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Early retirement and health insurance
Posted on 9/20/24 at 10:18 am
Posted on 9/20/24 at 10:18 am
Is there any way to do this and not get clobbered? What are the decent options? What is one reasonably looking at (say monthly cost for something comprehensive, similar to a typical employer plan) for a couple at age 60?
4
Posted on 9/20/24 at 10:35 am to Y.A. Tittle
Using a combination of taxable, tax deferred, and Roth assets, you draw them in combination so that your MAGI is low enough so that the cost of ACA (Obamacare) insurance is something you would want to pay.
The trick is to keep your MAGI low enough to avoid paying for Obamacare. Take note that after 2025 that might be a little more difficult if the Obamacare "cliff" returns.
It depends on what your income sources will be and if they are included in MAGI, but you could do things like Home Equity Loans or draw down Roth assets to keep MAGI low, or you could take an "Up year, Down year" strategy where you realize a high MAGI one year but purposely have a low MAGI the next so every other year you get free Obamacare.
Others may have different answers.
The trick is to keep your MAGI low enough to avoid paying for Obamacare. Take note that after 2025 that might be a little more difficult if the Obamacare "cliff" returns.
It depends on what your income sources will be and if they are included in MAGI, but you could do things like Home Equity Loans or draw down Roth assets to keep MAGI low, or you could take an "Up year, Down year" strategy where you realize a high MAGI one year but purposely have a low MAGI the next so every other year you get free Obamacare.
Others may have different answers.
Posted on 9/20/24 at 10:43 am to CharlesUFarley
That's interesting. I figured the answer would involve some sort of "gaming" the system.
Do you know a rough cost in my scenario outside of Obamacare?
Do you think Obamacare has ultimately made this more or less feasible for someone with enough assets who would necessarily have to "game" it to take advantage?
Do you know a rough cost in my scenario outside of Obamacare?
Do you think Obamacare has ultimately made this more or less feasible for someone with enough assets who would necessarily have to "game" it to take advantage?
Posted on 9/20/24 at 10:50 am to Y.A. Tittle
quote:
That's interesting. I figured the answer would involve some sort of "gaming" the system.
Do you know a rough cost in my scenario outside of Obamacare?
Do you think Obamacare has ultimately made this more or less feasible for someone with enough assets who would necessarily have to "game" it to take advantage?
It's not "gaming". You'll pay a good chunk of that advantage back when you hit RMD's at age 72-75. Any cost you avoid now will at least be partially paid back then, and if it's Roth assets, you've also paid at least some of it in the tax years you contributed to the Roth. Waiting to draw Roth assets seems like it makes a lot of sense but looking at all present and future tax consequences, realizing the future will probably change, is what really makes sense.
Posted on 9/20/24 at 11:05 am to CharlesUFarley
quote:
It's not "gaming".
Oh, I didn't mean it in a nefarious manner, hence the quotes. Maybe finagling would be a better word - and I was just hopeful there was an easier answer than having to do so.
Not a slam on you. I appreciate the info.
Posted on 9/20/24 at 11:58 am to Y.A. Tittle
My wife is going to retire from the school system when she's 54 and I'll only be 56. Going to try to work until 59 or 60 and I'll be able to stay on her health policy since I'll be vested into it by then. I'm lucky but I often feel like vomiting at the idea of her being retired for nearly 10 years before I can retire if I were to have to wait until 65 for medicare 
Posted on 9/20/24 at 12:34 pm to Y.A. Tittle
quote:
Oh, I didn't mean it in a nefarious manner, hence the quotes. Maybe finagling would be a better word - and I was just hopeful there was an easier answer than having to do so.
Not a slam on you. I appreciate the info.
I don't mean to criticize by these comments, but you need to change your mindset from that of someone that earns income to that of someone who leverages his assets to the max. Instead of thinking of how much income you will have, think like you have a pot of gold and when it's gone it's gone, but you do get a few more coins in that pot most years. The trick is to try to preserve that gold as long as possible and keep it growing. The number one threat to your gold is taxes, second threat is income related costs like heath insurance, and maybe IRRMA, because these are some of the things you have some control over, but you can't control things like getting sick or needing a new roof.
Everything you take out of your pot of gold buys something of value, but if you take too much, you pay IRRMA and taxes or pay more for Obamacare which buys you nothing of value compared to having a little less (realized) income and not paying for those things.
So when you are thinking of buying a new Corvette for your Ukrainian mistress, consider the cost of financing it versus paying for it and how each option effects your Obamacare cost, IRRMA (later on), taxes, and of course, the divorce lawyer.
Posted on 9/21/24 at 8:22 am to Y.A. Tittle
quote:I retired at 52 and won't be able to "game" my income for subsidies. Thankfully my wife is still working and so I have insurance under her employer, but I did estimate using the KFF Insurance Marketplace Calculator.
Do you know a rough cost in my scenario outside of Obamacare?
For my family of 4 (3 adults, 1 child) when we might get this in a few years, the costs are ~$26K to ~$32K anually depending on if I took a bronze or silver plan.
When I get rid of the kids, it drops to ~$18K to ~$22K.
If you get a plan through the Healthcare.gov marketplace (even without subsidies) they cannot turn you away if you have pre-existing conditions.
Posted on 9/21/24 at 10:48 am to TDsngumbo
quote:
My wife is going to retire from the school system when she's 54 and I'll only be 56
Yep. My wife is a retired school teacher. She is still eligible to participate in the group plan which allows me spousal coverage as well. Allowed me to "retire" from what I had to do and do what I want to do.
