The Looming Healthcare and Insurance Catastrophe for Baby Boomers

The Looming Healthcare and Insurance Catastrophe

Healthcare and health insurance are the driving forces for my wife and me to leave the country. I have been chronicling our progress on this blog and the Repurpose Your Career podcast.  You can find the entire series of blog posts and podcasts here.

2019 looks like the year when those of us who are between 55-64 and are self-employed, or retired, will be left with few options when it comes to healthcare and health insurance:

• Find a  corporate gig with benefits.
• Stay self-employed, insured and pay exorbitant health insurance rates.
• Go uninsured and take the risk.
• Get healthcare outside of the US.

My wife and I have chosen the last option.

How Did We Get Here

Ever since World War II, health insurance has largely been tied to your employer. You might want to check out the post, Fought for in War Lost in the Peace – Health Insurance and Employment [Guest Post], on why this is so. If you wanted health insurance, you received it as a benefit from your employer. If you were self-employed, you could purchase it on the open market with many stipulations, like no coverage for pre-existing conditions.

This has been a boat anchor around many of our ankles that deterred us from entrepreneurial endeavors.

When the Affordable Care Act (ACA) was enacted, it gave my wife and me incredible freedom. I had wanted to start my own business, in this case, CareerPivot, for years but I was never able to purchase health insurance on the open market for my wife. My wife has medical issues that are quite affordably treated, but not one insurance company would consider issuing a policy no matter the price. Therefore, I stay employed with a traditional employer just so I would have access to health insurance.

The ACA, which I might say is horribly flawed but fixable, allowed many baby boomers who were under the age of 65, to retire or pursue entrepreneurial endeavors and still be able to buy health insurance.

Then Came the AHCA

2017 was the year that the political forces in power in Washington D.C. planned on repealing the ACA and replace it. The problem was …. they had not a clue what they were going to replace it with.

ACA took over a year to create and it was horribly flawed. The current administration thought they would do something to replace it in a few months.

In 2017, the American Health Care Act, AHCA, was created and voted on by the House of Representatives in Congress. The  AHCA passed the house by just a small margin, but it failed by a small margin in the Senate.

It would have allowed insurance companies selling through the exchanges, to double or triple rates for those over 60 years of age. It would have created a greater crisis for baby boomers than what is currently happening.

Since the failure of Congress to repeal ACA and replace it with AHCA, the current presidential administration has been working to strip away funding for the act. Over time, this will kill the ACA but there will be a lot of pain inflicted in the meantime. That pain will primarily be felt by baby boomers who are self-employed, or retired, and not old enough to be eligible for Medicare.

I personally know of a number of self-employed baby boomers who decided to go uninsured in 2018 and pay the IRS tax penalty. The individual mandate was eliminated for 2019, therefore, there is no penalty for going uninsured next year. More people will take the risk and not purchase health insurance.

2017 Was the Breaking Point

Healthcare and health insurance cost our household over $25,000 in 2017 and we did not reach our insurance deductible. Think about that for a second.

That would have sent many families into financial ruins. We are blessed that our budget could absorb that cost, but … it was not pleasant and we do not want to do that again.

My wife and I made the decision to start exploring our options soon after the 2016 presidential election. We knew that there would be a fight over health insurance legislation, and neither side had a viable solution. Every sign said it was going to get ugly – and it has!

We made our first trip to explore overseas options in March of 2017, and we are now on our 5th test drive in becoming an expat. After trips to San Miguel de Allende Mexico, and Cuenca Ecuador, Ajijic Mexico was chosen as our first semi-permanent stop.

What Are Our Options?

I fully expect there will be an October surprise right before the mid-term elections, but it will not be what you think. It will be letters sent to ACA subscribers with their rate increases.

Who will feel the worst pain?

Baby boomers between 55 and 64 years of age.

I am already receiving frantic inquiries from my self-employed friends who desperately need health coverage and know that they will not be able to afford the rate increases. For these people, they really have only a few choices:

• Seek full-time employment with benefits.
• Enroll as a part-time student at our local community college and enroll in the school’s health insurance plan.
• Decrease your taxable income to be eligible for ACA tax credits.

Health Insurance Options

As I wrote in a previous post, Full Employment is Here Except For Baby Boomers,  finding full-time employment, much less with benefits for baby boomers, is not as easy as it appears. The economists and our federal officials love to tell us we are at full employment and anyone who wants a job can have a job, but that is simply not true.

