How to Recreate Your Work Health Insurance When You Retire

Matt Allen (00:02)
Welcome back to another episode of Talking Shit. Shit, of course, is an acronym for straight health insurance talk. I'm Matt Allen and joined with me today once again is Aaron Miller. Aaron, how you doing?

Aaron (00:16)
Doing great. Let's dance. Let's do it.

Matt Allen (00:19)
What are we dancing about?

Aaron (00:22)
Lot to dance about. I mean outside of the US getting knocked out of the World Cup, but you know. They're not they're done dancing.

Matt Allen (00:27)
Mm. Mm. I can go back to just caring about

women's soccer for four years now.

Aaron (00:35)
Looking forward to that.

But yeah, today we're going to talk about something that people on work insurance don't ever have to experience when it comes to their health insurance. And that is having a combination of products to solve the problem you're looking to solve. And so I actually was having a conversation last night. This guy's planning to retire in the next 12 to 18 months. He's in his early 60s. And he knew that that's a

You know, Gappy's got a cross. His wife's a little bit younger than him. And he's like, well, what do we do? Cobra's expensive. And you know, my wife's gonna need health insurance for two more years after I'm already on Medicare. And so I mentioned that depending on what your needs are, health, situation, income, there are combinations. And that word combination really stuck out to him. And so

Today I want to talk about the combinations of products and why there isn't just a, you know, get this and you're done.

Matt Allen (01:43)
That is a very nuanced conversation and everybody that I've ever talked to about health insurance wants a one-size-fits-all solution. They want one product, they want one card, one premium, one deductible. And that can work, but the deterioration of the quality of a lot of these plans.

have left these huge holes in them. And so what the most common phrase that you likely have heard of is something called a supplemental. Okay, I've got my insurance and now I've got a supplemental product. I mean think about the most common scenario is going to be Medicare.

Medicare is not a one stop shop either. Even though it's facilitated by the federal government, it was designed to help people over sixty-five or people disabled get health care through this Medicare coverage, but you still need a supplement. I mean the plans are actually called Medigap plans because they're straight up telling you Medicare has a gap. And this plan fills that gap. And so to think that

All

insurance should just be a one size fits all is a little bit short-sighted. I wish it were the case. I wish there was just this one platinum plan that I could sell everybody in all fifty states that was reasonably priced. I wouldn't even have to do this podcast. I'd already be retired. People people would love

To have that option. It'd be super simple, but it's not that simple anymore. And even to your point, where you were saying, hey, this is something that people on group insurance don't have to worry about, I would almost push back a little bit on that. So group insurance

Aaron (03:37)
Okay.

Matt Allen (03:38)
plans are going to be very high quality. And the best part about these group work insurance plans is that they have a PPO network, which simply means you

can go get care wherever you want to get care. Now

Not all of them, unfortunately, as we move forward in 2026, that is one of the areas where a lot of small business owners are looking again. They're looking twice at the network because in order for the network, the the plans get built out just like anything else. And in order to have a really strong network, it's like having the highest trim level on your vehicle. Okay? It looks great, it feels great.

It's what you want, it's what they show you in the commercial when they're telling you, hey, don't you want this car? And then they tell you the low sticker price, and you walk into the dealership and it's like, you want the one from the commercial? Yeah, it's 20 grand more. That's how you can think about these networks is if you want that nationwide PPO network on your health insurance plan, that's the highest trim level. And we all know, we've all read the news.

Premiums are going up. Premiums are at record highs for group insurance. Employers are paying more than ever. Employees are paying more than ever. So a lot of employers are looking again and they're and they're diving into, hey, how can we save costs? I still want to offer this benefit.

