This article was originally published April 2019 and was last updated November 2020.
What is Financial Independence, Retire Early? (F.I.R.E or FI/RE Community)
There is a global movement of people who choose to escape mass consumerism and invest wisely so they can “retire early”, which could mean working less, spending more time at home with their family, traveling the world, or using their increased free time to pursue passion projects.
The single biggest challenge to many American F.I.R.E folks is the daunting cost of healthcare. Premiums are expensive, deductibles continue to rise, and the cost of healthcare services can seem unpredictable.
The Healthcare Hustlers encourage all Americans to understand how their healthcare plans work, how to make the most of their health insurance, how to be a savvy healthcare consumer, and how to take advantage of innovative companies that make care more convenient and less expensive.
Are you looking for health insurance options, but don’t have employer sponsored health insurance? Check out this guide to health insurance without employer sponsorship.
FIRE Bloggers Approach to Healthcare in Early Retirement
This post features a roundup of F.I.R.E bloggers who describe their F.I.R.E healthcare strategy. Check out the summaries and tips, and feel free to comment with your own!
Our Next Life - Healthcare Strategy
Suggested health status: auto-immune disease, requires out-of-state care, requires prescription drugs
Takeaways:
ACA Marketplace Exchange plans will be available for purchase at least until 2021
Your Out-of-Pocket Maximum is more important than the cost of monthly premiums
The total amount you should budget for the year = out-of-pocket maximum + monthly premiums + a few thousand dollar buffer
The out-of-pocket maximum description in the Summary of Benefits will clarify if it includes premiums and/or copays and coinsurance
All deductibles are not created equal
On some plans (especially bronze plans or high deductible health plans), every service is subject to the deductible. On other plans, many services are subject to just a copay. For example, an ER visit may apply to your deductible on a bronze plan, while an ER visit on a different plan may only cost a $350 copay.
Plan around your circumstances and expected medical usage.
If receiving care out-of-state is important to you, make sure you buy a plan that offers out-of-state coverage. If you need physical therapy or acupuncture, make sure you buy a plan that offers those services.
When planning your future finances, assume healthcare costs will rise faster than inflation and budget for more than just premiums.
Mr. Money Mustache - Healthcare Strategy
Suggested health status: healthy, family with one child
Takeaways:
Healthcare costs continue to rise
Premiums are not an accurate representation of his risk, and insurance is generally a bad deal
While huge, uncovered medical bills are inconvenient, they are rare
In 2020, he announced that he has not been enrolled in traditional health insurance for two years, and recently signed up for direct primary care
Other options than the ACA marketplace plan:
Full self-funded insurance, meaning you don't have actual insurance and you save what you used to pay in premiums
Medical tourism, including traveling to other countries for cheaper medical procedures, or considering moving to other states for lower healthcare costs. For example, California, Utah, and New Mexico have lower on average healthcare costs than Colorado and New York.
Health Sharing Ministries, such as Liberty Healthshare. These are exempt from ACA rules, so they can drop you for having a pre-existing condition, and you must state alignment with their value system.
Expat insurance, for those who travel full time
Reduced income to qualify for ACA subsidies
Accidental Fire - Healthcare Strategy
Via a guest post from Michael Dinich at Your Money Geek
Suggested health status: not stated
Takeaways:
Follow these four steps:
Structure your finances in a way that minimizes your modified adjusted gross income (MAGI), which determines the amount of your Premium Tax Credit.
Max out your Health Savings Account (HSA) as it reduces your taxable income and is a growing investment.
Model some price and political instability into your FIRE calculations.
Live a healthy lifestyle to reduce your healthcare costs.
Traveling abroad for care or using health cost sharing ministries do not provide the same protection as traditional insurance.
Purchasing insurance on the ACA is the most popular form of health insurance for FIRE folks.
Learn how to "hack the ACA" here.
The ACA is likely going to be around for at least a few more years. If it does change, you may need to look into a partially self-funded health insurance plan if you have a side hustle or other business income.
Can I Retire Yet? - Healthcare Strategy
Suggested health status: not stated, but has a family of 3
Takeaways:
Estimating healthcare costs is particularly challenging because we cannot predict the political environment, the rate of ongoing health cost inflation, or our personal health status in the future.
Options
Buy insurance with ACA subsidies
Can I Retire Yet recommends Root of Good's post about understanding and navigating the different ACA subsidies
Join a Health Care Sharing Ministry
Pros: simplicity of simply "paying our share" instead of manipulating income to receive subsidies
Cons: these plans are not bound to ACA rules about pre-existing conditions, they offer little legal protection, they are some level of exclusivity (ex. Requiring Christian affiliation) and they cap the benefits an individual can receive, which increases risk.
Health Insurance Insurance
Maintain current work licenses and skills to allow for reentry into the workforce, and therefore access to an employer sponsored health plan.
Root of Good - Healthcare Strategy
Suggested health status: not stated, but has family of 4
Takeaways:
Sign up for ACA marketplace plan within 60 days of losing employer coverage
If you don't like the initial assessment of eligibility for subsidies, call the customer service number and talk to someone to review the application again.
Children may qualify for Medicaid for Kids, depending on your state and income. Go to your state's Department of Health and Human Services portal to see what is available.
COBRA coverage is available for two months after the employer provided coverage expires and it is retroactive, so they can wait to see if they have expensive medical needs and apply if needed.
The Motley Fool - Healthcare Strategy
Suggested health status: not stated
Takeaways:
If you are a low-income individual, take advantage of ACA subsidies.
If you don't want traditional insurance, there are Health Share Ministries - but be wary.
Health share ministries are not insurance - they do not have a contract with hospital and doctors. They may step in to help you pay or negotiate.
Budget for healthcare expenses.
Additional Resources for FIRE Healthcare
Whether you are on a F.I.R.E path or not, check out these additional articles below to save more money on healthcare.
How to Avoid Expensive Lab Bills During Your Annual Physical
What to Do If You Get an Expensive or Unexpected Medical Bill
Get Free or Low Cost Medications, Medical Equipment, or Health Services
Note: The opinions expressed above are summaries of some FIRE blogger’s approaches to healthcare. They are not necessarily shared or endorsed by The Healthcare Hustlers.