Health insurance and early retirement in the United States of America

By | June 5, 2019

People ask me about my health insurance a lot.

For the first few years of my retirement, I paid for Obamacare. It wasn’t ideal because of the high deductible and I used it only for physicals, which were free and showed me in good health. Whenever I traveled, which was always, I paid out of pocket for any actual medical expenses and when I ran out of the six month supply of antidepressants I requested before leaving Australia, I went without. Life was good and I didn’t need it.

Then I called and spoke to an Obamacare representative and realized that the insurance system cares only about income and not net worth.

Do you see the kitty?

I disclosed all my assets and my income in my application and the state told me I could enroll in Health First Colorado, Colorado’s Medicaid program.

So now I pay $0 per month on insurance. I’ve seen doctors and I’ve paid, so far, not a dime. My medication is free too.

How is that possible?

I don’t make any money, selling only a few books each month. I had some “income” when I took out some money from my VTSAX last year, but I took out a small enough amount that I’m still below the minimums for my state for eligibility.

So, that’s a positive thought for retirement.

If you can live a simple life and don’t plan on making any money after retirement, or if you do plan on making money, but don’t succeed, health insurance is pretty simple and easy.

I’m pointing at the kitty.

But net worth is a different story. I have enough money to choose where to live and I chose a state where the government wants to insure people.

The health insurance system in the United States can really screw you over if you’re not careful. It’s a patchwork of solutions.

My own health insurance journey

From birth to age 20, my parents paid for my health insurance through their own health insurance at work. I’m assuming.

From the ages of 20-23, I worked and received health insurance through my company. I paid a certain amount each month and my employer did the same. I paid copays on doctor visits and medications.

From the age of 23-26, I was in law school and bought the school health insurance. I paid a certain amount on top of my tuition and don’t think I ever used it. I enrolled in a clinical trial to get my anti-depressant for free. That clinical trial also netted me $30 per visit as compensation.

From the age of 27-28, I traveled the world and bought insurance on the open, unregulated market. I paid a certain amount each month for pretend piece of mind and never used it. I neglected to tell them about my depression in the application. If I had told them, they would not have approved me. I just crossed my fingers and hoped I wouldn’t get hurt and stopped taking medication.

From the age of 28-33, I worked and received health insurance through my law firm. I paid a certain amount each month and my firm did the same. I paid copays on doctor’s visits and medication in Chicago. In Sydney, my insurance reimbursed me everything, which was nice.

And I already told you about my post-retirement insurance saga from 33-present.

Now my insurance is excellent and not stressful. I dig it. There’s no calculating cost. It’s a much better system. So maybe that’s something for you to look forward to in retirement.

54 thoughts on “Health insurance and early retirement in the United States of America

  1. Mary Carney

    Oh my god, I never thought of that! It’s an amazing option. My safety valve is to move to the EU because I recently got an Irish passport (thanks grandfather I never even met!), but I don’t really want to relocate overseas permanently while my mom is still around. Spending time with her and being able to help should she ever need it (she turns 85 next week) is a huge part of why I semi-early retired. Thank god my parents raised me in Massachusetts and mom is still here. I feel fairly confident that Mass will continue to have options for someone like me to get health insurance even if the GOP completely destroys the ACA. I also take depression meds and pretty much only use insurance for access to meds, but I just turned 48 so the risk of needing something else is increasing. Thank you so much for sharing!

    Reply
  2. veronica

    I love that you’re writing more often these days. As mentioned by other commenters, you bring a unique perspective to the FI discussion, one that is much closer to my situation (i.e. single, no kids, already FIREd and not quite sure what to do next with my life). So thank you for that. And please don’t stop.

    Since you’re accepting questions…. do you do the credit card travel points thing? Every credit card application I’ve ever filled out asked for income. But I have no paycheque now, and my “income” is the lowest it’s been since I was a university student. Have you applied for a credit card since you’ve FIREd? How did you get around this problem?

    Also, I’d be curious to hear from anyone out there about ex-pat health insurance. I really want to go back to France for at least one year, but one of the visa requirements is health insurance. As I’m now 55, and not getting any younger, I’m finding it difficult to source long term health insurance at a reasonable price. Health insurance for a vacation? Sure no problem. Health insurance to fulfill a visa requirement – not so much.

    Thanks again for writing.

    Reply
    1. Robin Koloms

      Do you get Medicare (as stated in your post) or Medicaid? One is for the elderly and disabled; the other is for those with low income

      Reply
    2. Thriftygal Post author

      I used to do credit card points all the time, but after the Equifax breach, I locked down my credit and now I’m too lazy to unlock it to get a new credit card. It’s one of the things I wish I could change about myself, but not enough to actually do it. Because credit card travel benefits are amazing!

