Health Insurance For Early Retirement! (All You Need to Know)
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- čas přidán 31. 05. 2024
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Most of the time, when people plan their early retirement, they know they want to retire early, but they have yet to learn about where the health insurance will come from, how much health insurance will cost, or how to even get it!
Health insurance is vital in early retirement. It provides you a secure retirement and safeguards you from any uncertainties.
Today, in this special podcast episode, we have Lyndia Cunningham, a licensed health advisor and a certified medicare insurance specialist from Move Health Insurance.
She'll shed light on health insurance, especially for early retirement.
So, without any delay, Let's dive deep into it!
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Time Stamp
00:00 Intro
02:30 Guest Intro
04:45 Discussing The Insurance Options Available
06:15 When To Start Considering Health Insurance
07:40 How to Obtain Health Insurance Options
10:00 How Broker Fees Work in the Health Insurance Industry
15:44 Discussing Various Strategies
16:40 Summary
18:40 Pro Tips
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INSTAGRAM - / earlyretirementari
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What video topic would you like to see discussed in a future video?
Ari Taublieb, CFP®, MBA, is the Vice President of Root Financial Partners (Fiduciary) and host of the Early Retirement Podcast.
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All content is not to be received as financial advice, and each individual should consult with their dedicated financial planner, tax preparer, estate attorney, etc., before making any financial decisions.
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Just wanted to say that this video was fantastic! Lyndia was a great guest - she knows her stuff, and she did a great job of explaining it in a way that was easy to understand. Too many other CZcamsrs tend to gloss over this topic, which is unfortunate because there's just so much to it. If you have her on again, I'll make sure to listen in. Great job to you both!
I retired at 55 and moved to Portugal on a residence visa. My insurance is very affordable around $150 a month private insurance full coverage. If I stayed in America I will need to pay $900-1200 a month.
That's my plan thank you
My plan as well when i turn either 55 or 59 1/2😊
But you are paying near 50% tax rate on income
@@faridra6963 please explain
Thanks for having us, Ari! Grateful for the opportunity to shed some light on a top concern for early retirees.
It was so fun! Next week discussing ACA subsidies and Roth Conversions will also be :)
Great job!! You will be hearing from me
Great video - thanks for recognizing what folks want to know…great guest. Cheers Ari
This is super helpful and takes the stress out of looking for healthcare when retiring early
We retired early and we took the silver plan from the market place. $2400 a month and it was useless. The deductible and out of pocket was so high, the insurance never paid for anything. What a scam! It honestly drove me back to work, just for the insurance. I sure wish my husband was willing to live out of country for a time.
We'd be happy to help you re-navigate this important topic. We feel for you, insurance is HARD!
If you guys were paying $2400/month that means you guys had a pretty big AGI.
Been looking forward to these videos and am glad to have this resource when making this critical decision. Thanks for doing this.
Our pleasure!
Ari you are a LEGEND!!!
@@jameschaves5723 HA!
I love. This free book! Thank you so much!
You are so welcome!
Very helpful! Thank you for the information.
Glad it was helpful!
Terrific interview, thank you! 👍🏼
Our pleasure!
Very helpful information here. Ty. Healthcare is one of those items that is a little scary when thinking about early retirement. I look forward to continuing my education.
Glad it was helpful!
I am thinking of retiring by 62 so this session was very helpful.
Great!!
Wow this is so helpful. Thanks a ton!
Glad it was helpful!
@ari I'd like to suggest that in the next episode if / when you explain how types of income affect MAGI and ultimately the size of the subsidy, please use several examples (5?) of a mix of cash accounts, brokerage accounts with capital gains, Roth $s, converted ROTH $s (and the timing of the conversions) in order to illustrate how the composition of this income affects the ammount of the subsidy.
You got it!
Thank you. Very helpful.
Glad it was helpful!
A video on what counts as "income" when measuring the Medicaid threshold would be helpful.
Very informative video!
So glad!
There IS an income cliff for cost sharing reductions on the ACA. The cliff was removed for ACA premium subsidies, but not cost sharing. If your income goes $1 over the limit your healthcare costs can increase by many thousands of dollars.
