These days not too many people get their health insurance on the free market. Instead many have no coverage at all and many get it through their employer where it acts as a set of golden handcuffs, that is, the only thing preventing some people from quitting their jobs. Indeed, some still have a job simply in order to have access to affordable health care.

(Note, of all the developed countries in the world, this peculiar problem only pertains to the US, so if you live somewhere else, you can ignore this post.)

However, it is possible to get health insurance on the free market and it does offer a greater flexibility than “corporate health care”(*). Even when I had access to “good benefits” through my W-2 job, I elected to go with the “free market insurance” instead. In fact, even after I had retired from my career/job/employee-status and I could come in under DW’s plan, I stayed with my own plan.

(*) A kind of socialized health care available to people who are W-2 employees of tax-subsidized corporations.

I currently (2011) pay $91/month for a $4500 deductible HSA-compatible plan with HealthNet.

I consider $91/month a small sum. It is certainly nothing that’s going to break my retirement plans. Indeed, these plans exist even as people tell me they are spending hundreds, some close to a thousand each month for fully loaded health plans; and that would be something that would break ERE.

To verify my numbers, go to and enter my zip code (94551) and county (Alameda) and my age (I’m 35.5ish). It’ll give you a long list of plans. Go to the bottom in the left sidebar and click on Additional Features. Click on HSA-eligible. Then sort by price.

Note that the cheapest one comes in at $81/month.

Maybe I should change my plan.

Next, let’s see what the plan will cost in 20 years in today’s dollars (presuming business as usual and no fix to the most expensive health care system in the world), when I’m 55. Repeating the exercise, the cost would be $245/month. I also ran the plan for age 60 and it came to $288/month.

Go ahead click on the link and verify it.

Shortly after that evil socialized health care, you know, medicare, will be available to my age group.

Again, none of these amounts are restrictive for ERE. At that age, it’s very likely safe to move from the ultrasafe 3% withdrawal rate to a standard 4% withdrawal rate.

Now, I know that some areas/states are more expensive and some are cheaper. This is due to various regulations based on how much the insurance company can discriminate against things like gender, pre-existing conditions, smokers, obesity, etc. For instance, my premiums recently went up thanks to some California program that’s intended to provide cheaper health care for most people [which in turn means that some people, like me, are left holding the bag.] If you live in an extremely expensive state, consider moving. I promise you, if my premium costs were $500/month compared to $100/month in some other state, I’d be out of California within a month.

Of course, there’s still the question of the high deductible. The answer is that your HSA covers you. I’m adding $3050 to my HSA every year. This means it takes me 3 years to cover my deductible for two years. If I break my leg, I can take this out of the HSA. I just need to make sure that I don’t break a limb more than once every 1.5 years. If I stay healthy, the HSA works like an IRA. Should some situation arise where I need to spend down my entire deductible year after year, I would presume that the situation is terminal and I might as well start spending down my six-figure ERE investment principal. This would still take decades.

Of course, part of my plan is also to stay healthy and not rely on modern medicine to compensate for bad personal habits. Poor lifestyle choices account for 50-75% of all health care costs. Fortunately, ERE is not a poor lifestyle: no driving, no stress, and no eating out.

This still leaves the 25%-50% of the rest of the costs, most of which is simply old age cost, that is, trying to keep a geriatric alive for a few more months (on average, some live much longer, but most don’t), but some of which are driven by genetic factors, like type I diabetes and other inherited diseases. Unfortunately, I don’t have an ERE solution for this (beyond leaving the US for another developed country, like Mexico). This is a problem better fixed by your political representative.

Originally posted 2011-06-22 00:25:52.