Early Retirement Health Insurance?

[Peruvian]

My wife and I plan on quitting our jobs and traveling for an extended time in early 2026. We are years away from Meidcare eligibility and have a strict budget to allow us to pull this off. We will be drawing from our 30 years of investments to pay for this. Our travel will be overseas (we are US citizens) and we will purchase travel health insurance for any needs that come up. However I haven't found a travel health plan that allows coverage for a US citizen to visit the USA. I wonder if our state health exchange may make sense to ensure we can return freely without any risk of huge charges and/or violation of the ACA. My understanding is the the exchange considers MAGI which would include investment income and would cost an unreasonable amount for us (it would throw off our limited budget allowing for this who scheme). It would literally be cheaper to pay for family to fly and meet us to avoid stepping foot on US soil and needing a US health plan.

Does anyone have ways to reduce MAGI, purchase another product, or experience with FIRE (early retirement) health insurance?

[jackstraw]

No matter what it's expensive AF. I would think agi wouldn't be much different than your magi?

I'm at 1700 a month currently with some finagling.

Our insurance system sucks. 'merica, fuck ya

[fastfred]

I pay 750 a month right now figure it'll be the same till I can claim low to no income and get on disability/Medicaid or dome sort of government subsidy but the math may take awhile

Or get married and get on some chick's pension Healthcare plan

Retiring in less tgan one year and traveling can't wait

[El Chupacabra]

I'm a little confused -- are you going to be residing in the US, but traveling often outside the US?

Setting aside that question for now -- I'm in the same position, and you're correct, you have to manage income (MAGI for ACA purposes) in order to make ACA exchange plans work. This varies state to state, by a lot. There's a formula that (IIRC) bases ACA plan subsidies upon a percentage of a silver plan premium -- you'll have to google on this -- but the best way to explore it may be to punch in some numbers on your state's exchange, and see what's available for insurance and what it's going to cost you out of pocket.

For an example, and this may well be wildly different from your state and your MAGI levels: Mrs C and I are using a bronze ACA plan that provides health, dental, and vision coverage, for $69 per month, total. We had higher expenses than expected in 2023, and had to pull more from investments, affecting MAGI -- so at tax time, we ended up paying about $5K to balance out the premiums for 2023.

You may or may not want a bronze plan, vs silver, etc -- this will depend a lot on your personal levels of health care usage. We have very low usage, so for now, a bronze plan works -- though it comes with a very high deductible and high copay after deductible, in the event something catastrophic happens. The alternative would be paying a lot more in premium in expectation of higher usage -- in penciling this out, I estimated it'd be a wash if either (1) if we ended up with 1 in every 5 years incurring large medical expenses on a bronze plan, or (2) spend that much in higher premiums every year for 5 years.

AFAIK, all ACA exchange plans are in network only, with no out of network coverage. So pick something with a useful network for your US travels. As a backup for both US and international travels, we buy an annual travel policy from Allianz, which was something like $300-400 per year (don't recall offhand) for the two of us, provides usual travel insurance stuff like emergency medical, lost luggage, trip delays. The Allianz travel policy is a reimbursement policy and is secondary to other health insurance coverage. It covers health care within the US that is 100 miles or more away from your home. While we have not used it for health expenses in the US, it should work to fill the gaps from ACA coverage out of network -- for example, visiting an urgent care in another state, where there is no in-network coverage available. I have made several claims for travel losses, damage, and delays (got stuck in Ohio for a week due to COVID), and Allianz has paid promptly on all of them.

[schindlerpiste]

How long do you plan on traveling? What about COBRA through employment? That usually is available for 1-3 years.

[jackstraw]

$69 a month! We got the Silver, but the Bronze was still 1500+ a month.

And yeah, we have out of network coverage due to where we live and availability.
Based on everything I do a potential injury is just around the corner and my age, I prefer to be covered.

Although, even when we were covered by employment it was still 14-16k for a family plan.

Bernie is not wrong on this shit

^edit to say, COBRA sucks as well. I was paying 2k a month for that...still was on a family plan though.

[mcski]

All the plans, I looked at on our exchange had out of network coverage. Maybe it differs by state

Cobra would likely be most expensive option

Manipulating agi/magi is the path for a decent subsidy on the exchanges.

[Dantheman]

DISCLAIMER: I am not a tax attorney, accountant, or financial planner. I did utilize ACA subsidies for ~5 years.


What is your anticipated MAGI? ACA subsidies are available up to 400% of the federal poverty level. They are also tied to inflation and go up every year: https://www.goodrx.com/insurance/aca/aca-income-limits

The subsidies and plans vary by state, but my understanding is that they are all based off a percentage of a Silver plan premium. So, if you can live with a Bronze plan they can be a substantial portion of the premium (my average subsidy was in the 80-85% range). High-deductible Bronze plans are also HSA eligible and HSA contributions are deducted from MAGI. So, max out the HSA, drive down your MAGI (2025 limit is almost $10k if you're over 55), and you get to keep the money for medical expenses. At 65 anything in your HSA converts to an IRA. HSA funds can also be invested.

