How to Get Health Care if You Retire Early

Robert Brokamp: What about
healthcare? That’s a tough one. Obviously most people
get it through their jobs. There was a report today in The Wall Street
Journal saying that on average, an employer pays $20,000 a year for that, and that doesn’t
include the deductibles and the copays. From what I understand of your story, you’re
also looking outside the box for how you handle that. How do you do it for you and your family? Jonathan Mendonsa: This is a great question
just because it’s one that affects us very dramatically as we are now,
essentially, entrepreneurs. I can tell you that there are several strategies
in place and also let me preface this by saying that this is a disaster. This is truly a disaster. There is no good answer here.
I would love to tell you that it’s just going to work. If college was a problem, this is a freaking iceberg.
But having said that, you work with what you can do. There’s a couple of options that are out there.
One of them is the ACA is still intact. If you are a low-income individual, even without
an employer, you will likely be eligible for ACA subsidies. I know an individual that has
a small startup that he created post-work. He makes roughly $40,00-$60,000 a year
[somewhere in that range] for his family of five. The subsidies are in place. It’s $300 a month. You can control your tax rate to some degree
if you’re one of these individuals because you can then load up your 401(k), still taking
care of your retirement which then drops your AGI, when then will likely increase your subsidy
amount, so that’s one possibility. Let’s say that you’re in the situation where
your business has done very well. You have a lot of income. In that situation you’re just going to take
it in the face, or let’s say that you are retired with $3 million,
$4 million, or $5 million in assets. You have a wonderful problem. If that is your situation, you’re going to
take it in the face and, like you said, it’s just a line item that
you’re going to have to budget for. If you’re willing to get outside of that normal
paradigm you can look at something like health shares [health share ministries]. There are some
disadvantages of health share ministries. One, it’s not technically insurance.
Not everybody is eligible for it. Two, there’s something that’s called balance
billing that I’ll let Brad talk about it briefly, but let me just go away from
the cons and talk about the pros. In many cases you have up to $1 million in damages
that are covered for roughly $450 a month for a family. I think you’ve also got to think about
healthcare as there being three different types. There is preventative,
there is maintenance, and there is acute. Who is going to be the healthiest person? The person who has low-level stress constantly
and because of that overeats, under-exercises, or an individual that has reclaimed bandwidth
in their life and is actively taking care of themselves. But from a mental state, a physical state
and otherwise, as a whole, if you look at the FI community [and I have not data to back
this up] but I would put my money on the fact that as a whole the FI community is healthier
than a cohort which doesn’t have the bandwidth to take care of themselves.
That’s one additional thing to keep in mind. Brad Barrett: As Jonathan said, there’s truly
no good answer, here, but one thing he slipped in there is if you’re on the ACA, or even
if you’re using a health share ministry, this is a line item in your budget, and you just
have to deal with it and plan accordingly. I think that’s the background.
I wish there was some great answer. I wish we had some amazing
hack for this. We simply don’t. What my family has done is used LibertyHealthShare
for almost four years, and it’s worked exceptionally well. As Jonathan said, it is not insurance, so
there are definitely downsides to it. The biggest is that the hospitals and doctors
do not have a contract with this health-sharing ministry, so they’re not legally obligated to take what
in essence is that negotiated rate. We all see that. There’s the rack rate, there’s the negotiated rate,
and that’s what the insurance company generally pays. I’ve had an instance where I’ve been
actually balance billed by the hospital. Let’s say a procedure cost $10,000.
The normal standard repayment is $3,000. They bill me for the other $7,000; but incredibly
LibertyHealthShare [and this is anecdotal of course] hired a team of lawyers. They negotiated it
and they paid the remaining amount. So I was not out an additional dollar. Again, in my very anecdotal
experience, it’s been truly wonderful.


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