Health Insurance

Q&A: Self insurance brings risk

July 23, 2018 By Liz Weston

Dear Liz: A letter writer in your column says that “self insurance,” or going without health insurance, “certainly reinforces healthy lifestyle choices.” My husband made all of those “right” choices for more than 60 years, which was absolutely no protection against being diagnosed with brain cancer. Your penny-pinching correspondent might currently be running marathons or doing daily yoga, but as Clint Eastwood put it: “You’ve gotta ask yourself one question: ‘Do I feel lucky? Well, do ya, punk?’”

Answer: As a nation, we could certainly lower our healthcare costs by choosing healthier lifestyles — exercising, avoiding obesity, not smoking and so on. But accident or illness can strike even the healthiest among us, which is why health insurance is a necessity not just to ensure we can get care but to protect against catastrophic medical bills.

Unfortunately, as human beings we often have the delusion that what’s happened in the recent past will continue indefinitely. If we’ve been lucky with our health, we may think that will always be the case. The reality is that everybody’s luck runs out at some point, and often does so at great expense.

Q&A: Going without health insurance isn’t wise

July 16, 2018 By Liz Weston

Dear Liz: You recently wrote about early retirees going abroad for their pre-Medicare years in order to get more affordable healthcare coverage. Why did you not bother to even mention the COBRA option that is often available to workers upon retirement? And by the way, some of us prefer to self-insure in our pre-Medicare years and even opt to not buy Part B coverage once we were eligible. Self-insuring is not for the sick, only the healthy, but there is a place for this never-mentioned option and it certainly reinforces healthy lifestyle choices.

Answer: COBRA was mentioned as an option in the original column, which addressed the retirement concerns of a woman 10 years younger than her husband. COBRA allows employees to continue their healthcare coverage for up to 18 months, so someone who is 63½ could use COBRA to bridge the gap until Medicare.

The coverage isn’t cheap because the retiree will have to pay the full premium without the employer subsidy, plus a 2% administrative fee. Anyone retiring earlier than 63½, including the younger spouse in the original column, still could face years without coverage once COBRA is exhausted.

And going without health insurance isn’t wise. Regardless of how healthy you currently happen to be, you’re one serious accident or illness away from disaster. Self-insuring can make sense for the smaller ongoing expenses of primary care. At a minimum, though, people should have a high-deductible plan that protects them from catastrophically high medical bills.

The decision to forgo Part B of Medicare may be an expensive one, as well. (For those who don’t know, Part A of Medicare is free for beneficiaries and covers hospital visits. Part B covers doctor visits, preventative care and medical equipment, among other expenses, and requires paying a monthly premium. Most people pay $134 a month for Part B coverage, although singles with incomes over $85,000 and married people with incomes over $170,000 pay higher amounts.) A permanent 10% penalty is tacked on to monthly premiums for every 12 months you were eligible for Part B but didn’t sign up.

Q&A: Leaving the U.S. for cheap healthcare

July 2, 2018 By Liz Weston

Dear Liz: Your column a few weeks ago suggested a couple consider leaving the country for healthcare benefits until they reach the age to receive Medicare. We are in a similar position, with enough money to retire early but profoundly worried about the future availability of health insurance. Which countries are considered good options for American ex-pats who want good, affordable healthcare?

Answer: Five countries with healthcare comparable to or better than the U.S. are Colombia, Costa Rica, Malaysia, Mexico and Panama, according to International Living, a site for living and investing abroad. These countries have both public and private healthcare systems, with out-of-pocket costs that are a fraction of what they are in the U.S.

In Mexico, for example, many doctors receive at least some of their training in the U.S. and speak English, according to International Living. The public healthcare system typically costs legal residents a few hundred dollars a year, while private services and prescription drugs cost 25% to 50% of their U.S. equivalents.
Some early retirees like their adopted countries enough to stay past age 65, but they should strongly consider signing up for Medicare when they are eligible, even if they can’t immediately use its services. Failure to sign up can lead to permanent penalties that will make Medicare more expensive if and when they do come back to the U.S.

Q&A: Healthcare costs could nix early retirement

July 2, 2018 By Liz Weston

Dear Liz: Recently you included a letter from a retired person who was amused by the suggestion that early retirees may have to go abroad to find affordable healthcare. I was horrified by that letter and shared your article with several friends. Something is deeply wrong when a nation offers citizens who have contributed to its success so few options regarding decent medical care. It makes me very sad and angry. Thank you for focusing attention on this issue.

Answer: Currently early retirees do have an option before they’re old enough for Medicare, which is to buy insurance from Affordable Care Act exchanges. The future of that coverage is in doubt, though, which is why many financial planners are warning their clients who had planned on early retirement to continue working, if that guarantees them access to health insurance. Moving abroad is another option for the adventurous, but obviously won’t be a good solution for many.

Q&A: Beware of ‘junk’ medical insurance

July 2, 2018 By Liz Weston

Dear Liz: In response to your response to the retired couple about healthcare costs. I wish everyone else could be informed about this. Healthcare costs in the individual market before the ACA were anything but affordable. I had to quit my job because my husband got ill in 2000. I was healthy and was paying at first $350 a month. Every couple of years it went up because I entered a new age bracket. I had to drop my coverage when premiums went to $800. And that was for a junk policy. I was hit by a car and I realized what it didn’t cover. I almost went bankrupt, but was able to sue my own car insurance company so that I wouldn’t lose my house. I finally was able to get on Medicare when I turned 65.

Answer: Thank you for mentioning the issue of “junk” policies. Some of the cheaper alternatives to ACA policies offer far less coverage, something buyers may not discover until it’s too late. Any insurance policy worth the name should cover the kinds of catastrophically high expenses that could otherwise wipe out a retirement fund or lead to bankruptcy.