What The Wealth Retirement Podcast

Healthcare in Retirement: Navigating Health Plans During Your Transition to Retirement (102)

• Jonathan Bednar II, CFP • Episode 102

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This episode focuses on healthcare options for early retirees, highlighting the Affordable Care Act and its accessibility. 

I share insights into navigating healthcare.gov, addressing chronic health issues, and making informed decisions without the need to remain in the workforce solely for insurance. 

• Discussion of a couple's specific healthcare concerns 
• Explanation of the Affordable Care Act and its benefits 
• Step-by-step guide to using healthcare.gov for plan comparison 
• Importance of evaluating chronic health conditions in plan selection 
• Strategies for early retirement without sacrificing health coverage 
• Encouragement for taking proactive steps in healthcare planning 

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Thanks for Listening!

Jonathan

Speaker 1:

Welcome back to the what the Wealth Retirement Podcast. I'm your host, jonathan Bednar, certified Financial Planner. Today we're going to talk about healthcare in retirement, and I was meeting with a client earlier this week and they had some questions about what kind of healthcare do we get in retirement. Obviously, medicare is 65, and there's a certain window you need to sign up for that, but in this case they're 61, 62. So we're trying to cover a little bit of time before we actually get on and qualify for Medicare. So the question is what do we do Now?

Speaker 1:

They're currently both working. They're covered at their employers, but the burnout, they're tired. They have assets set aside that they can cover some healthcare expenses, but it's the big unknown. They don't know really what to do, how to get it, how much it costs. They're just used to having it through their employer and in fact they each have it on their own employer. But the wife in this case is working solely for insurance that cost her about $800 a month and the concern for her is a chronic health issue. And so you know she really wants to make sure she has health insurance until she turns 65. But again, she has a kind of a laborious job she doesn't want to continue doing it if she doesn't have to, and the husband is also just kind of burnout at work. And so what they're trying to do is find a gap, or a stop gap if you will, to let them go ahead and move into retirement, still have health insurance coverage and then in three years hop on Medicare. And so we've talked to them a couple of weeks ago probably a couple of months ago and walk through some scenarios using healthcaregov.

Speaker 1:

This is the Affordable Care Act plan. What's good about this plan is that there is no worry about pre-existing conditions and then there's no lifetime cap, so it doesn't matter what your health issue is, as long as you you know paying your premiums and meet your deductible and all those things. You have health insurance and so for. For the, for this client, the, the, the lady specifically the wife it was it's costing her about $800 a month just to cover health insurance through her employer. She is basically just working for the insurance. She makes $10,000, $11,000, $12,000 a year and all of that money goes to cover insurance. So we're trying to find a way that we can stop that.

Speaker 1:

So when we met this week, she had reached out to a health insurance broker to help kind of navigate some of these questions, to figure out how you do it. The healthcare broker's advice at the end of the day is I would just continue to work and get the health insurance. I don't know if we're going to be able to find a solution and I just don't feel like that is an adequate answer. As someone who has their own chronic condition, who is on an Affordable Care Act, I have zero issues being on the Affordable Care Act. I see the doctors I want to see, I get the medicine I need. I have no issues, and that's what I told this client. And so when we sat down in the office I said okay, first of all, you know you've got a little over a million dollars. We'll call it right at a million dollars. You have plenty of money to pay insurance out of pocket if you need to for a little while. You know, if you're not working and insurance premium is a little bit higher in order to kind of fund the next three years until you get on Medicare. But I don't want this to worry you.

Speaker 1:

And so what we did is we went on to healthcaregov, the Affordable Care Act exchange, and I started going through searching for a plan. So if you go on to healthcaregov, if you're kind of in a situation where you know you want to retire early or you want to take a sabbatical from work and take a few years off, or you want to retire but you're not quite 65, you know these would apply to you. And so at healthcaregov there is an option to look at, browse plans and cost. And as you browse these plans so you go through a series of questions. You type in your zip code and then you answer some questions about your family. So if it's just husband and wife, you put just the two of you, your age, and then it'll ask you a few questions Are you pregnant, do you smoke, do you have any dependents? And there's another question that I don't recall and then it'll ask you that for your spouse, and then if you have kids, you would plug those in. In this case we have no kids, and so we hit search, the next you know. So that gave us a list of, you know, 40 or 50 different options to choose from.

Speaker 1:

From there we need to kind of dive into her chronic health issues. So how do we look at her health issue? She takes a very specific drug. The concern is, you know this drug is very expensive. It's $30,000 or $40,000 a month for this injection and I need to make sure I take the injection for my chronic disease and so I want to make sure that the insurance company pays can help pay for that drug, because it's very expensive. If I have to pay for it on my own, you know we're wiped out pretty soon. So and this is where the prior healthcare broker you know she said she couldn't really help because she didn't know. So it might be better off to just stay where you are paying health insurance.

