249 comments

Our New $237/month Health Insurance Plan

It’s finally November 1st, and it means that for the first time in history, the Money Mustache family is running on a fully unsubsidized health insurance plan which we’ve paid for out of our own pocket. Isn’t that scary?

As noted in past articles, I’ve had a pretty cozy health insurance situation up to this point. Growing up in Canada, I was blissfully unaware of the issue, since like virtually all other rich nations, that country provides universal healthcare for all citizens. I took advantage of that system for exactly two major health events: being born in the early 1970s, and a broken ankle after a bike accident in the late 1990s. Both times, the hospital got the job done well.

Moving to the United States, I found the choice of employer-offered health insurance plans confusing, so I just went with the cheapest one. Occasional gaps in coverage occurred as I hopped between employers throughout the early 2000s, but I didn’t notice since I was fortunate enough to have no occasion to visit a doctor during those years.

Then early retirement came and my wife was kind enough to throw me under the umbrella of coverage offered by her part-time employer for the last five years. Although I was grateful, I was not able to take advantage of the insurance outside of an annual visit to the doctor for a checkup. But it did help out greatly by paying most of the bill for the hospital birth of our son.

At last, she quit her part-time job, the free insurance ended, and we were forced to think for ourselves earlier this fall. So all of the health history above went into deciding how to cover ourselves for the rest of our adult lives, during which we will probably never be conventionally employed again.

The thing about insurance is that it is best enjoyed as a game of numbers and probabilities – not feared as a nightmare of imagined outcomes. As I noted long ago in Insurance: A tax on people who are bad at math?, there are only two situations in which I buy insurance:

  • If I am significantly riskier than the insurance company thinks I am, or
  • If the consequences of being uninsured would be too disastrous for me to handle, yet still have a reasonable chance of occurring

For car insurance, the choice is clear: my car is worth about $7,000 right now, so if I destroyed it in a crash, replacing it would not make a big dent in the ‘Stash. Plus, I’ve never been in an accident, and my car lives in a cozy garage and rarely get used (meaning I am probably even less risky than the insurance company expects). So I don’t buy collision or comprehensive insurance.

Health insurance is different: medical care is expensive in the US, with lifetime costs for major conditions potentially reaching to a million dollars or more. On top of that, my young son is a wild card who is more likely than me to injure himself while playing, and I still have the slightly dangerous hobbies of mountain biking and snowboarding. We may even be slightly riskier than the insurance company estimates, making the choice to buy health insurance a positive one.

The next step was looking at our own health care spending over the 13 years we’ve lived in the US:

  • From 1999-2005, costs were negligible: less than one check-up per year each, with no treatments or prescriptions. They were covered by insurance, but even if paid out of pocket, this would have averaged to under $200 per year.
  • In 2006, the birth of the boy and related issues racked up a bill of about $20,000 (a routine surgical intervention was needed,  quadrupling the cost), $4,500 of which we had to pay ourselves.
  • From 2006 to the present, we have averaged one doctor checkup each per year, plus one antibiotic prescription per year between us, which if paid out of pocket would have cost about $600 per year.

Total medical spending (mostly covered by insurance): about $25,000
Total premiums paid by from employers to insurance companies on our behalf: about $100,000

Hey, there’s an unexpected result! We took a 12-year period which included the once-in-a-lifetime (for us) event of a hospital birth of a baby with added surgery, and it still ended up that the insurance premiums were about four times higher than the insurance benefits. This told me that I should probably shop carefully for insurance, in order to get something that protects me from those million-dollar illnesses, but does not attempt to pay for any hundred-dollar incidents, since the cost for that extra protection is clearly very high.

The next stop was an insurance comparison engine. We used ehealthinsurance.com* to do this search, which allowed me to see offerings from the companies that compete specifically in my area – sorted by price. I was pleased to note that prices drop rapidly as the annual deductible rises – meaning most health care expenses are statistically the lower cost ones, and the million-dollar illnesses are indeed very rare (otherwise the premiums would be different).

The winning plan for us was one called the “Saver80 United Health One” plan from United Healthcare, with a quoted price of $219/month** for the family (two 38-year-old adults and a 6-year old boy). The price is low because it comes with a relatively whopping $10,000 per-person/ $20k-per-family deductible, meaning we are very unlikely to ever use this coverage. But at the same time, covering $10-20k in the event of a catastrophe would not be a significant hardship for us, especially given that this is an unlikely event. Even if the expense were to reoccur annually for decades, we could adjust our lifestyle as needed, or earn more income, or get a job with insurance coverage, or make any number of other changes – assuming we even survived that long with such a serious condition. So it passes the test of putting a safe cap on expenses.

All plans these days also provide one free checkup (or “annual physical”) doctor visit per year, with no copay or deductible at all. The value of this alone is worth 10-15% of the annual premium of our new plan.

The Quote Process:

Here’s a screenshot of the quote comparison on ehealthinsurance.com

We also decided to search directly through United Healthcare and received nearly the same quote from them:

This particular plan does not team up with a “Health Savings Account” (HSA). I do like the idea of such an account, because you can put pre-tax money into it over time, then spend it on health expenses without penalty. But my tax rate is already low, and investment options may be limited within an HSA (note that some readers have mastered this issue and do fine with the accounts – see the comments below). I probably do better keeping my cash invested in stocks and real estate, where I earn over 7% in the long run, than in a cash-based investment in an HSA, with yields on cash near zero these days. The biggest issue in my case was that the HSA-friendly plans were at least $100 per month more than non-HSA for equivalent coverage, negating any possible savings.  The “HSA 100” quote from United (see image above) is $393 per month.

The most illuminating part was comparing our new high-deductible plan to the old one that has covered us since 2005:

Old PlanNew Plan
Monthly fee$1,218.06$236.81
Deductible (individual)$1,000$10,000
Deductible (family)$3,000$20,000
Out of Pocket Max (individual)$3,000$3,000
Out of Pocket Max (family)$6,000$9,000
Coinsurance80/2080/20
Doctor Copay (annual checkup)$0$0
Doctor Copay (other visits)$25n/a (not covered)
Specialist Copay$50n/a (not covered)
Emergency Room Copay$250n/a (20% after deductible)
Urgent Care Co-Pay$75
Annual cost (including base premiums) if everything is maxed out for one individual$18,616.72 + copays$15,841.72
Annual cost if everything is maxed out for family$23,616.72 + copays$31,841.72

See, our old insurance was fine, but it was still far from Cadillac. With their various loopholes, you still have to pay the first several thousand dollars of any sort of surgery, which is a good part of fixing your own broken arm anyway. And yet it was six times more expensive, at over $14,600/year for our family.

We also calculated how much we would have to pay out of pocket in a year under the very worst situation. These results are shown in the last two rows of the table.

On top of this, the deductible for our new plan drops each year that you don’t make insurance claims. After three years, it will already be down from $10,000 to $5,000 per individual, thanks to the Deductible Credit, which means last two rows of the table above start looking even better.

Deductible Credit Info from the United HealthCare Web Site:

Doing the math, there are very few situations in which the more expensive insurance would be a good buy. Under the current regime, we save almost $12,000 in premiums every year, just for coverage of doctor visits and a lower deductible on major care. I’d have to immediately get a chronic heart condition or cancer, or be a member of the crew of the Jackass TV show to end up saving money in the greater coverage case.

And there are greater savings out there for the self-insured. I recently got an elective procedure done (the one a man must do when he requires no more children) while under the old insurance. But I asked the doctor first, if there is any difference in the cost if a patient is paying out of their own pocket. His answer was quite interesting:

“Oh yeah! If you’re not going through insurance, we can do it right here in the office, and the cost is $600. If you use insurance, they insist that we do it in the Surgery center across the street because of legal reasons, and it costs an extra $250 there, plus the scheduling takes a month longer”.

Since the cost was less than my old deductible, there was absolutely no reason not to self-pay. This got me thinking even more. I called around to several clinics in my area and asked for their “self-pay” price for the same procedure. The prices ranged from $500 to $1000. It turns out that healthcare is indeed a competitive market, if you bother to ask. The same applies to prescription pricing: you will probably pay much less at Wal-mart’s pharmacy than at Walgreens. In the end, I chose the original doctor because he was the closest to home, but after the search I will never view costs as a fixed thing again.

In the end, we got through the labyrinth with a newfound understanding and a sense of relief. Health insurance is not scary after all. All of us have different situations – if you have a pre-existing condition, the insurance calculations will be different. If there are children planned in your future, the math changes yet again. And if you don’t live in the United States, none of this may matter at all!

And it’s all changing in the near future again. Starting in 2014, the Affordable Care Act begins to shift the balance towards fuller coverage for all. Plans like mine with very high deductibles will phase out (although existing plans will be grandfathered in), meaning you will have to get more coverage and pay more for it. Balancing that out, however, are subsidies that will offset most or all of the extra cost for Mustachian-level early retirees, so the end result could be getting better coverage at similar cost. When you combine this with the new much-better options for people with pre-existing conditions, the ACA provides a serious boost to entrepreneurs and aspiring early retirees alike, because the risk of unexpected medical costs is greatly reduced. Thus, fewer people will feel trapped in large company jobs simply because of the health insurance they provide.

