<p>Glad its working for you, VH, but I’ve heard not-so-good stories and as a provider it can be a royal PITA.</p>
<p>
It’s a pretty standard corporate-grade plan for the hi-tech industry, not the best I’ve ever had, not the worst. It’s pricey, employees pay about 30% of the premium. My company has about 50 employees. Why would that matter?</p>
<p>Just wondering if your company self insures.</p>
<p>Do any companies do that any more? I haven’t worked for a company that self-insured since the 90’s.</p>
<p>Yes. Companies still self insure.</p>
<p>My company self insures, but no one knows it. </p>
<p>We actually just pay the insurance companies to administer our health insurance program.</p>
<p>Everyone assumes that they are covered by traditional insurance because all charges go through a traditional insurance company, but our company bears all the risk.</p>
<p>This report mentions that 58.5% of private sector workers receiving health insurance in 2011 were employed by companies that self-insure:</p>
<p><a href=“http://www.ebri.org/pdf/notespdf/EBRI_Notes_11_Nov-12.Slf-Insrd1.pdf”>http://www.ebri.org/pdf/notespdf/EBRI_Notes_11_Nov-12.Slf-Insrd1.pdf</a></p>
<p>Many companies use management services from “insurers” so it is not obvious that they’re self-insuring. The charitable view is that they do so because the insurer has more expertise in managing this kind of thing; the less charitable view is that it’s so that you don’t identify the employer as a cheapskate when they deny coverage. </p>
<p>ETA: cross posted with @dadinator. I’m getting too slow at typing for this internet thing. </p>
<p>WalkingTessie…</p>
<p>You asked about keeping your principal intact for perpetuity. </p>
<p>Perpetuity is a long time. :)</p>
<p>4.64 million…will keep your principal intact for 40 years with a 3 percent inflation rate and 3 percent after tax return and your expenses start at $80,000. Your principal will be gone after 58 years.</p>
<p>5.2 million will get you 50 years with your principal intact and the money will last 65 years. If you make an extra 1 percent a year, your principal stays intact for another 5 years and you need 3.88 million instead.</p>
<p>I am assuming you are living solely on your principal. No SS. No pensions. These numbers depend on how long you want the money to last. 58 years is a long time.</p>
<p>I love dadinator’s post. </p>
<p>Bottom line for my early retirement plans is that I will need to budget $20k-25K/per year in after-tax dollars for health care until we are eligible for Medicaid. That’s a pretty big nut.</p>
<p>A lot of people where I work are setting up HSAs and funding to the maximum limit, investing it in the S&P 500 Index option, and planning on not touching the account until they retire and then using it to help cover medical costs.</p>
<p>You will never pay tax on what you put in and then the account will grow tax free until you retire, as long as you use the proceeds for medical expenses,.</p>
<p>Both your contribution and all the earnings will be tax free (not tax deferred), as long as you use the proceeds for medical expenses,.</p>
<p>Disadvantage is that all the copays, deductibles, etc. that you currently incur have to be paid out of pocket.</p>
<p>dadinator’s report is very interesting… in companies with over 1000 employees, more than 85% self-insure. I guess it makes sense, why let the insurance company scrape 15% off the top if you have a large enough risk pool.</p>
<p>So maybe I have worked for companies that self-insure. My last two companies prior to my current company have both been much larger than 1000 employees. None have said it publicly though.</p>
<p>Notrichenough, Yes it is a big nut. Medicare is going to help. Medicare is going to help most people’s assets last longer in retirement.</p>
<p>Are you going to retire early?</p>
<p>I shouldnt pass on my angst but I see some problems coming in the United States. Big Big Psychological problems for a large segment of the population.</p>
<p>Losing feels worse than winning. If somebody makes $1,000, he doesnt feel as good compared to feelng bad if he loses $1,000. There are exceptions but this holds for most people.</p>
<p>So some baby boomers are building up their nest eggs for retirement. The nest eggs are getting larger so baby boomers feel good. At some point most of these baby boomers are going to retire and at some point they will be spending down their assets. </p>
<p>These baby boomers are not going to be feeling good when they are seeing their assets decline. This is going to cause some psychological problems.</p>
