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You can read many facts and figures that help explain why early retirees need to find a good health insurance policy. However, research on how people make decisions shows that often it takes powerful stories to motivate you to put in the time, effort, and money needed to take action. To help you with this endeavor, here are two true stories that illustrate the protective power that good health insurance policies can provide for retirees who aren't yet eligible for Medicare at age 65.
One day while exercising, a healthy 59-year-old semi-retiree felt a lump in his abdomen. He kept an eye on it for a few weeks, but it didn't go away, so he went to see his doctor. She prescribed an ultrasound scan, which identified a large mass that needed to be removed surgically.
Fortunately, the semi-retiree had retiree health insurance from his former employer, which had negotiated reasonable rates with hospitals and other health care providers. Without this health insurance, the surgery and subsequent hospital stay would have cost more than $100,000, but the net negotiated cost to the health insurance plan was about $30,000. The health plan had a $3,000 deductible, which the patient paid, and the plan covered the rest of the costs.
I am the semi-retiree in this story. When I felt the lump, I was in otherwise very good health (I still am). I exercised regularly, ate nutritious food, maintained a healthy weight, and didn't smoke or abuse alcohol. I always passed my annual physical and associated blood tests with flying colors. I had no other pre-existing conditions and naively thought I was immune from serious medical conditions.
At the time, my wife and I were paying more than $1,000 per month as our share of the cost of my former employer's retiree medical plan. We had budgeted for this cost in our retirement planning, and we're glad we did since we dodged the $100,000 bullet. Luckily, the mass was benign; although I still have a nine-inch scar on my abdomen and occasional scar tissue pain as a reminder of my harrowing experience.
Six months later, my wife Melinda and I were celebrating my 60th birthday. Like me, she was very healthy and serious illness was the farthest thing from her mind. She was 59 years old at the time.
After dinner, we went for a walk, and Melinda felt what she thought was a charley horse in her leg. It persisted into the night, then her leg started feeling numb and cold. We tried calling my wife's doctor, but she wasn't available. Fortunately, we called close family friends who are doctors, and when they heard my wife's story, they urged us to immediately go to the emergency room at a local hospital.
We were somewhat doubtful that was necessary, but they insisted, and we're glad they did. It turns out that Melinda had a blood clot in an artery in her leg, caused by a cyst in her artery. It was a very rare condition -- there have only been a few similar cases in medical histories.
The doctors gave her intravenous blood thinners to dissolve the clot. Fortunately, she was in an Intensive Care Unit, as 36 hours later she started bleeding internally. She was taken off the blood thinners immediately and then had emergency vascular surgery to remove the clots and install a stent to flatten the cyst that was causing the clots. After seven nights in ICU, she limped home for a two-month recovery. Without the immediate attention she received, she might have lost her leg, maybe even her life.
The financial numbers surrounding her case were similar to mine, except that the pre-negotiated cost of the treatment and surgery was far higher than $100,000. Once again, we only had to pay the $3,000 deductible -- insurance covered the rest.
Both my wife and I were quite fortunate. We're grateful that we are retired at a time when modern medicine has the power to extend healthy lifespans. And we're also very thankful that our health insurance saved both of us more than $200,000, which could have been a catastrophic loss.
Lessons learned: No matter how healthy you are, don't think that a serious medical condition won't happen to you. Don't think you can go with little to no insurance for any period of time, and certainly don't wait until you're eligible for Medicare. A good health insurance plan can help you stay healthy and alive, sleep better at night, and enjoy your retirement.