Karawynn at the blog called Pocketmint wrote a great post on this issue here.

Medical insurance is a complicated field, but the MMM family is feeling nicely set for now. If it changes, we’ll re-evaluate and act as needed. The bottom line is that the issue of health insurance does not need to get in the way of early retirement for most of us. And the more you learn about it when the time comes, the better you’ll do.

 

* The ehealthinsurance.com link is an affiliate link, so if you end up using it for your own insurance shopping, this blog will benefit (and thanks!).

**- after applying for the plan, you fill out a detailed survey about past health conditions online. After hearing about the more costly birth of our son, they raised the rate by $18/month over the original quote to that $237/month you see in the article title. Probably because any additional births are more likely to be high-cost as well. In this case, it would be good if information were more transparent, since we should actually get a discount rather than a penalty due to the fact that there will be no additional MMM children!

  • Chris Highcock November 3, 2012, 1:18 pm

    Have you ever thought pf locating to somewhere that has free universal health care? Come to Scotland in the right place you can live very well

    Reply
  • Captian and Mrs Slow November 3, 2012, 3:53 pm

    Not that it applies here but it should be noted that Canada stands unique in the world in that it bans private healthcare. Live any where and you find that private and public universal healthcare can coexist side by side. Not that it doesn’t exist (ie you can always pay for any missing healthcare) but simply that you can’t purchase private health insurance.

    Reply
  • lurker November 4, 2012, 6:52 am

    where in Scotland should we move? I have Campbell blood on my father’s side….is that Findhorn garden in Scotland? I would love to live near it…

    Reply
  • JW November 5, 2012, 5:52 am

    My wife and I also just applied for a high deductible plan like the one described here, with some interesting results. First, we applied with the exact same insurance company we currently have through my employer, for the exact coverage with one difference. Individual vs Group coverage.

    The result? Individual coverage is 40% of the cost we have been paying for the group coverage. That is a savings for us of over $300/month!

    It pays to compare, even if you are part of a group plan.

    Reply
  • dottie November 5, 2012, 6:26 am

    two words: Melanoma Cancer
    Husband was diagnosed four years ago… 1 year Interferon, 4 treatments Yervoy, Removal of Brain Tumor, Radiation,currently on Zelboraf. Numerous ( and I mean Numerous!) CAT Scans, PET Scans, Brain MRI, DNA testing…..
    Total cost paid for by my employer provided United Health Care $250. annual ded.$2500.00 annual max out of pocket plan….1.3 Million dollars!!!
    It all started with a small round mole on his back that started to itch!!!

    Reply
    • George November 5, 2012, 10:01 am

      I am confused because based on the comments here, does this mean that most Mustachians are Democrates that support Obama and universal health care?

      Or are the politically charged comments being deleted here? as they were in (in the footnotes section of the article): http://www.mrmoneymustache.com/2012/06/04/the-lovely-low-taxes-of-early-retirement/

      I am Republican and plan on voting for Romney tomorrow, and for the most part I agree with MMM on everything in the past except on this issue regarding the Affordable Care Act.

      Reply
      • Mr. Money Mustache November 5, 2012, 10:11 am

        Thankfully, I haven’t had to delete any political comments on this particular thread. As a general rule, there’s nothing wrong with bringing up facts (with external links to real studies when possible) that support either side of an argument that is directly relevant to an article.

        But if people are just start chanting “Blue!” “Red!” “Obama!” “Romney” “Your guy’s an asshole!” “No YOUR guy’s an asshole!”, I tend to delete it, since the goal of comments is for people to learn more about the topic in question, not just to steamroll each other with ideology.

        Speaking of external links, I noticed that the Economist, my favorite hardcode capitalist free-market magazine (owned by Rupert Murdoch’s News Corp), endorsed Obama last week for the second time, although they did it very grudgingly: http://www.economist.com/news/leaders/21565623-america-could-do-better-barack-obama-sadly-mitt-romney-does-not-fit-bill-which-one?fsrc=nlw|hig|11-1-2012|4003157|35483256|

        I mention that because even the Economist was in favor of Obama’s health care reform. For any debate on which party is better, please keep it to the forum or another website though.

        Reply
        • George November 5, 2012, 10:19 am

          Yeah thats true all that chanting “Blue!” “Red!” “Obama!” “Romney” “Your guy’s an asshole!” “No YOUR guy’s an asshole!” just tends the ruin the comment section so that no one else wants to read them. There is already too much of that going on other websites and blogs.

          Also, it would be interesting to see what the actual Democratic/Republican makeup is of the Mustachian population just for curiosity. Not sure if the group leans one way or the other.

          Reply
    • Ceres Green November 11, 2012, 10:54 am

      We live in Oregon. My husband is self-employed and has been on my insurance plans for the past 20 years. He continues to work part-time because he enjoys it. I retired a couple of months ago and we had to assess the COBRA vs other health insurance plans out there and since my husband usually has several basal cell carcinomas removed per year along with the reconstructive surgery it was quite expensive either way. (He also has some other health conditions which we could cover out of pocket but combined with the cancer it is a lot).
      COBRA is $780 per month for both of us but covers everything and the deductible is $3000. We looked at the e-health insurance options for high/moderate deductibles and the various premiums along with the amount of copay after meeting the deductibles and for us, paying the $780 per month plus the $3000 copay still is less than what the other plans could offer to cover what our yearly medical needs are and as a cap for the pre-exiting condition ramifications. Thankfully, we can deduct the healthcare costs because of my husband’s business. He’ll be 65 in a year and at that time we will re-assess his Medicare and supplemental insurance options and then I will get my own insurance plan since I’m 50 and healthy. Pre-existing conditions suck and are expensive. Sigh…

      Reply
  • ultrarunner November 5, 2012, 10:51 am

    Thanks for posting this one. The health insurance question was a dead-easy one 12 months ago. Two kids, done, no more. Super healthy. *Incredibly* healthy… I’m an ultrarunner (and a climber, mt biker, cyclist, etc, etc)… I exercise 20-30 hours a week. Haven’t been to the doctor in a couple decades for anything but checkups and a couple sports injuries. My blood values are beyond incredible (total cholesterol of 105). Twas an absolute no-brainer.

    I planned to switch to the HD / HSA plan at work during the open enrollment period, but I procrastinated and missed the deadline. A month later, I woke up one morning with a rare (1:250,000) virus that left me partially paralyzed. It happened in hours. I racked up about $20,000 in procedures over the last year and was looking down the barrel of a rarely-performed $100,000+ brain surgery (which, thankfully didn’t need).

    Seven months later, a couple of weird accidents left me with a ruptured L4/L5 disc and now I’m (most likely) looking at a $40,000 spinal surgery in the next 6-8 weeks.

    *DESPITE* these two HUGELY expensive procedures, had I been on the HD plan my entire adult life (20+ years), I’d still come out ahead. Seriously.

    I’m just really fucking glad I procrastinated LAST YEAR. Occasionally, my procrastination pays off. :-) Once these are no longer “pre-existing” conditions, I’ll still switch over to that HD plan. :-)

    I’m not advocating others procrastinate, because the odds are utterly slim of it happening to anyone else (ie, 1:250,000)… but I thought the story was interesting enough to share. ;-)

    Reply
    • Mr. Money Mustache November 5, 2012, 12:07 pm

      That is damned impressive, Ultrarunner. You exercise at least five times more than I manage to even with no job, and probably at much higher intensity too.

      Have you read any of the “chronic cardio” opinion/research stuff by Mark Sisson (this guy: http://www.mrmoneymustache.com/2012/08/07/mr-money-mustache-vs-marks-daily-apple/)?

      He seems to argue that as you get to extreme levels of cardiovascular exercise for a prolonged time, although your fitness may increase, your overall immune system may get weaker. He was an ultrarunner in his earlier years, but now claims he is healthier with a more moderate amount of cardio.

      I don’t have enough scientific knowledge to support or speak out against that view. But it might make sense at least intuitively (from the perspective of our evolution), if you are devoting all of your body’s resources to a “travel emergency”, it might not expend as much energy on the immune system. And if you maintain a permanent travel emergency, you might exceed its ability to regenerate..(?)

      Reply
      • ultrarunner November 5, 2012, 1:18 pm

        Oh yeah, there’s no doubt in my mind that it’s probably “too much” from a health standpoint. :) Ultras can be very taxing to the endocrine system, especially if done wrong. Especially 100 milers, which is what I prefer to run.

        That said, my current level is “just about right” for my mental health! :-)

        Once I get this back in order, maybe I’ll do a run up to Longmont w/ some other MMM readers (seems to be a high percentage of my ultra-distance friends… interesting), if you want to grab a beer. (then take the RTD home).

        Reply
  • Stacy November 5, 2012, 12:30 pm

    As someone who has had individual and employer-based health insurance, this discussion interests me. I’m 38 years old and have always been in terrific health; I’m active and for years I rarely saw doctors (annual check-up, if that).

