Retirement Healthcare: What Are Your Options?

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For years, health insurance in the U.S. was a major roadblock to early retirement. If you dared to leave work before age 65, when Medicare starts, you were on your own for retirement health care. In my case, our assets were closing in on financial independence as I reached my mid-40’s. But pre-existing conditions precluded purchasing an individual health policy. So I didn’t dare take the plunge into early retirement.

Health Insurance Early RetirementBut then two lights appeared on the horizon: My wife went back to full-time teaching for a few years, qualifying us for retiree health benefits from our county school system. (They’re expensive, but we are able to buy into a guaranteed group plan.) Those retiree benefits removed the last obstacle to my early retirement, one that I could not have overcome on my own. I couldn’t have retired at 50 without them.

The other light was the passage of the Patient Protection and Affordable Care Act (ACA) in 2009, commonly known as “Obamacare.” This was our backup plan. It functions today, and is still our backup plan. But for many early retirees it’s their first, and only, plan. A decade after becoming law, it’s still under attack on many fronts, both political and financial. I’m relieved that we don’t have to rely on it for our early retirement, but sympathetic to the many who do. The picture is changing year-to-year. Here is an update on Obamacare and its alternatives….

Tax Complexity

The ACA has transformed the landscape for early retirees with pre-existing conditions in the U.S. We can now get quality health insurance at reasonable rates, at least in some areas.

Health insurance is more affordable through the ACA exchanges thanks to a complex web of tax subsidies. Premium Tax Credits are awarded based on income, in an attempt to ensure that families of the same size and means pay the same for insurance, regardless of their age, location, or medical needs.

But, for those who want to understand and optimize their health care finances, the new law creates new problems: Superimposing the ACA and Federal income tax profiles makes for a bewildering puzzle at tax time. Even the financially savvy will be hard-pressed to minimize all their costs, especially if life events don’t cooperate.

The problem is the number of constraints that come into play: You can’t make too much income, or you’ll lose subsidies. You also can’t make too little income, or you’ll be forced onto Medicaid or lose coverage. Further, the definition of “income” (Modified Adjusted Gross Income or MAGI) is different for Obamacare than for your income taxes.

The way the Premium Tax Credit is reduced as income increases, works like a tax. At incomes above 400% of the Federal Poverty Level (FPL), subsidies are completely eliminated. This is known as the “Premium Subsidy Cliff.” It’s a cliff because $1 of additional income could expose you to thousands of dollars in increased premium expenses!

Roth conversions and tax-free capital gains harvesting are other key tax strategies whose thresholds are complicated by the new ACA rules.

Given the current system, which subsidizes health care via the tax code, if you are retired and relying on Obamacare, and want to minimize your expenses, you will have no choice but to become an expert on taxes.

Update: Does the American Rescue Plan Change Health Care Planning for Early Retirees?

Optimizing Obamacare

Most early retirees and even many traditional retirees have some flexibility in how they realize income. You can control the timing for when you claim Social Security, withdraw from retirement accounts, harvest capital gains, work part-time work, and pay certain major expenses. Each of these events impacts your income, and thus your eligibility for ACA subsidies.

Based on my reading, here is a general strategy for optimizing insurance costs through the ACA exchanges in early retirement:

  1. Start by tracking your income carefully during the year: It’s the most vital metric for using the ACA.
  2. Be sure to generate enough income to exceed 138% of the Federal Poverty Level in states that expanded Medicaid, or 100% of the FPL in states that did not.
  3. Maximize benefits by keeping your MAGI between 100%-250% of FPL and choosing a Silver plan, to be eligible for the Cost Sharing Subsidy Reduction. That gives you lower out-of-pocket costs on copayments, coinsurance, and/or deductibles.
  4. Do whatever you can to stay below 400% of the FPL, to avoid losing subsidies altogether and possibly going over the premium “cliff.”

If you need more detail, Jeremy at Go Curry Cracker! shares his considerable experience in optimizing Obamacare for early retirement health care and optimizing health insurance premiums, out of pocket medical expenses, and taxes in early retirement.

Comparing ACA Plans By State

Another factor to consider before choosing an ACA plan for your early retirement health care is where you want to live. Since its inception, we’ve received reports of wildly varied experiences and satisfaction from readers using ACA insurance. Much of the variance is based on the state in which they reside.