I have a good friend who runs a bed and breakfast with his wife. He has a number of health issues that make it difficult for him to return to the corporate world. His wife is enrolled at the local community college and registers for one course per semester. As long as she stays enrolled and passes the class, they can cover the entire family, which includes 2 children, in the student group health insurance program. It is not cheap (over $1000/month) and has a high deductible, but they are insured.

I am working to keep my taxable income, notice I said taxable income, for 2018 under $61,000. This is being accomplished by having my wife quit working, deferring income from 2018 to 2019, bringing in business expenses into this year, living in Mexico for 4 months and playing accounting games. If I am successful, I will get tax credits that will pay 95% of 2018 health insurance premiums which will exceed $17,000 for 2018. If we go one dollar over the limit, I get nothing. Isn’t that a pathetic game to play?

Are there other options? Yes, a good example is Christian Medical Sharing programs, but they are most suitable for families that have few or no medical issues. This is not a viable option for my family.

Healthcare Options

Over the last few years, my wife has been required to give up seeing doctors she has been seeing for years. Our current policy requires her to see only doctors in a single group practice. Now it is a BIG group, and all in all, she has been pleased with the care. Nonetheless, this caused a lot of stress for both her and myself as she is a former RN. She is picky about who she sees when it comes to medical care. When she gets stressed, I get stressed.

When we started to discuss leaving the country and doing our research, we got 2 completely different reactions from people when we told them about our plans:

“Aren’t you concerned that you will get inferior healthcare outside of the US?”

“I go out of the country for all of my healthcare needs.”

The more research I did, the more I realized that healthcare outside of the US could be better and less expensive. Well, not just less expensive, but way less expensive, while at the same time offering exemplary service.

Current Experience

A couple of weeks before our return to Mexico, my wife called to make an appointment with an endocrinologist. She dialed the number given to her when we visited the clinic on our last trip. What was surprising was the doctor herself answered the phone. It was her personal cell phone.

The doctor did not know the number of the clinic to make an appointment but told my wife to give her 5 minutes and she would get it. My wife called back in 5 minutes and the doctor gave her the clinic telephone number.

The endocrinologist comes to Ajijic from Guadalajara, which is less than an hour drive away, every other Saturday. My wife had an appointment last Saturday morning. The appointment lasted 2 hours and the doctor completely reviewed my wife’s medical history. Remember, my wife is a former RN! She was thrilled with the attention to detail and care that she received. The cost was 700 Mexican Pesos or 35 US dollars. WHAT?? That is not a co-pay, but the total cost of the visit.

They agreed that my wife should also see the hematologist and they immediately made an appointment for the following Monday. Notice it was not 2 weeks or 2 months in the future, but 2 days in the future. She ended up spending 1 hour with the hematologist and she was once again thrilled with the doctor. The cost was the same.

Consequences

I am not going to get into the politics on whether what the current administration is doing is right or wrong. What I am going to say is, there will be some extreme pain from what baby boomers will pay in the meantime.

This means if you are currently employed, you had better stay employed until you are Medicare eligible. Even if you are covered by a spouse’s group health plan, you cannot guarantee that will be affordable.

If you become unemployed, you will want to get creative. The US healthcare system is not the envy of the world anymore. There are other options that will make some of you uneasy, like becoming an expat. You might need to learn a new language or adopt new customs but at the same time, that may well extend your life and health.

The number of expats is growing at an incredible rate that there are already over 1 million US citizens living in Mexico. Many have been leaving because they can no longer afford to live in the US. Now, more and more people are leaving for healthcare and health insurance reasons.

We will purchase an international health insurance plan from one of the major insurance companies for 2019. It will be a third, to half, of what our current insurance costs and will have a deductible that is a fraction of our current deductible. It will not cover pre-existing conditions, but that is okay because we can pay our healthcare expenses out of petty cash. It is there just in case.

Late next year, my wife will be Medicare eligible and we will sign her up, even though Medicare does not cover expenses outside of the US. This is another complicated topic that I am still researching. It will be there just in case. I am multiple years away from being Medicare eligible.

We are making preparations for 2019, when we may very well have a healthcare and insurance catastrophe for baby boomers.

Are you ready for what is coming? What are you going to do to prepare?

Marc Miller  

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