    When my state (Massachusetts) passed its health insurance law, I was on my small firm’s group plan. We had decent coverage but it was very expensive because the over-age-50 partners in my firm skewed the prices upward for everyone, including me (34 at the time). Fortunately, the individual policy market exploded after the health care law passed, and I dropped out of my work plan, purchasing an individual HMO plan that saved me 50% in premium costs. Fast forward two years. Three days before my wedding, I learned I had breast cancer. We quickly filled out the paperwork to switch me to my fiance’s health insurance plan to cover my treatment (his plan had better coverage/benefits, plus his employer reimburses the $1000 inpatient copay). On his family plan, our premium cost is $347/mo or $4170/year.

    For kicks, I just calculated how much our insurance co has paid out for me in the last two years: in 2011, $24,400 which included two surgeries related to the cancer. In 2012 (thus far), $7500 – mostly related to our son’s uncomplicated hospital birth. I will have 1-2 more surgeries in the next couple of years related to cancer treatment, and then surgery every 10 years or so. I am also at higher risk of developing another cancer at some point in my life.

    We’re not FI and we would not have been able to shoulder the financial costs without insurance — or the stress of burning through our available cash during a scary health crisis.

    My only real question for MMM – since he seems to have thought through most everything, and is in a different financial situation than we are – is this: what appetite are you or Mrs. MM going to have to go back to a “real job” in the case of a truly catastrophic health event? Not to be a scaremonger, but it seems to me that that would be a time where you would *most* want the flexibility of the FI lifestyle. No?

    Reply
  • bogart November 5, 2012, 1:10 pm

    @MMM I believe you significantly underestimate your potential out-of-pocket costs, as there appears to be no coverage whatsoever for drugs, and I believe there is no maximum whatsoever for uncovered costs, e.g. doctor’s visits and specialist visits. So the “maximum” you list is for covered costs, but there’s plenty that’s not included in those at all.

    Reply
    • Mr. Money Mustache November 5, 2012, 2:23 pm

      You might be right in certain situations, Bogart.

      But I calculate them as improbable enough in my own personal situation that I feel comfortable in our own insurance choices. For example, I’m generally against taking medical drugs for myself and would try many other options (including moving to other countries) before going onto any sort of ongoing expensive prescription.

      The best part of all this is, I will report back to everyone on how this turns out. If readers don’t want to follow my example, they can choose their own way instead. If I screw up a calculation and something bites me in restrospect, I’m more than happy to come back and write about it, in the hopes of helping other avoid the mistake!

      Reply
      • bogart November 5, 2012, 7:33 pm

        Fair enough, though (as I’ve said elsewhere on this blog, I think in the forum) your option of moving to Canada, delayed availability of public health plan there notwithstanding, to me makes this whole discussion a bit silly. I mean, I get that you are doing this stuff and willing to write about it and I appreciate that, but you do have a fallback that isn’t available to the vast majority of your readership, and it’s a big one. It’s well and good to say in a hypothetical sense that you’d feel uncomfortable using it, unethical, etc. etc., but if push came to shove — well, it’s there (for you but not for us). No offense.

        Still, while I’m (already) grumbling, to the extent your goal here is to educate, I’d be happier if you also drew attention to the interstate discrepancies in the availability of individual health insurance coverage in this country. What works for you in Colorado would look very different in some other US states.

        Reply
        • Mr. Money Mustache November 5, 2012, 7:48 pm

          Indeed, many states have better options than Colorado, and some have worse.

          Remember that we ALL have the option of moving around to various states and countries besides the one in which we were born. Mexico is a great place to seek out low-cost healthcare if you are priced out of the US market. India and Thailand are cool places to settle too. Canada will grant citizenship to US residents who have skills in high demand, if you’re willing to go live and work there for a while. Or if you can entice a Canadian to marry you, you might even get dual citizenship more easily. Meanwhile the ACA is flattening the extremes of our health care spectrum right here in the US.

          And the further you move along the Mustachian Spectrum of making your spending far less than your income, and the longer you live this way, the less you’ll have to worry about any of this.

          Conversely, the more time you spend worrying and typing to Mr. Money Mustache that he is unrealistically optimistic in all of these areas, the less progress you make moving along the Mustachian Spectrum.

          Bogart, you are a perennial complainer around here if I recall correctly. I’ve enjoyed it, as you have probably provided a voice to many other silent complainers, but at some point perhaps this should grow into your own blog. http://www.mrmoneymustacheistoooptimistic.com or something.

          Reply
          • bogart November 6, 2012, 10:53 am

            Thanks for your reply. Yes, it’s true, I’m a perennial (though, I’d argue, not wildly frequent) complainer around here. I’ll let you know if I start the blog (don’t hold your breath) :) .

            Actually I was (truly) thinking that I should also have posted in my comment my thanks for your critique of the US health system, a point about which I am largely in agreement with you; I very much appreciate your willingness to take that on here and to compare it to your experience of Canada.

            Certainly it’s fair to say that there’s lots you left out of your post and I realize you can’t fit everything in. I do worry, though, about others, differently situated, looking at your description of your decision-making process and making similar decisions in contexts where taking on the risks you are taking on is (a) a less good strategy and/or (b) something they don’t realize they are doing. Thus my propensity to complain.

            Reply
  • Anon November 5, 2012, 1:49 pm

    Larryw and JaneMD — Thank you for your comments. I completely agree.

    As someone who was diagnosed with a degenerative auto-immune illness three years ago (completely out of the blue at the ripe old age of 28) whose medication costs more than $40K per year, an HSA and high deductable plan is currently not feasible.

    My illness btw was not caused by my lifestyle; however, staying on top of my preventative care, watching my diet, taking my medication, and exercising is helping me to stay as healthy as possible by managing my condition.

    I understand the math/statistics behind making choices when it comes to shopping around for insurance, but you also need to look at the financial implications should something go wrong — even if statistically the odds are in your favor of you and your family being healthy. (Everyone thinks that the bad stuff will happen to someone else.) You need to make the choice that makes the most sense to you financially and weigh your odds.

    Can you afford it if you are one of the unlucky ones who gets into an accident or develops a sudden illness if you go with a high-deductable plan with limited coverage? If so, I say go for it. If not, then it might be worth another look.

    This is not meant to be a scare-tactic, negative kind of post. Only one from the opposite perspective of someone who IS living in the United States and dealing with a very expensive chronic illness, caused by bad luck and faulty genes. For me, I pay a lot in premiums for a PPO, but most of my medical expenses are covered with very few out-of-pocket costs.

    Right now, because I am relatively healthy *knock on wood*, the most expensive part of my illness is my medication, which plays a huge role in my determining which health plan to choose each year. (I always pay close attention to the drug formulary when making my decision.)

    Financially, paying more in premiums and having a low deductable has been worth it. (Estimated cost of medication these last 3 years = $126,000; MRI’s $7,000 to $11,000 depending on the year, so estimated total of $25,000 for MRIs these last 3 years.) I get MRIs at least once a year (sometimes twice depending on the results), and I’m on these meds for life unless a cure is found or I decide to go off them/cannot afford them.

    On average, I estimate that the cost of my care is at least $50k per year. And I am relatively stable. If my health takes a turn for the worst and I need rehabilitative care, additional medication to manage systems, etc…it can be much more expensive. (Thankfully, I have not gone down that route.)

    I am grateful that I have the ability to work and that my husband gets good coverage through his employer, but it angers me when I think of others in similar situations who are not as fortunate.

    Again, I present my story not as a scare tactic, but to offer a different perspective and to agree about needing to make choices that are best for your particular life situation.

    The national dialogue of our healthcare system is very real to me because I worry all the time about the financial implications of my illness and think about others in similar situations. We may be in the minority, but those of us that are living with a chronic illness experience first-hand the crippling costs of our care, and see that it is a very real, very complicated problem.

    Reply
    • anonymous November 5, 2012, 3:47 pm

      The question that keeps popping in my head with all these anecdotal cases of outrageous healthcare costs – Should healthcare really be that costly? I mean for meds and short tests like MRIs or short hospital stays and things of this nature? Trust me there are a LOT of people getting rich off of our collective bad circumstances. Do we really need HDTVs in every hospital room with designer wall paper? Do Doctors really need to office in the most expensive real estate in town? Do we really need 5 hospitals within a block of each other? Where is all this money being donated to cancer research groups really going? In my opinion, it’s overly complicated administration and top level executives drive to increase shareholders profits that is driving these costs. In the like of MMM “when is enough enough?” – I’m all for free markets in general, but I think some industries that are basic human needs need some sort of regulation to balance the greed – healthcare, banking, etc. Try to ask anyone you know if they can figure out what their insurance really covers or how much health care really costs or how health bills are calculated? I guarantee 90%+ of the population doesn’t question it and just pays into the system because that is what they have been trained to do, don’t questions just pay because otherwise scary crap will happen. I’m grateful for posts like this to get people thinking and to challenge the status quo.

