Here’s a FAQ that many of my readers probably have:
“Hey Ed, what about health insurance?“
Oh boy is this going to be a fun topic! “Deductibles, in-network limits, out-of-network limits, etc.” Do you feel your health-insurance juices starting to flow? Yeah, me neither. I’m sorry to disappoint you, but I’m no health insurance expert. Like many of you, I hate the subject of health insurance, and I find it confusing and boring. That said, I also know that it’s imperative to have health insurance because six-figure medical bills are not unusual in the U.S. I did not work, save, and invest for years to fork over my net worth to the healthcare-industrial complex. Going without health insurance coverage in the U.S. is a formula for financial disaster. Here’s what we’ve done over the years:
August of 2002 to October of 2013
For eleven years my wife and I used our workplace health insurance provided by Georgia’s State Health Benefit Plan (SHBP). While we never fully understood the ins-and-outs of the plan, we didn’t have many complaints either. We were always protected from financial catastrophe resulting from uninsured medical costs, and the plan covered most of our annual exams. We also had two major events under this coverage: 1.) our son was born in 2006 and 2.) I had my shoulder “cleaned out” in 2009. In both cases, the plan covered most of the costs.
In 2012 we made a significant change to our SHBP plan when we began using a high-deductible healthcare plan (HDHP). We made this change for two reasons. First, since we were all very healthy, we seldom had to go to the doctor’s office. Instead of overpaying for health insurance that we hardly used, we changed to a HDHP which reduced our insurance premium and increased our deductible a little. Second, our HDHP allowed for the establishment of a health savings account (HSA). In 2012 we opened an HSA, essentially a healthcare IRA, and funded it with $6,250 of tax-deductible dollars (related HSA post). For us, the switch to a HDHP with an HSA has worked out great.
October of 2013 to December of 2014
After we decided to take the 2013-14 school year off as a family, we had to get our own health insurance. While our previous employers offered us a COBRA plan, we decided that it was far too expensive. Next, I went online at Ehealthinsurance.com and found exactly what I wanted, a catastrophic HDHP with affordable premiums. The plan had a $11,900 deductible with a premium of $285 a month. Obviously, if something bad had happened to us, we would have been on the hook for the first $12k of medical expenses, BUT our losses would have corralled at that point. (That’s the point of insurance, right?) The plan worked so well for us that we continued using it even after we took jobs in Douglas, Georgia in August of 2014. In 2013 we contributed $6,450 to our HSA and we added $6,550 in 2014 .
Then in the fall of 2014, we received a notice that our insurance policy would be increasing from $285 to $778 a month…for the same exact coverage! Wow, that was nearly a three fold increase for a health insurance policy with a $11.9k deductible. It seemed so ridiculous that I scanned it in for future documentation. Here it is:
At that point, we decided to join the school plan through SHBP as we had done in the good ole days. It was an easy move to make during the annual open-enrollment period that stresses the heck out of employees all over the U.S. In November of 2014 we signed up for the district’s HDHP knowing that it would begin coverage on January 1st of 2015.
January of 2015 to September of 2016
In January our new HDHP took effect without any problems. The cost of the plan was $226 a month, or $59 less than our previous plan! Wow, maybe the Affordable Care Act was affordable after all? It sure was for us especially since the school district kicked in another $945 a month towards the cost of the plan. Naturally, the district’s $945 monthly contribution seemed high, but after consulting with co-workers, I verified that all employees received the same amount. In all, our 2015 HDHP cost $1,171 a month or $14,052 a year; I paid $2,712 and the district paid $11,340. I don’t know what to say except that $14k a year seems to be a lot of money for a HDHP.
In 2016 our costs increased another $10 to $236 a month or $2,124 for our nine months of coverage. (We only worked through May of 2016, but our coverage was intact until September 30th.) Just as in 2015, the district contributed $945 a month to our health insurance. The total cost of our coverage was $1,181 a month which totaled $10,629 over our nine months of coverage. Once again, that seemed like a lot of money to me, but I was more concerned with finding insurance for the last four months of 2016. Like before, we did not consider continuing with a Cobra policy due to its high cost.
