Adapting To Healthcare Changes


Change always happens…whether we like it or not.  Besides death and taxes, change is the only real constant in life.  The seasons change, the weather changes, people change, and (of course) politics change.

This post is about adapting our financial independence plan to change.  Specifically healthcare changes.  Changes we can’t control, but we can plan for…

 

The Wacky Shit-Show Called Healthcare

Let me start off by saying that healthcare in the United States is terrible.  Really terrible.

I’ve had my eye’s opened to this reality by actual personal experience.

Unlike many, I’ve actually had the opportunity to visit an emergency room in a foreign country .  It wasn’t a planned visit either…this was a middle of the night “I’m vomiting my guts out in the middle of a train station, and can no longer walk” kind of visit.  

It’s the kind of hospital visit where you don’t give a damn what things cost…you just want to survive.  That kind of situation.

Emergency Room
I was feeling a lot better after the IV and meds.  You could call this a very educational tourism experience.  I highly recommend it.

Some of the details are hazy (I blame the drugs), but I remember getting IV’s, a hospital bed, a lot of pain killers, abdominal X-rays, and of course there were doctors and nurses to provide care.  The whole 9-yards.

Sure, it wasn’t a nice hospital, but it was clean.  The doctors and nurses seemed to know their business.

As I lay on that hospital bed (pumped full of drugs), I couldn’t help but create my own mental nightmares over what this tourist outing was going to cost.

(Clearly, I was feeling lot better at this point, because I was thinking about money again)

In the United States, when you step into the emergency room it can costs thousands of dollars even with health insurance … and here I was in a foreign country with no insurance.

What did this experience in foreign healthcare cost me?  A mere $150 … for all of it.  No insurance at all, and we paid with cash at the front desk. 

Here’s the real kicker folks:  This was in Japan.  A country known for being one of the most expensive in the world.  Yet, in my experience, the cost of medical care was a mere fraction of the cost I would have paid at home.

Have a few experiences like that, and you come to realize just how messed up the U.S. “for profit” healthcare system really is.

 

Post Employment Healthcare

Back in 2015, before I started this blog, I had a variety of jobs — some with healthcare benefits, and some without.  When I did have health benefits, they weren’t anything great.  They weren’t terrible either.  Everything had co-pays and coinsurance and cost a lot…the same as everybody else.  

All that changed the day I got laid-off.  As I was already financially independent, I decided to be a stay-at-home dad instead.  Depending upon who you ask, this could be called an unpaid full-time job.  Whatever!

Regardless of how you define my “vocation”,  I needed post-employment healthcare and a plan that would fit within our family’s limited dividend income budget.

What I came up with was actually two plans…

 

Plan A

Luckily, this first year of early retirement has been a breeze as far as healthcare goes.  Mrs. Tako is still working, so I’m covered under her health insurance plan (along with the kids).

But her work sponsored healthcare plan isn’t going to last forever.  Eventually we’ll need to purchase our own health insurance.  This is our Plan A.

If Mrs. Tako quit her job today, we’d purchase health insurance off our state exchange. (That’s how it works for the moment anyway) 

How much does a qualified ACA insurance policy for a family of four cost?  With our annual dividend income just shy of $50,000, the Washington State healthcare plan finder gives us a few options….  

Qualified Health Plans
Here’s a screenshot straight from our state-exchange.  There are a couple silver-level options that allow us to keep our doctors.

We want to keep our same doctors and pediatrician; given that constraint, the exchange provides us with three silver level options:

exchange_plans

* All numbers are monthly.

For my money, if I had to choose one policy today, I would pick the Bridgespan plan.  It’s the most expensive on a monthly basis, but it’s also the most flexible plan offered.

The exchange does offer other plans, but we would need to change doctors (and drive further to see a doctor).  That’s probably not in the cards for now.

So can we afford it?

Yes, we absolutely can.  We’d pull the kids out of their language immersive daycare and have nearly $1,200 per month of extra dividend cash flow from which we intend to pay for this plan.  The cost of a HDHP with tax credits is affordable compared to daycare.

Having a big income buffer makes life a lot easier.  (Yet one more reason why financial independence is awesome)

If you intend to set-up a Plan A similar to ours…give yourself plenty of breathing room for expense growth (more on this later).

 

Plan B

Plan B is our backup plan when life trumps all our other plans.  It’s the plan we use when healthcare really goes to shit in the U.S.  When low income families like ourselves can no longer afford healthcare — Plan B is what we’re going to use.  If the cost of healthcare continues to rise at rates greater than 10% a year, this is our backup plan.

Plan B means we move to another country (legally).  

For most people, a plan like this means finding work in another country…which isn’t an easy proposition.  Teaching English in a foreign country is probably the easiest option for most … but not an especially good one if your intention isn’t to work at a job.