Kaiser Family Foundation reports different states are taking varied approaches to provide consumers more affordable health care options. Some of the approaches they highlighted include stabilizing marketplaces by implementing reinsurance programs, state individual mandate programs, state funded enhanced subsidies, and public plan options.

WalletHub enlisted a number of health care experts to rate the best and worst states for health care across a number of categories. Each of our health care needs are personal, so it is wise to see how the state where you plan to purchase health care ranks in the categories important to you.

At the very least, it is wise to understand how the ACA currently functions in the area where you want to retire. For those looking to relocate in retirement, finding a favorable state could provide an interesting opportunity for domestic geoarbitrage.

Our Early Retirement Health Care Expenses

What if you aren’t forced by circumstances to use the ACA exchanges? As explained above, we do have retirement health benefits. We are some of the “lucky” ones. We have guaranteed coverage, and some price stability. But our health care expenses are anything but cheap:

When I retired nine years ago, I budgeted what I thought would be generously for our health care. I knew these costs could be the single biggest risk factor in our retirement.

So I planned on $700/month for health insurance premiums. And I also budgeted $500/month for out-of-pocket health care expenses. How is it going? We are fast approaching that premium figure. The next inflation adjustment to our health insurance premium will likely put us over. As for out-of-pocket expenses, more months than not, we are spending our full budgeted amount. Together those two categories make $1200/month or over $14K/year in health care expenses.

So, by our early-60’s, we will be close to exceeding our health care budget. It’s a worrisome trend for our future. We can expect some relief when Medicare kicks in at age 65. Basic Medicare coverage would appear to save us several hundred dollars a month in premium costs. But that savings could quickly evaporate if we elect a more comprehensive Medicare Advantage or Medigap plan.

Health Savings Accounts

These expenses are not out of the ordinary, even for those with health insurance and relatively good health. They can be much higher for those dealing with an acute event or chronic disease.

Utilizing a health savings account (HSA) is an excellent strategy to prepare for these expenses. Contributions to an HSA provide a tax deduction in the year the contribution is made.

This money can then be invested, without annual taxation of dividends, interest or capital gains. Money can then be taken out to pay for health care expenses without being subject to taxation. Chris reviewed the best options for those who want to invest the funds in your HSA.

Insurance Alternatives to ACA Coverage

If government programs don’t fit you financially, or philosophically, there are some alternatives to Obamacare, some which completely bypass the traditional health insurance model:

Employer Provided Medical Insurance

The challenge of obtaining affordable and reliable health insurance in early retirement leads many people who are otherwise financially independent to continue to work in order to receive health care benefits.

This can come in many forms. Rather than retiring fully, some people elect to cut back from full-time to part-time in their current job or profession. Often one half of a married couple will continue to work enough to provide health care benefits to the household.

If you are willing to return to work part-time (and most early-retirees need that in their bag of tricks), there are some prominent companies that offer health benefits for part-time workers. Articles at InsuranceProviders, PT Money, and MoneyCrashers offer details, including some information on the coverages available.

Military Programs

Retired military have several affordable options to obtain health insurance in early retirement through TRICARE. These benefits extend into traditional retirement years when retirees can obtain coverage between a combination of Medicare and TRICARE for Life. Others who may be eligible for benefits under TRICARE include national guard/reserve members, survivors, former spouses and dependent parents and parents-in-law.

Retired military members may also be eligible for health care benefits through The Department of Veterans Affairs (VA). These benefits are more restrictive than TRICARE, but do provide an additional layer of protection for veterans who qualify for them.

Short-term Limited Duration Health Insurance

The ACA initially included a mandate to have ACA compliant health insurance. A popular feature of the ACA is not being able to discriminate against those with pre-existing conditions. The mandate was a way to balance the costs of those with pre-existing conditions, who use more health care services, by requiring younger and healthier people, who use less services, to participate.

Congress passed legislation, effective in 2019, eliminating the financial penalty for those without ACA compliant insurance. President Trump also issued an executive order to expand the availability of non ACA compliant short-term limited duration insurance (STLDI) policies.

Premiums for STLDI policies are typically far less expensive than ACA insurance. This is because they operate under different rules.