      Reply
      • Liz I November 6, 2012, 2:27 pm

        The actual costs are absolutely more expensive. The reason (I think, I’m not an economist or health-care-puchasing expert) is that when the NHS (UK) or Medicare (Australia) name a price for a service (MRI, drugs, check up, whatever) they have massive bargaining power. I imagine the price blow-out in the US is due to having all these disparate groups trying to get lower prices (and why would they?). Even if Obamacare begins life being more expensive, after a few years I imagine costs would plummet.

        As an example, in 2010 the Australian ambassador to the US slipped on ice and broke his knees. Naturally the best health care was provided, which came to $US35,000. Some Australian newspapers did a comparison to what it would have cost here and it came to <$US9,000, for exactly the same treatment/procedure. (http://www.theaustralian.com.au/news/nation/us-health-costs-bring-beazley-to-his-knees/story-e6frg6nf-1225844966960 apologies if it's geo-blocked or whatnot). Not to mention that if it had happened in Australia, most of that $9000 would have been paid by Medicare anyway.

        Reply
  • riggerjack November 6, 2012, 6:55 am

    Wow, I can’t believe I’m the first one to bring this up. There are alot of ways our health care system is broken, but most of these suggested fixes caused the problem.
    nationalized (single payer) systems never reduce costs, but they are good at shifting costs. Then, you’re health care is determined by budget committee. An excellent example of this in the states is VA medical. In the army, we had free medical, and it was worth every penny.
    If you want to get down to the brass tacks of the issue, look at the market failures. Not enough doctors, caused by not enough Med school capacity. This isn’t an accident. The number of Med schools opened since WWI is just a handful, I’ll look it up and edit this when I’m on my PC tonight. When was the last time you heard of an unemployed doctor? That is a clear sign of market failure. Md make multiples of the typical PhD salary.
    then there’s the issue of costs. You don’t know what you are spending, and neither does the doctor. Is there any transaction anywhere else in your life that works that way?
    And then there is the volume of nonmedical service providers involved in the industry. The book keepers that vary pricing according to perceived ability to pay, transcriptionists, lawyers, lobbyists, insurance industry, etc. None of that is necessary to a doctor patient transaction.
    there is only one fix to this. It’s not regulation, that, at best, will shift costs. It’s w
    hat MMM has already done. High deductible insurance. As a high deductible Patient, MMM will shop around, be price sensitive, be what economists call a rational consumer. With more like him, there will be a more efficient medical system. One where the needs and wants of the patient are more important than those of the insurance company’s.
    The only way to reduce costs is to embrace the laws of economics. Laws that thru regulation and custom have been suspended in this market.

    Reply
    • Liz I November 6, 2012, 2:46 pm

      On the contrary, single-payer systems reduce the absolute costs massively. See my earlier comment comparing what proportion of various GDPs is spent on health care. UK & Australia spend <10% GDP on health care. US is more like 17%. So the cost is both increased and shifted to the consumer in a non-single-payer system.

      Reply
      • riggerjack November 7, 2012, 6:35 am

        Yeah, a 5 minute Google search will verify everything you said. Unfortunately, it’ll take more than 5 minutes to point out all the falsehoods and half truths that went into the basis for the studies. This is hardly the place, I’m not nearly a fast enough typist to do the subject justice.
        I’ll try a little in case you have any interest I’ll through a few reasons out there.
        #1. Most people are happy with their health care. The study I last heard about was 87% of Americans. Now that’s health care,not health plan. That’s. Because most of us are healthy, or being treated for our health issues. Even 3rd world countries are fairly happy with their health care. This is because most of the population’s problems are fairly simple. The real question is how does your system deal with the unusual/difficult issues. Once you go down that path, you want all the option open. Spend some time on a board for fibromyalgia for a glimpse into that world.
        #2 gdp comparisons with America will always need to factor in relative wealth. The greater disposable income of Americans makes greater healthcare spending reasonable. When choosing a different treatment for breast cancer is competing with remodeling the guest room, that’s going to be different than if it’s competing against selling the house. The first rule of economics is that there is always a tradeoff.
        #3 nationalizing NEVER, EVER, reduces overall costs. It may result in lesser spending, but that’s not the same thing. I could reduce your grocery spending by restricting your purchases to rice and beans, delivered by shipping container, or confining you on a bread and water diet, but in neither case is your costs reduced. You simply pay in lost opportunity and keep the cash.
        #4 markets gain and lose efficiency based on the information available to the participants. The further the decisions are from the concerned parties, the less informed the decisions. For our purposes, efficiency is the buyer’s percieved value. We all seem to agree that the price for healthcare is higher than we believe the value to be. Letting someone else make your buying decisions is not going to consistently make you happier with your purchase. This is why the military buys $400 toilet seats, and corporations spend $13 in accounting costs to write a $2 check. We don’t need to compare the $10 hospital aspirin to the bottle of aspirin at the 7-11 across the street.
        further, better written, reading can be found by Googling Thomas Sowell and Walter Williams, both are economics professors with very accessible columns. Nothing that would require a reader to know anything about economics to follow along.

        Reply
        • Liz I November 9, 2012, 6:10 pm

          I’m not going to say too much more, because I fear I will incur the wrath of MMM for complainypantsing about something in a distant country that a) doesn’t affect me one iota and b) I can’t change anyway. But I will just add that people everywhere may be happy with their health care — until things go wrong. You seem to have personal dealings with people who have fibromyalgia, and I’m sure some people are put into terrible financial situations because of their chronic disease. You never hear those stories in Australia.
          Also, I have no idea who stands to gain from falsifying or misinterpreting the data in those articles I linked to. But a whole lot of people stand to gain from the current system in the US. After all, that money has to be going somewhere.

          Reply
          • riggerjack November 12, 2012, 7:31 am

            Falsehoods and half truths was the wrong term. When you do a study, you lay out your parameters. How you lay them out determines your results. As my grandfather used to say, “all figures lie,and all lies figure.” Statistics is the fine art of manipulating numbers to tell the story you want to tell. When you see the 4 paragraph summary artical, they never mention how the numbers were worked.

            That’s why I like to vary my news sources. You can’t avoid spin, but you can balance it. Read
            the same story in the huffington post and the wall street journal, and the details are often completely different. It’s not lieing about the subject, it’s emphasizing the part of the story the editor believes you will be interested in. The same principal applies to authors of studies.

            Reply
  • riggerjack November 6, 2012, 7:56 am

    Ok, I looked it up on Wikipedia. The USA has 141 MD schools. And 29 DO schools. 80 of them were open in 1916, 68 more opened between 1916, and 2004, and 18 closed or merged in that time.
    21 more between 2004 and 2012, and 23 more are currently in development. Whatever the roadblock was has clearly been removed.
    on a side note, Illinois seemed to be a hotbed for fraudulent Med schools in the 19th century, and the best reason for a school closure : Franklin medical college. Closed in 1849, after a grave robbing scandal, and protestors shot the founder!

    Reply
    • victoria November 6, 2012, 8:28 am

      Illinois was bananas in the late 19th/early 20th century (I’ve done research on the Flexner Report, which is still an interesting read today and freely available — there’s a link at the bottom of its WP article). They had no laws whatsoever regulating medical schools at that time, and you had situations like night schools that were taught by medical students attending day schools nearby, and combination missionary training/medical schools. Really, the whole country was crazy. My favorite part of the Flexner Report was the report of Kansas Medical College: “The dissecting-room is indescribably filthy; it contained, in addition to necessary tables, a single, badly hacked cadaver, and was simultaneously used as a chicken yard.”

      I went to a talk not long ago about new medical schools opening. There actually weren’t too many official roadblocks until 2004; however, most of the schools that were capable of running a medical school already had one. Lately you’re seeing a number of situations where hospital networks and insurance companies are partnering with existing universities to open medical schools; this benefits the networks because recruitment of physicians is phenomenally expensive. Thus generating homegrown physicians should offset some of the high costs of medical education.

      There actually are enough physicians in the US to account for the needs of the population by most measures. The problem is how those physicians are distributed. We are by many measures properly or even oversupplied with specialists and undersupplied with primary care physicians. That’s a difficult problem to solve because while primary care physicians do make more than most PhDs, they also have far higher loan debt than PhDs and a lot of malpractice insurance to cover from their salaries. This is especially a problem in obstetrics, which is one of the lower paying medical fields but has among the very highest malpractice insurance premiums. You’re talking in the 100K-150K range for a starting salary (with potential to get up close to 200K depending on what type of practice you have), with average student loans of 150K and between 10K and 20K a year in malpractice insurance premiums for a GP. An OB/Gyn can expect to make a similar amount but will pay an average 45K/year in malpractice insurance.

      There’s also one other problem with increasing physician supply that can’t really be solved by opening new medical schools: there aren’t enough residency spots available to accommodate a much bigger number of medical students in the US. There’s some flexibility to make sure that most or all of the existing spots are “homegrown” — the real losers with more medical schools in the US are going to be the schools in the Caribbean that cater to US students who couldn’t quite get into med schools on the continent and send most of their students to residency programs in the US — but there isn’t a whole lot of room for growth in that area, because residency programs are resource-intensive. Only larger hospitals can realistically run one, and most of the hospitals that could run residency programs already have them. And without residency, MDs can’t be board-certified and can’t practice.

