This Nurse is Tackling a Major Barrier for Early Retirement- Ep.16
As traditional work has now become optional for Lynn, One of the biggest barriers for her family of four was figuring out health care options in early retirement. Over three years and over 100 different sources, she created a database of all the options she could find, taking notes on each one. She is hoping to crowdsource this information on a site called https://www.fihealthcare.com/ as This information is most powerful and useful if we all come together to keep the information up-to-date and support each other--that is the essence of this platform. Through this page, Lynn is here to promote transparency for healthcare options in early retirement.
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TRANSCRIPT:
Naseema McElroy (07:38): All right. Welcome back to the Nurses on Fire podcast, Lynn. Thank you for being my very first podcast guest on Episode 2.
Lynn Frair (07:48): Yes, I love that.
Naseema McElroy (07:50): And Lynn, you have some amazing news to share. So Lynn, what are you working on and how is it going to change the world?
Lynn Frair (08:01): That's a lot to live up to Naseema, but I am definitely working on something that I think is pretty exciting. So as I made the transition from traditional employment as a nurse, I was trying to figure out what we would do for our family for healthcare options. And so, I'm a data collector and I'm a researcher, so I started looking up all the options that I could find here in the US for health insurance and wrote them down the pros and cons, eligibility criteria and helpful links as we're making our own transition and planning. And then a lot of people that I talked to, they wanted access to this. They wanted to figure out what I had collected, what the options were. And so I kind of held onto the information for a long time and I kept thinking somebody else was going to present this or I could add to what they were creating and nobody created this. And so I actually went to FinCon. That was part of the reason I went to FinCon this year to look for who is creating a crowdsourced database of options for healthcare in early retirement. And I couldn't find anybody. So I decided to just step forward and create it and invite other people to edit it, add to it. So that is currently what I'm doing. So I am going to be launching FI (standing for financial independence) fihealthcare.com currently has a landing page. If you're listening to this in October, 2019, we hope to go live around the 31st of October. So you can go there now at any time and sign up to be notified or if it's after that point, hopefully it's already live. And I'm very excited. Lots of interest and I hope it adds value to people's lives.
Naseema McElroy (09:42): I think it's hilarious that you guys chose Halloween.. And I love the terminology where it says, yeah, healthcare, it can be scary. And it totally can be.
Lynn Frair (09:55): I admit. It's so cheesy. When I look at people and they're thinking about, you know, I'd love to make this transition. I'd love to have more time freedom. The look when they are thinking about what can they do about healthcare? It's sometimes panic looking, it's their limiting barrier to having more time freedom. And I'll be completely honest, the options are not great really. I mean there's not magic that I have, but if we can take all the information that's available and put it into one place, then at least people will
know what options are there. So I can't solve all the problems of US healthcare, but I can help take the information that's out there and put it in a place where we can all come together to help each other. So that's what I'm trying to do with the site.
Naseema McElroy (10:43): And I think it's all about just having a resource so people know what's possible for them. And I think that's important because yeah, it's super overwhelming to try to navigate this on your own and to have one like compository of this information is going to be game-changing. And that's why I say it. You're changing the world, Lynn and you definitely are, I mean you're already changing the world and just being a phenomenal person and sharing your story, but you are taking this to a whole another level and you're serving so many people by letting them know the healthcare options. And of course it sucks. I mean the US healthcare system is really primed for some change. Like we really need to have some really dynamic changes to our healthcare system. But in the meantime, this is really gonna serve so many people. I mean, it's not going to stop when the healthcare system hopefully changes, but you know, hopefully it'll shed light that we need to really do things differently and we can adapt a lot of the things that are done globally because, you know, we're not the leader in healthcare. We're supposed to be a world leader, but as far as like our provision of healthcare and the cost of healthcare here, we are failing our people and so we've got to do better. And I'll be so happy if nurses are at the forefront of that.