It’s important to understand the details of STLDI policies before considering them for your early retirement health care needs. A few key features that differentiate them from ACA insurance is they provide coverage for only a limited term following which a new policy is required. There is no guarantee to be able to renew coverage from year to year if health status changes.

STLDI also can charge higher premiums or simply deny coverage based on health status. They can also limit or exclude coverage for pre-existing conditions, mental health conditions, prescription drugs, maternity care and preventative care which are required to be covered by ACA compliant plans.

STLDI plans can also impose annual and lifetime benefit limits which ACA plans can’t, while also imposing much higher cost sharing provisions than ACA limits. This allows STLDI plans to pass on risk to the insured in ways ACA plans cannot.

For these reasons, STLDI plans are probably an option only for healthier retirees as a short-term bridge to Medicare or another more stable plan.


Another potential short-term solution for early retirement health care is courtesy of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986. Under COBRA you will be eligible to continue the group health benefits from your current employer (assuming you have any), for a limited time.

But COBRA coverage is generally far more expensive than the same coverage when you were an employee, because you usually must pay your employer’s share of the premium as well. When I left my secure corporate job, the cost to continue its typical low-deductible corporate group health family plan through the COBRA mechanism was $1,700/month. That’s a punishing sum, easily totaling one-third or even one-half of a typical retirement living budget!

But COBRA was never intended for extended health benefits, as in an early retirement scenario. It was designed to provide temporary coverage while transitioning between jobs. Though there are a variety of extenuating rules, in general, you can continue COBRA coverage for 18 months — a year and a half — after your voluntary or involuntary retirement.

Group Insurance

Joining a trade, fraternal, or professional organization was once an easy route to affordable group health insurance. But the easier it is to get into an organization, the less likely it will offer any compelling health insurance advantage. Insurance companies are not so blind as to change their rules for pre-existing conditions or substantially reduce premiums just because you’ve filled out an application and paid a few bucks to join a club. Years ago, I paid relatively steep premiums for a health plan purchased through my professional engineering society, only to discover a year later that a plan purchased directly from Blue Cross/Blue Shield in my state was cheaper and had better coverage!

Insurance Workarounds and Supplements

Health Care Sharing Ministries

Faith-based health care ministries (HCSM), which function like private insurance pools for groups willing to live by similar beliefs provide an alternative to traditional medical insurance. Members pool their resources when they’re healthy, to provide for times when they’re not. In these plans, everybody pays equally and is eligible for equal benefits. No government regulations or insurance company rules are involved. But payments aren’t guaranteed either — they depend on cash flow. In general, the plans seem to work: You’ll find many reports online of high satisfaction and significantly lower premiums and deductibles than Obamacare.

Currently there appear to be five such HCSM with critical mass: Liberty HealthShare, Medi-Share, Christian Healthcare Ministries, Samaritan Ministries, and Altrua HealthShare.

Related: Are Health Care Sharing Ministries a Viable Alternative to Health Insurance for Early Retirement?

Direct Primary Care

Another alternative to traditional health insurance is direct primary care (DPC), which replaces the typical fee-for-service insurance model with a simple flat monthly fee that covers routine primary care services. This makes your expenses, at least for routine healthcare, more predictable.

DPC is on the frontier of delivering medical services and it is unclear how reliable of an option it is for your early retirement health care needs. When I originally wrote about DPC in 2016, Qliance was cited as an innovator in health care delivery with nearly a decade providing DPC. In May 2017, they closed their doors and filed bankruptcy. Others like MedLion continue to expand across the country.

Bipartisan legislation has been proposed that would allow the use of HSA funds to pay monthly DPC fees. Currently, DPC fees are treated as an insurance premium by the IRS. Thus, they are not a qualified medical expense. This creates a barrier for those who would use HSA funds for DPC services.

Related to DPC are higher-end “concierge medicine” practices where a group of patients pay an annual retainer and receive exclusive access to their doctor. According to knowledgeable insiders, such practices may thrive in a few well-to-do locations, but will be challenged to keep up with the infrastructure demands of modern medicine, particularly information technology systems. This link takes you to a nationwide map of DPC providers.

Medical Tourism

Medical tourism means traveling abroad to receive medical care. Americans can often receive care at less cost, even after factoring in travel expenses, than can be obtained at home.

Some people use medical tourism to save money on procedures ranging from dental work to total joint replacements. Others elect to relocate on a long term basis to countries with more affordable health care systems.