      Reply
      • riggerjack November 6, 2012, 2:48 pm

        I’m sure to ratio of doctors to patients is comfortable for the doctors. Medical costs and total lack of unemployed doctors imply the ratio is less favorable to the patients. While I’m no fan of unemployment, I believe that every field has a small percentage of people that should only be employed as a last resort. In the tech boom a comp science degree made a pulse optional for employment. Supply and demand pulled candidates from other fields to even things out. In the Med field, there are many severe restrictions placed on the supply side. High costs are to be expected.
        Restricted residency programs are an artificial impediment to the medical staffing supply line. If obstatrics pays less and comes with higher insurance, there must be balancing factors that stop a shortage of obstetricians from driving up salaries. More Med schools should help with the student loan slavery.
        personally, I’ve seen doctors when a medic or nurse or nurse practitioner would have been fine, or preferable. The system is geared to steering me to a doctor, and there is no incentive for me to fight it, being fully insured.
        When I was in the army, if I saw a doctor, it was because I’d already been seen by 4 or more people and passed up the line. I expect that most single payer systems use similar strategies. While I like it in principle, I strongly object to it as a primary system. When it works, it’s efficient and cheaper, but there needs to be a viable alternative.
        Commonly used High deductible insurance will give incentives to make nurse practitioners and nurses more available to the general public. This will lower demands on doctors and decrease costs, while maintaining a viable alternative path for those looking for more specialized treatment.

        Or, we can just give up and use obamacare.

        Reply
  • Jeff Diercks November 15, 2012, 6:30 pm

    Great analysis MMM! We went through a similar process with health insurance in past years. Our analysis added one more option, we explored Christian Care Medi-share as well. Our monthly premiums are slightly higher for our family of four, but our coverage and deductibles are better. Your readers might also want to explore this option when they review their insurance options.

    Reply
  • mfadhlan December 10, 2012, 6:30 pm

    237/month of health insurance? In Malaysia, with USD100/mth, we can get lifetime limit of MYR 1.5 mil or USD 490,000. And plus of that, no limit for doctor visit. And yes, no co-insurance at all.

    Maybe it would be change on 10years later…

    Reply
  • Ken February 14, 2013, 4:31 am

    Mr. M,
    I’m a young 20 something who has never been out from under my parents umbrella. Is there a site or resource I can peruse to inform myself about all this?

    Reply
  • Enyar March 6, 2013, 4:36 pm

    Before 3/22, I need to make a decision on a traditional plan or a high deductible plan for health insurance. My question is for those who have posted with an extremely rare disease/condition/accident. If you have a high deductible plan, you still wouldn’t be liable for the $100,000s in bills right? Only the amount of the deductible, in my case $2,500. It seems like after you factor in the benefits from HSA, lower premiums, cash discounts, etc….there is only a small window where a traditional plan makes sense.

    Reply
    • Kim March 6, 2013, 11:51 pm

      Actually, your costs per visit will probably go DOWN after your deductible, but for many plans you also have to pay attention to the Out of Pocket Max for the year.
      The high deductible plans seemed scary to me too after all the years I’ve been on really great employer plans, but they are looking less and less scary to this self employed scrapin by mama! I thhink one of the scariest issues for me is that no one wants to tell you what a doctor’s visit or anything else will run. Finally had to concentrate on that OOPM bottom line and not stress too much about the routine costs.

      Reply
  • Nancy March 17, 2013, 2:13 pm

    I haven’t read all the comments so maybe this has been addressed. One of the most important questions to look into about your health insurance coverage is what is the annual limit and the lifetime max that your plan will pay. Check out the very long but very worthwhile article “Bitter Pill: Why Medical Bills Are Killing Us” (Time magazine March 4, 2013). Sorry, but I don’t know a link that will show the entire article to folks who aren’t Time subscribers.

    Reply
  • James Steamer April 28, 2013, 8:27 am

    It is estimated that preventive self care would save the US health care system 75% of its costs. I may not live forever but eating properly, exercising well, getting a good sleep and keeping stress reasonable is our insurance. Just imagine if we all had “grocery insurance” and could buy $600 of food at the store for a co-payment of $20. Obviously there would be no incentive to reduce prices and no doubt quite the opposite. Except for the most major of medical issues we should be paying cash reasonably and fairly for our medical care. I got a tick bite and Lyme Disease a couple of years ago while camping. The only place was a damn ER room nearby. Two minutes to get a prescription for $10 of Doxycyline. The bill came for $525!! I sent this place $100 and they will never get another penny! This is the only weapon left in the consumer’s arsenal – don’t take it free but only pay reasonably!

    Reply
  • Barbara Saunders April 29, 2013, 11:14 am

    Self-employed people do NOT pay health insurance premiums with pre-tax dollars. They’re an above-the-line deduction for federal (and state) taxes but not for the self-employment tax.

    Reply
  • Erica May 6, 2013, 2:29 pm

    MMM, new to your blog and love it. Has made me a little obsessed with finding a way out of my job, though! Followed the pocketmint link above and realized that if my family cut our income to $30,000 a year, we would actually qualify for Medicaid. I feel kind of uncomfortable about that…. The price is right, but I wouldn’t actually have a true need for it, I guess, compared to some. Will your family be in the same situation? Will you avail yourselves of Medicaid?

    Reply
    • Alex R May 6, 2013, 9:04 pm

      I don’t know about where you live, but here you have to meet asset tests, not just minimum income requirements. You may, though, be referring to the situation after the Obamacare Medicaid expansion “in participating states”. I wouldn’t hesitate if my family were struggling in any way financially. If I were in an area where I could live okay on $30K, AND not fear for the future, then I too would be less than comfortable on Medicaid, in anything but a system that equitably serves the essential healthcare needs of ‘anyone’.

      Reply
    • JBS July 5, 2013, 1:18 pm

      My understanding of the new law is that Asset tests for medicaid are mostly going away except for one major exception. This is the biggest deal in the Obamacare law because it basically implements “single payer” health care for everyone who lives below 133% of the Federal Poverty Level. The one exception is that Asset Recovery will continue for those who accept medicaid benefits after 55 years of age. This means that the government has the right to recover (seize) assets from your estate after you and your spouse are dead. I could be wrong about this as details on this part of the law are hard to find. To me, this is a flaw in the law since people do not become eligible for Medicare until age 65. The obvious fix (and an idea that has been floated for years) is to allow persons 55 or older to enroll in Medicare which may still happen once Medicaid costs begin to soar. Medicaid is gold medal insurance ( at least in Washington State) compared to Medicare.

      Reply
  • Erica May 7, 2013, 9:23 am

    Yes, I was unclear….I meant after Affordable Healthcare Act comes into full effect in 2014. It appears that if I choose to retire early, and live on 30K or less a year as MMM suggests, we would qualify for Medicaid. I just wondered if the same will be true for his family, and if he would pursue it….or if that just wouldn’t feel right, given his overall assets.

    Reply
  • JP June 17, 2013, 6:06 am

    @James Steamer…
    I know these are slightly older comments, but the topic is just as relevant today. As far as paying what’s reasonable, good luck! Several years ago I ended up with ER bills ~$6,000. I was on a very small income and a student; the hospital counted my student loans as income and therefore denied my hardship application. They sent me to collections are threatening to sue to me.

    Now I have a good job making ~$18.00 an hour. The problem with this however, is my company has mandatory health benefits that I MUST pay for. Since I’m part time I get a small amount of reimbursement, and therefore a HUGE chunk of my check taken out. (We’re talking about $500 lost from each check.)

    So one hospital is essentially ready to sue me for NOT having insurance, which I won’t be able to afford to pay because I’m being forced to BUY very expensive insurance!!!

    We will be the best insured homeless family you’ve ever met.

    Reply
  • NW July 17, 2013, 8:17 am

    This is the article.

    This is the one that let me know there really was a way to retire early and not live life in a antimicrobial-bubble-wrap-cocoon for fear of getting sick and going broke.

    I think I’ve read every post on here after finding this one and have very much enjoyed them. Thanks!

    Reply
  • FBN July 28, 2013, 9:31 am

    There is a good website that I used for insurance: http://www.medicalrepricing.com Essentially its a similar plan to what MMM used: a 10K deductible combined with critical illness insurance that essentially covers the deductible should you get a serious illness.

    Reply
  • Heather Miller August 2, 2013, 9:48 am

    The lowest family plan now available on eHealthinsurance.com is a $6K deductible plan for $735.00/month, 9 months after this article was posted. What am I missing? How did you come up with $237? I live in Sacramento, CA, I’m 47 and my husband is 48, and we have 2 kids. I know my stats are slightly different than yours, but I don’t think my premium should be triple what you found, and I can’t find the $10K deductible plan. I’ll check out Blue Options and the medicalrepricing site to see what I can find there.