Lynn Frair (12:06): Yeah. You know, and I've heard this a lot actually, I've spoken with some heavy leadership in the healthcare transparency space and also nurses and they're very proud that a nurse is the one that's creating this. Because if you think about it, we have hands on experience in terms of both being on the patient side and at the direct bedside. And many of us also have the leadership experience. And so, our experience on both sides of that equation are really helpful in developing things like this. So, it's, yes, our healthcare system, unfortunately the data shows that it's fairly inefficient and I think what sadly is going to happen in the future of healthcare is that it's going to create more of a splintering of these different options, which will be increasingly difficult to track. And so my hope is that as the splintering occurs, we at least have a place to track this so we know what options are available. And my hope is that by making it more transparent, the less efficient systems can see what the more efficient systems are doing and learn from that. Because I think it's our lack of transparency and the cost is one of our biggest problems. So I have like this bigger vision, you know, hopefully if more people have more time freedom that they can do things like innovate around areas like healthcare and healthcare costs. So that's my overarching hope. I know it's ridiculous and ambitious.
Naseema McElroy (13:37): It's not, I feel like it's a lot closer than you think and just because you put the action, the intention out there, and you're actually doing the work. I feel like it's possible and it's totally something that I feel like we'll see relatively soon. Thanks to you, Lynn. So let's get into this heavy content. Let's get down and dirty in to what healthcare options do we have available for us when we choose to lead the workforce?
Lynn Frair (14:04): Yes. So depending on how it's split and this is gonna evolve over time, but I would say there's about 20 ish options. So this is gonna evolve over time, but there's several different options. None of them are perfect. I'll be completely honest. So we'll just start kind of ticking through the options. Is that good? And then you can ask questions as I go through. Okay. So the most common one that's used by people who are outside, so they've left traditional employment, maybe they are early retiring or maybe they're entrepreneurs. The first place you would go and the most common is the healthcare marketplace, the individual marketplace. And that means that, so you would go to healthcare.gov or ehealthinsurance.com, those are aggregators that'll tell you what's available in your area. So that is a way to compare different options that are available through the ACA. And so there's different ACA standards and the big pro of this is that they can't accept anybody right now how it stands or charge higher rates because of their health. So that is a big benefit of it.
Naseema McElroy (15:14): So meaning that people with preexisting conditions who used it didn't qualify for healthcare until the Affordable Care Act came into place can now qualify via this marketplace?
Lynn Frair (15:25): Yes, as of the time of this recording, I think that's what's tricky and that's what I hope to accomplish with this interactive databases that if that changes, then part of the community could submit, Hey, there's a change that affects this. So that's why I don't think it should be a book or a piece of paper. That's why it should be an interactive database that gets updated with the most recent information. But yeah, as of the time of this recording, yes, they are... One of the other benefits of the individual marketplaces that there is currently a subsidy based on your income. So, I mean that could be a pro or a con depending on the level of your income.
Naseema McElroy (16:03): But typically when you're retired early then you're drawing less of an income than you would when you're doing that ramp up phase. And so it could be potentially depending on if you're retiring into something else. But you know, that's the point.
Lynn Frair (16:19): That's absolutely true. There is... When I expand this site, what I hope to also have aside from this database is really helpful links for how to make those decisions 'cause there are graphs and that talk about what the levels of subsidy are. So it's going to start this way and then I'm sure it's going to develop. I have lots of people reaching out to me with ideas and willingness to help, but how it's starting is this database. So yeah, that is a good... For most anybody, that's a really good place to start because that is the most commonly used way to figure out what your options are. And it's also available in every area legally. It's supposed to be in the US, so sort of attached to that as Medicaid or expanded Medicaid. That's different than Medicare. Medicaid is, it's considered, so if you apply through the individual marketplace, if you're below a certain income and it depends on where you are, but if you're below a certain income, a certain percentage of what they call the federal poverty limit the FPL, then you may qualify for Medicaid, which is out of pocket cost is very, very low and sometimes nothing.
Naseema McElroy (17:37): And that's state dependent, right? Like you were saying, it depends on your location. Like in California it's called Medi-Cal and in the Bay area, because like for a family of four, the poverty level is like 110,000. A lot more people qualify for that. Like people look at it as like welfare, but a lot like your average person usually can qualify for Medi-Cal in the Bay area.