<p>We have built a financial retirement stucture in this country around a system that is going to make people feel bad. This argument that your money is going to last until you are 95 sounds ok when you are 60 but isnt going to sound so good when you are 80 and see your assets decline while your expenses rise. </p>
<p>Annuities sound good on paper to get around this issue but what are the real returns? If you receive a constant pay out, that payout declines in value over time.</p>
<p>Anyway…I dont want to sound too gloomy. Life is good. We will see how things play out over time.</p>
<p>Just mentioning that we too were in a position where we needed to select between COBRA and ACA and the COBRA option was significantly better for our family so it’s definitely worthwhile to compare.</p>
<p>dadinator, I’m familiar with HSAs through an employer (where a set amount is taken out of one’s paycheck pre-tax and is used for medical expenses) but 100% of the funds must be used within that company’s fiscal year. Your post leads me to believe there’s some other option that allows funding for future (outside a year)? Sounds like a great option.</p>
<p>Lastly, I asked this upthread but would love more feedback. Much to dh’s chagrin, I like keeping a fair amount of cash accessible ‘just in case’. Accessible to me means (1) in a very, very low risk (or no risk) instrument and (2) can be made available in cash in very short order (no CDs, for example). Right now we have too much cash sitting in our checking account earning .1 % interest. I don’t expect to make much on this cash but I have to believe we should be doing something with it that will return at least a slightly higher return. Any suggestions? Or, where do you keep your cash/emergency fund?</p>
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<p>Slight correction: as long as you use, or have used, the proceeds for medical expenses. If I have $5,000 of medical expenses this year that I pay for out-of-pocket without reimbursement, and keep an accounting of it, I can take out $5,000 tax-free for ANY purpose after I retire. </p>
<p>I’m a bit late to this party, but wish that I had arrived sooner to what we call a “super stealth IRA.” It might be the best retirement savings vehicle of all, except that it has a low annual limit. </p>
<p>@collage1, I think you’re referring to an FSA account rather than an HSA. </p>
<p>
I’d certainly like to… I’ve got two more kid-years of college to go. After that…</p>
<p>I think I’ve mentioned before, our income would come from our rental properties. To get enough cash flow from them I need to pay off a bunch of mortgages, and to do that we’ll have to downsize, move to a cheaper town (wouldn’t have to move far, MA is weird like that) and use the rest to pay some off. Downsizing could add $6-7K in cash flow every month. </p>
<p>I could start taking IRA money at 55 if I need to, and I wouldn’t be adverse to that because we will get income bumps as more mortgages get paid off and SS kicks in, so I will actually need that less in the future than if I retire now.</p>
<p>I haven’t really worked out a budget yet, and that $20K health care nut will be a big factor.</p>
<p>IxnayBob, you’re right – I did confuse the two. Will google HSA, then, and see what I can find out. Thanks.</p>
<p>@collage1 - Sorry, I should have explained that.</p>
<p>Most people are in Flexible Savings Accounts (FSAs) that expire up to 2-1/2 months after the end of the fiscal year (except for the new $500 amount that is now allowed to be carried over to the next year).</p>
<p>Health Savings Accounts (HSAs ) are newer. They require you to participate in a high deductible health plan (another potential disadvantage that I should have mentioned), but there is no date you have to use the funds by.</p>
<p>Yes, pre-tax dollars are used to fund an HSA.</p>
<p>The contribution limit for a family this year is $6,550 (plus $1,000 catch up for those 55 and older). We have people who have set aside tens of thousands of dollars for retirement health care costs in their HSAs</p>
<p>@collage1, re your other question. There’s no free lunch, and you give up some return for an immediately accessible low-risk investment. </p>
<p>Two options to consider:
1 some CDs have very low premature withdrawal penalties
2 I bonds and EE bonds. You can’t cash them in immediately (6 months, a year? I don’t remember) but after that they are pretty much immediate withdrawal. There are annual limits to how much you can put in them, though. You can buy them through Treasury Direct. </p>