How do Bogleheads (in general) plan to finance their healthcare for later life?

[katzmandu]

Are most going for an HSA? Simply using your compounded gains to pay for any and all emergencies via a personal health care plan + cash? Do any Bogleheads believe in purchasing Long Term Care as early as is feasible to lock in a super low rate for later life? Im curious what if felt to make the most sense.

[Meaty]

My plan is HSA. Tax free sounds pretty good

[katzmandu]

My plan is HSA. Tax free sounds pretty good

Theoretically, a big honking ROTH balance could accomplish that same as an HSA (though I believe the HSA avoids some taxes along the way that you pay with contributions to the ROTH). Thats it? No supplemental or long term care? Not an accusatory ask...just an ask

[Meaty]

With a roth you fund with after tax dollars and get tax free accumulation. With a HSA you never pay taxes (contributions or gains) ever so long as you use it for medical expenses.

Long term care insurance has gotten ridiculously expensive and the benefits tend to be limited; I couldn't justify the policies I've seen

[Professor Emeritus]

HSAs IIRC are not available if you are covered by any non HDHP health insurance or medicare.

That being said.

We have the FEHBP. and resources carefully held for LTC

[katzmandu]

With a roth you fund with after tax dollars and get tax free accumulation. With a HSA you never pay taxes (contributions or gains) ever so long as you use it for medical expenses.

Long term care insurance has gotten ridiculously expensive and the benefits tend to be limited; I couldn't justify the policies I've seen

My folks mentioned to me that the plan they have appreciates over time so the initial amount covered grew by a % every year the premiums were paid. The amount covered grew by a lot. And they didn't have a specific defined benefit period once you tap into it. Its quite possible this is generous by todays standards and that's just a vestige of policies past.

[cricket49]

We will be using our HSA accounts and should have 100,000+ in the accounts when we retire.

I read an article about Long Term Care policies a few weeks ago that stated fewer insurance companies are offering these policies and
many of the ones offered now are very limited. Another issue is that many of these policies do not have fixed premiums and may go up in
the future. So even if you can afford the premium today you might not be able to years down the road in retirement.

The concern I have with LTC is whether the insurance company underwriting the policy will be around in 20 or 30 years to pay the benefits.

[obgyn65]

Retiring from my full time position this summer, at age 50. However, I will still see some patients part time, which is also a position with healthcare benefits. I also bought LTCI a couple of years ago, just in case.

[AlohaJoe]

Are most going for an HSA? Simply using your compounded gains to pay for any and all emergencies via a personal health care plan + cash? Do any Bogleheads believe in purchasing Long Term Care as early as is feasible to lock in a super low rate for later life? Im curious what if felt to make the most sense.

I live in a country with a national health care system. (There are Bogleheads outside of the US!)

[cadreamer2015]

The way LTC insurance was explained to me, if your assets in retirement are relatively modest, you probably can't afford LTC insurance and should "plan" on Medicaid (not Medicare) covering your LTC needs after you spend down your assets. If you have enough assets that you can afford to pay LTC costs out of your normal income / retirement account withdrawals you might as well self insure and not purchase LTC insurance, even though you can afford it. LTC insurance is most applicable for those in the middle, who have substantial assets and retirement income but not enough to self insure. They can probably afford LTC insurance.

Another way to think of LTC insurance is bequest insurance. The provisions of LTC insurance in some states, there is asset preservation of the LTC amount. So in most cases you can be more certain that you'd be able to leave a bequest of some amount, rather than spending your assets down to zero paying for your long term care.

Because of that bequest insurance angle, we purchased LTC insurance several years ago. I originally thought we'd only get it for my wife, but it turned out that we'd get a 40% discount (IIRC) if we both bought policies at the same time. So I bought the smallest policy I could ($50/day benefit for 1 year with a 1 year waiting period and no inflation protection). That costs about $150/year, and saved ~$1,500 per year on my wife's policy.