We receive occasional comments and emails from readers who are taking this approach. Billy and Akaisha Kaderli have documented their decades long personal experience with medical tourism, as well as others who they’ve met on their travels, at Retire Early Lifestyle.

Medical tourism introduces unique risks and complications when planning for your early retirement health care needs. The CDC outlines risks and provides a helpful checklist for those considering medical tourism. Organizations including Medical Tourism Quality Alliance and Joint Commission International provide resources to help find providers in a number of specialty areas and geographic locations.

Self Insurance

Self-insuring and negotiating rates with health providers have been the last line of defense for some. But this poses a grave risk of bankruptcy if you encounter any major medical problems. It also puts you at an immediate financial disadvantage: According to Health Affairs, the uninsured are charged 2.5 times more than an insurance company would pay for the same service. So you might have to bargain ferociously, just to get back to what your insured neighbor is paying.…

The Future

Regardless of your politics, the future of Obamacare is uncertain. The Right wants to gut it, the Left wants to tweak it, expand it, or replace it with Medicare for All. Given such a new and volatile program, any election year could bring dramatic change.

And, even without political changes, there are worrisome indicators for financial stability: Actuaries question whether Obamacare will be financially sustainable if current usage trends continue.

Major insurers have abandoned unprofitable Obamacare business in some markets. Large swaths of the country have only a single participating insurance provider.

There are reports of sick people gaming the system, while healthy people avoid it. Some experts advise using the ACA exchanges only if you’re getting a subsidy: That might be a good personal strategy, but it’s not financially sustainable for a country. (Insurance doesn’t work if only the people in need buy it.) If these trends continue, Obamacare could be bankrupt in a few years.

If Obamacare fails, will the U.S. health care system take some other route to expanded coverage? The interests vested in the current system are numerous, wealthy, and powerful. Expecting significant change any time soon looks like wishful thinking to me.

However, one aspect of the ACA that we can probably count on continuing is the ban on denying coverage or raising premiums due to pre-existing conditions. Those provisions will be too politically popular to get axed.

While not the roadblock it once was, health insurance remains both uncertain and expensive for U.S. retirees. And no resolution is in sight. Naturally, you’ll try to optimize your health care spending. But, given the pressures and changes afoot, no single strategy is likely to carry you all the way through retirement. Staying informed and flexible, and healthy, is your best hope.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to Financial planning inquiries can be sent to]

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  1. Hello Darrow,

    This is a supremely thorough article, perhaps the best I’ve ever read on health care. I am not an early retiree (on Medicare), and as a retired state government employee I truly lucked out big time in terms of so-called “Medigap” or secondary health care coverage. So while the information here is not really relevant to me personally, I think it’s going to help a lot of people out who need to account for health care costs in retirement, early or otherwise. Thanks for the thorough research and the time it must have taken to write this post.

    1. Thanks Tom,

      This article was originally written by Darrow and published in 2016 and was one of our most popular articles, but as we were going through our site for the redesign, we realized that a lot had changed since then. So we collaborated to bring together the best from this original article and some of Darrow’s other prior writing, my ideas, updates on things that have changed since we’ve last written about them, and a few things neither of us has covered yet on the blog (STLDI, medical tourism) to try to create a comprehensive and current resource which will continue to evolve as our health care options evolve.


  2. Thanks for posting this Darrow. The link to the state comparisons was interesting and reassuring to some extent. Living here in MA, it was nice to see the state rank so high. While it also means it’s expensive, it’s good to know that it’s there when my wife does join me in retirement and we lose her employer’s coverage.

    I’m also a huge fan of Health Savings Accounts. I didn’t have access to one for very long but tried to fund it as much as possible when I did. We’ll let it continue to grow until we need to move to ACA (or whatever is then available). It’ll provide a tax free stream of cash to help offset our medical expenses in the future. I urge anyone who has access to an HSA to fund it and not use it on a current basis to give themselves one more trick in retirement to pay for their health care.

    1. Mr. P2F,

      The state to state differences in the ACA were something I only learned about from reader feedback. I assumed since the ACA is federal law, it would function similarly in all parts of the country, but that is simply not the case.