Lynn Frair (18:00): Yeah. It does vary state to state and each state seems to have its own name. In Washington state, it's called Apple Health, in California Medi-Cal, the overarching federal term is Medicaid and it is subject to income level. And so when you go through the individual market place, it'll tell you what you qualify for in as far as it'll include Medicaid if that's something. So you don't really need to go pursuing that. But I did include that as an option. I'm including all options so that people can make the decision. The options I'm including are things that people have used. So no particular option. I'm not condoning or against anyone. I just want to make that information available. Okay. And now, one of the more common alternatives I would say for healthcare options, again, these are all healthcare options. They're not all insurance. So health sharing ministries are common in the financial independence movement. It is not considered an insurance plan. It is considered basically like a donation. It's a monthly premium. It tends to be more affordable than other plans because there's a reduced administrative burden. There also, this is a con or a pro, depending on your perspective. They're particular about who they accept. And they can do that because they're not subject to those ACA guidelines about health, preexisting conditions. So they tend to approve people who are in a healthier cohort which keeps their costs down. So there's a lot of mixed feelings out there about that. They're pretty restrictive. So it has to be limited to those have a Christian faith background usually, those who lead a healthier lifestyle like no smoking and mild drinking, not high risk activities I hear or is sometimes their criteria like lots of skydiving. Yeah. That too. Yeah.
Naseema McElroy (20:07): Yeah. And then like certain ones of them don't cover contraceptive care. Right?
Lynn Frair (20:11): Exactly. Yeah. So contraceptive care, things like vasectomies, things that you could see sort of the religious frame of it for those limitations. So...
Naseema McElroy (20:24): But they're pretty affordable, which I wanna do a comparison just for my personal self. So like when I switched over to being covered under my boyfriend's insurance as opposed to us being covered under mine, my premium basically went from nothing to $16,000 a month for our family of three. And then I checked a healthcare sharing ministry out and the premium went down to $400 a month. So just by comparison like it's substantially cheaper.
Lynn Frair (20:53): Yeah. So, the premium is cheaper. It's all a matter of risk and do you qualify and you know it's really about trying to figure out what the best fit is. And for a lot of folks, sometimes there's a huge percentage of the population who are uninsured and so this could be an alternative for them versus being uninsured it may be much more reasonable and people don't realize that this exists.
Naseema McElroy (21:23): Let's pause and talk about two things. One thing is that the thing that people need to understand what these health sharing ministries is is that it's not insurance and you said that, but in that it's not insurance. A lot of healthcare providers don't necessarily understand them. So like what you usually have to do is kind of like talk to them like you're paying in cash, which actually might work in your favor 'cause if you think, if they think you're paying in cash, well you are paying usually get, you typically get reimbursed but you can negotiate really like discounts because they like cash. They don't like dealing with their insurance company. And so they'll give you discounts in Lynn, you might know this but there are sites that actually give you like what the care should cost you. And like what insurance companies typically get reimbursed for, what they reimburse for, meaning that they get like a discounted price. And so, if you go in with that information it's actually pretty powerful because now you can negotiate down and yes you can negotiate with your healthcare providers for your bill. But like I said, with the health sharing ministries, you kind of have to like talk to them like, okay, I'm paying cash. What can you do for me? And then you typically get reimbursed for approved things.
Naseema McElroy (22:31): And then, another thing is that you talked about the amount of people who are uninsured. Sometimes, people strategically are uninsured and decide to just pay whatever the tax penalty is at the end of the year because it's cheaper than getting insured. And then kind of just like have a savings to either pay for things out of pocket or they just know that they put money aside or they just take the risk of just not having any kind of healthcare. Can you speak to us on that portion?
Lynn Frair (23:03): Yes, so that's one of my options that I'm going to talk about. Again, this is not me condoning any particular thing, but I'm just taking down a list of what people have done and there's pros and cons of that. So, with the health sharing ministry, so I've got a bunch of things that I think will be helpful. With the health sharing ministry, what's tricky is providers, you're right, don't understand it. So they'll say they take the health sharing ministry and then they'll build them directly. But there's a possibility that there could be a balance left after they bill. And the... One of the cons of health sharing ministries, they do sometimes what's called balance billing, where they'll say, yeah, we take that, Oh but we charge more than your health sharing ministry. He said, so we're going to give you the balance of that bill and then it can be fussy and frustrating. So that's one of the cons that I've heard is that there can sometimes be this balance billing phenomenon, which is a combination of, I think providers not really even understanding what health sharing ministries are and administrators not really understanding and also people wanting to get paid as much as possible. And it's very tricky. I think as health sharing ministries become more popular, it'll have a bit of a smoother process. But that is one of the cons is I think that there is some negotiation sometimes in these surprise bills. This is what I'm hearing from folks. So I wanted to mention that. Yeah, that's what keeps people sort of shied away from this. So I don't know how often that happens. I do know that that happens though. And so something to be aware of if you're considering. There's something that's helpful, I think, that goes to the related to the cost of different interventions. So there's a website called healthcarebluebook.com and they are, you can look up the cost of a particular intervention like pediatric anesthesia for dental care in your zip code and see what a fair price is for that. I used it and I still use it because sometimes we have no idea what something should cost. How much should a CBC cost? You know, because it can vary by in order of 10 or 20.