And I don't want to blow up people's deductibles, what can we do? And so a lot of these group health insurance companies, they're coming up with these things called skinny networks, where they're they're limiting the providers who you can go to, or they're completely eliminating out of network coverage. And that is a really good way for them to eliminate some of these premium increases and sort of keep the premium increases at bay and keep it somewhat affordable. But now we've got this huge whole

in the plan if you know the Jones family are going on vacation to California but the plan that they have is just a Cigna Local Plus network that only works in the Midwest. Well, and that's not necessarily the case with the Cigna Local Plus, but I'm just using an example. What if they're only covered in the Midwest and now they go out there and they don't have any coverage? Well in those situations sometimes a supplemental plan

To

wrap around your small group plan is now going to make sense for the Jones family, where maybe Mr. and Mrs. Smith, they haven't left the state of Indiana in 40 years and they're not going to. So the Cigna Local Plus Network works

Aaron (06:20)
Mm-hmm.

Matt Allen (06:21)
perfect for them. They love the savings, they love that discount. So so small group plans.

And large group plans, employer plans, plans that you get through work have historically always been much higher quality than you can get on the individual market. And they are the closest thing out there to something I would consider being safe to be a standalone plan. Hey, this is all you need. Especially if you work for like a union or you work for one of these Fortune 100 companies, they're gonna they're gonna pay the extra for the highest trim level on that health insurance.

They're gonna get you the moon roof and the and the chrome 20-inch rims. They're gonna get you all the bells and whistles because they want to attract the top talent and retain the top talent. Okay. But okay, so that is small group health insurance. That's group health insurance, large employer coverage. Most of those, to your point, are pretty pretty good. But as we move forward into the future, I'm going to make a prediction.

That supplemental plans for these employees are going to become more and more required as employers look for cost-cutting measures. So that was a very long tangent and a quick aside just to sort of clarify some of the stuff you were talking about. But what you are more talking about, and what the conversation you had with this early retiree was more centered around, was once you leave that job.

Once you no longer have that employer coverage, let's say it was one of these great top trim level nationwide PPOs, once you leave that company, you'll get a Cobra offer for 18 months. Cobra is simply continuing the coverage that you had through your job, but now you're paying your employer's portion that they used to contribute, and you tack on a two percent administrative fee.

That can last you 18 months. And again, that will remain the same quality plan. So that still is a one size fits all. But in your situation, your case with this conversation, hey, this guy's gonna retire at 62. Well, 18 months down the road, he'll be 63 and a half. He still needs coverage before 65 before Medicare. And you mentioned his wife is two years younger. So she's gonna need three

Aaron (08:42)
Yeah.

Matt Allen (08:43)
and a half years, even if they take out Cobra.

And

so you brought up this idea of a combination plan. And a lot of people don't realize that this is a viable strategy. Not only is this a viable strategy, but this is often the best strategy that you can take. Very much like Medicare is your major medical, but then you need that medic gap to fill in the gap. You need two products in order for it to make sense. And then guess what on Medicare? Then you also got a drug plan. And then if you want dental

Aaron (09:14)
Sure.

Matt Allen (09:14)
envision,

You also got a dental envision plan. Like there are so many different pieces. A lot of that still applies and will apply to the individual market. So let me give you two examples of where that is pertinent. Number one is gonna be that early retiree. And let's imagine a couple. Let's say let's let's not use the couple you were talking about. Let's say these two are are they're both 60 years old.

And they've got a bunch of savings, there's no pension, they're delaying social security income, and they only need to take out in distributions about five or six grand a month to live off. So they're going to be in retirement, their income is gonna be be below that ACA tax credit threshold. And what I mean by that is after they leave their work plan.

And they still need health insurance to bridge the gap to 65 to Medicare. They could go to the Affordable Care Act marketplace. They could let them know, hey, we're only going to make 60 grand a year in retirement, and they will get a huge tax credit from the federal government to lower their premiums so they can be covered for all five years on an ACA plan that's heavily subsidized. I'm talking 30%.

thousands, tens of thousands of dollars a year, they'd get in a subsidy on that. Okay, that sounds all well and good, but unfortunately, we're 17 years into the Affordable Care Act. These plans have unfortunately gotten bloated in their premium, super high deductibles, but the worst part and the blindsidedness of this that happens to people who come from work plans is completely a blind a blind spot to them.