[IlliniDave]

My plan is to be an early retiree. My health is pretty decent so far. I plan to start an ACA HDHP plan and begin to fund an HSA. I'm looking at going the SEPP route with my 401k (or IRA if I roll it over). That would give me a slight excess of "income", which I would direct into the HSA up to the limits. If I understand things correctly, doing so should reduce the overall tax burden on my 401k withdrawals over time as get a tax-free pool of money for medical expenses. I'm already 51 and don't currently have an HDHP, so there's only so much I can accumulate. HSAs are one thing I truly wish would have come along farther upstream in my career so I could have had decades to accumulate. The ACA policy premiums are already factored into my estimated living expenses, as are a certain level of annual medical costs. With some luck, the HSA can survive largely intact until my later years. It probably won't cover everything, but it is better than having nothing but medicare/medicare supplements.

Right now I don't plan to buy LTC insurance. The odds of depleting my my funds in such a facility seem like they are pretty remote, although if I languish in one for longer than usual it could put a pretty big dent in things. That's a decision I will likely revisit periodically over time.

[Tim_in_GA]

Move to my wife's home country where they have national healthcare.

[Levett]

Clearly, coverage varies with the individual.

Am on Medicare now, backed up by employer health plan.

Yes, I purchased LTC in my late 50s (with 5% compounded rider). So far, no premium hikes.

Have some dental insurance provided by former employer, but no optical.

Having much younger sons, I well understand that things have changed pretty dramatically for younger folks.

Lev

[Bill M]

Getting the HSA over $300K before 65 is tough. At $7K/yr, it just doesn't accumulate fast enough, and once you're 65 you can't add any more to it. So I figure the HSA is one small part of funding healthcare, with sizable balances in other accounts dedicated for healthcare too.

[Grt2bOutdoors]

All assets are open game for paying expenses, including that of healthcare.
I don't have access to an HSA, my Roth can serve double duty if and when the time comes that I no longer have other assets from which to pay.

[SpringMan]

After age 65, nothing special here. Spouse and I both started Medicare A & B at 65, with a Plan C Medigap and Part D prescription drug plan. All paid for by us out of our monthly income stream. Dental has been the Achilles heel having no coverage and needing many expensive implants. The only silver lining is the dental expense has allowed us to itemize medical deductions on our income tax. We have no LTC insurance and doubt if we will ever purchase it, whether we can afford to self insure on LTC is a matter of opinion. We have been quite happy with Medicare so far, we are now both age 68.

Before age 65, since I retired at age 57, I was fortunate to be covered by my spouse's employer offered insurance. She did not retire until age 65. Her job was low hourly pay but had excellent medical benefits covering both of us at no cost. It also allowed both of us to make Roth contributions during those years.

[JDCarpenter]

All assets are open game for paying expenses, including that of healthcare.
I don't have access to an HSA, my Roth can serve double duty if and when the time comes that I no longer have other assets from which to pay.

Yep. We currently have a bit more than 50K in HSA; that is unlikely to last for even our anticipated pre-65 retirement years. After that, I figure that healthcare is an expense like any other and will be paid out of our assets.

[ChrisC]

I take a belt and suspenders approach to this issue, especially since my mother has been in a nursing home for the last 8 years.

I have LTCi, an HSA (which can reimburse me for LTCi premiums incurred after I established the HSA in 2008), FEHBP traditional insurance (after I exit off the HDHP at 65), Medicare A (and Medicare B, if we choose that coverage at 65) -- this is before we get to retirement or taxable accounts that could cover long term health care as well. I don't worry about us financing long term health care. Last year, I started paying for current LTCi premiums from my HSA and we started reimbursing ourselves for prior qualified medical expenses in 2008 and 2009 because I started getting worried about having old, unreimbursed qualified medical expenses after reading some threads in this forum about paperwork issues and "overfunding" an HSA; we still have around $80K in our HSAs.

What is kicking me in the butt now is dental care, though I have great dental insurance from my former employer, with $3000 annual coverage and it includes implants. Over the years, I've probably spent around $40K in dental crowns and bridges that are now being replaced by an implant here, and implant there, and an implant it seems everywhere. I'm also thinking that I'll probably need hearing aids in a few years too.

[fandango]

You should save enough to generate approximately $12,000 per year (for two) people. This assumes that you have Medicare, a Medicare Supplement and a Prescription drug plan.

Any dollars not used should be saved to pay for dental expenses.