Naseema McElroy (25:22): Oh the multiples are crazy. Like how much should an ibuprofen cost? Well, let me tell you, I just charged you six hundred dollars for that. Okay. By the way.
Lynn Frair (25:28): I mean it's just crazy. And so what's so cool, that's a great site. I reached out actually to the founder of that site and the founder, his name is Bill stood up in front of the Senate to talk about healthcare transparency. And, he is somebody that's very big in the healthcare transparency space, the cost to transparency. And he's been a great person to work with about this and encouraging me to kind of get this stuff out there. So, I do recommend the healthcare Bluebook site to folks for comparing the cost of various interventions. It's a very helpful resource. [Naseema Says "I think we killed that one. We killed it. Yes."] We killed it. Okay, let's move on. Self-Insurance is kind of what you were talking about where people basically take on the idea that if something comes up they'll pay for it and either they have a large, large stash of money where they could take on anything or they are very high-risk I guess you would say. But you can obviously see the pros and cons of that. Pros, there's no monthly premium. Cons, if something catastrophic happens, it could wipe out a lot of money potentially.
Naseema McElroy (26:41): And let's not like gloss over that because healthcare expense is the leading cause of bankruptcies in this country, so the chances that something will happen to you are pretty high. The chances that it'll wipe out everything and Lynn, this is something that you know a little bit too much about too, are pretty high too. So you know, can't take that into consideration. Yes.
Lynn Frair (27:01): Yeah. That is one of the options. I'm including that. But, I mean with lots of caution around it because of that possibility of very high risk. I wanted to also talk about, so another option is short term plans. So some States, yeah, it's interesting. Some States, it's variable, have these short term plans that usually it's not longer than one to three years. They have limited benefits usually, but the premiums tend to be lower. The pros and cons you could say is they don't have to comply with the ACA preexisting condition clause. And, it's something that is truly because of the name of it short term. So you won't have as much security in knowing that. So they kind of present this tradeoff to consumers about lower premiums in exchange for more limited coverage and less protection. So the Kaiser family foundation estimates short term plans have fewer benefits at about 54% lower than the ACA compliant plans. And the result is the premium savings is because they are excluding people with preexisting conditions. So there's a lot of, you know, potential conflict there, you know, as far as people's belief systems and such. But that is an option that some people are electing, particularly those who have sort of unknowns or might be traveling, looking for a temporary bridge. So that is an option. People are sometimes using. Moving on there is a whole... I wanted to talk about military plans, so I certainly don't recommend, you know, joining the military just so you can get, you know, early retirement healthcare benefits. But that is one of the things that could be possible. The pros obviously, well the coverage can be generally affordable. The cons is that it's limited obviously to military or ex-military or I think the spouses and family of, usually it's through Tricare and the VA I'm told. The quality of care tends to vary based on the VA. So you might want, another consideration is considering the timing of your departure to coincide with, apparently there's a lifetime healthcare benefit along with pension at some times. Yeah. So you want to really understand those benefits that are specific to you, 'cause I'm sure they vary, but I did want to mention that that's not going to be, so most of the stuff from here on really isn't going to be for most people, but wanted to mention it for those that it's helpful for. So we'll continue.
Naseema McElroy (29:39): But what I wanted to really emphasize with that is that yeah, I think that it's very smart to understand this because it can cost you a lot of money if you exit the military at the wrong quote unquote times. So be very strategic about how you time your exit because you can miss out on certain pensions and especially we're talking about healthcare coverage, but yeah, make sure that you're looking at those things when you're timing your exit.
Lynn Frair (30:04): Yes. Yep. Very important.
Naseema McElroy (30:06): Okay, next.
Lynn Frair (30:07): There's something called FEHB, federal employees health benefits. So in some cases, some federal employees might be able to continue their healthcare coverage after ceasing employment if they enroll. So that's worth a consideration. If you're a federal employee, it may allow continuation of your federal health insurance plan after at least five years of enrollment if you've been continuously enrolled is what I'm hearing. So something to consider for federal employees.