The income is self reported on the marketplace application (The IRS and/or Marketplace is not tracking income in real time throughout the year). In our experiences at Move Health, If for whatever reason your income fluctuates significantly upward, you would potentially lose premium subsidies that would have to be paid back at tax time, but the Cost Sharing Reductions you experienced throughout the year, would not be effected (nor would be expected to pay them back in any fashion). This is certainly something we deal with at Move and many times we craft a unique strategy for subsidy implementation to curb any issues come tax time.
$27,000 or lower seems to be the sweet spot
Great info
Thanks for watching!
Do I ever switch to Medicare after retiring before 65?
Thank you
You're welcome!
Thanks but what if we are 65 & DON’T want to take Medicare due to exorbitant cost due to my last 2 years of income? Pls point me in right direction & yes I’m hoping to get part time job with benefits but due to just getting unexpectedly laid off I need benefits ASAP. THANKS.
It would be great if you can bring her back on to go over some examples. I'm still confused about deductible and out of pocket max definitions. Thanks.
Thank you for the suggestion!
Great conversation and content!
Thank you!
Ari, where is the link to the ebook located?
rootfinancialpartners.com/health-insurance
I want to make sure I understand that the subsidies are based on ADJUSTED gross income and not gross income. Is that correct?
It is based on MAGI which is usually the same as you AGI but adding back some things such as tax-free interest. The MAGI is before any deductions, so the comment of being based on “taxable” income was not completely accurate.
I’m about to pay $2600 a month in Mass for family healthcare. Not a lot of great options in Mass
That’s a lot. What a shame on how these companies make so much money in health insurance premiums.
No doubt a lot of money. Essentially $650/pp for arguably access to the best healthcare in the world.
That's ridiculous. Who do you support? Perhaps they can pay their share???
We are planning on retiring in 3 years at the age of 55, our plan is to move to the Philippines for at least 10 years till medicare kicks in.
DAMN lmao. Isn't that sad that health insurance is so expensive in America that we have to leave the country to afford it!
@@funguy1086 the irony is that all those other cheap healthcare systems across the world only exist because drugs and services are developed in the US. So basically Americans are paying for the entire world's healthcare.
Have you consider Thailand? Awesome and affordable healthcare.
@@t.q.6639 started with a pretty large group of countries, Thailand being one of them, but after going over everything we ended up with the Philippines. Affordable medical was a consideration but not a major one, if it was Thailand would have been higher on the list.
Are you moving just because of healthcare insurance? If so best of luck!!
I have about 30% of my retirement savings in Roth. Would it be worth it to pull from those accounts from 60-65 to get the ACA discounts. I don't have enough in a brokerage account/savings to fund these years.
1) brokerage 2) 401K/B 3) Roth
@@jameschaves5723I'm taking about getting a discount rate by having a low magi.
Thanks Ari for another very informative video! Do you know if the ACA cliff returns for tax year 2025? I heard conflicting infomation. One person said the ACA cliff starts back in 2025 and another said 2026. I will only need to get health insurance for year 2025 because I'll turn 65 in 2026. A little off topic, did I hear James correctly that you now have a minimum AUM requirement of 2million?
There are zero plans for an "ACA cliff" Zero!!!
@@Davek111 it's hard for us to say with certainty but from what I know we are hopeful that the income cliff will not come back.
@@LyndiaCunningham Correct.... there's no way to know for sure. However the ACA and the applicable subsidies is the law of the land. It will not be overturned by the current administration, and even if Trump wins it is highly unlikely that the republicans will control both houses of congress to allow the maga right wingers to make changes to a policy that currently protects millions of people. More likely that the current subsidies will continue.
Currently the first year the cliff will be back is 2026 unless Congress changes this.
@@Jl-620 Thanks
Ari, thanks, but please clarify (next week's podcast??) if there's specific timing required on ROTH conversions to ensure that the converion $s are excluded for purposes of qualifying for the subsidy. Can we convert for income above the 400% FPL and still qualify? Do we need plan to convert in the year prior to taking the subsidy? Seems like a (tax) catch-22 unless we live partially off exiating ROTH $s
Stay tuned!
Conversions are absolutely included in your income.... and therefore must be considered as you manage your total income levels for subsidy qualifications. I'm 60, retired, and do this today with my ACA insurance. The process is EXACTLY what you would do as part of your tax harvesting strategy.... regardless of what stage of life. If you can master your income level appropriately, you will be able to get yourself at the 150% FPL and receive the greatest amount of subsidy, and enroll in the highest subsidized Silver plan.... which has the lowest cost shares (out of pocket requirements).