Like it it absolutely they don't see it coming is the narrow network. So I was talking about kind of forecasting in the future we're gonna see more employers going from these PPOs to these skinny networks. The ACA's already done it. There's rarely a PPO you can

Aaron (11:21)
Who

Matt Allen (11:22)
find on the ACA. They're all narrow network. Even the PPOs, if you go outside the network, you're owing forty, fifty, sixty thousand dollars.

And so on the ACA, this couple who's 60, yeah, they might get a huge discount. They might get this huge tax credit savings. But now they're on an HMO and they're used to a PPO. PPO, they can go anywhere. HMO, they're told where they can go. So this Affordable Care Act plan is very inexpensive and it'll cover their pre-existing conditions. We'll make sure that their doctors accept it, the local hospital accepts it. If they're on any prescriptions, we'll make sure those prescriptions are covered.

But

it's an HMO, their coverage ends where their network ends. And they want to travel. If they got a bad diagnosis, they'd want freedom of choice to go wherever they can for their care. If if Mr. Smith in this

Aaron (12:14)
Yeah.

Matt Allen (12:14)
two sixty-year-old example had a brain tumor, he's like, I'd go to the mail clinic. Well, his HMO's not gonna let him go there. The HMO is good for the stuff you already know, but for the unknown, that's where this combination can come in because there are plans specifically designed

To pair with the ACA, very much like Medicare, there are plans specifically designed to pair with Medicare to fill in the gaps. There are plans that fill in those network gaps of the ACA. So maybe at 60 years old, they're only paying $250 a month for their ACA plan. Well, if you add on another $600 a month supplement, yeah, it's gonna be $850 a month, but their Cobra's probably two grand a month. So they're still saving a ton of money.

That supplement will extend their coverage outside of the network in case they need or want to receive treatment. So now we've got this combination. We're utilizing the tax credits on the ACA, we're getting our prescriptions covered, we're getting our doctors and network, but now for the unknown diagnosis, or maybe we're traveling and we get hurt, now we actually have that covered as well. So it's a combination of two insurance products to actually create.

Something that holistically covers them for the next five years when they get on Medicare and they go to another combination of Medicare and Medicare supplement. So it's just a a a way to well round your coverage. That's example number one, where we're utilizing tax credits from the ACA and then we're filling in the gap that the ACA has, which is its network restrictions. Does that one make sense?

Aaron (13:56)
Absolutely. And I I think people see the big brand names on the ACA and they just assume, yeah, this is the coverage, this is it. I'm getting a tax credit great. This is just what it costs now, and I'm I'm saving a whole bunch of money on health insurance. But like the guy I was talking to, he said, I know there are gaps in plans out there. Like it's not all, you know, my big box, you know, beautiful PPO.

I know I can't get that on the individual side. And so, you know, I've worked hard. I want to protect this. I know there are gaps. And they want to know how to how to fill them. So, no, it all makes sense to me.

Matt Allen (14:36)
Yeah. Yeah, I mean when we're talking about the ACA, if we go back to the car analogy, this is like still hand crank windows, you know, you got your AM, FM radio dial, you know, you're pounding the dashboard to get the AC to work. It's still health insurance. It's covering your pre-existing. It's discounted because your income's within that certain range. But man man, it's not going to make it cross country. You know, you you need a supplement on there. You need a tune-up.

You

need to fill in those gaps to make it whole. And so very much to this guy's point, he's worked so hard, he's saved all this money, he's invested it, to simply just go to an ACA plan and be like, well, we don't have any out of network coverage, but that's the plan that was available. All right. And to just have this steadfast thought that I only need one insurance, it would be nice. I would love if the world were that way. Again, to go back to my point at the beginning.