      I remember my expat health insurance being about the same as my health insurance in Chicago, but that was through work and I’ve never tried to get it elsewhere.

      P.S. Thanks for noticing the increased volume of my writing. I’m trying! 🙂

      Reply
  3. Mike

    I’m curious how you handled the transition from full time employment and salary to Obamacare – did it matter that you had likely earned a high income very recently, or were you able to receive subsidies or discounts immediately because you were technically at zero income the day you retired?

    I’ve been on the FIRE path for years and now that I’m seriously closing in on it, all this logistical stuff (ROTH ladders, Obamacare, etc.) is actually starting to mean something! I’ve always assumed I’d have to “coast” into the next calendar year to take advantage of the ACA and lower capital gains taxes, so I’d love to hear any tips you could offer on the immediate transition, or an old post you could point me to.

    Reply
    1. Thriftygal Post author

      I don’t think I ever got any subsidies. I used my income right when I retired and paid like $200-$250/month for health insurance. I did that for years without thinking about it before I let the state know about my income change. That was a big blunder on my part! I should have done more research and realized the income vs net worth question much earlier!!

      Reply
  4. Frogman

    In what state do you claim residency so that you qualify for medicare by income?

    Reply
      1. Frogman

        Thanks for the reply but could you also tell me your state of residence so I can research their medicade requirements? Thank you.

        Reply
        1. Thriftygal Post author

          I mentioned it in the article. It’s Health First Colorado. I think their maximum allowable “income” per month is like $1300 or something.

          Reply
          1. Brutsaert

            So I am confused. In one of your other articles, you state that you take a years worth of living expenses at the beginning of the year from your VTSAX account and deposit into the account you spend from. That’s income. Are you saying that amount you take out amounts to less than $1300 per month??? It would have to in order to qualify for free insurance…

          2. Thriftygal Post author

            The entire amount I take out doesn’t count as income. The income is only on what I’ve earned on it since I put it in.

  5. Lance

    I can’t say enough good things about Liberty Healthshare. $250/mo, $1500 deductible and…. wait for it….THEY COVER YOU ANYWHERE IN THE WORLD! No networks, no BS. They also will pay for your travel to get elective surgery if it’s cheaper and the predicted outcomes are the same or better. Last I checked the US was 37th in the world on healthcare and LAST in the developed world according to WHO. Liberty is actually a healthcare sharing ministry so it’s not for everyone and you have to be healthy to get in, but it does meet the Obamacare requirement that you must have insurance.

    Reply
          1. TJ

            Read the disclaimers on any of the health sharing ministry’s sites. They have no obligation to pay. They also aren’t regulated or required to have sufficient reserves….

  6. Douglas Morris

    Wow! VERY interesting Anita, thanks for sharing this! I retired in 2015 (at the age of 53) but there’s no way I would’ve done it without affordable health insurance. Like you, I’ve got a ‘comfortable’ portfolio but no real income–but I didn’t WANT Medicaid, in my state (PA) I heard the state can take control of your assets after death if you were on it. So to get Obamacare, you have to ‘earn’ a minimum income (currently $16,753.00 for a single person). I earn about $5K in dividends from my taxable account, so I convert $12K from my IRA to a Roth (pay the tax now, counts as earned income). But I’ve got great health insurance, costs around $40.00 a month. At my 50-something age, health insurance would cost me $750 a month without the subsidy. Anyway, glad Medicaid is working out for you! And I still don’t see that kitty 🙂

    Reply
    1. Thriftygal Post author

      That’s kind of a bummer that the state can take everything upon death. But I guess if you’re dead, you won’t care.

      And the kitty is black and hard to see! I can kind of see her ears in the picture where I’m pointing.

      Reply
    2. Peter

      So Anita, being financially free, living in different parts of the United States or abroad, and receiving Obama Care, you pay federal income tax. Do you owe any state income tax when you live a few months in say Colorado or some other state in the United States? What address do you use to file tax returns? Maybe a PO Box?

      Reply
  7. greyhk

    Free healthcare! Now that’s what I’m talking about.

    I recently retired early at the end of last year. Unfortunately, my apartment building in NJ burned down to the ground on Valentine’s day along with all my stuff and IDs, so I wasn’t able to apply for anything. Thanks to a copy of a congressman’s email, I was able to get a replacement passport in time and am currently holed-up in the Dominican Republic until my home gets rebuilt.

