Healthcare in Early retirement- our plans

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

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

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.

10 thoughts on “Healthcare in Early retirement- our plans

  1. Insurance doesn’t cover OPD, Diagnostics, Pharmacy. Bill of all 3 for a 67 yr old couple is around 2 lakhs per year for most people. As you get old, you will suffer from 2-3 diseases at same time. Medications, consultations, pharmacy, diagnostics- all are pretty expensive today. The expense for one old guy suffering from diabetes, hypertension and cholsterol for 1 yr is minimum 1.5 lakhs per year per person.
    A major complication can set you back by 50 lakhs in one go as of today. It can be a cancer or a brain tumor. I have seen people recovering and living a good life – after both breast cancer and brain tumor. Many cancers are full treatable if you have the money. It may require treatment outside India too. In that case, the expense may be 1 crore +
    Which private insurance covers a 65 yr old with pre-existing diseases. You think an insurance co will pay you 50 lakhs just like that. They will have a lawyer, a doctor, whose salary will be continued only if they are able to refuse your claim.

  2. Hi Vijay,
    We have two sets of parents with the Dads over 65. They are both covered with insurance and both came with one pre-existing disease or the other.
    There is a reason why we want to get the cover around 3-4 years before we actually retire. That time should allow us to be covered for pre-existing diseases.
    Currently expenses for one set of parents with one on insulin and other myriad drugs as well as one with Thyroid and BP related treatments we incur around 5-6 k per month.
    We have also found it quite easy to be reimbursed for 10 day emergency hospitalization as well as a major surgery with few weeks of monitored recovery. I do realize that it is not the case for everyone and even simple diagnostics can run in Lacs for those facing diseases like cancer or brain tumor.

  3. Hi,
    One of the major risk early retirees face is related to health issues. Just like we have SIP for our savings we can start health SIP by having proper diet,followed by regular exercise. Having said that one should also target to create separate corpus in addition to your retirement fund, to handle any medical emergencies. Just to share, I plan to attain financial freedom in next 8 years from now, but also planning to create separate corpus equivalent to inflation adjusted value of 10 lakhs. Once financial freedom goal is attained, I will opt for critical illness plans.

    Another major concern for early retirees would be source of passive income getting dried up during turbulent phase of economy.

    1. That seems like a good plan. We are still chalking out our actual strategy while I keep my fingers crossed for universal healthcare!!

  4. This is an important part of FIRE which I have missed. I am an H1B worker in the US who plans to return to India. I’m trying to save and invest as much as possible before I have to return. I plan on working for a few more years at least in order to accumulate enough wealth to retire early. I’d possibly also get a side hustle (read blog) going to help out with expenses. However, I will have to rethink my strategy with the healthcare piece that I completely missed.

    1. Raman, compared to the US cost of treatment in India is far less, though not insignificant by any measure. I would advise you to look for a good cover along with critical illness a few years before you retire and are fully dependent on your corpus.
      Also making money from a blog takes a long long time, get started if you intend to do that in next few years.

  5. Even we are undecided on healthcare as of now. The good news is 1 set of parents do not have any of the hereditary diseases like diabetes and BP. We are in our mid 30s and have not taken good care of ourselves in terms of fitness. Like Lalit has mentioned, we have to start focussing on improving our health so we can avoid the short visits to the doctor.
    We are planning to FI/RE in 10 years and estimating health care costs is 1 of the major open points in our plan. Trying to calculate what the insurance costs would be 5/10 years from now is a bit confusing. Undecided if we need to opt for a policy now or take up one later. Have you done any calculations on which would be more beneficial financially – taking up a policy for a lower premium now vs investing that amount?

    1. I have not done any calculation since we are covered by a relatively comprehensive health insurance through our jobs for a decent sum. We do intend to buy a good health cover at least 3-4 years before we retire since that would allow for preexisting conditions to be covered in case we are hit with emergency healthcare scenario just after retiring. We are fairly conscious of additional expenses that will be added in due course and intend to re look at our numbers or retirement age every year or two.

  6. Why not take a super top-up plan of say, 20L, with a deductible of say 2, 3 or even 5L. One can always pay upto 5L in cash and rest 20L will be covered by insurance company. Takes care of bigger financial losses.

    Btw, I have a 5L normal family floater plan (38yr couple + 1kid). Premium = 14k (increased from 8k to 14k in 6yrs !!)
    And a super top-up plan of 20L, with a deductible of 5L, family floater plan (38yr couple + 1kid). Premium = 5k.
    This covers upto 25L.
    However, I intend to stop the normal family floater plan after FIRE, as I feel I can always pay up 5L cash. Also I assume the cost/premium of this plan will increase substantially going further.

    What say?

    1. Vish thanks for pitching in. To be honest you have given this much more thought than we have. we strongly believe that Indian healthcare and insurance are going to change drastically in next 10 years. All that we can hope is that it does not go the American way. I have looked into a few high deductible plans and the top up plans but was under the impression that you need some base plan to get the top up.
      5lac should not be a huge sum for someone who has decided to retire early as long as they have built in right kinds of buffer. I am still researching into top up plans and we might choose to get one in near future if we can find a reasonable one. Care to share the plan and company you use.

      Also when are you planning to pull the plug?

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