This would make my life so much easier if there were a plan like this. It just doesn't exist anymore in the individual market, so we have to get creative. Now, let's talk about number two.

Aaron (15:44)
Well, I wanna go

back to something you said before real quick. So I think one thing that might give people pause is you know, they say two fifty for their main coverage and then that's six hundred for the supplemental. But in reality, their main coverage would cost how much without a supplement, like or without a tax credit, right? Like that difference in cost of the main versus the supplement. How do you run people through that?

Matt Allen (16:14)
Well, you can see what the sticker price of the marketplace plan is, even if you're getting the tax credit. So in that made up scenario, those two sixty year olds making sixty thousand dollars a year, I mean they depending on where they live, that would get twenty thousand dollars a year in a tax credit. You know, their normal AC full price plan be probably two thousand dollars a month. and so

Going from that, utilizing the tax credits to get down to 250 and then adding back 600 is well worth the money. I mean, you gotta think, is six hundred a month extra worth it to have total network freedom in case you got a bad diagnosis and to ensure that your retirement plan is sound. That to me is well worth the money for those five years. If it's not, then you can roll the dice with the ACA.

And that's fine. That's fine by me. Wrap you and your partner in bubble wrap for five years. Don't go on any vacations. Don't get sick. And then you're good to go. But if you want a little freedom, which most people in retirement do, that's what I would recommend. Add the supplement and then you get the peace of mind. Which is what you're really trying to buy with health insurance anyway, is peace of mind. You're not shouldn't be too caught up in premiums and deductibles and everything. And if that couple of s sixty year olds

has a financial planner or financial advisor worth a damn, they would have already earmarked for their retirement income strategy probably fifteen hundred to two thousand a month in healthcare. And so that eight fifty is going to come in way below. They're going to be tickled about that. They're going to be like, my God, it's only $850 a month. I would have retired last year if I knew about that. So that's that's how we walk them through that. And that kind of is a perfect bridge into

The

other scenario. I

Aaron (18:12)
Mm-hmm.

Matt Allen (18:13)
told you at the beginning, there's two main scenarios where a combination makes sense. The first is the ACA and its limited network. Let's add a supplement to extend the network. But what if you're healthy and what if your income is above that tax credit threshold? A lot of people think you need to financially qualify in order to get an ACA plan.

A lot of people when we bring up the ACA, they go, well, I don't qualify for that. My income's too high. Well, the income is just whether or not you get a tax credit. You can always buy an ACA plan and pay full price. There's no barrier to entry there. But for a lot of people who don't get that tax credit, the ACA is not the right fit. And there are alternative options. There are non-marketplace options, but those come with their own warts as well. Those come with their own drawbacks as well.

Those come with their own gaps as well to bring it back to Medicare and Medigap. Okay, so what are we talking about? We're talking about these private, non-marketplace plans, and I am a perfect example of this. I actually have three different companies for my insurance in regards to health. So first first off, I have a private, medically underwritten health insurance plan. The reason I have this.

Is because when I look at the ACA, the cheapest plan available to me in Memphis, Tennessee, as a healthy 40-year-old who makes income above the tax credit threshold, cheapest plan is $500 a month. It's an HMO and it has an $8,600 deductible. I can't take it outside of the state of Tennessee. Terrible. What on earth would I be doing with that? Instead, I've got this private plan.

And the private plan has a lot of pros and a lot of cons, but the pros of this private plan are number one, no network restrictions. I can go wherever I want to go. And that is super important to me. Number two, it has a $5,000 deductible as opposed to $8,600. And a lot of the benefits on this plan actually have a $0 deductible. I don't need to hit that $5,000 to go to the doctor or the chiropractor or urgent care or anything like that.

But $5,000 after that, it pays 100%. Number three, the premiums are going to be lower than the marketplace. My premium is a little bit under $300 a month for this. Whereas the marketplace was $500 a month. And number four, it's guaranteed renewable. I can keep it as long as I want. I've had my plan for nine years. I've never had to go back through underwriting, reapply. There's no enrollment periods. If you want to keep it, you can keep it.