@@Davek111 thanks for confirming. So, there's no ability to increase your ACA subsidy with a ROTH conversion in the same year you try to max-out the ACA subsidy? Why bother with a ROTH conversion while on ACA insurance? Seems like you need to live off cash while drawing down your qualified accounts to to 150% of FPL. At least you might have lowered your future RMDs?
@@paulscheuer9455 You're spot on! I am living off my passive income today.... interest income from cash/CD ladder. I have $1M in my Vanguard brokerage which is mostly EFTs, so the capital gains are very minimal. Therefore I still have room for some Roth conversions to boost me up to 150% FPL. You can hold off on your Roth conversions until you're on Medicare, so you'll still have 5 years to whittle down the IRA to reduce RMDs at 70.
@@paulscheuer9455 You're exactly right. The opportunity for $$ savings on the ACA premium at the 150% FPL is $24k or more per year. If you have your cash bucket, you can set-up a CD ladder and put your cash to work for you. If your brokerage account is heavy in mutual funds and dividend paying stocks, then you might need to forgo the CD ladder so you don't earn over the 150% FPL income level.
So tax exempt municipal bonds interest of say 100k per year is not included in income? MAGI includes tax exempt interest i been told. She said was not included.
For the MAGI used for ACA, tax exempt municipal interest is included, as well as the non-taxable part of SS if you are already collecting.
Hold on - so if I retire early I can sell stocks in my brokerage (I think you gave the Apple stock example) and not have the capital gains count against me in my MAGI calculation for healthcare??? Is that true? I thought we can never sell much anymore and was freaking out on how to come out with enough cash/bonds to bridge the gap from 51 to 65 when medicare kicks in...
thank you!!!
I think the capital gains would count toward your MAGI. However, you need some level of income to avoid Medicaid, so you could be strategic and still get the full ACA subsidy. For not paying taxes, he was referring to the 0% bracket for long term capital gains.
@@nutria12247 Yes, capital gains count toward your MAGI.... but that doesn't neceassrily mean that you will pay Federal taxes on the capital gains... as they are stacked in the counting process and might allow you to escape tax free. State taxes will depend on the state you live in. When it comes to the ACA and MAGI, they don't give a shit where your income is generated.... as the IRS is simply looking at the reported income to determine insurance subsidies.
Does having Cobra available through employer after retirement for 18 months considered available insurance? Would this disqualify me for ACA ?
Good question. I believe it depends on the circumstances of leaving your job
Great question! Having ACCESS to COBRA (you typically have 60 days post employment separation to elect COBRA coverage) doesn't disqualify you from taking tax credits since COBRA doesn't count as "employer sponsored coverage"... If you took COBRA, you would have a special enrollment period to enroll into ACA coverage when your COBRA expires after the 18 months. Note: You cannot terminate your COBRA mid year and qualify for an SEP. You must be within Open Enrollment Period or have a valid special enrollment period to enter into ACA coverage.
Thankfully, this is one thing we don't have to worry about. As retired military we have Tricare and that's a game-changer if you want to retire early.
Tricare for life is 🔥
@@Move_Health absolutely! I pair that with VA healthcare for me and financial worries due to medical are essentially removed!
Omg.. This is my main concern. We both work medical for thirty years now. Insurance is not great.. Not even close to teachers, Which my Brother/ Sister-in-law are And they make a good living., ... Kind of makes me sick. Sorry.. Touchy subject at times. And that insurance is the thing that I think we're worried about the most in the next 5 years when we want to retire early.
I totally agree. We want to retire before 65 n fear health insurance expenses
What do you do in medical?
Our team at Move Health is happy to help! You're not alone in fearing health insurance costs. Insurance is hard (and expensive sometimes!). We're happy to act as a resource.
$500/ month average is for one or a couple? For someone will need to do Roth conversion, what is the highest income to get tax credit for ACA?
Most likely for 1 person based on what I had read online.
The average that Lyndia provided is "typical" for an early retiree COUPLE. There are serveral individual variables that can impact your healthcare costs in early retirement though, so it's difficult to speak in generalities when it comes to health insurance.
There is currently no income limit you need to stay under to qualify for advanced premium tax credits on the marketplace (through the end of 2025). The tax credits act like a sliding scale. The higher your MAGI goes, the smaller your advanced premium tax credit becomes. The lower your MAGI goes, the larger your advanced premium tax credit becomes.