Posted on 9/21/24 at 12:20 pm to TDsngumbo
quote:
My wife is going to retire from the school system when she's 54 and I'll only be 56. Going to try to work until 59 or 60 and I'll be able to stay on her health policy since I'll be vested into it by then. I'm lucky but I often feel like vomiting at the idea of her being retired for nearly 10 years before I can retire if I were to have to wait until 65 for medicare
This is my scenario. My wife has now been retired for 10 years. I'm probably not fully retiring till she has been retired 15 years or more. That's just wrong.
Posted on 9/22/24 at 2:33 pm to kywildcatfanone
quote:
This is my scenario. My wife has now been retired for 10 years. I'm probably not fully retiring till she has been retired 15 years or more. That's just wrong.
.
lots of us out there. dammit. LOL. she can retire at 55 but she needs to work one more credit to qualify for SS benefits. She will probably go teach in catholic school a few years. The public school basketball people are out the box. She can't teach without them disrupting everything then the parents report the whole staff for the R word. ridiculous.
Posted on 9/22/24 at 5:49 pm to Y.A. Tittle
I used ACA from 2020-2022. I "gamed" the system and paid only $90/month for an individual silver plan.
Actually I had no taxable income at all and so didn't qualify for ACA. I'm not sure if this is a general rule or by state. For GA at least, I think it was you had to have at least $17k in taxable income to apply for ACA. Otherwise my only option was Medicaid.
To get around this, I did a Roth conversion and converted $40k from my ira to my roth ira. This gave me the taxable income I needed to qualify and I paid very low taxes on the conversion to boot (~11%). ACA doesn't care where the taxable income comes from whether it's from a job or investments etc.
Imo yes. I'm planning for early retirement at 55 which is in less than 10 years for me. My plan for insurance is ACA and I will control my taxable income (gaming the system) so that I get good premium credits.
Without ACA, my early retirement plan would not be as feasible. I would guess that private insurance could cost 5-10x of ACA.
Actually I had no taxable income at all and so didn't qualify for ACA. I'm not sure if this is a general rule or by state. For GA at least, I think it was you had to have at least $17k in taxable income to apply for ACA. Otherwise my only option was Medicaid.
To get around this, I did a Roth conversion and converted $40k from my ira to my roth ira. This gave me the taxable income I needed to qualify and I paid very low taxes on the conversion to boot (~11%). ACA doesn't care where the taxable income comes from whether it's from a job or investments etc.
quote:
Do you think Obamacare has ultimately made this more or less feasible for someone with enough assets who would necessarily have to "game" it to take advantage?
Imo yes. I'm planning for early retirement at 55 which is in less than 10 years for me. My plan for insurance is ACA and I will control my taxable income (gaming the system) so that I get good premium credits.
Without ACA, my early retirement plan would not be as feasible. I would guess that private insurance could cost 5-10x of ACA.
Posted on 9/23/24 at 8:32 am to Y.A. Tittle
Wife and I are in early 60s and pay about $2k/month for Obamacare silver plan. We have $7k deductible each. We make too much money from investment income to get cheap insurance.
Posted on 10/6/24 at 9:09 am to Y.A. Tittle
I found a broker out of Florida that live in La about $700/month
$2500 deductible
Max out of pocket $8500
No pre-existing condition
Guaranteed acceptance
As a cancer survivor I could’ve went with a plan around $400 but I needed guaranteed acceptance
I’m retiring November 01, 60 year old
$2500 deductible
Max out of pocket $8500
No pre-existing condition
Guaranteed acceptance
As a cancer survivor I could’ve went with a plan around $400 but I needed guaranteed acceptance
I’m retiring November 01, 60 year old
Posted on 10/6/24 at 9:45 am to CharlesUFarley
Agree with your sentiment, but health care is number one threat vs taxes in retirement. And this is with a strong run of high income since retiring at 55. Just premiums ($23k) and deductibles ($7k each) has us spending $30k/year and we haven't had any major health problems.
Posted on 10/6/24 at 8:12 pm to gpburdell
quote:so does this mean you have a good amount of post-tax savings to supplement your lifestyle?
I'm planning for early retirement at 55 which is in less than 10 years for me. My plan for insurance is ACA and I will control my taxable income (gaming the system) so that I get good premium credits.
Posted on 10/7/24 at 8:05 am to gpburdell
quote:There are other options like medi-share as well.
Without ACA, my early retirement plan would not be as feasible. I would guess that private insurance could cost 5-10x of ACA.
Anytime one talks about gaming, the devil's in the details, and I'm not really clear on those here. Roth and retirement maximization is prudent. Tax avoidance, or avoidance of income exposure, is advisable as long as it is not a relative impediment to performance. For example, taking profits or rebalancing does expose cap gains, but is often a more productive strategy.
In favorable rate environments, and at certain income levels, borrowing against a portfolio rather than drawing from it makes a whole lot of sense as well.
I'm not sure I see benefit of an ACA policy driving those strategies, but kudos for making it work for you.
Posted on 10/7/24 at 8:13 am to Gorilla Ball
quote:Bingo!
I found a broker out of Florida
Anyone doing this on their own should at least consult with a Healthcare Insurance "Sherpa" (broker). It's no additional cost, and the information gained can be very helpful.
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