Why I’m Not Afraid of the Health Insurance Boogeyman

These probably won’t help…then again, you only live once! – Image courtesy of Jean-Marc Buytaert

I occasionally hang out with early retirement minded people. Some of them have already taken the plunge, some are thinking about it more and more as I am, and some are much earlier in their financial journeys but are intrigued by an alternative to the “work till you’re either dead or wish you were” program that has been the standard for far too long. Easily the most common question I hear being asked of the people who have already retired ten, twenty, or even thirty years before the traditional age, is “what about health insurance?”

And I admit that was one of my first questions as well. Most people I’ve met answer this question in one of a few disappointing ways. Some were able to negotiate some sort of arrangement with their final employers, some have a spouse that is still working, and many are structuring their incomes in such a way as to be eligible for subsidies on individual coverage under the Affordable Care Act. None of these is workable for me. My current employer will likely be neither willing, nor able, to make any deal with me, I don’t have a spouse who can keep working so I can “retire,” and I can’t stomach exploiting badly written legislation for personal gain – particularly not when I’m currently paying a substantial share of the associated bill.

After I recently learned of some significant challenges my current employer is facing, which threaten not just my job and those of many of my colleagues, but the company itself as a going concern, I’ve been thinking a lot about my options. I could find a similar job at another company. Since I started my latest job search, there have certainly been some encouraging signs that this will be a viable option – although nothing has come to fruition just yet. But aside from maintaining the status quo as an employee/entrepreneur hybrid, I’ve been looking at other, more adventurous options. One common thread among many of them would be stepping out from under the umbrella of having an employer at all. And this has brought the health insurance question back to the forefront.

But as I’ve begun to explore the issue, I’ve actually been very pleasantly surprised by what I’ve learned. It turns out individual health insurance is both fairly straightforward and less expensive than I had anticipated. I acknowledge that things would likely be different if I had dependents. But at roughly $15k per child, per year, for as long as one is willing to keep the financial umbilical cord intact, having children is one of the most expensive financial decisions a person can make. That is one of several reasons I’ve personally opted out.

Anyway, I searched around and Blue Cross Blue Shield appears to be king of individual health insurance in my neck of the woods. By simply entering my birth date, non-smoker status, and zip code, I was presented with a menu of options ranging from the most minimalist plan at roughly $320 per month to something approaching the top of the line plan I have now at nearly $700. I didn’t see an annual payment option but if one is offered with a decent discount, it would amount to an awesome churning opportunity. One nice thing that I believe came out of the ACA is that it appears all plans now cover the one annual preventative appointment we should all be going to. Of course, that is priced into the premiums. But I digress. Beyond that, as a relatively healthy young adult, I’m almost certain to spend somewhere in the $0-1500 range per year on health care expenses, meaning paying an extra $400 a month for a high end plan that would cover most of that doesn’t make sense. I will note that there are subsidies offered for people with surprisingly high income limits. Sadly, I’m in the group that pays handsomely for those subsidies to be offered, and don’t anticipate that changing, so I’m paying full freight for my own coverage no matter what. But your results may be different – particularly if you have kids. And as the birth rate continues to decline, it is very likely that we will all see the government using more mechanisms like this to force people like me to subsidize your procreation efforts. For what it’s worth, that will likely offset at least a portion of the additional costs you would face in areas like this.

Ultimately, my choice would be a plan that costs $332 per month because it is the cheapest HSA eligible option. With a deductible of $6k, an out of pocket limit of $6650, and no prescription coverage until the deductible is met, I would almost definitely be paying all of my costs beyond the annual preventative appointment. In most cases, I would probably not even use the insurance, instead opting to negotiate directly with doctors since my insurance would effectively cover nothing anyway. I’ve heard there is often significant room on the pricing if you aren’t forcing the provider to deal with an insurance company.

But this is where it becomes important to calculate things out for yourself. If you tend to spend a lot in health care costs, it may make sense for you to go with a plan with higher premiums but more coverage. One thing to consider is that it’s not necessarily the end of the world if a plan doesn’t offer prescription coverage (it can’t if it is HSA eligible). Thanks to a wonderful website called Good RX, anyone can pay much less than retail prices for prescriptions whether or not they have insurance. Don’t ask me what kind of sorcery makes it possible, but this can be an absolute godsend if you don’t have prescription coverage and yes, I did use it back when I worked for an employer that offered a very minimalist coverage option.