I assume you claim no dependents on your tax return?

IRA contributions are deducted from MAGI, so you could potentially convert money from cash accounts into IRA contributions to avoid losing your subsidies if your income may be a little too high. Depends on how far over you might be and how your savings are allocated. I assume you're over 50, so between you and your wife you could drive down your MAGI by up to $15k.

Do you have Roth IRAs/401ks? Withdrawals of principal from Roth accounts are not taxable income (well, Roth withdrawals are are not taxable income period, but if you withdraw gains prior to age 59.5 you pay a steep penalty), so if available you could preferentially draw on Roth accounts until you hit Medicare eligibility.

If you go over the ACA income limit by $1 you have to pack back all your subsidies, so make sure you have everything accounted for. If you did not max out an HSA and/or IRA, contributions can be made for the prior year until April 15 of the following year.

[El Chupacabra]

All the ACA plans provide out of network for emergency room visits - - it's one of the core requirements of the ACA. But the % of that coverage and deductible vary, and max out of pocket is also important to note.

None of the plans I looked at (all from Nevada exchange, because that's where I live) provided any out of network coverage other than ER. This was the same whether bronze, silver, or gold.

[Peruvian]

I'm a little confused -- are you going to be residing in the US, but traveling often outside the US?

Yes. No permanent home. Think slow travel.

[CarlMega]

I assume you're over 50, so between you and your wife you could drive down your MAGI by up to $15k.
...
max out the HSA, drive down your MAGI (2025 limit is almost $10k if you're over 55), and you get to keep the money for medical expenses. At 65 anything in your HSA converts to an IRA. HSA funds can also be invested.

This is good.

I'm planning a similar 'travel retirement'. Despite many 'oversea' nations having a dramatically different cost/insurance options than in US, keeping insurance stateside is sensible should something happen.

Given that you're traveling and not working, typically you're not drawing a salary. So that leaves your investment income/passive income - and as you point out - max out your retirement and options to keep MAGI to min and hopefully get a decent subsidy. A bit of a tight rope, but I think this is the best way if the whole household is without employer insurance.

Similarly, you could do a few shifts as you stretch out your timeframe: possibly cobra (while still incurring a higher MAGI) - spousal insurance (again while potentially having income) - then subsided ACA - and carry that until you hit Medicare and can also exercise retirement deductions.

Good conversation.

[Danno]

I know nothing, and probably won't be able to retire until I'm medicare eligible, but posting in this thread to say congrats!

[jackstraw]

All the plans, I looked at on our exchange had out of network coverage. Maybe it differs by state

Cobra would likely be most expensive option

Manipulating agi/magi is the path for a decent subsidy on the exchanges.

Yeah, all the CA ones did not have out of network.

And when I said "manipulating" I meant legally doing some stuff we can do via our fiduciary. I never screw with the feds/irs! That's way more expensive in the long run. Not that we seem to be saving much, but it was going to be 3k-ish instead of 1700.

[riser4]

My wife and I plan on quitting our jobs and traveling for an extended time in early 2026. We are years away from Meidcare eligibility and have a strict budget to allow us to pull this off. We will be drawing from our 30 years of investments to pay for this. Our travel will be overseas (we are US citizens) and we will purchase travel health insurance for any needs that come up. However I haven't found a travel health plan that allows coverage for a US citizen to visit the USA. I wonder if our state health exchange may make sense to ensure we can return freely without any risk of huge charges and/or violation of the ACA. My understanding is the the exchange considers MAGI which would include investment income and would cost an unreasonable amount for us (it would throw off our limited budget allowing for this who scheme). It would literally be cheaper to pay for family to fly and meet us to avoid stepping foot on US soil and needing a US health plan.

Does anyone have ways to reduce MAGI, purchase another product, or experience with FIRE (early retirement) health insurance?

You didn't mention it so I'm guessing either employer doesn't offer a retiree health care benefit after a certain number of years of service and a certain age, say 15 years and age 55, for example? And if so, doesn't provide some sort of assistance either in the form of a finite account expressly for that purpose or a reduced premium? If you don't know the answer, you need to check. Its always nice to have that money later, but using some of it now for your plan seems worthwhile.

[Peruvian]

You didn't mention it so I'm guessing either employer doesn't offer a retiree health care benefit after a certain number of years of service and a certain age, say 15 years and age 55, for example? And if so, doesn't provide some sort of assistance either in the form of a finite account expressly for that purpose or a reduced premium? If you don't know the answer, you need to check. Its always nice to have that money later, but using some of it now for your plan seems worthwhile.

Clearly I’m in the wrong industry!