Lynn Frair (30:41): Travel medical insurance. So which is also called international medical insurance or worldwide medical insurance. It's coverage abroad. So a lot of folks looking at financial independence are doing a lot of traveling or potentially doing a lot of traveling. So the premiums are relatively reasonable. The cons of it are that there's usually a policy limit, which sometimes can be pretty low, like $25,000 although that goes a lot further in most other countries that... [Naseema Says "None of you have to metaback back to the States."] Right, right, exactly. So the, and that's a good point.
Naseema McElroy (31:20): When I say metaback. I meant metafly. Right?
Lynn Frair (31:22): Yeah. No, no, no, you're right. Yeah. The focus for those plans is usually on covering the emergency, medical or evacuation costs. So sometimes emergency dental is covered and emergency transportation. Of course it varies just like anything by policy, so you'll want to see what's covered. But I would definitely look at, you know, is your evacuation covered, is ambulance or airlift covered? Is dental covered when you're making your determination? Who qualifies are ex-pats or longterm travelers, missionaries, visitors to the US sometimes and business travelers working overseas. This is another line item that's interesting that has been brought to me. So medical tourism where we live in the US but we might go somewhere else for certain medical procedures. So the pros of that.
Naseema McElroy (32:17): Like thailand for your surgery?
Lynn Frair (32:19): Yeah, for example, this is becoming, I think increasingly popular because I think of the cost of US healthcare and is just continuing to rise now. It's at three times the rate of inflation. The average family, I think Bloomberg just said over $20,000 of healthcare costs per family in the US is what I recall. And not all of that is paid by the person. Some of it's paid by the employer, but that is another record. So anyhow, we see more and more medical tourism. And so the pros are that the cost can be favorable, certainly. The cons are that you need to travel for care, which I guess could be a pro or a con, but it's not very convenient usually and it eliminates, this isn't an option for urgent or time sensitive needs or management of chronic conditions. So, I have in my database a link from the CBC which talks about, or you can just Google a medical tourism. They've got some cautions and some things to look out if you're considering medical tourism because there's obviously risks associated with that. Okay.
Lynn Frair (33:25): Another option, another maybe not stellar option that it's an option is being on your spouse's plan. Pros, the costs are generally paid by the employer. And the cons, your spouse still has to work and they may resent you. So I think that's obvious, but that is actually what a lot of folks are doing. Their spouse maybe still has a position they absolutely love and some sense for them. So I wanted to include that. Also, this is, I probably should cluster this more by the travel section, but full time ex-pat living. So a lot of people actually, well maybe I shouldn't say a lot, but many people have moved abroad and one of the big motivations has been healthcare. So the overall healthcare costs for almost any country, if you can qualify for the healthcare, is less than the US. I actually think we're the highest costs in the world. So the cons or the pro, you need to live in another country. So the coverage and costs obviously varies by country. And so yeah, I think that there's a lot of variation there that countries that I hear most often referenced and used for healthcare are Costa Rica and Portugal are the ones that I'm hearing a lot lately. Are you hearing any others, Naseema?
Naseema McElroy (34:45): They're the ones that are top of mind right now.
Lynn Frair (34:48): Yeah. So, and then sometimes people do part time ex-pat living. So there's this sort of integration, there's sort of a nomads, I'm going to put some links in this database about nomads and how they do travel insurance. And sometimes people take up travel insurance for part time. These policies and plans can be confusing in what they cover, if you have to be a resident of a country or not. So I'm hoping actually to crowdsource a section about folks who travel, who are ex-pats and get a little bit more clarity and wrote best in this. I don't think that's a word... To the section about travel because I don't personally have experience with this. So I'm just taking the information people are giving me. And so I'd like more contributions about travel, ex-pat living insurance and medical tourism. So that's why I'm crowdsourcing this. But I've got a good start here. Okay. So another option is employer coverage after leaving your employment. This is actually increasingly rare. It's at the discretion of the employer. It used to happen a lot more than it does. I would say if you have an employer who does that, it's like a unicorn but that actually still does happen. So that's one thing to look at. Very, very rare, but it does happen sometimes.
