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Healthcare Planning: The FI Wildcard
Healthcare can be the single biggest swing factor in your FI plan. Here’s the standard playbook—plus creative options many people overlook.
The “standard” paths (pre-65)
- ACA Marketplace: Control MAGI to qualify for premium credits; choose high-value Silver plans with CSR if eligible.
- COBRA / Retiree coverage: Useful as a bridge year (e.g., between jobs and ACA open enrollment).
- HSA strategy: Pair HDHP + invest HSA; pay expenses out of pocket now, reimburse later tax-free.
Post-65 (Medicare)
- Understand A/B/D basics and timing to avoid penalties.
- Medigap vs Advantage: Medigap = broader access/predictability; Advantage = network-managed tradeoffs.
Hidden costs to budget explicitly
- Dental, vision, audiology.
- Fertility, maternity, mental health.
- Long-term care risk; consider partial self-funding or hybrid policies.
Out-of-the-box options (pro/cons)
- Direct Primary Care (DPC): Monthly membership for unlimited primary care; pair with a wraparound catastrophic plan.
- Part-time employment for benefits: Some employers offer health insurance at 20–30 hrs/week—acts like a subsidy while preserving lifestyle.
- Medical tourism: Elective procedures abroad with accredited hospitals; plan for follow-up care at home.
- Expat/Global insurance: If living abroad part/all year, international policies can be cheaper with quality networks.
- Healthsharing ministries/ALOs: Not insurance; lower costs but real coverage gaps and contract risks.
- Self-insuring deductibles: Maintain a dedicated “medical reserve” to raise deductibles and cut premiums.
MAGI management (the lever you control)
- Prioritize taxable withdrawals/dividend control, Roth conversions, and capital-gains timing.
- Use charitable tools (QCDs post-70½, donor-advised funds) to hit bracket targets while meeting giving goals.
Case study: retiring at 50
Target spend $70 k; by blending taxable withdrawals + small Roth conversions and limiting ordinary income, a couple can retain ACA support and lower lifetime tax—while keeping a DPC membership for primary-care access.
Your annual healthcare checklist
- Estimate next year’s healthcare line item (premiums + OOP max + routine care).
- Choose a plan during open enrollment that fits your providers and expected usage.
- Set a medical reserve equal to your plan’s OOP max.
- Map MAGI targets for subsidies/IRMAA and plan conversions/withdrawals accordingly.
Bottom line: Treat healthcare like a project: define requirements, pick a strategy, and review annually. Creativity can save thousands without sacrificing care.