There's a lot to healthcare planning! We're here to help if you need it.
This is a great introductory video on this topic. It was worth it just for the info about the 8.7% limit. I do have to wonder though, how long until the income cliff is re-established? (end of 2025?)
ACA family plans (spouse + 2x kids) are not cheap! It comes in the same ballpark as COBRA for me, and with COBRA I can easily continue my vision and dental. Pre-ACA I paid as much for an entire year then as they want now every month, and covered more kids then.
DO you have no way of managing your retirement income level so you can obtain the ACA subsidies? Or maybe you're not yet retired???
@@Davek111 nope. just retired, but no way I can maintain the lifestyle of my family at an income to qualify for subsides. Maybe after I'm done doing Roth conversations and the kids finish school and are on their own. Until then I'll be subsidizing others.
@@Sylvan_dB If your passive income is at the right levels (between 150-400% FPL), I would absolutely forgo Roth conversions until you get to Medicare. Do know that you get standard deductions.
@@Davek111 Until and including 2025 the subsidy does not completely phase out at 400% FPL. The cliff will be back starting on 2026 unless Congress makes Sanyo changes. In many cases it indeed makes sense to forego Roth conversions while on ACA but it is good to make a projection to determine if paying full ACA without subsidies for a few years and doing conversions may put you in a better position in the future in terms of net worth and taxes paid, assuming that you currently have enough funds to pay full ACA, leaving expenses, and the tax for the conversions. If you have very large balances in pre-tax it may be better to do this vs the very high RMDs you could face in the future, as you will not have as much time to convert after you reach Medicare age and your pre-tax balance may potentially be even higher. It is good to run the numbers in both scenarios to help you decide.
@@Jl-620 I retired 18 months ago at 58. I spent a full year crunching the numbers.... and all results said to make the leap. BTW.... I pay zero $$'s for my ACA premium because I manage my income to fall directly at the 150% FPL. I also have the highest subsidized Silver plan so I have $0 deductible and my copays are $0 to $10. It's all a beautiful world!!! I worked my ass off to get here.... and now I'm enjoying the fruits of my labor. :)
Oh, and I was the national director of ACA regulatory policy and product strategy for a fortune 100 insurance company. I do this shit blindfolded. :)
Retiring the end of August 2024 with a 72% State Pension, no Healthcare. Delaying Social Security until 65 when I'll get Medicare. As long as I don't file for Social Security, I qualify for Covered California. I plan to get a Bronze Plan for less than $100 a month. By Mid-October, I'll be in Cebu City, the Philippines for a Six Month Vacation. I'll get a Pacific Cross Gold Plan for about $150 a month. If I don't return [as planned] I'll drop the Covered California Plan as Pacific Cross works as Travel Insurance for less than 30 Days in the US. At 65, I'll file for Medicare & get a Supplement accepted by The Medical City chain, they have a Hospital in Guam & can bill some US Insurers.
My coworker retired at 62 ten yrs ago. She paid $1600/mo for her and her husband's health insurance until they reach 65. It cost them around 60k. 😱
As we talked about in this video, each scenario is highly-unique and dependent on several variables. We've seen folks retire with premiums that are that high like what you mentioned and others that strategized and pay nearly $0 for health insurance in retirement.
What is the affordability of early retirees that still need family coverage for their kids?
It would depend on whether or not you are still claiming your dependents on your tax return. If they are claiming themselves it may be more beneficial for them to be on an ACA plan on their own.
@@LyndiaCunningham You are not required to claim a dependent on your tax return. If this person is enrolling their family while filing a combined husband and wife tax return, the IRS/ACA simply looks at the adjusted income to determine eligibility. The returee is not required to be enrolled. This also occurs when individuals are court ordered to cover their dependents in a separation or divorce. The IRS/ACA doesn't give a shit about the court order, and have no way of actually using such a decree within the enrollment and qualification/determination process. Eat your wheaties... or ask whatever questions you're not sure about. I can do this shit blindfolded.
Structure your income on paper to qualify for medicaid, live off cash, income counts , assets don't ...just show under your state minimums as your MAGI
For Medicaid, the state usually completes what is called a "means test" and looks at "countable assets" - this can include cash, stocks, bonds & bank accounts. Many times, this will disqualify an early retiree who is attempting to keep their income SO low that they qualify for Medicaid. Often we instruct clients that are able to manipulate their income significantly to show an MAGI just above the federal poverty level in order make the most of advanced premium tax credits.