Naseema McElroy (36:15): And I was talking to you before we started about when I used to work for Kaiser and if you work there like 10 years ago or more, they did have this like lifetime medical at retirement, but of course it was kind of cost prohibitive even though it was like lifetime medical at Kaiser, which is you know in itself the hospital health plan and insurance all in one and so it's cheaper than most other places, but it still was cost prohibitive for them. And so they have since gotten rid of it. And so that's why it's becoming more and more increasingly rare.
Lynn Frair (36:45): Yeah, I would like to know if anybody, please feel free to email me at hello@fihealthcare.com if you know of any employers, because I'm hearing that this exists, but I am not hearing who's actually still providing it. So it feels a little bit theoretical right now because I don't know if an actual employer who still is providing this, so if anybody knows, please email me. I know. They'll get flooded with applicants. I mean, it's a really great way to keep, you know, candidates will stay a long time. You're showing them that you are invested in them and it's increasingly rare these days. So anyhow, one option that I wanted to put, it's a word that scares people COBRA. I mean, not because it's the same name as a snake, but because people immediately think it's so expensive and it absolutely is generally very expensive. So COBRA, it stands for consolidated omnibus reconciliation act, something along those lines. [Naseema Says "It stands for hell of expensive."] Yeah. What it is is an extension of your existing plan, but you're taking over what the employer used to pay and usually employers cover about 84% of the cost. So you're now taking that part over. Plus, usually an extra administrative charge of, usually I see about 5 to 17% more, so it's very, very expensive. I put that there because this could be a good option if you have a different option later and you maybe just need to bridge a couple of months, you need to keep the same providers and or money. Money's no object.
Naseema McElroy (38:30): Or you just big ball shot calling me. You don't have to check your change. But that's not most people who are in the FI space. Like we are about every single one of those coins.
Lynn Frair (38:42): Yeah. It's just not going to be, but you can use it up to 18 months usually after employment. So, it can be a way to sort of buy time with this coverage, you know. So the qualifications are, the employer has to have, I think it's required if you have 20 or more employees. So a lot of employers are required to provide COBRA. And then, I have a nice link in here about how to find out more about that. So keep moving on. A lot of people actually do part time jobs for healthcare. So Starbucks is, when I hear about commonly, again, if you know of another employer, feel free to email me who is a good part time employer providing healthcare. So I just heard Starbucks is now spending more on healthcare than they are on coffee. So I haven't verified that myself. It's interesting though. So healthcare costs are a huge thing.
Naseema McElroy (39:35): So they're probably going to get rid of it.
Lynn Frair (39:40): They may, but it may be what's working for them or they may be very vested in trying to self-insure. A lot of big employers are trying to figure out how to get these costs in control. And it's a big pain point for big companies. So I think they're gonna work on solutions, but I don't know that it's to change that. So yeah, email me if you guys know of any other companies that are doing this. So the option, we talked about self-insuring already, so I'll skip over that. I want to put a section in here and I'm not sure how I'm going to structure it. So I have a some folks working with me right now on building it, alternative medicine, healthcare options, not necessarily that this would take the place of insurance, but a lot of people are using alternative therapies in, well instead of insurance. But also in addition to, as an adjunct, because most healthcare costs are related to modifiable behaviors, as much as we don't want to think about it, I'm just, I think it's like 80% so it's really, really crazy how much could actually be modified in a lot of it is stress related, lack of sleep, eating habits. So, and certainly I'm not perfect at all, but I did want to acknowledge that that really contributes to our own healthcare costs.
Naseema McElroy (41:03): I'm all for the complimentary medicine approach and like those costs can be prohibitive though, you know, if it's not covered under your insurance, but the savings over your lifetime are substantial if you just keep yourself healthy. Like you know, functional medicine doctors, you know, acupuncture, all those things like you know, holistic dieticians like, Oh, all those services are super essential. But yeah, I definitely see them as an adjunct to something like that and your ACH plan, I mean, whatever the exchange plan is and maybe even catastrophic coverage we haven't talked about yet, but I'm sure you're getting too. Right?
Lynn Frair (41:46): Right. Yeah, I've thought about do I even put this as a line item in here and I just think it's so important that yeah, it really looks at the whole picture, but I don't want people to think any one of these is your only solution, you know? So I want to be super clear about that. Okay. So luckily, I have people that are working with me who are crowdsourcing this and developing this right now. It's very exciting. They're so passionate about it. I love it. So another, this one is pretty interesting because I'm hearing a lot more people in the FI movement going this route, so it'll be interesting how it evolves. It's called DPC, direct primary care, also known as blue collar concierge care.
