Healthcare is something that has been on my mind for some time now. Today when we are young and earn a decent sum we can probably afford to get sick and pay for some damn expensive treatments. We are also insured through our job, which means till we need over 6L in expenses we will probably be fine. The insurances cover pregnancy and child delivery should we need it.
Both sets of parents are well insured and their insurances have come to our aid in past few years. There has been a hospital admission, with both cashless (mostly), and reimbursement after paying. Our families have managed to get out largely unscathed from each one of these. However if the amount had gone way above what the insurance covered we could have easily managed the difference. Would we be able to do that if we were facing a debilitating illness? Nope. Would we be able to manage the same hospitalization post FIRE? We don’t know because we really don’t know where we will be and how much healthcare will cost at the hospital we are admitted to.
Let’s deal with the second question first. We have thought a lot about how we would manage finances if we face a long drawn severe disease. Today it would mean a drain on our savings, insurance and loss of pay. It will in almost all cases mean one of us or both of us will have to work longer. The ability to earn more will dwindle as soon as we distance ourselves from work and the gap in experience increases. Add to that the emotional stress that accompanies such a disease we might not be able to come out unscathed at all.
However we are also not sure if we should be worrying about it a lot either. But it seems to be a major concern for many and is definitely not unfounded. In past one year we have had a surprising (to us) number of people, reach out through comments and healthcare has been a major concern for most if not all.
As I said before we are currently covered by a decent cover and even though I would wish universal healthcare becomes a reality, I am not holding my breath for it. If it happens good for us, otherwise we intend to take a high deductible plan with a good cover and something that would cover major number of illnesses. Since wait period for most pre-existing conditions is 3 years 6-7 years from now would be a good time for us to buy it.
Insurance for 37 year old couple with 50L cover (excluding critical illnesses) today run for around 38,695/year , assuming a 10% hike every year they should be around 75,405/year when we are 37. This is neither high deductible nor requires co-pay. These usually reduce premiums in absence of claims, or in this particular example increases your cover to 70L if you don’t claim for 5 years. In the above cases of hospitalization of family the bill never exceeded the claim limit of 2 & 5 lac. Both the hospitals are considered reputable in their city; it included surgery in one and intensive care in both cases.
We realize that we need to have a robust strategy on how to deal with any health related expenses after we retire. In a lot of ER forums many suggest working part time for a job you like to maintain health cover. That might be another option.
Critical illness cover is more important than a considerable health cover. Cancer treatment costs run upto 10-20L today and even though research is on to reduce the price of drugs treatments are definitely going to get pricey. Those treatments that would require lifelong treatment are indeed a big drain on both emotional as well as financial energy of the family. This is one of the reason why critical illness cover is something which I have been looking into.
Term insurance is another such ‘what if’ cover that we have been researching of late. For barely 2-2.5k per month it sounds logical to be insured for 20 times your current income. Term insurance plans are of vital importance during the accumulation phase of any FI dream. Any life cover might be good to have but it kind of defeats the purpose if you have already accumulated enough wealth to live for the rest of your life.
Things other than healthcare
As I have said previously we are not sure what we will do when we retire and a small part of me worries if we would be happy being home all the time. Then again maybe we’ll be a celebrity through this blog in next 9 years and never have time! Like I said there are a lot of things we are ironing out. In past few months I feel like we have a better handle on expense side of things even with a lot of eating out. I hope to add the next part on the Saving Money series and probably start a monthly expense tracker on the site (like this one here though not as fancy).
On a side note it is next to impossible to get decent stock images for healthcare with US ACA issue splashing all over my screen. We request you to avoid having the same discussion here as well.
As you know the biggest reason for us starting this blog was to share and get feedback of our plans. We are really grateful for all the comments and suggestions we have received and would love to know, what your contingency plan for healthcare is.