Can't

be singled out for a rate increase and he can't get kicked off if he gets sick or hurt. That sounds pretty great. So that's the main building block. But I told you there are gaps in it. And that's why I have the other two programs. The two main gaps in this plan, number one, we can't really fill this gap. And this is where, hey, maybe the Affordable Care Act is a better fit for you. But the the number one drawback of these plans is that there is a 12-month waiting period.

in order to cover pre-existing conditions. And so for some people, that's an unpalatable thing. They don't want to deal with that. Maybe they have a chronic condition or an expensive medication, a surgery coming up, wife is six months pregnant, any of these types of pre-existing conditions where you're going to need health care in the next 12 months, this just isn't a good fit. But if you're somewhat healthy, you're reasonably healthy, there's no surgeries on the horizon, we're not taking an $800 a month medication.

don't have a chronic disease that we constantly need therapy or specialist visits for, that 12-month waiting period's not really that big of a deal. So that's the first gap. This second gap though, this is the one where another product comes into place. Because the second gap of these private plans is that they are something called a limited benefit plan. And a lot of people hear the word limited associated with health insurance

And the hairs in the back of their neck stand up and they're like, hold on a second, wait a minute. That's not what we want to do. But if you take a beat with me and just think about insurance in general. So so let's not even talk about health insurance. Let's zoom out. Let's look at insurance products in general. We've got auto, home, health, life, disability, all of these types of insurances, maybe without the with the exception of health.

All of these types of insurance, they all have something called a limit on what the insurance company would have to pay out. So your auto insurance has limits, your homeowners has limits, your life insurance has a limit. If you pass away, your spouse doesn't get a blank check. They get the face value of the policy. Disability insurance, it pays a certain percentage of what you were earning before. It's not unlimited. And so all of these.

Policies, all of these types of insurances have a limit. And that limit, that maximum exposure for the insurance company, allows them to price the product appropriately. That's one of the pieces of the calculation when they give you a premium. So now let's go back to health insurance. On these non-marketplace limited benefit plans, they have a limit, and that is how they're able to control their costs.

Keep

your premium steady and give you an actual medically underwritten premium. Now these limits are very high. It's a million dollars per person per year. It's a lot of money. The likelihood that I will ever exceed those limits is super low, but the likelihood isn't zero percent. It's a non-zero likelihood. And so that concerns me. I'm very risk averse. It's under 300 a month already.

My cheapest ACA was $500 a month. So in my mind, I've got a little bit of wiggle room there on the premium. So what I can do is bring in this combination of products, bring in this other piece. We use it as sort of an umbrella policy that goes over the top. Very much like you can buy with your auto insurance and your homeowner's insurance, you can add an umbrella policy. Well, what we utilize is a cost sharing program that acts as this backboard that says, hey.

If the limits are ever exceeded, and you owe more than $5,000 for any medical incident, that cost sharing program is going to come in and share the cost above that $5,000 for an unlimited amount of money. And so between the private, underwritten, no network restricted marketplace and that umbrella.

My total premium per month is now $450 a month. I now have no network restrictions. I can keep this as long as I want. The most I can possibly owe for anything is $5,000 by utilizing that with the umbrella. And a lot of my benefits, the day-to-day stuff, the little stuff is that I'm probably more likely to use, like doctor visits, chiropractor urgent care, those types of things, all of those have a zero dollar deductible.

Those are getting paid out right away. And the total cost of 450 is cheapest cheaper than the cheapest ACA marketplace plan for me. And I don't have any of the network restrictions. I got way more benefits. That to me, using a combination like that makes a lot more sense. And then the last part, you know, I said there were three pieces. Why also have dental envision? We haven't even talked about dental envision. So many people are concerned with dental envision because they usually get it through their job.