    I did buy health insurance here in DR, which is dirt cheap. But I have never and probably won’t ever use it. Drugs are cheap here and no prescriptions are required. When I get back to the states next year, I will do the same as you and apply for medicaid. I probably won’t be in NJ, much less the US much, but it’s free and nice to have.

    One thing that was weird is after one fire, I went from a US citizen and veteran to illegal immigrant. I was initially unable to get a replacement social security card or passport.

    Reply
  8. Allegra

    Aren’t there only limited drs or groups that will take Medicaid ? How about hospitalization ? Is it limited ? Will you get dumped to lesser hospitals?

    Reply
    1. Thriftygal Post author

      I think there are limited doctors that accept Medicaid, but I’ve never had a complaint about anyone I’ve seen. Maybe I’m naive because I’ve never been sick, but I don’t know about lesser hospitals. I think everything is free because I’ve never had to use anything that cost money so far. That’s probably a bad thing to assume.

      Reply
      1. tom

        Currently doing the same thing here in California! From what I know this strategy is only applicable to states that have expanded Medicaid. For those on the Affordable Care Act and those will adult children under their own plan. Watch closely watch Texas v Azar, outcome of this case will greatly affect you.

        Reply
  9. Nedo Laanen

    So, in the USA, if you’re a retired billionaire you can get medical insurance for $ 0 a month and any medical bills you have are being paid by the (hard) working class?

    And you sometimes can’t get medical insurance when you have a preexisting illness?

    Here in The Netherlands we have quite a different system, but not necessarily a better system. We have our own problems. One of them is that the whole medical insurance scheme here is to complex to comprehend. I pay about $150 a month, but not all medical procedures are fully covered, so I end up paying for the bills anyway. So much for insurance.

    Thankfully, I’m still healthy and I don’t really need a lot of healthcare.

    Reply
    1. Thriftygal Post author

      The system is broken, no doubt about it.

      Obamacare disallows discrimination against pre-existing conditions, but that wasn’t the law of the land in 2009 when I bought insurance on the open market.

      Reply
  10. yitood

    Hi! I’m a federal employee and I’ve struggled with my personal ethics of “using” the system. I worked as a seasonal park ranger for several years and we were not allowed to work more than 6 months per year (and no benefits then. They can now enroll in health; no retirement for seasonals though). At the end of the 6 months, usually in October-ish when the tourists slow down, we were “fired” and then eligible for unemployment. Yes, we had to make 3 tries per week or whatever, but I would always submit for permanent park ranger jobs because that was my goal, and I welcomed the time off to be a hermit after talking to people all summer. But I always felt bad using the gov’t benefits.
    I wouldn’t claim them the weeks I would go travel. I also once took a part time job that paid the ~$300 per week I was earning thru unemployment, and I found that working 3 days a week paid me exactly the same at unemployment, so what’s the incentive to work? I followed thru on my commitment to work part time that year until my seasonal job started, but I didn’t go for that option again in future years. No incentive to work.

    I share this because the systems are stupid and I too have, by a super high ethical standard, used/abused them.
    I ask this question of you, because I wonder if you pondered the pros and cons of the ethics of using the government system and what your analysis entailed. Do you figure you paid into the system before and didn’t use it? Did you figure you pay taxes so might as well? Do you donate to non-profits or Caring Bridge strangers to help with medical expenses on occasion from your assets, knowing its helping the people and not the corporations? Fill us in 🙂

    Reply
    1. Thriftygal Post author

      I don’t feel guilty about using the system. I’m not lying about anything and I’ve contributed a lot. The world is better off when I’m meditated and sane. 🙂 I’m okay with the world helping me. I can’t do it alone.

      Thanks for the long, thoughtful comment.

      Reply
  11. Liza

    So someone with a net worth approaching a million can get insured free while older people with nowhere near this amount of money who are still working and need to work are forced to pay crazy premiums. My mom makes very little money and coverage for her and my dad (who is self employed) cuts her paycheck by almost 1/3. Taking advantage of this is not right. This is shameful and the government should not allow it. The same people who bash our government are the same people who take advantage of it.

    Reply
    1. HT

      Why shouldn’t she take advantage? She didn’t inherit her million dollars, she earned it and paid a lot of taxes along the way.

      For some reason (which i think i know, but dont want to say for being accused of playing cards), I never see such comments on other finance blogs, where the bloggers similarly take advantage of govt programs incl in poor countries.

      Reply
  12. Mark

    In 1984 Medicare was introduced in Australia to provide a safety net for those who would otherwise slip through the cracks. The Prime Minister who introduced it at the time faced enormous criticism and backlash. He died a few weeks ago but his legacy lives on.