Naseema McElroy (42:31): Yes. We have a lot of that here in the Bay area and it's just because we're the hub of FinTech and I was hoping that you would cover that, you know, just the tech companies for the other kind of just like yeah, you just pay us this flat fee and then you know, I'm sure you'll talk about it. Go ahead.
Lynn Frair (42:44): Yes, this is really emerging and I think part of it's emerging because of frustration of consumers of healthcare and also providers of healthcare. So the idea is that it's a practice and payment model where the patients and the consumers, they pay their physician or their practice directly in the form of a periodic payment for a defined set of services. And they vary. So they usually charge patients a flat monthly or an annual fee under the contract terms. And then the practice framework includes practices and structured around direct contracting with the patients. And what's tricky is so a lot of the primary care is covered, right? Direct primary care. But when things get more complicated like specialists or hospital interventions, my understanding is that's a separate issue in most of these providers' cases. Is that you're understanding too, Naseema? [Naseema agrees] Okay. Yeah. So big limitation of that DPC is it's not an insurance or a replacement, it's a type of care, which is also, it's considered retainer medicine or concierge care. So the fees might still be too high for some people. And so there's some definite pros and definite cons related to that is concierge care, which DPC is considered a type of concierge care. But the main difference between the two is about how the doctors get compensated. And I think of concierge care is more higher end higher cost versus the DPC model tends to be lower cost. Yeah. So there's a little bit of nuance and I actually think there's difference in terminology depending on where you are geographically. But the basic idea of direct primary care or concierge care is that it's a model where you're really paying the doctor to provide you care, paying out regular installment. So that versus a per visit model.
Naseema McElroy (44:52): Do you know if this, what is it called, qualifies to for your taxes so you don't get taxed for it? What is it called?
Lynn Frair (44:59): Oh, the HSA?
Naseema McElroy (45:01): No, no, no, no. Qualify. So that you know, like, so you won't get penalized. So like if you don't have health insurance, you get penalized if you have this direct care model and you're showing that you're paying this provider or this monthly, are you still gonna get that penalty?
Lynn Frair (45:16): I don't think that this is considered insurance. One thing that we're seeing, and again, we're recording in 2019 we used to have an individual mandate that people had to have insurance. Otherwise we had, there was a fee for not carrying health insurance and that mandate was repealed. So effective 2019, as I understand it now, you won't face fines in 2020 for not having health insurance.
Naseema McElroy (45:44): That's major. That's major.
Lynn Frair (45:46): Yeah. So again, this is like Lynn's understanding, I'm not an expert at any of this, I'm just like a supreme studier of information. So always check with your accountant.
Naseema McElroy (45:56): Let me just put this disclaimer out there. This podcast is for entertainment purposes only. For professional help, you need to actually act on this advice. Please seek professionals. We are not professionals, we are just conveying information for you. So that's my little, you know, legal statement disclaimer.
Lynn Frair (46:17): Yeah. Disclaimer that we exactly, we're trying to help folks, but we're by no means tax advisors or you know, financial planners or healthcare experts. We're studiers of this information and hoping to share in ways that are helpful. So yes, and plus depending on when you listen to this information changes. So then I want to, you know, there's different... Within this, I'm going to split them up in various sections depending on, and we're formulating it now, getting the final touches on it. But I also wanted to mention Medicares. So Medicaid is for low income, otherwise you know it can be called different things by different States, but the federal government calls it. Medicaid is for low income. Medicare is for generally folks over age 65. There are times if people are disabled that they qualify for Medicare before the age of 65. So the pros of that, I wanted to mention that because that's can be part of planning for a lot of folks, especially if you're closer to that age. But even if you're not, it should be good to know what could be in your future. The pros are that it's essentially guaranteed health coverage if you make sure to apply for it. I mean is guaranteed as anything can be really, and it doesn't discriminate based on preexisting, but a lot of people don't know this. It tends to cover only about 70 to 80% of your medical class. So it doesn't cover the full cost of prescriptions or drugs or doctor's visits.
Naseema McElroy (47:45): What's the age of Medicare, is it 65?