Well, this private health insurance company, for as great as they are with health insurance, they got a dental envision and it's a little underwhelming. And so I go to a third insurance company. I make sure my dentist is in network with it and my eye doctor is in network with it. And it costs me $40 a month. I get the two cleanings a year, the eye exam, glasses, contacts, up to $3,000 a year in dental work if I need it. And that $40 plus the $450. Now we're at $490.

It's still cheaper than the cheapest ACA plan, no network restrictions, first dollar payout on so much stuff, dental, vision, keep it as long as I want. And so that's how you can utilize a combination if we're looking at the ACA and it doesn't really make sense. Circle back to the ACA making sense. Hey, now we got to supplement the holes in that, the gap in that. So we have all these different strategies that we can utilize when a plan does have a gap.

to utilize this combination approach to sort of mimic that one size fits all plan that everybody's clamoring for, but that just doesn't exist.

Aaron (27:21)
Absolutely. And these are two situations. We don't really see anyone outside of those two situations. I mean, we're we work on the individual side. And so I mean, these are the conversations we're having every day. This is the you know route that we're gonna take people through with Plan Shaman and how they're going to essentially just logic themselves into the right right combination.

Matt Allen (27:47)
Yes. And the the one situation that gets a little tricky that we haven't spoken about and we'll just briefly touch on it is if you have to be on the ACA due to a serious preexisting condition and your income is above the threshold. That's the that's the danger zone. That's where we just don't want to be. This is even more reason to take better care of yourself and better health.

Or if you happen to be unhealthy to be able to somewhat control your income. Because if you need to have a full priced ACA.

Plus the supplement for out-of-network care, it is going to be very expensive. And so if that describes your situation, maybe upon retirement or upon leaving a job, that is one of the situations where we will recommend that you take Cobra. Take Cobra, exhaust the benefits if we're unhealthy and above the income threshold, because the alternative of the ACA plus supplement will be more expensive than your Cobra. So take the Cobra out and then we'll transition.

Yeah.

Aaron (28:56)
Absolutely. No. It's an important conversation. There is no one size fits all.

Matt Allen (29:03)
Yeah. I feel like I just threw down a master class of individual health insurance options.

Aaron (29:09)
I I feel like that was it. Decade in the making.

Matt Allen (29:11)
That was it. That's the one.

We just close up close up shop here.

Aaron (29:16)
Yeah, just links links below.

Matt Allen (29:19)
Yeah, absolutely. All right. Well, this has been another episode of Talking Shit. Shit, of course, is an acronym for straight health insurance talk. I am Matt Allen.

Aaron (29:30)
And I am Aaron Miller.

Matt Allen (29:32)
Thanks for your time.

Aaron (29:33)
Deuces.

Can one individual plan replace my employer health insurance? Rarely. Employer plans often include a nationwide PPO that's hard to find on the individual market. Most early retirees combine two or three products, much like Medicare is paired with a Medigap supplement and a drug plan.

What is an ACA plan plus a supplement? You use your ACA tax credit to buy a heavily discounted Marketplace plan, which covers pre-existing conditions and prescriptions. Then you add a supplement that covers surgery, hospitalization, illness, and injury outside the plan's narrow network. The pair is often well below the cost of COBRA.

What if my income is too high for an ACA tax credit? If you're reasonably healthy, a private, medically underwritten plan is often the better base. These plans have no network restrictions, are guaranteed renewable, and frequently cost less than a full-price ACA plan. A cost-sharing program can cap your total exposure above the plan's benefit limit.

What are the drawbacks of private, non-Marketplace plans? They usually have a 12-month waiting period for pre-existing conditions. They are limited-benefit plans, often around $1 million per person per year. They aren't a good fit if you have surgery planned, take an expensive medication, or need ongoing specialist care.

Do I need separate dental and vision coverage? Often, yes. The dental and vision benefits bundled with individual health plans can be thin. A standalone dental and vision plan, checked against your own dentist and eye doctor, often gives better value.