    Reply
    • Mr. Money Mustache August 3, 2013, 3:10 pm

      Thanks Heather, that is a good bit of data to add to the collection. Note that we are in Colorado and the insurance market currently varies greatly from one state to another. When you combine 10-years-older parents, an extra kid to cover, a lower deductible, and a different state, I can imagine that tripling the premium.

      Try an imaginary scenario in Colorado to see what your price is, to figure out the price differential between states.

      Reply
      • Dustin November 21, 2013, 11:42 am

        I want to make people aware that they don’t have to buy an insurance policy. You can cover a family of any size for just $370 a month (less for single-parent and young two-parent families) with a $900 annual deductible through Samaritan Ministries, a Christian health care sharing ministry that satisfies the Obamacare law. Check my website link to read more about it. Our family chose this over the “awesome” health insurance my wife’s state university job offers and we love it – and the monthly savings and low deductible is very mustachian! What’s more mustachian is that this approach tells the health the insurance industry where they can stick it. This non-insurance, private non-profit approach actually has lead to a better and happier relationship for us with our doctors. If you’re frustrated with the mess insurance has become or just curious, check out Samaritan Ministries. http://creationbasedhealth.com/2013/11/whats-alternative-health-insurance-health-care-people-christian-faith.html

        Reply
        • Mr. Money Mustache November 21, 2013, 1:05 pm

          Wow, that is a bizarre loophole. So this insurance alternative is designed only to accept people with only certain religious beliefs?

          From their website:
          “Do you support abortion, sexual immorality, drug & alcohol abuse with your health insurance?” reads the cover of one Samaritan pamphlet. Joining with “unbelievers” to cover the “health consequences of sinful living,” it warns, “is not a way of showing the love of Jesus Christ.”

          Still worth sharing just so others understand some of the other workarounds to the law.

          Reply
          • Dustin November 21, 2013, 2:21 pm

            Hi Mr. MM, what an honor to get a personal comment from you : )
            (Pardon me for being a bit star-struck!)

            The law of Obamacare hasn’t changed. It still requires everyone to have health coverage, it was just written so that being a member of a health care sharing ministry qualifies as health coverage. There are at least 2 other Christian non-profit ministries I know of that satisfy Obamacare, but I don’t know if they maybe don’t have as strict religious adherents.

            Reply
    • Huck September 13, 2013, 11:41 am

      I just ran a quote for my family…39 and 38 year old parents, and 3 kids (9, 7 and 4). The “Saver 80” 10000/20000 plan is quoted at $309.31.

      Reply
      • Revilo February 24, 2014, 11:48 am

        I tried to match your values today on eHealthinsurance.com and the lowest value I found was $473.82 with Kaiser. Married Couple Born 1975, One child born 2007 in 80027 zipcode. I couldn’t seem to get anything close to $300/Month- Am I missing something?
        I’m trying to get health insurance for a family of 4 at 40yrs, 35yrs, 6yrs, 4yrs and the lowest I can find is $574.89

        Reply
  • Tom Murin September 15, 2013, 7:12 am

    I’m new to MMM. Excellent article and comments too. I have an HSA through my employer. They sweeten the pot and contribute 2K to my account as well. I take the savings in the insurance cost and put it into the HSA. I am in the second year and so far so good. I used to fund an FSA, but it had to used by each year. HSA is much better since it builds up over time (also, you can’t have an FSA and HSA), is portable and can be invested. MMM made a very rational decision on his choice and did not want to pay for something that he was very unlikely to use based on his history. Most people are not willing to do this and they do not like to pay for anything out of pocket. Basic human psychology at work here, I think. There is a saying in insurance (my line of work) – “don’t risk a lot to save a little.” That’s why you keep coll/comp coverage on a car until the value has dropped to a certain point (but you should take a deductible on the high side while you have the coverage).

    Reply
  • Jeff in Detroit October 6, 2013, 10:03 pm

    It’s been interesting (depressing) to see how the Affordable Care Act is panning out. For 2013, I can get the Saver 80 for $55/month. Not bad! It’s all the coverage I really need. But for 2014, the cheapest plan I can get on the exchange is a catastrophic (below-Bronze) plan for $210/month! Crazy! And I qualify for a total $0 in tax credits, making about $40k/yr. Everyone should be taking a much closer look. Even if your plan is grandfathered in, it doesn’t mean your rates won’t increase. As libertarians said all along, you can’t expand coverage for everyone in the country and give generous tax credits for many, without somebody somewhere paying for it. I guess that meant me. The young(er) and healthy(ish) will pay for it.

    Reply
    • Mr. Money Mustache October 7, 2013, 11:18 am

      Thanks Jeff – that is good data and I need to make the 2013 edition of this article:

      – my own plan is still available for renewal, and it barely went up this year (only 3 bucks, from $237 to $240)
      – on the exchange, the lowest program available for my family offers much more thorough coverage ($5k deductible plus other goodies), but costs much more (in the $420/month range)
      – So I’ll be keeping the $240 plan for now.

      Here is a great WP article to get others started on the research: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/30/%3Fp%3D63297/

      Reply
      • Jeff in Detroit October 7, 2013, 11:10 pm

        Glad they’re keeping rates stable. Right now, it looks like my best path may be to sign up for Saver 80 while it’s still offered in 2013 and get grandfathered in. I semi-retired from cubicle-life earlier this year at 33. My Aetna HDHP coverage ended when I quit, but I’ve still got a decent HSA from it. I put off getting new coverage until I could see what the Affordable Care Act would offer me. Now is definitely the time for people to investigate options, regardless of political viewpoints.

        Reply
      • PatrickG October 14, 2013, 5:32 pm

        MMM,

        Eagerly awaiting your post-ACA implementation healthcare update. Unless I’m looking in the wrong places, it seems the affordable high deducible health plan is going the way of the dinosaur. I just received the letter from my insurance company that my $94/month, $5000 deductible plan will no longer be available starting Jan 1 2014. Looking on ehealthinsurance and the California exchanges, my cheapest options for 2014 are $150 and $199 respectively… a tough pill to swallow!

        Reply
    • JBS October 7, 2013, 11:49 am

      I question your assertion that a “Below- Bronze” plan is available via the exchange. The law does not allow for this. The whole point of the Bronze -Silver- Gold paradigm is to standardize benefits across the nation.

      I would guess your quoted rate is the inclusion of a prescription drug benefit which , I would guess, was excluded from your current(?) plan at such a low price.

      I can see why “getting more benefits” can be really frustrating for someone who just wants bare bones major medical coverage and does not want to pay for more.

      But insurance that does not include coverage for prescription drug benefits is not adequate to cover potential risks. This link describes the prescription drug financial risks associated with typical cancer treatment: http://www.cancer.org/treatment/findingandpayingfortreatment/managinginsuranceissues/the-cost-of-cancer-treatment

      This link describes what 200 bucks a month gets a single male 30 year old in Washington state under ACA: http://exchange.ehealthinsurance.com/ehealthinsurance/benefits/qhp/WA/SBC-WAPremera_MSP-MSP_PBC_B_5250_HSA_SBC_Final-9.2013.pdf

      Reply
      • Jeff in Detroit October 7, 2013, 10:48 pm

        Thanks. You may be right about the Below-Bronze plan. I ended up using ehealthinsurance.com since the actual government exchange website is still laughably inept. So for the lowest bronze plan, it goes up to $275/month. Yikes! I’m hoping the exchange will show more options. Also, some of us don’t believe in prescription drugs as a core component of healthcare. My mother survived cancer only to die from liver and kidney failure from all the drugs (the ones they said “saved” her). So… yeah… being forced by BIG government to buy something I don’t want is … distasteful. As well as financially unfortunate.

        Reply
  • Kendall October 8, 2013, 11:34 am

    Random Health Insurance Info:

    I am currently enrolled in my companies health plan, also located in Colorado. I found out after an emergency appendectomy several interesting things:

    1. My companies plan is self insured, and therefore falls under a federal act called ERICA. Due to this the plan is immune to any Colorado laws regarding health plans. (Specifically parts that obligate the insurance company to have adequate coverage, and deal directly with providers)

    2. Most staff in hospitals, at least their ER’s, are independent contractors, including the onstaff Surgeon.

    3. Just because you call both the hospital and your insurance in advance, and confirm coverage (my carrier is Bluecross Blueshield btw), does not mean the doctors do, and even when you verify this to them, it is the paperwork, or more specifically its 5 pages of small print, that you signed while under the most intense pain of your life, that mattered. Even though the hospital will make it very complicated to later get copies of this paperwork.

    4. An non-emergency appendectomy can be performed for as low as $1500-2000 (inclusive), but an emergency appendectomy will cost anywhere from 40k-100k without coverage. It would have been 55k in my case, but was reduced to 12k based on BCBS coverage rates. This did not include the surgeon.