I’ve mentioned “HSA eligible” twice now. Why? HSA stands for health savings account and it’s a hidden financial gem. Unlike an FSA, which is garbage unless you have health care costs you can forecast very reliably, an HSA is a tax advantaged account that can be built into quite an asset. To put it simply, it is a miniature Roth IRA for health related expenses only. This year, an individual can contribute $3500 into one. The money can be invested in whatever you want, provided you’ve chosen a good provider, and as long as you don’t spend it, it will grow tax free just like a Roth IRA. It does ultimately have to be spent on health care expenses, but given the state of the industry, I don’t believe any of us will have too much trouble accomplishing that. In fact, remember that quarter million dollars the media is always screaming about you having to pay for your health care expenses during your traditional retirement years? Well, if you contribute the max to a Roth IRA for twenty or thirty years and don’t use any until you retire, that is more or less covered – without dipping into your other assets. As usual, a little knowledge can go a long way towards putting out the fires of mainstream ignorance. The important thing to keep in mind with HSAs is that only certain more minimalist health insurance plans are eligible for them. If you have a lot of health care expenses now, you may be better off with a “Cadillac” plan paired with an FSA. No one can tell you definitively without specific information; I recommend that you run your specific numbers yourself to figure it out.

But in my case, a disaster only health insurance plan and an HSA are a home run combination. The only problem is that pesky “Cadillac” plan I have now. But given that I’m kicking in well under $100 a month for it, and that’s tax deductible by the way, it’s obviously the best option available to me as long as I’m with my current employer. However, once that relationship runs its course, likely by the end of this year, it’s nice to know I will have some great options available to me and that they won’t be nearly the financial disaster the media would have folks believing they are.

My 50th Post Spectacular (Yes, That is a Play on the Title of a Simpsons Episode – Yes, From Back When the Show Was Still Worth Watching)

No, I’m not sure how this relates to the post. But it does strike me as one of those cool “only in Houston” sights and since I haven’t found an occasion to use it yet, I’m using it now.

With this post we’ve reached a milestone on Health, Wealth, Power. By my count, this is post number 50. So far, readership has been going up steadily and that has been very exciting. To those of you who have been coming here for a while, I’m glad to have you along on this journey. To anyone who has started reading more recently, welcome. Today I want to highlight both some of my most viewed posts and some of my favorites that haven’t been seen as much – in many cases because I posted them before many people were reading the blog at all. Thank you to everyone for reading and here’s to the next 50 posts (and many more) to come!

Most Viewed

How Do You Respond When Your World Comes Crashing Down (Again)?

A window into my raw thought process on a recent night when I got some seemingly devastating news about my career. I wrote this almost immediately when I got home so I would have a good record of my immediate reaction to look back at later. I’m still in the midst of dealing with this situation but I have a very exciting recent development that I’ll be sharing soon.

Bank Account Basics

A basic guide to how I use bank accounts to maximize income, minimize risk, and pay zero fees in the process

The Importance of Outlook – How I Still Struggle with the Scarcity Mentality of My Past

A discussion of how even though I am more financially fortunate than 99% of the world, I still haven’t been able to completely adopt that mindset over that of my much more difficult financial past

A Happy Night of Insomnia

This is one of my personal favorite posts so far. It is a nostalgic look at the way the most difficult event of my life so far has spawned so many wonderful changes. While I and my life will never be quite the same as before it happened again, that is mostly a good thing.

My New Diet Experiment

In this post I talked about time restricted eating and how I planned to implement what I had learned about it. It has been a very positive change for me and I wrote about that in a follow up post – Time Restricted Eating Update: There is Definitely Something to This!

My Favorites

The Most Important Investment

Health and fitness is a topic that’s near and dear to my heart. Medical science is keeping people alive longer and longer today. But what is it worth? My argument is that we’ve long since passed the point where quality is much more important (and elusive in many cases) than quantity. This post is my attempt to lay out the basics for anyone who feels similarly and wants to do something about it.

The Opportunities in Life’s Challenges

I’ve written a number of posts on this theme now – the value of finding the positives in situations that don’t seem very positive at face value. But this was one of the first. As someone who has put a ton of work into thinking more positively and seen firsthand how dramatically that mentality shift can change life in often unexpected ways, it is very important to me to share my experiences in this area.

Today I’m Going to Challenge You

I wrote this post for people who struggle with depression or have in the past. It’s not comprehensive and I’m no mental health professional, but it’s a discussion of some tactics and information that have helped me in the past when the weight of the world seemed to be crushing me with no sign of relief. If it helps one person, it was worth far more than the time it took to write it.

The Internet Game and How You Can Win It

I’m trying to be less of a bastard in life. But I do tend to temporarily suspend that effort when it comes to fighting back against what I view as unethical tactics. In this post, I illustrate how I’ve been mostly successful at keeping the shenanigans of those damn ISPs from succeeding in robbing me blind.