Thankfully, our family doesn’t need to go the “immigration-through-work” route.  We have other options…

Mrs. Tako just happens to be a citizen of another country, and one that just happens to have an affordable “not for profit” healthcare system.  We decided it would give us the most flexibility if she did not become a U.S. citizen.

Rather than tie ourselves down to one country, we each maintain citizenship in our respective birth countries.  I can apply for a spousal visa (if we need to move), and approval is almost certain.  (I would enter the country on a 90-day visitor visa and then apply).

For our children, we’ve made certain that both of boys have dual citizenship.  They can live in either country legally.

 

Adapting To Change

I’d be foolish if I thought our original Plan A was going to survive unmodified under this newly elected administration.  It won’t. 

It’s a fair bet that the ACA will be demolished or modified within a few short months.

Any tax credits we might have received under the ACA are going to disappear like money on the sidewalk.  

I can’t guess what will replace the ACA, but it’s a fair bet that whatever replaces it will cost more than Plan A with tax credits.  

With tax credits Plan A consumes 12% of our monthly dividend income.  Without credits, that jumps to 17%. 

Could we still afford Plan A with no tax credits?  Yes, we could … for now.

 

When Plan A Breaks…

Absent any real fixes to the healthcare situation in the United States, it’s logical to conclude that healthcare costs will continue to rise.

Costs could almost double from today and we’d still manage.  We’ve built enough buffer into our budget to deal with problems like this….but we would need to cut back on luxuries like trips to Hawaii, and expensive sushi dinners.

After costs rise above $1200 per month, that’s when things start to break down and get unaffordable for our family.  We’d need to find work just to pay for healthcare!!

Work for health care benefits, or execute Plan B?….hmmm.  

Personally I’d prefer Plan B over going back to work — there’s absolutely no reason healthcare should consume more than 25% of a family’s budget when we’re healthy and only visit the doctor a few times a year.

Assuming health expenses grow 10% annually, this is only 7 years away….plenty of time for system improvements to be made.  Cross your fingers and wish on a lucky star everybody.

Hopefully these problems will get resolved before they truly come to a head…but I wouldn’t bet on it.  

Plan B isn’t necessary yet, but I’m keeping the option open…  

Wide open.

 

[Image Credit: Flickr]

21 thoughts on “Adapting To Healthcare Changes

  • November 12, 2016 at 8:46 AM
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    Gahhh, this totally sucks. I’ve only had foreign experience with European healthcare and, while it has its own problems, it was definitely cheaper than care here in the U.S. It’ll be very interesting to see what happens to our healthcare system in the next couple of years. :/

    It’s nice that you have the option to move abroad, though!

    As far as our healthcare costs, we’re fortunate to have coverage through Mr. Picky Pincher’s employer (I’m a contractor and get zilcho benefits). But I do need to start considering what we would do if he lost his job or if we started working for ourselves. This stuff is stupidly expensive!!

    Reply
    • November 12, 2016 at 10:54 AM
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      I’ve not experienced Europe’s version of a healthcare system…but give me time. I’m sure I’ll end up there sooner or later. 😉

      One of my big rules in life is to always have a backup plan ready. It’s served me well over the years, and couldn’t recommend it enough. Eventually contracts end and employer’s lay people off. What would your plan be if you both were laid off and had no income? Cobra? An exchange plan? Could you afford it?

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      • November 12, 2016 at 1:04 PM
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        I think we’d be able to do Cobra for a while as we evaluated our options. At that point we’d need to do an exchange plan. We can totally afford it, but it would mean sacrificing other nice-to-haves!

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  • November 12, 2016 at 9:06 AM
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    An ER visit that only cost $150 is amazing! We took my son to the ER for a bad migraine a few weeks ago and to get two bags of IV fluids and two meds and it cost over $1000 (we had a $100 copay). He was there for over three hours and his treatment took about 20 minutes (we had to wait for 2 hours for people overdosing on heroin…) Something needs to be done. Your plan B is interesting – but hate that you have to consider that.

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    • November 12, 2016 at 10:47 AM
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      We actually planned to move overseas for a year or two…just to give the kids the experience. But, if healthcare costs keep growing at this stupid rate, it might need to become more permanent.

      Reply
  • November 12, 2016 at 10:20 AM
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    ACA is pure idiocy. I retired before it came along and had high deductible plans for my son and i for around $250 a month. Those became illegal and are long gone.

    For the last few years i’ve have had subsidized silver plans – costs me $7 a month. And my son is on medi-cal – a real shambles.

    I’d love to go back to the old days when I could buy what I needed and not need to suck at the teat for a plan I don’t need. In all fairness the old days are gone and lord knows what the trump and the new folks will end up doing. Still I like the idea of getting the feds out of healthcare – they’re real bad at it.

    Just look at the VA.

    Reply
    • November 12, 2016 at 10:50 AM
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      A couple of other data points – my silver ACA plan goes up over 30% in jan – although the teat makes my increase much smaller. Something unsustainable about that huh??