Speaker 1:

What you can do on this healthcaregov is you can actually go in and you can type what your medicine is and you can select it. So this is a tier five drug. It's a very expensive drug. It's not your normal drug that everybody uses and so it costs more Drugs. Pharmaceutical drugs are labeled in tiers based on frankly, I don't know what they're based on, but price is probably a big thing but it's a tier five drug. It's the highest price drug tier there is, and so it's important that we find a health insurance provider that will cover her drug.

Speaker 1:

And so as we go into, there's a little filter section. You can click on the top, you click the filter, you type in the drug and it brings up a couple different options depending on how you're taking it and how much. And so we put hers in and we hit apply filter. And so we put hers in and we hit apply filter, and then it shows you the list of the health insurance plans that will continue to pay that drug, with you getting that drug. And so there's all kinds of options. You know where you see your doctors. You can plug your doctors in. There's all kinds of options that you can kind of build out to see can I do this? And so the big question still is then what does it cost? Can I afford it? And so in one of the questions that we'll ask you as you're filling this out, you know what's your income, what's your annual income as a household. So in this case it's $75,000, $70,000, $75,000.

Speaker 1:

As you press submit, you apply these filters, you press submit, you pick your list and you read through the various options that it'll pay. Once you've selected the premium or the health plan that you want, it will take you to another screen that tells you what your tax credit would be and what your premium would be. And so in this case, you know, to cover both of them, I want to say the plan, if I recall correctly, was around $2,000, $1,800 to $2,000 a month. The tax credit was like $1,500 a month. So they were actually only going to have to pay a $300 a month premium to cover both of them. It would pay for their drugs, it would pay for their doctor's visits. Everything would be the same. They're out of pocket $300 a month which they can easily afford. They can both quit working. She doesn't have to continue her laborious work on her feet all day long and she gets health insurance far cheaper than she's getting it right now from the employer work.

Speaker 1:

It's kind of going the extra mile to sit down with you at the table or on the Zoom or however. You want to meet and spend time figuring out how can we solve some of these problems, instead of just saying, well, I don't do that, you know, go see so-and-so. I don't do healthcare. I don't sell healthcare premium policies. I don't. It's not my expertise, it's not my specialty, but it doesn't take a rocket scientist to sit down and look at this healthcaregov website. But, more than anything, it doesn't take a lot of work to be empathetic and to put my arm around clients and say, look, I will walk this with you every step of the way. I may not know exactly the answers. I'm not licensed to sell health. Actually, I am technically licensed to sell health insurance, but it's not my specialty, so I don't sell it.

Speaker 1:

My objective is to wrap my arms around clients, be there with them as they make these decisions, help them find the partners that they can use to execute these decisions, but show them that it can be done, and unfortunately, they didn't get that from the prior health broker. Before they came to me, I had no idea who this person was, but what I did was I took the time to show them. I don't know that I believe what she says. Let's dive into it together at this meeting right now. That was the number one issue on their plate. They had a couple other questions about their portfolio and their investments and a couple of other things, but the primary concern was this health insurance and how are we going to pay for it. How are we going to take care of ourselves until we can get on Medicare? How are we going to pay for it? How are we going to take care of ourselves until we can get on Medicare.

Speaker 1:

And so they left that meeting with a lot of confidence, knowing you know we can do this. We don't have to continue working if we don't want to. And I think they're at the point where you know there's plenty of money left aside. What's kept them there is the health insurance, and you know they're ready to move into the next phase of life, move into retirement, move into spending more time together doing the things they want to do traveling and fixing properties and just having their own. The world is their oyster, being able to do whatever they want to do for their sake. They've got plenty of money.

Speaker 1:

Obviously, this is a little bit different healthcare and retirement than the traditional Medicare conversation, but it is certainly possible to retire early, get decent healthcare coverage. Obviously, there's a lot of factors that go into this, which range from what your income is to how big your family is and all of that stuff, but it is certainly possible to retire and have health insurance, not have to kill yourself to provide health insurance for you and your family. And again, this is where I think we add value above and beyond investing, but really showing. Here's how I think you can retire, here's what it looks like and put those plans together so that there is a real strategy on paper for their retirement. I want to talk about that. I'm probably going to show this strategy in a YouTube video at some point coming up, so I want to just kind of talk about that. I'm probably going to show this strategy in a YouTube video at some point coming up, so want to just kind of talk about this.

Speaker 1:

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