      I also didn’t have access to a HSA until 2017, but we now fund it fully every year while we’re healthy and able to do so. Agree it is another nice tool to have at your disposal, and the risk is minimal b/c almost everyone will have medical expenses at some point and the “worst case” scenario is that you stay healthy and have an additional tax-deferred retirement account.

  3. Thanks for such a good review. Health insurance and healthcare costs are especially difficult since they are hard to predict.
    But one aspect that I find often overlooked by the FIRE advocates is that if you are not able to afford healthcare in retirement you are not FI.
    For me no different than if I can’t afford housing or food.
    Especially since a major health event is the greatest threat to ones financial status. I actually consider my high deductible insurance policy to be wealth insurance more than health insurance.

    1. I’d kind of agree with you Stephen, except you have a lot of control over your food or housing costs. How can anyone know if they have enough saved for health care when 1.) we can’t predict our future health status and how much care we’ll need, 2.) we can’t predict what the marketplace will look like so no idea what premiums will be 2 years from now, let alone 20, and 3.) even if we have insurance, but we have an incident and have to go to an out of network provider or even if we go in network but get an individual provider there who is out of network and we can be charged massively inflated fees that we can’t even fight? It’s a really tough issue, no doubt about it.

    2. Premium Tax Credits=PTC, for an ACA Policy, are somehow different than other Tax Credits? Should you voluntarily turn down tens of thousands of Premium Tax Credits? Let us do the numbers. A couple in their late 50’s may receive over $18K in PTC. Most people are also unaware of this: Cost Sharing Reduction (CSR)
      A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace, cost-sharing reductions are often called “extra savings.” If you qualify, you must enroll in a plan in the Silver category to get the extra savings.

      When you fill out a Marketplace application, you’ll find out if you qualify for premium tax credits and extra savings. You can use a premium tax credit for a plan in any metal category. But if you qualify for extra savings too, you’ll get those savings only if you pick a Silver plan.
      If you qualify for cost-sharing reductions, you also have a lower out-of-pocket maximum — the total amount you’d have to pay for covered medical services per year. When you reach your out-of-pocket maximum, your insurance plan covers 100% of all covered services.

      This reduced our deductible to $75 and the max out of pocket to $700. The billing for my wife’s surgery in December totaled over $111K thus far. Thankfully she is covered by the ACA. I’ve been buying our own insurance since 1997. We pay less per month now than we did then. What you don’t know about the current system can be very expensive.

  4. I was called to military service (moderator’s edit) in the early 70s. Conscription and police actions were something I didn’t support but… I went to school on the GI bill. While it was minimal, it was sufficient. But more importantly, I used the VA medical benefit to allow me an early retirement. Almost all writing on health care neglects this important benefit.

    1. I worked in the VA system while a student at the U. of Pittsburgh. There is a lot wrong about that system, but there is a lot wrong about American health care in general. The VA provides an option for vets that they should be aware of.


  5. Regarding differences in the ACA from state to state, for those who reside in California, subsidies are now available on incomes up to 100K AGI. In essence the income ” cliff ” has been eliminated, subsidies have been spread out to more people, but the subsidies aren’t as high.

    I was one who had to manipulate my rental property income and deductions to make it under the previous cliff at $64K; a penny over would have cost me about $10K. For 2020 I was able to raise my rents for the first time in four years and not have to spend money on improvements to create deductions. My monthly premium is now $629 for my wife and I, last year it was $195, but that’s fine, I’m about $4000 a year ahead with the new program in Ca.

    So if you live in Ca take a look at the ACA again. I am optimistic that even if the program is destroyed by the current President, that California at least will do something for those of us with pre existing conditions. It’s a shame that retiring early in the US is made so much more difficult by the high cost of health insurance.

    1. Thanks for sharing your insight Mitch and agree that the American health care system is a shame. I actually thought of you and some other readers from CA who have shared generally positive experiences with the ACA. Many readers in other parts of the country don’t share that experience unfortunately.


  6. ACA Can be a competitive choice depending on your personal circumstances.

    I just retired at age 59. I was given a choice of COBRA or continuing group health (HMO) as I have now, but obviously I would have to pay full premium. The cost for COBRA a continued coverage was basically the same ($10 a month).

    I am a single man, no pre-existing conditions. Good health. Fifty-nine years old.

    My choice then ended up being continuing group health from my employer or ACA.

    ACA cost is of course directly related to your annual reportable income.

