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On rumors that the State of Arizona will offer only two employee healthcare plans, Cigna and Aetna, when open enrollment comes around, I once again reviewed the financial prospects for my upcoming enforced retirement.

Right now, the State offers employees an incredible EPO plan, to which I subscribe with joy. It covers my doctors at the Mayo Clinic, and it costs all of $13 a pay period—that’s right, folks: $26 a month! Earlier retirement calculations have assumed that I’d stay in this plan this fall, which would mean that the discounted COBRA would cover it until I turn 65 in May, 2010, at about $150 or $200 a month.

Cigna is roundly hated by medical care professionals, some of whom will not even allow you in the door if that’s you’re insurer. At one point, Cigna was our only choice, after every other insurer dropped out of the bidding, claiming that Cigna came in with a bid too low to cover reasonable costs. Healthcare professionals I know here say that Aetna is even worse in terms of slow payment, bogs of paperwork, and collection hassles.

And you can be sure that neither of these outfits will offer a plan that covers virtually all our costs for $26 a month. To coin a phrase: LOLOLOL! That means my healthcare costs will go way up in September, and the cost of COBRA may very well be unaffordable even at the discounted rate.

However, both apparently will cover the Mayo, so I figure that if they offer a high-deductible plan, that will be the thing to get…and hope I don’t get sick or hurt before next May.

Contemplating this state of affairs brought me back to the question of what the whole cost of cobbled-together Medicare coverage actually will run. I’ve been estimating around $300, but I really have no idea, because I can’t find out what Medigap costs in Arizona.

I’m determined not to be herded into an HMO, which is what the Medicare Advantage plans are. My mother died hideously at the hands of HMO doctors. She would have died anyway, but she didn’t have to suffer the way she did. The people who operate an HMO—doctors included, in my experience—do not have your welfare at heart; what they have at heart is the bottom line. It’s not in the organization’s interest to treat you when you develop an expensive, catastrophic illness. They longer they can delay treating you, the less they’ll have to pay for your care between the time they no longer can ignore you and the time you croak over.

Now, if you’re going to die anyway, really: who cares whether you get treatment for the disease itself? The issue here is that all the time your doctors insist there’s really nothing wrong with you, they’re not giving you palliative care. A disease that’s going to kill you is likely to be extremely painful. And so what happens is that until you reach a near-comatose state, you suffer.

You suffer a lot.

To stay out of a Medicare HMO plan, you have to cobble together coverage by combining Medicare Part A (free for most US workers), Medicare Part B (about $100 a month), the required Medicare Part D (about $30 a month), and private Medigap insurance to cover the large holes in the government coverage (premiums apparently a closely held secret).

You can get Medigap insurance through your employer, if your employer offers retiree coverage. GDU does: the present, magical $26/month premium morphs into something well in excess of $300 a month, bringing the tab for the total package close to $500 a month. That’s for one person who takes no meds and has no health issues—other than the stress brought on by working for the freaking Great Desert University.

That’s well beyond my price range.

Stop the presses! Just this minute, a volunteer for Medicare called and said she would send a sheet comparing premiums for local Medigap carriers, plus a bunch of other information. We’ll see what that amounts to.

While gnashing my teeth over this, I found a Web site showing that Medigap policies can range in price—for the SAME COVERAGE!—from around $100 to to around $500 a month. A site over a year old shows that in Arizona, the most popular Plan C ranges in price from $976 to $2,735 a year. Not only that, but cheaper policies are engineered to increase in cost over time, so that after a few years you can end up paying more than you would have paid if you’d bought a more expensive policy at the outset.

The whole system is a minefield of rip-offs!

This is a problem. I can’t afford more than a total of $300 a month for health-care insurance, and the munificent amounts I’ll be able to scrape together between Social Security, much-reduced retirement savings, and a part-time job whose de facto hourly rate is well under minimum wage will disqualify me for any help with these costs. People are advised to comparison-shop for Medigap policies, but it’s virtually impossible to get rates online. You have to track down your state’s SHIP office and hope to God their volunteers have built a list comparing the several score of Medigap offerings in all their various permutations, and got the figures right (these outfits are apparently staffed exclusively by volunteers, or nearly so). Good luck with that!

Good luck, indeed. The volunteer who just called reports that COBRA does not count as “credible” coverage. In other words, according to her if I buy COBRA to cover the five months between Canning Day and my 65th birthday, these Medigap carriers can refuse to cover me for any pre-existing conditions, real or in the minds of their bureaucrats. Now, I had understood that Medigap insurers were not allowed to punish you for being sick. But evidently if that was ever true, it’s changed. Although they can’t refuse you coverage, they’re allowed to refuse to cover whatever ailment they think they’ve identified, at least for up to six months. But according to this page, COBRA does exempt you from the six-month waiting period…so, as feared, the volunteer counseling that seems to be the only source of comprehensive information has its limitations. Such as, oh…say, accuracy.

Any way I massage the figures, under the best of conditions things are going to be excruciatingly tight once I enter my enforced retirement, at least untilI reach age 66 and can again earn a living wage—or as close to it as I can come after being out of the workforce for two years.

Unless I get a lot more Social Security than I expect or the tax bite is a lot smaller than I think it will be, a 4 percent drawdown from savings won’t let ends meet. Five percent will keep me in the black…by about $50 over the course of a year, assuming I never, ever overspend my much-straitened budget. Even a 6 percent drawdown will just cover expenses, with only a couple hundred bucks to spare at the end of a year. Those estimates are based on Medicare and Medigap costs of no more than $300 a month.

If the cost exceeds that amount, then I’m up the creek. I’ll have to sell my not-out-of-the-ordinary home and move into an apartment or a trailer.

Defies belief, doesn’t it? Especially when you realize that studies show average Baby Boomer retirement savings range from $38,000 to $88,000, with a mean amount (in 2005, before the economic collapse!) of $49,944. That would put my savings, from which a sustainable drawdown can be expected to generate $17,000 to 25,500 a year, at 4.8 to 11 times the typical total you’d expect someone in my age bracket to have accrued. How do people with “normal” savings rates afford health care and still have enough to live in retirement?

Or…do they?