How to Spend a Fraction of What Most People Do On Electronics Without Having to Sacrifice Much

Simply put, the methods I described in this post have saved me five figures by this point in my life. One of the many benefits of living in the richest country in the history of the world, particularly at a time when technological advancement has been unprecedented as well, is that extremely marginal compromises can result in enormous savings. There is an almost constant chorus in the media about the retirement crisis in the United States. That means that for most of us, there is no excuse for not taking advantage of opportunities like this to get so much in return for so little.

A Day of Triumph and Reflection

It was immediately rewarded with a tasty fortune cookie so this fortune was, in fact, correct

Today was a very big day for me. This morning I was informed that I recently achieved one of the sought after milestones of people in my line of work: a five figure payday from a single deal! So I’ve been enjoying the hell out of my moment all day and now I want to reflect a little bit, both to mark this for myself and to hopefully inspire someone else to keep fighting the good fight even when it doesn’t feel like it’s accomplishing anything.

First and foremost, I am overwhelmed with gratitude. Only a few years ago, I was working a salaried office job where I didn’t get any bonuses at all. If that version of me could see me today, I don’t know if he would believe it. It was just impossible to see even the possibility of a day like this from where I was at that time. A very small portion of the population knows what it’s like to be able to make this much money this quickly – probably a single digit percentage. It is an incredible privilege to be among them and even more so given that this isn’t even a terribly unusual occurrence in my profession.  

Of course I have worked very hard to get here. This particular deal took weeks of back and forth and culminated in a whirlwind trip that included a flight to Memphis, driving halfway across the state to Jackson and back, and another flight to Chicago, all in about a twenty four hour period. And of course I have also had some good breaks. Those do typically come to capable people who work hard. But I also got plenty of help from some incredible people. One woman was willing to go to bat for me with a good friend of hers (now a good friend of mine) who happened to be a superstar with my current employer before I even knew the company existed. My manager treats me very well, works his ass off every day, and does an amazing job making everything I do possible behind the scenes. Most of my fellow sales reps have been welcoming and helpful but a few have treated me like family and provided endless mentoring, advice, insight, and support all along the difficult journey from brand new, first time sales rep to whatever it is that I am today. Obviously my life isn’t perfect and neither is my employer. But I have gotten better and better at focusing on the positive side of things and the results have been wonderful. I couldn’t be more thankful for the many people who have contributed to my ongoing success and I will be lucky to pay it all forward if I live to be 100.

Gratitude is obvious on a day like this. And of course part of me is incredibly excited. But I also surprised myself. Part of me just kind of shrugged this whole thing off. How does that make sense when I’ve been pursuing this day for almost three years? I think this is where the “it’s the journey, not the destination” quote comes in. Sure, longing for this “destination” has fueled a lot of my activities for a long time. But somewhere along the line, it became about something else. As I started to succeed with deals that led to big paydays, of course I was happy about the money. But I noticed that I derived more satisfaction from the personal growth that had allowed me to make it. These deals were the kinds of opportunities I had failed to convert on or possibly not even noticed at all just a year or two prior. I don’t think there is any feeling in life quite like the one you get when you realize you can do something now that you couldn’t before.

And today is similar. Yes, I scored a big one. But there is a very good chance I will do it again this year and possibly more than once. I have a handful of deals nearly as big in the works as I type this. I probably won’t close every one. But I will almost definitely close some of them. The incredibly fortunate reality is that I am on a relatively lucrative career path and am at the point where things are starting to go my way more consistently. The excitement I feel over this win comes from viewing it through the window of my past whereas the feelings of pride, contentment, and joy are from where I sit today.This can be an amazing life if you work hard and position yourself in such a way that it is likely to pay off. None of this would have happened if I hadn’t gotten myself a good education or taken advantage of the opportunities in the not so great jobs I had before this one. There were plenty of days when I felt like I wasn’t making any progress and sometimes I didn’t want to go to work at all but I did it anyway and did my best to learn more than my job required and go above and beyond in any way I could. I also wouldn’t be enjoying my current success if I hadn’t worked hard resiliently in this job. For every day like this one, there were probably a few dozen where I struggled mightily and didn’t come away with a win at all much less a big one like this. Even today, while basking in the glow of my good fortune, I was hung up on while making some cold calls. Life never stops being difficult but if you do the right things consistently, your capabilities will never stop increasing either and you will win more and more often. When I started this job, being hung up on would have bothered me. Today I simply shrugged and moved on to the next name on the list. That change didn’t happen by itself and it wasn’t easy. But if I hadn’t done everything it took to make it happen, today would never have happened either.

That’s all for now. Have a wonderful night, sleep well, and go out and be the best possible version of yourself tomorrow! You never know what might happen if you do.