I think the American rescue plan expires in 2025. So does the ACA subsidy cliff return?
I'm just a future DIY retiree but, my understanding is that congress would need to vote on continuance of the ACA subsidy that the American Rescue Plan (which eliminated the cliff) put in place (and extended) during covid. I am planning 2026 healthcare with the assumption that Congress does nothing and we're back to the cliff (exceeding 400% of Federal Poverty Level eleimnates any chance of a subsidy).
That’s what I’m thinking as well. If we are correct that was pretty bad advice from her. Should have at least mentioned the possibility that after a year of great ins rates they may quadruple.
@@mbmatt100 there is definitely the potential for the income cliff to return. We cannot say with certainty that it will not but from what we know we are very hopeful that it will not. This podcast was really meant to give high level details about the options available. We plan to have future podcasts going over each option in more depth and if so I will be sure to mention the income cliff and what it would look like if it were to return. Thank you for your feedback. It is truly appreciated.
@@LyndiaCunninghamwell I hope you do, do more on this topic. You had me googling my fingers off hoping the cliff hand been removed.
@@mbmatt100 it's so difficult to hit on every part of the ACA and tax credits because it truly is so in depth and individualized. At this time if they reinstate the income cliff 2 million Americans would lose their tax credits and subsequently their health insurance. We are hoping that alone will secure the extended subsidies that are currently in place.
Doesn't she mean at least 20 employees on more than 50 percent of its typical business days for Cobra? She said 50 employees.
Money is not meant to control people rather it is meant to be put to work producing more money for you. You cannot build wealth without putting money in its rightful place.
I am 69 still working. My wife is 58 years old. She does not work, just housewife. If I stop working how can she get health insurance. Thank you also I have an eighteen year old daughter
You're welcome!
It's actual more like $800 min per month.
I’ll save you the time. Have a truck load of money because your per premiums will be a shit ton
My situation is not retiring, but I lost my job after many years at one university. Found out COBRA will cost $1,115 a month, which is not affordable for me and I'm in a panic.
Lyndia is very nice. She even has a halo over her head!
Indeed!
I hate to break it to you but if you are retiring with $4 million in cash at a bank or brokerage, you probably are making $120,000-$200,000 in passive interest/dividend income and won’t qualify for ACA rebates on your insurance….😮😢
That is ridiculously wrong! I am doing it right now! I'm 60 and living on my cash/CD ladder while the majority of my assets sit in my Vanguard ETFs. I have minimal capital gains and interest income... after the standard deduction my income doesn't take me even close 150% of FPL. Therefore I actually have plenty of room to do some Roth conversions. At the 150% FPL I qualify for the absolute highest subsidies. I get my ACA coverage for $0, most of my copays are between $0 and $10, while my deductible is $0.
@@Davek111 what is your taxable income? Remember here - he said cash….but good for you.
@@PorscheSpeedster-kz6nc My taxable income after standard deduction was $14k. This was all of my interest from CD ladder (cash) and capital gains from my brokerage accounts (EFTs and mutual funds). I amassed 3 years of cash I can use to live on prior to Medicare. I have plenty of room in income to do some Roth conversions.... and sell some stock if I need more cash. My burn rate has been around $60k.
COBRA IS WAAYYYYY TOOOO EXPENSIVE!!!!!!! YOUR POCKET WILL BE TORN WITH ITS FEE.
It can be a big expense in early retirement! That's for sure.
You both are clueless. Why would anyone pay over $500.its easier to move out of US
Wishful thinking !
Retired in my 40’s income too high, no choices, only crappy plans, I’m 61 now and no coverage still. Work on your health. I stopped worrying.
Until I get to 65 and a gap plan, no scam money grab plans for me.
Good genes/history
No sugar low carb
Little exercise
3x auto liability
Your odds are extremely high that you will be fine.
Crazy that we have to go without healthcare over 50, yet had it when we were young. (What a waste of money!) :( Wish I would have saved that money for my retirement! In addition to your list, I’d add in an occasional fast for a day or 2 several times per year. ✝️
My wife is real religious, she helped a lot by telling me to forget about it and stop worrying cause god will catch you, crazy but it helped.
Another thing, most people don’t realize how awful there plans are. Might as well have none