Planning Financial Indpendence

Retire Early
Summary
Getting Started
Debt Management
Expense Log
Strategic Purchases
Expense Estimate
Cash Flow
Wealth Accumulation
Work and Career
Health Insurance
Pitfalls

Health Insurance

Heath care costs have risen dramatically, and the cost of health insurance is a major concern to those who plan to retire early. It goes without saying that lack of health insurance in the United States is potentially a personal financial disaster. At the same time, the cost of a low-deductible, blanket health insurance policy is becoming cost prohibitive.

A number of points to consider:

  1. If you or a member of your family has an existing health problem, you may not be able to get a new insurance coverage, and should stay with your existing coverage.
  2. Hospitals and health care facilities have two prices lists: a high priced list for those who do not have insurance, and a lower priced list for those who have insurance, so it is important to have some kind of insurance.
  3. There is a pre-tax medical care cost deduction from your income that can cover some of your health care costs.
  4. Medicare kicks in when you reach a certain age.

There is another option.

High Deductible Health Insurance

If you select a health insurance plan with a high deductible, your insurance costs will likely go down.

There are different types of deductibles: per occurance, per person, per family, per year. You need to work out which plan will benefit you the most, and you need to know the insurance plan and schedule your health care visits to make sure you get the most benefit from your plan.

Health care facilities are notoriously bad at billing health care costs. Expect your bills to be in error, months late, and watch for double billing. You need to take charge by carefully accounting for your visits to health care providers. Consider paying up front to keep yourself out of the billing system (this is not always possible).

A suggested strategy:

  • Switch to a high deductible health insurance plan, either as an individual or as part of a group, and do this while you and your family are still healthy.
  • Save the annual deductible amount in a pre-tax medical account by having it deducted from your paycheck. This account is a "use it or lose it" account, so you have to make a guess as to how much you will spend on health care in the next year.
  • Save an additional amount for medical emergency costs in a savings account for emergency expenses.
  • Plan your health care visits to meet your insurance plan requirements.
  • Carefully account for health care visits, services performed and payments made.
  • Review when your Medicare coverage begins, and what type of health services it covers. Plan accordingly.

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