    I tried to compare apples to apples when making the decision, so I looked at Blue Cross Blue Shield HMO (Same as my group insurance).

    The cost through ACA would have been roughly $100 less, but with a $2000 deductible (No deductible through group insurance) and my group insurance covers dental and vision (Benefit worth $1600 at best).

    At least this year (Because of higher earnings) I will stick with group insurance, but depending on my projected income next year, I might switch to ACA (If it still around).

    So how much $$$, I am sure you would like to know; $715 a month.

    To some, it is nothing. But to me, it is a substantial amount to cover for the next six years until Medicare (If it still around).

    I plan to cover it with some side gigs here and there. And of course, money spent on health insurance, can’t be spent traveling ($8580 buys you a real nice overseas tour once a year).

    What it is, is what it is. But after comparing with quotes (about 25% percent the cost as in the US) I received on private, top of the line health insurance in Europe, Canada and Latin America, it is pretty sad state of affairs.

    1. Thanks for sharing SUSANDSAND. This is why my wife continues to work enough to get insurance for our family through an employer. In an ideal world, we would both do very limited (10-15 hours/week) part-time work, but because we are relatively high earners we would pay an arm and a leg for health insurance, so it makes more sense economically for one of us to work enough (25-30 hours) to get insurance that way and the other to be a stay-at-home parent/spouse and do the lion’s share of the household work. It is quite a financial penalty if you have to pay the full cost for your medical insurance.

  7. Okay, this was a pretty comprehensive article giving the ACA a good presentation, but I would have appreciated more input into how to get affordable coverage when your income just barely passes that 400% FPL. This author feels that a $600-700 month premium is “affordable” because his income level is a great deal higher than mine. I am not very impressed by the “affordability” of the ACA because I saw my healthcare coverage cost quadruple after it came into effect and I lost coverage for medical services because some committee decided on what was deemed covered services. Healthcare costs should be programmed to the needs of the individual, not just the most profitable services. We still haven’t gotten true transparency in costs for medical services which for some reason are higher in states where the insurance companies feel they can charge more merely because not enough people complain enough or don’t read the fine print enough to see how they are being overcharged. I believe the doctors and nurses should be paid properly but there’s too much cost hidden in administration costs past on to patients. We do need some revision to how costs are determined and need to leave geography out of the denomination in determining the cost for the same treatment across the entire country.

    1. Unfortunately, there isn’t much you can do with the cost of ACA insurance if you can’t limit your income. To be clear, Darrow does not get insurance through the ACA. He probably could get it for a significantly lower price as an early retiree with little income. However, they pay more to purchase through his wife’s former employer b/c leaving that plan is a one way road and if subsidies go away there is no guarantee what they would pay, and how or even if they could get insurance.

  8. I wonder why the emphasis on staying above 138% of the FPL, and thus “forced onto Medicaid” – as if Medicaid were to be avoided? As you say, retirees can often determine their own income, which might include making little enough to be eligible for Medicaid. We used an ACA plan the year after I retired, then Medicaid for a number of years when our taxable earnings were quite low. The years on Medicaid, we were able to save thousands in annual healthcare costs over what we’d paid while on employer-sponsored insurance or our ACA plan. Sadly, we’ll not have that option this year, but I’d stay on Medicaid if we were eligible.

    1. GH,

      The primary reason is that Medicaid has very low reimbursement, so in some areas your choice of health care provider will be very limited b/c many don’t accept Medicaid. Medicaid may work well in some areas, and most providers will accept it for children.

      Hope that clarifies.


      1. Yes, I’ve found a number of providers in my area don’t accept Medicaid – but they also didn’t accept the insurance I had under my employer-provided plan or the short-term ACA plan, so this didn’t make any difference in my case. Our primary needs for coverage were for our kids’ medications (covered by Medicaid), our primary care provider practice (which accepts Medicaid), and occasional PT (also covered by Medicaid).

        But one thing I DID notice is that NONE of the dentists in our town accepted Medicaid, except for our kids. Despite having a lengthy list of providers that our state listed as taking Medicaid, not one of them said they would take it when I called around.

        1. This is consistent with my experience on the provider side. Medicaid is a great option for minors, mixed bag for adults.

