Alea and I are fortunate to be able to retire early. Obviously, the fact that we never had kids is a big part of why that is possible - we've clearly had fewer expenses than a lot of people. And pooling two professional incomes has helped as well. But the other thing that makes it possible is the Affordable Care Act (ACA or Obamacare). A little vignette of ours helps to explain why that is, and is the topic for Part One of this story.
A few years back, the physical and emotional stress of Alea's part-time nursing job became too much for her, so she quit. At the time we had plenty of cash on hand, so there was no panic over the fact that we now had very little income to live off of. She was determined to see her siblings in Florida that year, which was the year when the airlines were gouging people with steep airfares. I did some quick math, figuring we could make the long road trip by car and our expenses for gas would be far less than the two airplane fares. So we decided it was time for a long vacation and set about making that happen.
Alea's main responsibility in our household unit is to do the worrying for everyone (believe me, the dog never worries, and I can't do it nearly as well as Alea). So health insurance was in order and, in Alea's mind, regardless of cost. Fortunately, we are members of USAA, and they happened to have an agreement with Assurant Health to provide medical insurance for their members (so it was probably offered at 10% off the "rack rate"). We weren't looking for Cadillac coverage to pay for every nick and boo-boo, we just wanted to be covered for something major - a heart attack, a gall bladder operation, some traumatic injury, etc. After all, the odds are extremely high that between the ages of 50 and 65 most people will have at least one major hospitalization (which is why insurance is so high for folks in our age group).
We know from an experience of my brother's that the costs of health services are far higher for the uninsured than for those with health insurance. He was uninsured when he had a heart attack. His bill when he left the hospital was well over $100,000 and his net worth was about zero, with an income that barely covered his daily expenses. Fortunately for him, he is a Viet Nam vet, so he looked to the VA for coverage. He found that he was eligible for coverage, so the VA went about negotiating payment of his bills, which in the end got settled for about 25 cents on the dollar. If the same thing would have happened to us, we wouldn't have been so lucky.
So, getting back to our saga, we got the cheapest policy offered, which we could get as either temporary or permanent insurance. We opted for temporary three month coverage, which we could get with no questions asked, since we were currently covered by Alea's work policy. The policy would pay next to nothing until we had spent $17,500 (each) out of pocket. The cost for the two of us was a bit north of $600 per month. Clearly, the insurance company was not assuming a great deal of risk with us as policyholders, as there were few scenarios where either of us might have a need for health care that exceeded our huge deductibles. Even another knee replacement for Alea would not exceed that deductible, so we'd be paying for that entirely out of pocket.
About two weeks before the temporary policy expired, we applied for permanent coverage. It should come as no surprise that Assurant dragged their heels until our policy lapsed, then they gave us a call. It seemed it was now necessary for us to fill out a health questionnaire in order to get coverage. We did so, and waited for the verdict.
I got the call when it came in. I was told up front that they would not cover Alea due to her osteoarthritis (and likely because she's already had one knee replacement). I, on the other hand, because I had a basal cell carcinoma 20 years ago, could have coverage for only $795 per month! And this is insurance where we pay out of pocket for the first $17,500 in costs! So, as much as it pained Alea, we went without insurance the rest of the year (not that she had any choice in the matter).
The beginning of the next year was when the ACA started up. Under it, our premiums were a bit less than $600 per month. We got a few free checkups per year, access to the rates that had been negotiated with the healthcare providers, and our deductible was something like $6,350 each. And the new law allowed that the expenses that went toward our deductibles could be paid with pre-tax dollars - that meant we could roll part of our IRAs into a Health Savings Account to pay our healthcare bills. This preserved our existing cash in the bank and in effect gave us a 15% discount (our tax rate at the time) on our health care expenses, since we had never paid income tax on that money. Avoiding that tax hit means that our deductible is really only $5,400.
So access to affordable health care is part of why we are able to retire early, as without the ACA it is exceptionally difficult to get any sort of coverage, except through an employer. But of course all of George W. Bush's friends would love it if the ACA died a quick and fiery death, so we have to be concerned about whether we'll have coverage between now and 65, when we'll be covered by Medicare.
Alea's brother Joe e-mailed us at the end of last year about a friend who was retiring to Costa Rica. It intrigued us, even though we weren't keen on living in Central America, but we could definitely see visiting at some point. So I did a lot of research on living abroad: the various perks offered to people with sufficient means to come and live permanently abroad; the costs of healthcare; where were good, safe, affordable places to live; the various pros and cons, etc. There appear to be good possibilities in Asia, South America, Central America and Europe, so there is no shortage of options.
So that was our answer to the current health care fearmongering: if the co-conspirators in The Great Bushwhack succeed in pulling the rug out from under the ACA, we'll go find a cheap place to live overseas until we turn 65 and are covered by Medicare. In effect, that is the foundation of our early retirement.
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