    Reply
  13. Stephanie

    I appreciate your willingness to share your experience with the health care system, including personal details like being treated for depression. I’m a clinical social worker who works in a medical setting as a psychotherapist. In this role, I’m in a position to see first-hand how royally F*C#@D our healthcare system is. I am not suggesting that you are “using” the system at all – you are simply utilizing an opportunity that exists in a system that has been created, as so many systems have been in our country, to favor the rich and screw the working poor.

    I know of many cases where working poor families make “too much” to be eligible for Medicaid yet cannot afford other medical care (or other essentials like food, housing).

    From a social justice perspective, I feel that your post trivialized the privilege of the health care benefits you are receiving that are subsidized by the same working-poor taxpayers that have “earned” themselves out of being eligible for the same benefits. I understand that your blog is not a social justice blog and I understand that you have earned every bit of your way into early retirement and FI — that’s great news for you. Your post just came across as a bit out of touch.

    Reply
    1. Thriftygal Post author

      Thanks for saying that. I do understand where you’re coming from. Health insurance is a BIG FUCKING PROBLEM and there are so many gaping holes in the safety net. There is a big difference between deep generational grinding poverty and frugality. Frugality won’t solve poverty.

      Reply
  14. Chris Symes

    I think Medicaid is being confused with insurance. Medicaid is a welfare program to help low income folks have access to healthcare. Medical INSURANCE is just that, insurance to protect your assets in the event of a catastrophic illness. ACA required that a yearly physical and several wellness visits to a doctor were free, which was a good thing. Make no mistake, if you don’t have medical insurance and have a catastrophic illness, you will probably lose all of your assets. I don’t believe Medicaid will pay for specialized treatments. I have a $5,000 deductible policy that has no limit. It cost $440 a month. At 61, that’s important. Maybe not so important when you’re young and healthy. I had great insurance my entire working life and hardly used it. The system is backwards. We should have high deductible insurance when we’re young, and the savings to insurance companies should be passed to us when we reach retirement age.

    Reply
    1. Thriftygal Post author

      Yeah, as someone else said, I’m sure if there was something catastrophic, they would go after my assets to help pay for it. So far, nothing catastrophic and just some depression medication.

      Reply
  15. Chris Symes

    I have friends that are my age who quit paying for health insurance, pay cash for visits, and bank the savings instead of making the billionaire ceo’s of the insurance companies even more wealthy. My friends are betting they will stay healthy until they get Medicare. They probably are correct. I wish i had the courage to do the same.

    Reply
    1. Thriftygal Post author

      Yeah, that’s a scary idea, but even with health insurance and a catastrophic injury, you can go bankrupt.

      Reply
      1. Chris Symes

        I’m convinced that eliminating as much stress as possible will keep a person healthier and happier. It is my belief that for most people, having to go to the “daily grind” of work is the most stressful part of their lives. I always had planned on retiring as early as possible, and was able to at age 44. Having control of my life back was the most liberating thing I have ever experienced. I’m convinced that is the reason I’m so healthy now. I firmly believe that most illnesses are caused by stress. I’ve actually never needed health insurance. Maybe the insurance companies and the government have been able to brainwash us into believing that we are crazy not to spend any amount to get it.

        I’ve read your blog since you started it and have really enjoyed your insight. Please keep it up!

        Reply
        1. Thriftygal Post author

          Since I started it! Wow. I appreciate your loyalty and I agree with you 100% about stress being the source of most ailments.

          Reply
  16. Jeff L

    Thank you for sharing your experience and thoughts on this controversial topic. I know you mentioned post-retirement health insurance briefly in your book but I found this post (and the thoughtful comments it generated) to be very enlightening as someone considering the possibility of early retirement.

    Reply
    1. Thriftygal Post author

      I’m sad that it’s a controversial topic. Health care should be a universal right.

      And thank you for reading my book!

      Reply
  17. Laszlo

    Another great post. Thanks, Anita. I really appreciate your honesty, which is almost to a fault.

    I have some insight into how myself and another Canadian friend is faring here in the US. I am on an ACA plan, and working a part time job to make enough to qualify. My premiums are $23 per month and it ‘s a pretty decent plan with only $700 of annual deductible and out of pocket maximum. My friend is working as a truck driver in the oil patch without any health insurance whatsoever and he just pays whatever medical expenses he has, and he has been able to negotiate prices with clinics and doctors because he pays cash. Since we have universal medical care system in Canada, we always have the option to move back there in case something catastrophic arose.

    Reply
    1. Thriftygal Post author

      There are so many holes in the system and so many different patches for different people. I love the idea of paying in cash and negotiating.

      And yes, honest to a fault! Some of the comments I deleted were pretty scathing.

      Reply

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