The Federal health care portal, HealthCare.gov, has been reopened for 2021. This means that people who live in the 36 states that use HealthCare.gov as their health care insurance portal have until May 15 to enroll in a health care plan.
Health Care and Financial Independence
Achieving financial independence without health insurance is luck. There are too many ways a person may need health care, from accidents to illness. Yours truly spend 47 years basically never seeing a doctor save once or twice every two or three years. My last stretch before being diagnosed with cancer, it had been four years since I had seen a doctor or used health care in any way.
Then, bam, an unexpected diagnosis and treatment that costs thousands of dollars per dose, a hospital stay of two weeks, and more. My high-deductible health plan (HDHP) with Health Savings Account saved my $200,000 of liquid assets by having a legally required out-of-pocket maximum. I never had time to worry about deductibles and copays. By the time the first bill hit my house, I had crushed the $7,000 out-of-pocket family maximum, which ironically, had the function of making my family’s health carefree for the rest of the plan year.
The following year, we obviously chose our health insurance plan with different goals in mind. Where before I was diagnosed with cancer we looked for the cheapest monthly premium for our healthy family, for the plan year following my cancer diagnosis, we ran all the numbers to see what our total expenses for the year would be knowing that I would not only hit the out of pocket maximum, but crush it within the first month. That meant a plan with higher premiums, but a lower out-of-pocket maximum. In this case, the cheaper plans offered a higher $10,000 family out-of-pocket maximum, while the more expensive plans offered an individual $3,000 maximum. The difference in premiums didn’t come close to making up that $7,000 difference, or the tax advantages of a health savings account.
It is interesting how similar choosing a health plan is to choosing whether or not to itemize your expenses on your taxes. You see what your big expenses for the year are, and then compare them to the big deduction (out-of-pocket maximum) and then choose the one that is the cheapest.
Is there a Betterment IPO on the way?
Eventually, everyone’s luck runs out. Whether it’s getting cancer or a kid falling on the playground and ending up in surgery with an awkwardly broken bone, someday, somehow, you are going to need health care. And, when you do, it’s is going to cost a lot of money, way more than your six months of expenses emergency fund can cover. It’s going to costs tens of thousands of dollars, or more.
Anyone looking to be financially independent needs health insurance, if for no other reason than to protect your assets.
Health insurance from your work will almost always be better than the insurance you can get through the health care portal. This may not be true if you work for a particularly small employer (who won’t have access to the best health insurance plans), or a particularly stingy employer.
The Health Care Portal
In America, getting good health insurance at a reasonable rate means getting health insurance through your employer. For those of us looking to be financially independent and retire early, that’s not a viable plan. For us, and for those whose employer does not offer health insurance, the government’s health care portal is our only hope. Take a look at healthcare.gov and assess your finances.
Do not go to healthcare.com the official website is healthcare.gov
Choosing a health care plan is out of the scope of this article, but basically, there are two ways to analyze it.
- Get a health care plan that covers the really expensive stuff and cover the usual stuff from your own savings, and expenses, and pay a lower premium
- Get a health care plan that covers most everything so that you don’t have to worry about hits to your savings and expenses, and pay a higher premium
Those are the only options for financially savvy people looking to retire early financial independence.
Take this opportunity to at least look at the health care website and protect the assets you need for proper money management to achieve financial independence and financial stability along the way.
Just because you have been healthy so far, doesn’t mean you’ll be healthy forever. And, you don’t always get a warning. One day, I was fine, a few months later my back hurt, then I couldn’t stand, and then they found cancer. That’s it. Three months from always healthy to forever “sick.”
Don’t gamble with your financial health.