    5. Apparently a emergency doctor can charge you any rate they deem appropriate. I have spent far too many hours trying to research this, but can find not consumer protections. It appears the normal covered rate for the surgery (surgeon labor only) would be 1200-1500, but my bill from the surgeon is almost 5k. This is definitely not life destroying, at least for me, but from what I have been told the Surgeon could have charged 50k the situation no different. Is there really no requirement for a doctor to provide cost justification (especially since this is a common procedure & took under an hour to perform)

    Reply
  • Kendall October 8, 2013, 11:48 am

    Also regarding my comment above, in my research I was referred to a manual written by an individual that claimed he and his family had avoided insurance by negotiating rates with Doctors for non emergency procedures (This is not surprising). But he also claimed to avoid costs in the ER, by having another individual sign for him (I believe it was actually him signing for his wife when she was having a baby).

    Supposedly the scheme of this is he in advance creates some type of signing authority document for the individual, that limits their signing ability to the rates of X insurer (in his case it was bluecross/blueshield). This document is then present to the reception staff at the hospital. Also, no SS# is provided (Supposedly it is against the law for the hospital to require it).

    The absence of a SS# supposedly makes it impossible for them to just tag the debt to your credit, and the alternate signature, according to the author, legally limit your liability. The goal of the process is to leverage your negotiating ability during the billing process. I don’t know if any of this would be considered fraud. I am not a lawyer, I am also not the author, which is why I avoided mentioning the title. The eBook is sold for a ridiculously high $50, but comes with a satisfaction guarantee. If I were the author, I would sell it at $5-10 with no guarantee, but that is neither here nor there.

    Anyways, MMM If you have heard of this process, I would love to hear your opinions. It seems like something right up your alley. I never had much interest in health insurance until the event I mentioned before, but I do have a professional tie to procurement, and handing an amount of money over to someone (the surgeon) simply because thats what they tell to, with no justification, is something I have a very hard time swallowing.

    Reply
  • Loren W November 6, 2013, 2:44 pm

    Hey Mr Money Mustache,

    I’ve recently been turned onto your blog by a co-worker and I like what I see. I use an app on my phone that can convert your blog text to audio for long drives. I look forward to participating with the rest of this blog community.

    Regarding this particular blog, your mention the HSA and it’s limitations on investment restrictions. 99 times out of 100 I would agree with you on that statement but the company I work for, New Direction IRA, offers self directed health savings accounts that can be invested into the asset of your choice. Our CEO, Bill Humphrey, has recently released an entire video series on our website about HSA investing as well as lots of great tips. Perhaps you can review the videos and do a blog on the info in the videos?

    I’m happy to help provide data or information if you’re curious to learn more. The tax advantages of an HSA really allow for great investment opportunities if you can diligently put money into them and avoid withdrawals for medical expenses today.

    Carry on…

    Loren

    Reply
  • skidude January 24, 2014, 12:24 pm

    I think your chart comparing benefits has a mistake. You list the deductible as $10,000 and the max out of pocket as $3,000 for the new plan. How can the max out of pocket be less than the deductible?

    Reply
  • Jen February 25, 2014, 5:51 am

    I just went on ehealthinsurance.com to check out pricing. For just me and my husband (ages 34 & 35) the monthly plans start at $534 per month. Not great, but doable. Just for kicks I wondered how much the pricing would increase if we were 64 (the oldest on our own before medicare kicks in) and our cost would be a whopping $1304 per month!! And that’s if I was 64 today, so imagine how expensive it will actually be 30 years from now!!! I’m would love to retire in the next few years, but with insurance costs being so high I just don’t see how it is possible.

    Reply
    • Mr. Money Mustache February 25, 2014, 7:33 am

      Wow Jen, I wonder why our results are so different. What state are you in? And what deductible would your proposed plans have?

      At rates like those (especially the $1304 one), I might just self-insure.

      Reply
  • Carolyn April 29, 2014, 10:32 am

    Things have recently changed on ehealthinsurance.com, and the rates have literally doubled in the last 5 months. All insurance policies now cover the new Obamacare full-coverage requirements. However, temporary plans do not need to comply with the same regulations. So if you’re healthy and do not qualify for subsidies, you can get a new policy with a Mustachian-price by applying for policies that only last 5-11 months.

    Reply
  • LAL June 12, 2014, 10:57 pm

    Just got a quote online for health insurance for my family of 4 and it is $596.71/month for a HDHP. Okay so I guess it depends on where you live.

    Reply
  • Carolyn June 13, 2014, 7:49 am

    If you don’t qualify for subsidies, I think there’s 3 different ways to get a decent price on health insurance:
    1. opt out completely, and adjust your taxes to eliminate your tax refund so that the O-care fine can’t be enforced; or
    2. only apply for temporary coverage, keep yourself healthy from chronic conditions, and re-apply every year. Temporary coverage is much less expensive than regular coverage. If something unlucky or unlikely happens within that time, then you go into the state exchanges for pre-existing conditions in the future. You still may be subject to the O-care fine, but it’s not enforceable unless you have a tax refund; or
    3. find a bargain rate for regular coverage. The way you can do this is to avoid instantly buying the plans you see printed on ehealthinsurance.com or other websites. Instead, fill out a few applications on several health insurance websites and wait until they call you. I’ve found that they call you with lower rates than what are openly printed on these websites.

    If you go with option 2, you’ll realize that you must keep your health records ‘clean’ in order to qualify for low temporary-insurance rates each year. Each application makes you list your height/weight, how many times you’ve been to the doctor, what health conditions you suffer from, and what prescription drugs you take. To qualify for the best rates, you need be skinny, don’t go to the doctor unless you absolutely have to, and try not to rely on prescription drugs for your conditions that automatically go onto your health records. Instead, exercise, eat right, and take natural supplements for your health conditions. If you haven’t been to the doctor, re-applying for temporary coverage should be a breeze.

    Reply
  • Justin August 7, 2014, 1:21 pm

    So, I went to ehealthinsurance.com and apparently their insurance is all “short term”. Mr. Money Mustache, do you have to reapply for health insurance every six months, or is there something that I’m missing here?

    Reply
    • Mr. Money Mustache August 8, 2014, 8:10 am

      Hmm, maybe things have changed since the ACA? Anyone else seeing this?

      Reply
      • Joe August 8, 2014, 12:08 pm

        Under the ACA, you cannot apply for a new standard health insurance policy outside of the open enrollment period unless you experience a qualifying life event (job loss, marriage, divorce, have a kid, etc). The open enrollment period for 2015 is November 15, 2014–February 15, 2015. You can, however, get a short-term policy to last you until the next open enrollment period.

        Reply
      • jessica August 8, 2014, 12:44 pm

        If you select ‘other’ as in retired you need to call to get longer term insurance. If you recently lost coverage, you are able to have long term insurance.

        It looks like they are operating within the OEP guidelines and can’t just sign up anyone for anything (ie need verified reasons). Probably due to the change in tax law surrounding healthcare penalties….

        Reply
    • todd August 8, 2014, 12:11 pm

      I think you may have missed the cutoff date and that is why you are only seeing short term plans offered to you. If you had a “life changing event you may still be able to enroll in a regular plan”. If not you may need to wait until the next cycle. Checkout what qualifies as a “life changing event” in your state. In ours it is things like “lost insurance”, “lost job”, “moved”, “got out of jail”….. Call an insurance person.

      Reply
  • Amanda November 29, 2014, 1:26 pm

    I would love a re-visit of this issue! My family self-insures like you do. Since the Affordable Care Act was passed, we have seen 2 of our insurance carriers withdraw from our state (Maryland) – Aetna first and then this year United Healthcare. So our policies were not “cancelled” per se and the insurance companies are still in our state, but no longer offer coverage to the self-employed. Our alternatives this year for a four-person family (2 adults, 2 kids) mean monthly premiums that have gone up, and a deductible that has almost tripled. We do not qualify for any subsidies. I would love to know what others are facing, and whether or not there are any alternatives out there that we could take advantage of!

    Reply
    • Amy September 7, 2015, 2:46 am

      My husband receives health insurance from his employer, but his employer does not offer it to me and my 3 children. We saw our high deductible HSA plan premium( for 3 children, 1 adult) increase by 27% from 2014 to 2015. I went back to work part time for a very large employer, so I could receive group insurance along with a medical and dependent care FSA. We now save $600/month and our yearly deductible is 8k cheaper.

      Reply
  • ThatGuy March 31, 2015, 9:24 pm

    What I want to know is did MMM bicycle to and from the doctor’s office for his vasectomy?

    Reply
  • Money Saving April 20, 2015, 6:33 am

    MMM,

    I am going to start my own research, but I would love it if you could perform a similar analysis now that the ACA is out there. I think many readers would find it extremely helpful and interesting!

    Reply
  • Todd October 27, 2015, 8:22 am

    The biggest Illinois insurance carrier (BCBS) just dropped most of the major hospitals from coverage. So I’ll be paying over $300 a month for limited options. Might as well go cheap–which is more Moustachian. Can anyone recommend a provider that is exceedingly cheap but covers major catastrophes?