      Does the head of the state exchange – coveredca – get his coverage there, no he has a state employee plan with much lower costs and wider networks.

      My son’s medi-cal is called the Contra Costa County Health Plan – do county employees get the same coverage. No medicaid reimbursements are laughable – the county folks I call on the phone have much better county health insurance.

      People wonder why costs are so high – doctors make over twice what they do in japan and the nice new medical facilities spring up all around us. It aint hard to see where the money is going.

      ACA is not real insurance it’s a gussied up version of medicaid.

      Nah Trump won’t do worse. Sadly I fear he won’t do much better either.

      Reply
      • November 12, 2016 at 11:05 AM
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        Interesting viewpoints manuel, thanks for sharing. I’ll agree with you on the point that medical facilities overseas are not nearly as nice and new (in my experience).

        I can’t speak to the difference in medical worker salaries, but it does seem logical to conclude that salaries and bureaucracy consume much of the cashflow (like they do in any business).

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    • November 12, 2016 at 10:57 AM
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      $7 a month actually sounds a lot better than $250 to me….why were the ‘old days’ better? Is it just inflation working its magic, or are the programs busted for your particular situation?

      Reply
  • November 12, 2016 at 10:32 AM
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    We are in the same boat right now. Mrs CKs retirement gig provides us with excellent coverage. But if and when she is tired of teaching, we will probably sell and move somewhere more affordable. At that point healthcare would become one of our largest expenses. Moving outside the states might get even more appealing if healthcare costs skyrocket.

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    • November 12, 2016 at 10:45 AM
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      I don’t see any reason why they would suddenly stop growing. There is no incentive for less profitability, only more. Keep your Plan B handy. 😉

      Reply
  • November 12, 2016 at 11:43 AM
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    Almost 500$ / month in health insurance through ACA, I had no idea it was that expensive.
    My wife and I actually hold citizenships from 2 different countries where health-care (and education and a bunch of other things) aren’t for profit as they are in the US and way cheaper.
    We don’t plan on moving, life is (still) great here but like you we do have a plan B.
    Hopefully we won’t have to use any of them, not because we wouldn’t have a great experience, but because things would have to get pretty shitty here first.
    But I don’t see how healthcare costs would go down, given how the current system is set up for profits.

    Reply
    • November 12, 2016 at 1:54 PM
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      Yep, and $500 a month is with tax credits. Those will probably disappear shortly and we’ll be in the $670+ range

      Reply
  • November 12, 2016 at 12:45 PM
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    It’ll be interesting you see the type of changes enacted as a replacement to ACA. My guess is they aren’t wholesale changes, more around the edges. I don’t think it’ll get worse though. My guess is more options and more competition. We’ll see. The underlying problem though… How sick and poorly managed our health is… Won’t change overnight so neither will the costs.

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  • November 12, 2016 at 4:44 PM
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    Your plan and ours is the same. Mr. BITA is an American. I am not (yet), but even if I do decide to get citizenship here we will all be overseas citizens of India too, and like you, we can get the hell out of dodge if healthcare costs (or anything else for that matter) goes bonkers.

    Reply
  • November 13, 2016 at 2:42 PM
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    I think reaching FIRE but still needing to purchase health care is one of my biggest worries. I’ve been playing around with some of the plans and man is it expensive to pay for health insurance on your own. I hadn’t previously considered moving ton another country but it’s definitely something for us to consider in the future. Thanks for sharing!!!

    Reply
  • November 14, 2016 at 10:28 PM
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    Haha, your ACA is cheap!!!!! My ACA premium for 2017 will be $1481 per month for a family of only 3. For 2016, my premium is $1173 per month. These rates are for Silver 70 PPO in California.
    I used to have Platinum PPO in 2015, but the rates jumped from ~$1500 to ~$2500 in 2016, so downgraded to Silver.

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    • November 14, 2016 at 11:10 PM
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      Wow, that *is* really expensive! Are those numbers with or without tax credits?

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      • November 15, 2016 at 3:23 PM
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        Without tax credits. Can’t meet the income limits despite not working.

        Have no idea what will happen to ACA after Trump takes over!

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    • January 23, 2017 at 3:23 PM
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      Not much different than what my last company’s COBRA charged for family coverage, which would be the equivalent of ACA Platinum.

      That your old plan evaporated implies it didn’t have ACA compliant coverage. Was it as comprehensive as ACA?

      Reply
  • December 15, 2016 at 8:22 PM
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    My ACA plan is going up to $188/m from $166/m. My copay and deductible will be even worse than they were this year, but I hope that I’ve reached a point where I’ll only need a physical in 2017 unlike the care I received in 2016. My girlfriend’s job is ending and we are really worried about her ability to get health care if the ACA goes away because she has a pre-existing condition.

    Reply

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