October 1st to December 31st of 2016
In August of 2016 we moved to Tennessee to be near my family. After changing all our residency paperwork and documents, we began looking for health insurance. Just as I had done back in 2013, I went to Ehealthinsurance.com and logged into my account. A few minutes of scanning the website yielded nothing. About a minute after I got off the site, my phone rang…it was an Ehealthinsurance rep who explained that they no longer could sell policies like they did previously. Instead, he walked me through the Healthcare.gov application and submitted it for me. (Let me say right here, that guy was SO HELPFUL during that confusing and frustrating process.) The rep entered all of our info, and he then asked me about our annual income for 2016. I did a quick mental calculation:
($18k of 72t income + $30k Roth IRA conversion) – $5k of HSA = $43k of total income
That was all the income we had planned for the year, but I quickly added $2k to the total just to be sure. I told him, “$45k.” He next told me that at that “low level of income” we’d qualify for a healthcare subsidy. He then said that my wife and I could get a bronze plan for $40.28 a month. (What?! I couldn’t believe my ears. Hey buddy, you’re talking to Ed Mills here; I’m not poor!) When I asked him why our son wasn’t on the policy, he said that he’d have to be on the State’s CHIP plan, CoverKids, because of our low income. The cost of CoverKids was, get this, $0 a month for a health, dental and vision plan. Incredibly, our son would have been eligible for the program if our family of three had an income of $51,050 a year.
Since we had plans to go to Mexico in October, I promptly signed us up for our new health insurance plans. With plans secured we spent the rest of 2016 in Mexico. While we never even used our plans, we at least we had some coverage in the event of a healthcare emergency. (However, I’m sure our plans would have been useless in Mexico.)
January of 2017 to Present
In November the open-enrollment season started again, so I made a Skype call to Healthcare.gov to inquire about our 2017 health insurance. When asked about our 2017 income, I used “$45k” again. Within seconds, the rep told me that we qualified for a healthcare subsidy of $1,823 a month! For a small monthly payment we could get a gold plan. I politely declined the offer and signed all three of us up for a silver plan (for some reason Eduardito was now eligible to be on our plan). The cost of the silver plan would have cost $1,767 a month. Wow, wow, and more wow…that’s a lot of money to me. If that came out of my pocket, that would be $21,204 a year just for health insurance! (You can forget about tax-efficiency, free money, and hardcore savings if you have to pay over $20k a year for health insurance.)
Dear millionaire reader, what could I do? If I accepted the healthcare subsidy, I was a societal moocher. If rejected it out of principle and went commando on health insurance, I’d subject my family and myself to all types of financial risks. If I paid for the coverage out of pocket, I’d burn through my savings accounts way too fast for comfort. What did I do? Yes, you guessed it: I signed up for the silver plan. To this day, we have not used the plan, but at least we have some health insurance.
As I write this post from Merida, Mexico, I am now in a new healthcare environment. Currently, I cover medicals expenses out of pocket until I get on the Mexican national plan, IMSS. The annual cost for our family of three should be around 9,000 pesos (or $500 U.S.). I’m not sure what that will cover, but again…at least we’ll have some health insurance. Here’s a fee list from a clinic attached to a local pharmacy:
Two weeks ago our son twisted his ankle at P.E. and was limping around for a few days. Eventually, we took Eduardito to a local clinic where a pediatric doctor examined him. After an x-ray, the doctor said all was well and prescribed some medications to alleviate the pain and swelling. All in all, it was a great experience: the doctor spoke English, and he was both knowledgeable and professional. The total cost? About $80 U.S. The next day the school secretary told me to submit the receipts for reimbursement from the school medical insurance since Eduardito had the accident at school. So, we might even get that money back.
It seems that we have three choices for health insurance depending on what we do in the future:
- New Job in the U.S. — For example, if we take another teaching job in Georgia, we’re sure to jump back on the State health-insurance plan. In 2018, I’m pretty sure we’d be able to get an HDHP plan for $300 or less. Of course, we’d use the opportunity to fully fund our HSA again.
- FIRE’d Stateside — If we decide to go back to the U.S. and not work, we’ll have to visit the Healthcare.gov exchange and see what happens. Who knows what this will offer in the future? We’ll assess as that situation arises.
- Living in Mexico — In January of 2018 I plan on signing the family up for the Mexican national plan. After three years in the plan, we’ll be eligible for complete coverage in the plan. At a cost of $500 a year, it’s a good back-up plan for us.
I’m not sure I’m too thrilled with any of those options above. Go back to work? Depend on a healthcare marketplace that’s in flux? Getting our healthcare in Mexico? At the same time, I’m not afraid of any of those options either. It’s probably pretty obvious that I’m not a big fan of health insurance schemes; I just want some coverage in the event that we need it. I put a lot more focus on health factors that I can control: exercise, healthy eating, proper sleep, work-life balance, stress management, and optimal levels of red wine and coffee. (Okay, maybe that last example was a little weak, but I’m not giving them up!) Here’s a table I made for my readers who crave them:
** Does not include hefty government healthcare subsidy
Wow, was that a tedious topic or what! At any rate that’s how we’ve managed to maintain our health-insurance coverage since 2002. If you’d like to read more about this topic, Justin McCurry wrote an excellent post on the subject. If you have any questions or comments, FIRE away.
|Health Savings Account: We use Elements Financial to access commission-free, low-cost Vanguard ETFs at TD Ameritrade.