    Reply
    • nice joy December 12, 2015, 2:15 pm

      I Had BCBS
      I am changing to Aetna HDHP. 3000 deductible 6800 out of pocket limit. My company pays 1500 towards deductible. 264/month for family of 2 kids. I will be contributing to HSA.

      Reply
  • fearlessly frugal November 4, 2015, 10:45 am

    I would love it if you would do a follow up on this article now that the ACA has taken effect. We live in rural Northern California and my husband works in tech. He moved from one great job to another, with a bigger paycheck, but we lost the full coverage health insurance for the family at the new job. So off I set to get coverage for my son and I. What a labyrinth! Husband’s company offered us insurance on their plan for the bargain price of… get this… $1400/month for my son and I! There was no way we were paying that, so I checked the CA exchange. We don’t qualify for a subsidy, so our plans started around $280/month. I selected a silver package, having an infant who inevitably would need to go to the doctor. At $450/month it seemed like a deal next to the employer sponsored plan to only have to pay a $50 copay for sick visits. What a rip off! After paying nearly $5000 in premiums they have covered a total of $750 worth of medical expenses. Now I get a notice that our plans are increasing 12% for 2016, and the cheapest plan with a $7500 deductible (and a 20% copay) is going to cost us $390/month for my son and I. I am having a hard time with that number, but even having shopped around, there is nothing available to us for cheaper. It’s a tough pill to swallow, but I guess my mini-mustache is going to have to suck it up and pay it. I just can’t understand how a healthy family should have to pay that much in health insurance…

    Reply
  • Gatman December 4, 2015, 11:40 pm

    We would also love a follow up on your most recent perspective on medical insurance. Do high deductible, low premium plans still exist? I haven’t been able to find any premiums for our family of four for less than $900/mo. in California. We do not qualify for subsidies either. I’ve been working for a very small company where we share the costs of benefits. So that helps but in the spirit of frugality and, more so, the Avoidance of Bad Math, it would be great to find something less than $500 with a super high deductible and maybe an HSA attached as the cherry on top. Any ideas? What do you think of Medical Health Sharing programs?

    Reply
  • Pete May 26, 2016, 7:42 am

    For fun I rand the same parameters on health plans in my area. For a family of 3 with those options (which aren’t even offered I had to get as close s possible). It was $570/month for the family of 3…..I need to move.

    Also the lowest possible paying advertised plan for a single person was already $180/month.

    Reply
  • Frugal Frieda November 9, 2016, 4:52 pm

    Just checked einsurance to see what’s available and the cheapest plan I could find — parent and child with a 14k deductible — is $721 a month. I just can’t imagine paying under $300. I am currently covered by my employer, but always keeping my eye out just in case.

    Reply
  • Milwaukee January 5, 2017, 8:39 am

    Now THIS is a helpful article! Comments, too! Wish I didn’t have to study it, along with the comments, the way I know I will have to do, but it will help me – as a self-employed self-insuring individual, make the best of a terrible situation.

    Yes, you can ask for prices from doctors, but you might have to be more aggressive than MMM makes it sound. Many doctors or receptionists are embarrassed by how much they charge. Understandably so. Often they will pretend not to know, but they know. I tried the same gambit as MMM for my “no more kids” procedure. Couldn’t do it “in the office.” Couldn’t find a price under a thousand. Had to pay cash, but at least they had to admit how much they charge.

    It helps to be tough. My wife, who is far tougher than I am, severely sprained her ankle and was able to hobble for several days. She spent much of that time calling medical offices and negotiating x-ray prices. She was making offers such as getting the x-ray image only and walking out the door with no reading. That would have been nice. But we paid a couple hundred and that was that.

    If you are adventurous and active, you will get hurt. Grit your teeth and call the medical trade to task: negotiate. As a patient, you can be viewed as little more than an ATM. Try not to let them make you an ATM.

    One exception: if a car ever hits you, call the cops, find out insurance situation, and climb in an ambulance. I am not in any way advocating lying or taking advantage of someone. All your legal and insurance recourse is completely lost forever if you do not go to the hospital. Dumb, but it’s the only protection cyclists and pedestrians have, so don’t unwittingly give it up trying to be “nice.” The judicial and healthcare systems will not be “nice” back to someone who is not driving.

    Reply
  • Lucy January 30, 2017, 6:38 pm

    Do you have an update? Has your insurance stayed as low as when it began? Thanks!

    Reply
  • Dylan February 28, 2017, 2:34 pm

    I don’t understand the total annual expenses math. All the online examples I’ve found describe the “out of pocket maximum” as the maximum you spend including the deductible (and not including monthly premiums). This would mean the New Plan should have a maximum spend of Out of Pocket Max + Premiums. However MMM has calculated it Out of Pocket Max + Premiums + Deductible. What is this confusion!?

    Reply
  • MKE March 14, 2017, 12:50 pm

    It took me a while to figure out why this ten-thousand dollar deductible plan is a bad idea. Having a medical “bill” of nearly $10,000 showed me why. In essence, MMM is assuming he is dealing with a moral, honest business platform. Most businesses are, but hospitals are not. Some routine medical interventions, and some emergencies, taught me why having a high-deductible is a bad idea.

    My first huge expense came when we were quite young, but had managed some savings. My wife was between coverage for a while, so we saved money by getting a stop-gap plan with a $10,000 deductible. Ooops! Along comes an emergency, and a bill that just so happened to be for about $9,800. So what happened? The insurance company just passed the bill along to us, and being young and dumb, we paid it.

    I learned later that 80% of health-care bills contain errors in the providers favor. We were funding corruption.

    Lesson learned, we dropped our deductible to a less painful five-thousand. Ooops! Medical emergency. For about 50 minutes sitting around waiting in an emergency room examination room, and one lab test, we were hit with a bill for about $,4,600. So what did the insurance company do? Pass the bill to us, and we paid it.

    Now this was starting to hurt, having essentially no insurance and no advocate, so we dropped our deductible to a less painful $2,500. Time for relatively routine but costly surgical intervention, and we get a bill for $5,600. Except now the insurance company intervenes. They get all kinds of charges tossed out and reduced, the final bill comes to about $1300, and the insurance company even kicks in a little. Nice!

    As I became older, another “routine” examination requiring surgical tools . Still have the much smarter $2,500 deductible. As usual, the bills come pouring in, but the insurance company does not feel like paying the $9,000-plus in “bills”. So all kinds of charges are dismissed, most are cut by 50% to 80%, and the overall “bill” turns out to be about $1900. The insurance company kicks in some kind of deductible refund. I pay a few hundred bucks again. With a high-deductible plan, I would have paid the nine grand, even though that is not a legitimate charge for the procedure.

    With a high-deductible, you will be subsidizing corruption. If you don’t pay your bloated bill, you will be subjected to all manner of threats, harassment, and intimidation (my post is not complete). No expert is available to speak for you. The hospital will railroad you. With a lower deductible, you will have an insurance company that is in no mood to pay, and has experts on staff who can be just as sleazy as any hospital.

    Either way, you lose. It’s a matter of how you lose. I would rather pay slightly more in insurance costs, and not get hit with bogus charges. Everyone loses in that scenario. When you are dealing with health care, you are in a corrupt, morally bankrupt system. You will have to pay any bills knowing that you are being screwed. You know it ,and the hospital that is screwing you knows it. If nothing ever goes wrong, maybe a high-deductible plan works. Luck is a funny thing, though, and planning on being lucky did not work for me.

    Reply
  • Claire March 28, 2017, 9:50 am

    I would love to hear an update on how to handle the cost of health insurance.

    My husband and I are both self employed and make to much money for a ACA subsidy. We are 54, 55, and have a 17 year old son. We currently pay $21,000 a year for a high deductible ($10,000 per individual) bronze plan. The “platinum” plans run like $30,000K a year. We are in good health, but know several people who were brought ot finanicial ruin as they did not have insurance and had medical problems (ski accident, chronic Lyme disease, Cancer). We could afford to retire now as we have good savings, no debt, live frugally…but the insurance alone keeps us working. I dream about emigrating to another country like Denmark…but our 4 aging parents are counting on us.

    Reply
  • Lili April 6, 2017, 3:27 pm

    Greetings! Love your blog! Any new info on this topic would be most helpful. We’re self employed and our health insurance is like a mortgage. Ready to stop the bleeding! Thanks for all your insights & cheers!

    Reply
  • Craig April 27, 2018, 12:34 pm

    This is all well and good, unless you have a chronic condition. The reality is that is most cases medical providers charge MORE for those without health insurance, NOT less. High deductible plans are a reasonable solution, but current changes to health insurance laws will actually make the recent premium increases even worse. My wife has poly-cystic kidney disease. We could easily live on 4% of our nest egg if it weren’t for the cost of medical care. Without insurance we would go through most of that 4% just on medical costs, and the cost of insurance at our ages and with her condition approaches 2% of our nest egg. At this point I plan to work until Medicare eligibility even though I don’t need the income otherwise for that very reason. This is just one more reason why we need to have single payer, universal healthcare in the US.

    Reply

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