Prior to retirement, this is what my wife and I budgeted for medical/dental costs. Medical has been lower than expected and dental has been higher. We also have LTC insurance. Other than that, this amount has been generally more than we have needed.

[jstrange1970]

All good suggestions above. Also want to point out the importance of a living will and discussing plans and strategies for dealing with a terminal diagnosis. I've heard a lot of horror stories about families completely bankrupting themselves for end-of-life care that doesn't make a bit of difference in terms of the end result (and in some cases the treatments are worse than the disease until the very end). Unwilling to put that burden on my family.

E.g., if I get an Alzheimers DX, before I have to get committed to a home, I'm saying goodbye and going for a long, one-way hike in the mountains. Hopeful that before I get to an age where that is a concern there will be better treatments but paying hundreds of thousands to delay the inevitable at end of life would not sit well with me. Same story with many other terminal illnesses.

[ResearchMed]

We are grandfathered in to some very good retiree health insurance, which will be a blessing.
(Younger cohorts will have coverage, but not as good.)

We've also got long term coverage for DH.
When Employer switched insurers for their plan a few years ago, there was a new "window" during which employees, even older ones, could get coverage without any medical underwriting: "sign up, you're covered".

And it's at relatively good rates, given the group plan.

Spouses got "limited medical underwriting", but I didn't qualify.

But we should have more than "enough" for some years of care if I need it.
(However, I'm with jstrange1970, and am not interested in merely "surviving" in a severely debilitated condition, and certainly not a painful one.)

RM

[verbose]

HSAs IIRC are not available if you are covered by any non HDHP health insurance or medicare.

I keep hearing about the HSA on this board. But apparently I can't have one. My small employer offers a single health insurance choice, which is not HDHP. Since the employer pays 80% of family premium and the remainder is pre-tax, it's ridiculous to buy insurance elsewhere.

How do you get one? Do you just have to have HDHP once and keep the HSA open or do you need to have HDHP for a long time? And can you get HDHP from employer-provided insurance?

[JDCarpenter]

...

I keep hearing about the HSA on this board. But apparently I can't have one. My small employer offers a single health insurance choice, which is not HDHP. Since the employer pays 80% of family premium and the remainder is pre-tax, it's ridiculous to buy insurance elsewhere.

How do you get one? Do you just have to have HDHP once and keep the HSA open or do you need to have HDHP for a long time? And can you get HDHP from employer-provided insurance?

I am not very knowledgeable on the precise legal framework, so take with a grain of salt, but our experience (consistent with my reading) is:

1. HDHP can come through employer. Many employees do not like this approach. The employer can legally contribute the Max to your HSA account, but few do so. You can make up the rest by individual contributions.

2. You or your employer can contribute to HSA only in years where you have an HDHP. If you have not spent the money down in the account, you keep it open and can spend on HC expenses even in years where you no longer have HDHP.

3. Bonus observation: the HSA is yours as soon as it is funded. If your employer has your account with an expensive provider and you intend to use the HSA as an investment account (thereby paying the high deductible out of taxed pocket), you can move the funds to a better home immediately.

[Sheepdog]

I'm 82. Is that later life? Or is 92 or 102?
Medicare, Medigap and Part D has served us reasonably well. I did switch to an Advantage Plan in 2014 (my wife did not change) and so far that saved me over $1200 last year. We lack dental insurance so that can be expensive in some years. My hearing aids cost about $2200 each and it is said that replacements will probably be needed about every 5 years or so. Eyeglasses are not insured either, except in the year in which I had cataract surgery. For us, eyeglass expenses aren't too high. We have been able to handle annual $12,000 in out of pocket medical expenses just fine from savings.

I am concerned about long term care expenses. My wife has a policy, but I was turned down in 1999 and 2001 because of something in my medical history. [ My advice, if you want LTC insurance, get it while your history is clean.] (By the way, I am more healthy than in 1998, so what do insurance companies know?!!) If I do require nursing home care someday, I can only hope that it will not be over 3 years otherwise the financial result after Medicaid spend-down could be serious for my wife's economic health.

[Miriam2]

My hearing aids cost about $2200 each and it is said that replacements will probably be needed about every 5 years or so. Eyeglasses are not insured either, except in the year in which I had cataract surgery.

