. Of course, the ACA has many wonderful attributes. What is crucial for us non-traditionals is that it is based on income not assets. If you have structured your life right, where you have a fat savings, but live off very little, then the ACA can work for you.
Let’s say you’re able to hit that magical sweet spot of income that gives you the maximum tax credit, which makes the coverage reasonably affordable. You’re able to sleep at night knowing that you can get some preventative care and a medical bill is not going to crush your finances.
But, what if you decide with your freedom from work, you’d like to travel. You want to live the #vanlife and become a happy camper. Well, ACA is state based, and is not very portable, even within the United States. Plans vary greatly from one state to another. So you can’t just pop into any doctor’s office along your travels and expect them to be ‘in-network.’
What if, with your new found freedom, you start creating something that people pay you for….or you sell your home or rental property. You can suddenly have a windfall that changes your ACA plan cost dramatically. If its a huge windfall, then maybe you can afford to pony up for a while, but it can be a matter of $1000 increase in income that can mean the difference between tax credit, or no tax credit towards your ACA premiums.
Health Sharing Plan
This is not insurance, but kinda. Participants agree to ‘share’ health care costs, but there’s no legally binding contract that they will 100% pay for exactly this or that. They are typically more affordable than traditional insurance, usually in the area of half the cost. However, they don’t have to cover everything that true insurance that is in compliance with the ACA has to, such as preexisting conditions or chronic conditions.
Also, these plans are traditionally religious based, specifically Christian. Many plans will require you to agree to live a certain type of lifestyle. They often won’t pay for ‘unbiblical’ lifestyle things like birth control, anything related to drugs or alcohol, or high risk behavior like not wearing your seat-belt.
To qualify for Health Sharing Plans you cannot be eligible for ACA tax credit subsidies. So, these plans are a good option for those years when your income is has gone up for some reason. That is, if you’re lucky enough to not have any preexisting or chronic condition, and you’re good with Jesus being your co-pilot. They often have pretty high out-of-pocket minimums before they will kick in anything, as well. Don’t expect a small co-pay at the doctors visit. Each plan is different, so you have to do a lot of research and due diligence to see if it might work for you.
Move or Utilize Medical Tourism
Many countries are happy to welcome expats and provide affordable, good health coverage. Geo-arbitrage is the fancy name for letting your geographical location work to your financial benefit. Depending on the country, you may have access to their public health care. Some countries extend health care to temporary or permanent residents. You may even have some access as a tourist. Straight purchasing private health care in many other countries can be very affordable, in comparison to the US.
There are several good options for Expat and Nomad insurance that will cover you in variety of foreign countries. They often provide coverage for whole regions of the world. If you want to spend a year traveling around Asia, for example, you are able to get affordable health insurance. This can even include emergency transport back to the US, for a third of what you would pay for insurance in the US.
Medical tourism is also a tool to have in your post-work life tool kit. If you know you need major dental work, or non-emergency surgery, it can be cheaper to fly to a top-rate facility in another country. Many caters to English speakers. Even with airfare and accommodation, it can often be thousands of dollars cheaper.
Coverage Through Your Partner
Let me just tell you, I hate this answer. Sure, there are some people out there who are going to swear that their spouse, or SO, just LOVES working…they don’t want to retire! Perhaps because I’m a divorcee, I’m skeptical. All I’ll say is, just be careful how this might be playing a role in your relationship, and maybe have a back-up plan. Or maybe, just get with somebody for their insurance? 🙂
Budget For It
If you’re thinking of early retirement & health care, you may just need to come to terms with the fact that there will be a big fat line item for it in your budget for it, for at least some years. Its unlikely you’ll be able to save enough to pay for full-priced, high end health coverage for a lengthy time. But for a year while you get your income low-enough, can figure out what country you want to be in, find the right Bumble match with an excellent PPO? Maybe you need to prioritize saving in an HSA? That in conjunction with a Health Sharing Plan will get you through some years?
You might just always have to have a little more set aside than you’d like to. Just to make sure you can cover your medical in the ever changing environment. Have some cash or frequent flier miles at the ready! The only thing worse than being stressed out because you’re sick, is being sick and financially stressed out.
I’m going to rant a little….
I’m going to go off a bit here….we all know that health care in America is far from ideal. NO DISRESPECT to the many caring medical professionals who bust their butts daily, I don’t know how they do it! But the system, largely doesn’t work for anyone, including the medical community. Here’s the reality.
- The United States consistently ranks last among industrialized nations in terms of health outcomes and quality of care.
- People go broke because of their medical bills, sometimes even with insurance.
- The over-worked, fast-food, in-debt lifestyle promoted in the US is literally bad for your health.
Having health insurance tied to full-time employment is a way to keep us all working long hours…producing and consuming. While it is a hassle, don’t let having to jump through hoops to get decent health care be the reason you stay chained to a desk. It is possible to make it work.
Go! Take time for yourself, and be healthy!
Helpful Links
Here’s a variety of links relating to Early Retirement & Health Care:
- Retired in their 40’s, Tim and Amy have several videos on their challenges with navigating the health care system. They share their experience on their YouTube channel GoWithLess: https://www.youtube.com/channel/UC_OyYOATliIj9xEx6bv2Z9Q
- More early retirement insurance talk: https://havenlife.com/blog/financial-independence-retire-early-fire-flaw-health-insurance/
- Health Sharing 101: https://euphorahealth.com/blog/what-you-need-to-know-about-health-care-sharing-plans-2/
- Expat and Travel Insurance: https://expatfinancial.com/top-3-global-health-insurance-companies-for-expats/