MonthNovember 2016

Health Insurance – OMG there is nothing funny about it.

healthcareWe are coming off COBRA and I needed to sign us up for health insurance for next year. Silly me, I thought with the Affordable Health Care Act, the offerings would be complete and “affordable”. The reality is that the process is a nightmare and the offerings are incredibly complex and filled with outs for the insurers. My wife and I are both under 65 so we don’t qualify for Medicare and I suspect that those are better programs.

My wife and I have Blue Cross coverage and it seems to be well accepted, so I thought that it would be a good place to start. The primary care physician told us that she accepts Blue Cross so that was the direction that I took. The problem is that on healthcare.gov, there are several offerings from Blue Cross and a wide range of limitations. The biggest surprise was that the lower level policies have deductibles in the $10,000 to $15,000 range. If you look at the premium offerings to get the deductible down, the cost increases to a point where you are essentially paying the $10k to $15k deductible as part of the premium over 12 months. There are many preventative care procedures that are fully covered and drug benefits that have a low copay for generics, but if you get sick, injured in an accident or hospitalized watch out. While the deductibles are outrageous, at least they are clearly disclosed.

In reviewing the “silver” plans available from Blue Cross, I found two that looked reasonably complete. The plans looked identical based on the headline coverage, but the premiums were $150 a month different. In looking at the details of the plans, the lower cost plan had slightly higher deductibles for emergency rooms and specialists, but the kicker was the co-insurance clause. What this clause does is identifies what portion of a bill the insurance will cover. In the case of this plan, the clause split the coverage 60% to the insurer and 40% to the insured for a hospital stay. So if you end up in the hospital with a $100k bill for something not so major, your responsibility will be $10,000 for the deductible and $40,000 for the co-insurance. Had I not read the details and understood the term “co-insurance” I would not have given the coverage differences a second thought since the deductibles were within a few hundred dollars of each other.

Dental coverage is a total joke on the buyers. The policies have waiting periods of 6 to 12 months, coverage caps of $1,000 to $2,000 annually and deductibles everywhere. The premiums are not cheap and if you do the math make you more inclined to write coverage than buy it. One of the better offerings I found had a monthly premium of $72 for my wife and I. The annual maximum benefit was $1,000 per person and the first year coverage on all but checkups and X-rays was 60%. So we would pay $864 in premiums annually to get no more than $2,000 in coverage. With the deductibles, we would need to spend $3,333 in dental work excluding caps, root canals and anything else that’s really expensive to get the $2,000 covered. The expensive stuff is not covered in the first year and the coverage is very limited after that. You need to be an accountant to dig into the coverage and understand all the limitations.

For dental, I decided that an HMO solution was the best approach. I found a well rated dentist that took the program and will save $640 in annual premiums. The preventative care coverage is about the same and the other coverage is well documented. It’s unlikely that I will spend the premium savings on dental work, but even if I did, I’d still be well ahead.

Having set up benefits programs for companies with over 3,000 employees, I found this experience very disturbing. The breadth of options and gaps in coverage built into the various plans is appalling.   Given the target customer for these programs is the less well off in society, it’s even more disturbing that the options are so complex and so poor. To be fair, I am sure that the mandates in the law have created many of the problems that I have seen, but as a country, we can do better.

If you are in a similar situation, look at the details of the plans that you are interested in and make sure that you understand the gaps in coverage.

 

Deciding where to retire?

where-to-live-comic

Great moments in the decision process of where to retire

Where we spend our years after working is one of the most difficult and significant decisions that we will make. It’s impacted by our obligations to family members, our personal desires, finances, weather and activities. There are frequently conflicts that arise in the varying desires that come from picking a retirement location.

The importance of each factor to you and your significant other is a very personal decision. Only the two of you can decide between the proximity to family, friends, finances and how other factors play into that equation.   If you make the decision and move forward in a manner that allows flexibility it may help you come to an easier answer.

There is no simple decision tree to follow in reaching the decision on where to retire. However, I will share the process that my wife and I followed as an example. The key decision that we made at the beginning of the process was that we want make any move in stages with the first stage allowing us a high degree of flexibility to change our minds.

My wife and I decided that we wanted to live in a warm climate on a permanent basis. We also agreed that we wanted to be near an ocean. The warm climate meant that we needed to move away from our families, leaving kids, grand kids and parents behind.   So we also decided that we should be close enough to get back to loved ones within a few hours. Flying is a valid transportation option so that gave us the entire east coast to choose from.

We did the research online and targeted a few locations from Maryland to South Carolina. At that point we planned a driving vacation with a night or two in each location that we were considering. After our trip we focused on Newbern, NC because we liked the people, the housing and the healthcare. So we continued to focus our research on NC, watching the weather looking at housing options and pricing. Finding opportunities to engage in the activities that we wanted to participate in as part of our retirement. After watching the weather through a winter and comparing it to more southern locations, we decided that we wanted to eliminate winter, not just minimize it. So we watched the Florida weather versus NC and made a decision to take another trip.

For the second trip we decided that we wanted to look at the east and west coast of Florida. We’d been in the Miami/Ft. Lauderdale area and thought a little north of there might work. We’d also heard that Sarasota was nice so we put that on the itinerary. As it turns out, Sarasota was just what we thought we were looking for so we focused our research on that area.

Six months before we were planning on moving, we booked a weeklong stay in Sarasota just to confirm that is where we wanted to go. During that week we found several apartments that would work. Libraries and continuing education opportunities are important to my wife so we visited the libraries and local colleges to get an understanding of what they offered. I wanted tennis and an exercise program that I was doing weekly so we visited those facilities. We went to local supermarkets, restaurants and stores with an eye toward getting a feeling for day to day living. We also looked at opportunities for joint activities. After our week visit, we were confident enough to commit to a move to Sarasota.

The goal for the move is to get us into Sarasota. We decided to rent so we could put the decision of where to live off for a while. When we left from our weeklong visit, we had 3 apartment complexes where we could live, two tennis clubs that would work, a top pick for the library and a workout facility. We also became friends with the director for lifelong learning at a local school.

Having the basics in place for the move was a very comforting feeling. Having the flexibility to go virtually anywhere from here just added to the comfort level. Moving is far from stress free. However; moving with the attitude that we can do it again if we hate it takes a lot of the stress out of the move.

Planning for free time

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As I began thinking about retirement, one of my biggest questions was how will I spend my days.  A lot of my discussions and readings about retirement centered on this topic.  After having the forced structure of a working day for so long, it’s hard to imagine how to fill the time.

The key for me was to have some core activities that began to fill my weeks.  In my case, tennis and exercise class were regularly scheduled activities.  My wife and I like to hike and explore, so that, plus reading, served as flexible activities that were options as our collective schedules permitted.  Finally, I have a strong interest in the stock market so I like to start the day with my breakfast and the financial news of the day.  This gets me going in the morning and keeps me in touch with the progress of the week.  When I get bored, I remind myself that only I have the power to fix it.

Planning our life in retirement needs to be an important part of the planning process.  Having a long list of things that you want to do is great if you make the effort to do them and not fall into a routine of living life via social media or watching television for hours.   Make a plan for a fulfilling life, not just filling the hours.