I heard somewhere that hearing aids are not covered by Medicare - is that true?
It doesn't seem right since being able to hear is so connected to physical and emotional health and is important to one's physical safety moving about. It is not merely a luxury.

[Starper]

deleted

[Sheepdog]

My hearing aids cost about $2200 each and it is said that replacements will probably be needed about every 5 years or so. Eyeglasses are not insured either, except in the year in which I had cataract surgery.

I heard somewhere that hearing aids are not covered by Medicare - is that true?
It doesn't seem right since being able to hear is so connected to physical and emotional health and is important to one's physical safety moving about. It is not merely a luxury.

Miriam. That is correct. Hearing aids are not covered just as eyeglasses and eye examinations related to prescribing glasses. Nor are dental services covered. All of which are important for physical and emotional health. More the reason to save and save more for needs in later life.

[island]

A couple of you mentioned FEHEP. What's that?

Can only contribute to HSA if have a high deductable health plan correct?
My employer provides my healthcare with only copays for office visits and meds, 'so I'm out of luck for contributing for future needs, say in those early retiremnet years when I no longer have employer sponsored healthcare?

Thanks.

[roflwaffle]

For now, I'm setting aside ~4% of my earnings in an HSA and using post-tax cash to pay for any medical treatment. Depending on how things go, I'll invest more and/or look for supplemental insurance. My mom kept her FEHB plan through Kaiser even after she was old enough for part A, which is great because she can get care at a skilled nursing facility for the entire year under Kaiser/part A, which isn't possible with just one or the other. Outpatient is also available for a lot less than it would be through Kaiser's medicare plans. With 2.5+ million peeps, the federales have mucho bargaining power.

[plannerman]

What we are doing, and I'm surprised that someone else hasn't mentioned it, is moving to a Continuing Care Retirement Community (CCRC) at a relatively young age--74, if everything goes according to plan.

Every CCRC is different, but in general, at least one of a couple needs to be able to walk in and you must have sufficient assets to take care of your expected needs. However, if something unexpected happens, e.g. you live to be 100, and you run out of money, the community pays for your care. Once you are in you are in, they will not throw you out.

In the CCRC we expect to move to, if you need assisted living, skilled nursing, or spend 10-years in the Alzheimer's wing the costs are covered by the same monthly fee you pay for independent living. Not all CCRCs do this so, if this is something you want you need specifically look for it. In essence, the community becomes the insurance company and pools the longevity and health care risks over all the residents.

Edited to add that this is not unlike buying an annuity. The residents with low health care costs and short lives subsidise the residents with high health care costs and long lives. The difference is the insuring body, the CCRC, in our case is not for profit.

plannerman

[tim1999]

Google "Smith and Wesson Retirement Plan" ...that's what I have in mind. Decades away, hopefully.

[carolinaman]

DW and I are retired and have Medicare A & B. My former employer provides supplement and prescription plan at no charge for me (except deductibles and co-pay). DW has medigap and part D. This works well for us.

I never purchased LTC insurance and given the way that industry has gone, I am glad I did not buy. We will self insure for any LTC needs.

[RWeThereYet]

Medical: Medicare + Tricare for Life. I pay the Medicare Part B Premium, everything else is covered by TFL...100%. Best thing going.
Long Term Care: Have purchased a small LTC policy for myself, wife not eligible. For the balance will self insure and hope not to have to use it for too long!!

[fandango]

Just a comment for those of you who say that they are in a "grandfathered plan".

I was too at one point with the largest, most profitable chemical company in the world.

That "grandfathered plan" disappeared about six years ago. Just because you have something now, you cannot assume that commitments to employees will be honored. Companies are bought and sold, and new leadership could have completely different ideas.

Better to plan on being completely independent.

[itstoomuch]

LTCi is not health care. It is more akin to disability ins.
Medicare is not partial or full residential care.
The distinctions important.
We have LTCi purchased in our early 50s, c2002.
We have deferred high fee ,annuities. 2008-2012 purchases.
The combination of LCTi, income insurance (SS, pension, and annuities) should be enough for all eventualities that do not require end-of-life decisions for either of us.
GL