    2. GH, that’s my experience with Medicaid exactly. It’s been great.

      I somehow got the impression, growing up, that Medicaid would mean inferior health care. But I’ve been covered by it for about a year now and so far, so good. Per Chris’ point, below, I was even able to keep all my previous doctors. (Ironically, I’ve had several friends who get insurance thru work who have had to drop their doctors when they, or their employer, have switched providers.)

      Two Caveats: My ability to keep my previous doctors may be due to being in a “good” state. Two, I can’t speak to what Medicaid is like when you have a major medical need/emergency since so far (knock on wood) that hasn’t happend to me.

      1. LJB,

        You make two great points that are worth highlighting. I have a bias against Medicaid having been a health care provider. Our facility didn’t accept Medicaid, I know many others in our area didn’t and this is backed up by demographic data nationally. However, as you note you may deal with similar issues with private insurance networks and parts of the country function differently from others with regards to both Medicaid and private insurance, so you have to do your homework.

        The second is that few of us really know how our insurance will work until we have that “worst case” scenario that we’re insuring against. I’ve seen this with bloggers who write glowingly of health care sharing ministries, but who are healthy and so are judging their satisfaction based on lower costs of premiums. The reason we have insurance is to prevent a health care issue from destroying us financially, so before accepting someone’s antidotal “satisfaction” with their health care, it is important to know if they’ve actually stress tested it with an event they’re insuring against.

        Thanks for the thoughtful comment.


  9. Hi Chris, quite thorough and I like the new site design. Hope you are well.

    We are certainly seeing more and more payment mechanisms trending heading towards a “population-based payment system”. I think we will continue to see that assuming they can make it financially viable. It reminds me in some ways of the direct primary care model and PC will always be a potential gatekeeper on how premium dollars are spent.

    Fee-for-service certainly has a target on its back. Adam Boehler, the former Director at the Center for Medicare & Medicaid Innovation (CMMI) has said that on record. He has since moved on, but I have seen others with this mindset.

    “I’ll tell you a lot of what I do in my role running CMMI as senior adviser to Secretary Azar is to blow up fee for service,” he said during a fireside chat at the Office of the National Coordinator’s annual conference. “That’s one of our prime goals—is to get rid of fee for service.

    Take care,


    1. Max,

      Thanks for reading and taking the time to comment. And thanks for the kind words. I appreciate you insights, understanding, and nuance. Health care is complicated.

      Fee for service clearly creates perverse incentives, but no system is perfect. Paying based on outcomes or playing a flat fee based on diagnosis also create perverse incentives for providers to cherry pick simpler patients who require less care and are thus more profitable, while avoiding caring for more complicated patients who will require more care and thus be less profitable.

      Similarly, everyone loves the idea of the pre-existing conditions clause the ACA mandated. However, it doesn’t work without a mandate that healthy people participate. It also doesn’t allow insurance companies to discriminate with lower rates for healthy lifestyle or higher rates based on unhealthy behaviors. Someone who is morbidly obese, is an IV drug user, or who has 10 STDs pays the same rate as someone of the same age living in the same geographical area who lives a healthy lifestyle. That’s not how life, auto, or really any other insurance works but it is our health care insurance system.

      Alternatives like health sharing ministries or short-term medical plans can discriminate allowing them to be much cheaper, but they can also deny pre-existing conditions, max benefits, and in the case of short-term care raise your rates or simply not renew your policy once you develop an illness. Again it’s all complex and I’m curious to see where things go from here.

  10. Thank you Darrow (and Chris) for a thorough and excellent article. I was surprised by all the options presented.

    I would like to point out that for item 3 of your ACA strategies (Maximize benefits by keeping your MAGI between 100%-250% of FPL and choosing a Silver plan…) that you may be better off with a Bronze plan. That was my case because the premiums were zero or near zero for several of the bronze plans. The only way the lowest cost Silver plan approached the cost of the bronze plan I chose was if I had extreme medical costs for the year and even then it was about even.

    For my situation (early retired with options on 2020 income), not only was I deciding on an ACA plan for the year, I was deciding on my income for the year and income taxes to be paid. To analyze, I created a spreadsheet for different incomes and listed the costs for premiums, deductibles, doctor office visit, medication costs, etc., for each plan available. I also took into account my typical costs in a year and what if I maxed out costs. I also ran the income numbers through my prior year tax software. All of this is an arduous task, but it nailed down my numbers for the year.

