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Early Retirement: The health insurance hurdle

In a comment on yesterday’s grouse about the GOP’s stubborn resistance to a viable national healthcare program, Bucksome Boomer remarks that the main thing blocking her way to early retirement is the difficulty of obtaining health insurance.

There are a few ways around this.

One is to go back to college.

Yes. Tuition at most state and community colleges is far lower than private health insurance, and many colleges provide group policies for students. Arizona’s Maricopa County Community College District, for example, offers quite a nice policy for anyone who is enrolled in even one credit! Pre-existing conditions are covered if your prior policy covered you for 12 months without a break before you enroll (rules vary somewhat by state). Californians have access to student health insurance through the Community College League of California. In Texas, Houston Community College is among many that offer health insurance for students—here, you have to be signed up for three credits, but it can be an online course. A list of Texas universities that offer student health plans appears here.

If you’re yearning for early retirement and you live in a state where the colleges do not provide decent student health insurance, it might be worth considering a move to a state where such programs are offered. Google community college student health insurance to bring up a list of leads. Be sure the program does not exempt pre-existing conditions or, if it does, whether having been covered for 12 months by your current employer’s plan will trump that rule.

Another option is to join a trade group that offers group health insurance. These are not so easy to find; you pretty much have to figure out what groups you might, by any stretch of the imagination, be eligible to join and then find out if they have health plans. This list from California might be a good jumping-off point. Here’s a list of writer’s groups with various plans. Different writer’s groups have different requirements for membership—some expect a serious publishing track record; others will admit wannabes. As a blogger, you are a writer, especially if you’re earning any money at all from your site. Look at all groups associated in any way with your trade, business, or outside interests. The American Library Association and the Modern Language Association, for example, offer group health insurance for members—and anyone can join these organizations.

A third possibility is a high-deductible HSA. In these schemes, you take out a high-deductible policy and combine it with a medical savings account. The savings account functions like a hybrid between an IRA and a flexible spending account. The money set aside is used to cover your health-care costs during your deductible period and any other expenses. If you’re within a few years of Medicare age and you don’t have an expensive chronic condition, this strategy could carry you over until you can get less risky coverage. Any amount that’s left in the HSA rolls over to you when you reach Medicare age, at which time you can use the money any way you please. Shop around for these. At one point I had an HSA that covered 100 percent of my costs at any doctor and any medical facility, once the $1500 deductible was exhausted.

And finally, you might take a 50% FTE job with a public college or government agency—if you can find one in the current economy. Half-time jobs are usually considered benefits-eligible. This means you can get the health insurance without having to hang around the salt mine all day long. It’s not as good as being fully free from the day job, of course, but it’s a lot better than a 40- or 60-hour work week. Some government employers offer health insurance that is significantly cheaper than Medicare; when I go on Medicare, for example, I will pay about 10 times as much as I was paying for the State of Arizona’s EPO plan, and more than I’m now paying for COBRA.

None of these strategies is perfect. But then, no health insurance plan is perfect, at least not any I’ve ever heard of.

This post is part of a series on achieving financial freedom.
Our story so far:

An Overview
The health insurance hurdle
The roof over your head

3 thoughts on “Early Retirement: The health insurance hurdle”

  1. Wow! News you can use. And the junior college tip is not just for early retirees.

    Years ago, I suggested to an insurance-less pal, who knew he would need major surgery eventually, that he join the Modern Language Association for the group insurance. He did, but got dropped after a $70,000 operation (this was 20 years ago).

    Also, sometimes alumni associations have decent short-term insurance. A divorced friend did that.

    i told my son–who will be w/out insurance when he graduates college–to find a wife in France, but so far he hasn’t done so.

    This is some messed-up system.

  2. Hmmm… I like the whole wife in France idea. Suppose he could look for an aging French widower who would like a lovely Yanqui bride of a certain vintage, while he’s over there? 😉

    If your friend scored the $70,000 surgery before MLA’s insurance plan dumped him, he at least came out somewhat ahead.

    Now they can’t drop you for using the insurance, but what they CAN do is drop a whole “group” that includes you. When they do that, I’m pretty certain, they drop everyone in the group and then they quietly cherrypick back the ones who aren’t costing them. My experience with private insurance was that every time I went to the doctor, within a month or two I was told my “group” was being dropped and to re-up I had to pay a higher premium.

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