Lynn Frair (47:47): 65. That's my understanding. [Naseema Says "If you have a disability."] Disability and you meet the criteria, so they've got, Medicare has different parts a, b. Part a covers hospitalizations and I know b covers prescription medications sometimes. So yeah, I wanted to mention that even though that's not the age range everybody's looking at yet, but it's important to know. So the premiums are usually paid, my understanding, through social security check if you social security. But what's great is I have somebody who's sort of an expert at Medicare who's going to be adding helpful links in this section as well. Yeah. So those are really the main pieces.
Naseema McElroy (48:34): You were saying something super important and I'm sorry I interjected, but you were saying that Medicare does not only cover 70% of expenses, right? So this is something that you need to plan around financially.
Lynn Frair (48:45): Yeah, exactly. That is really key. So they cover about 70 to 80% on average for medical costs. So that surprises a lot of people because they think that it will be covered, you know, 100% or you know, 90% but it does cover a bulk of it. But there is still a lot that is not covered under Medicare. So there's still personal responsibility even after the age of 65 financially.
Naseema McElroy (49:10): All things to know.
Lynn Frair (49:12): Which is important for planning.
Naseema McElroy (49:13): Definitely important for planning. Yes. Like if people think that, Oh yeah, I've just got to get to 65 honey and then everything is going to be taken care of. No, boo. You still need to put that money aside because you will be paying 20 to 30% of the cost.
Lynn Frair (49:26): Yeah, exactly. So like in summary, if you guys are still listening, the TLDR is that it's very difficult to navigate, which is why I want to bring people together so that we can help figure this out together. But for most people going to the individual marketplace, so going to healthcare.gov and seeing what you qualify for, taking a look at health sharing ministries, the pros and cons, really evaluating to see if that's a consideration. There's a lot of pros and there's a lot of risks to it and also maybe considering what you might have as your DPC, direct primary care aka the blue collar concierge, seeing what's there in your area, seeing what they cover and maybe overlaying that on top of your ACA plan. I would say those are the three things to really look at. Not that you would only choose the DPC. I would be very leery about having on its own because essentially then you'd be self-insuring for a lot of big potentially catastrophic things, but starting with those three places to see what's available in your area and then kind of going from there.
Naseema McElroy (50:36): You know what I'm leaning towards Lynn, like if things stay the same, like the healthcare is, I'm going to find me a part time benefited job and then like that just for two days a week and then I'm just going to request to get canceled all the time.
Lynn Frair (50:51): As a nurse? Are you wondering about as a nurse?
Naseema McElroy (50:54): Yes. I mean like anybody can work like two days a week. I mean, and then like take their vacation as they want to, but I was just like, man, that's going to have my job code for my insurance for the rest of my life or until I can't work anymore. And they just get canceled all the time. Like let these newbies work. You know?
Lynn Frair (51:11): It's such a problem. And what I'm seeing and what's so sad is that we're moving away from having these part-time benefited positions and which makes sense because it's very costly for the employer. What I really want is us to have more efficient, less costly healthcare so that this isn't such a, I mean every other country does it. So I mean, if our healthcare outcomes were better than other countries, it would be easy to sort of justify these costs, but they simply aren't. So our healthcare costs more and is less effective.
Naseema McElroy (51:47): We just need to get our ish together as a country just in general. So I mean like let's work on this healthcare.
Lynn Frair (51:54): Yeah. So my just dream is that if we can get people where they have this financial runway who are already in the healthcare system as providers or as employees like nurses, we get a little time freedom, we get a little financial runway and then we start looking at there has got to be a better way. We can do this better because so many other countries are able to manage with decent outcomes and lower costs. I believe we have such innovative, bright people in the FIRE movement and in healthcare that we can find better ways to do this. So...
Naseema McElroy (52:30): Yes, so my audience out there listening, I task you with this. I task you with obtaining financial independence, getting yourself free and then start working on causes like this where you can too. Just like Lynn who was retired at 40, change the world. Lynn, thank you so much for fantastically in, so comprehensively covering this wealth of knowledge that is just can be super overwhelming for most people, but I think you did an extraordinary job in making sure that it was broken down to, if I can understand it, basically, anybody can understand it because I'm a really basic.
Lynn Frair (53:13): I call it the beast. It's kind of like a beast but hope to tame it a little.
Naseema McElroy (53:18): Yes. Well, thank you for taming the beast Lynn. And again, it is always my pleasure to have you on here, and of course you're going to be my recurring guest because you know, we're just like, cool, I like that and I need you in my life. Alright Lynn, thank you.
Hey there I’m Naseema
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