    I glanced at the link for best and worst states for health care. I am not sure I trust the accuracy of the results. They may be correct (or not), but may be different for specific areas within a state. I would not dismiss an entire state (especially big states like Texas or Alaska) based on their chart. Instead I would go to the healthcare gov site and run the numbers myself. For Texas you will be prompted for the zip code.

    In case you are curious, I decided on almost taking the full subsidy which came to about a $5 per month premium. I am not sure I will have this option (or low cost) in the future so I am taking advantage of it while it lasts.

    1. Thanks for sharing your experience John G.

      Re: gold vs. silver. Several factors go into that decision. The healthier you are and the less care you are likely to need, the more likely the cheaper Bronze premiums (and higher deductibles) are to work in your favor. In addition to the premium subsidy, which is dependent on income to determine insurance premiums is a second cost sharing subsidy. This was traditionally only available to those with Silver Plans. This further complicates your calculation for those using more care. This second subsidy also has been a bigger political football and so less certain to plan around.

      Re: best and worst states you make a good point. The larger point is that healthcare quality and health insurance administration is not uniform from area to area. You are absolutely correct that it is worth also looking at this on a more micro level.

      Thanks again for the thoughtful comment.


  11. Hi Darrow and Chris,

    I lived in Canada all my life and cannot imagine all the twist and turns Americans have to go through to receive health care. We do not have a perfect system here in Canada.

    But it mostly works without the many layers of paper work to go through.

    I hope after the 2020 elections things will improve for our American friends.

  12. Hi you missed out on one other ‘retirement’ technique to get health care.
    Don’t 100% retire. Stay on somewhere at 10-20%
    If you keep on at a company at a minimum capacity that covers health care costs you can get discounted health care with a little paycheck on the side!

    This is what I did and it’s working out for me 🙂 !

    1. Leif,

      Agree with your comment. Agree this is a great deal if you can get it. And agree if you can work this type of arrangement you should strongly consider it or hold onto it, BUT…

      1.) That is in the article and that is actually what we’re doing for the time being with my wife’s work. The only difference is she is working closer to full-time (28 hours/week) to get the benefit, allowing us to pad our portfolio so when the time comes that she doesn’t want to work we can recognize a very low income and get a larger subsidy.

      2.) This is getting harder and harder. Many employers are not even offering insurance to spouses and children of full-time employees, and some are even cutting that benefit for employees because medical insurance is becoming cost prohibitive.

      Congrats on being able to do that though! We certainly would if we could find a way.


  13. I’m a physician myself and here is what I did when I retired at 63( my wife was 62): we analyzed all these options and none were acceptable for us, for example if we would’ve applied for OBAMACARE roth conversions and others pre-retirement tax strategies were impossible, so the only option was short term health insurance ( at first needs to be renewed every three months and later, the current administration restored to twelve months), we never used it, it was just a backup plan in case disaster strikes. You will be surprise to se how “cheap “ is to see a doctor, get a ct scan, echocardiogram or buy drugs with GOODRX if you pay cash. The plan B in case we have a catastrophic event happened was to go to OBAMACARE(once you are in short term they have to cover you after the deductible is reached for until twelve months, the problem would be to renew the policy ). Is that to play with the system? Of course not, you are are following the law, I did not made the law, congress did. Anyway we are happy now that both of us are in MEDICARE now.

    1. Luis,

      I think that strategy makes total sense in the short term. Agree that we all have to play the cards we’ve been dealt.


  14. When you say, “i planned on $700/month for health insurance premiums. And I also budgeted $500/month for out-of-pocket health care expenses”, what do you mean? Single or with spouse? PPO or high deductible?

    1. Teri,

      I’m moderating the comments for the week. I can tell you it was for a couple, but not sure exactly what type of plan.


  15. VA Eligibility. You don’t have to be retired. I did my 3 years and was honorably discharged decades ago. If you qualify you may receive VA care and Insurance. Always apply. Look at the income levels and how it applies to you and your family. You may start in Priority Group 8. There will be co-pays but they are much less than private insurance and you won’t have the monthly insurance payments. I believe the max out of pocket is $700 a year.

    1. I hadn’t heard of that site, but just gave it a look. Interesting resource. I’ll have to spend some more time with it.


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