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One of the greatest benefits I received from my last employer was the gift of health care insurance in my retirement years. At the time I was hired (almost 28 years ago), they offered an early retiree benefit: work for twenty years and, if you chose to retire after you turn 55, you could continue to receive coverage as if you were an active employee. Needless to say, it’s a benefit they no longer offer.
I retired on my 55th birthday, after nearly 24 years of employment. I have to pay a portion of my health insurance premium and it’s been steadily increasing. Next year my share of the premium will be $409/month versus the $240/month I’m paying this year. The full cost of the insurance (according to my former employers website) is $ 1223 per month.
I assumed my premiums would go up over the years although even I’m surprised by the magnitude of this year’s increase. But it was the chance I took retiring at such a young age.
This morning I found this article on CNBC: https://www.cnbc.com/2025/10/17/aca-enhanced-subsidy-lapse-government-shutdown.html
It documents a couple who both retired early, ie. before they became eligible for Medicare. They estimate they’ll earn $127,000 in pension income in 2026 and are upset because they may not get their ‘enhanced’ ACA healthcare plan subsidies. They currently pay $442/month (total) for their ACA care insurance plan that covers both of them. The ‘enhanced’ subsidies were introduced during the pandemic to allow more people to afford to enroll in the ACA plans. Based on their income, they wouldn’t have been eligible to receive subsidies prior to the pandemic. Without the ‘enhanced’ benefits, their ACA premium will jump to $1700/month for the two of them.
It makes me wonder how many people jumped on the ‘early retirement’ boat between 2021 and now assuming that the ‘enhanced’ ACA premiums would be in place forever. $1700/month in premiums for two people isn’t unusual–and a bit of a bargain depending on the coverage they have. If I were covering my husband on my ‘early retiree benefit’ plan, we’d be paying nearly $1100/month for coverage (with my former employer picking up an additional $1350/month). And our income is nowhere close to the $127,000 a year the couple in this story have.
I guess I’m both fortunate and lucky! Given the option to either retire or continue employment in an extremely stressful and competitive environment, I took advantage of an early retirement offer over 25 years ago due to a corporate merger/downsizing. In addition to my pension, both me and my wife get reimbursed for our monthly Medicare premiums and our supplemental Medigap insurance health premiums; it also includes Part D drug premium coverage. We are very thankful, but like Richard Quinn and corporate benefit bulletins indicate each year, the company states they reserve the right to discontinue these ‘benefits’ at any time and for any reason.
My spouse retired early because of serious health issues. She hated the entire ACA system; the annual research for insurance and high monthly insurance fees. Add the deductibles and we were paying more than $14,000 a year for her, and that was 10 years ago.
In America we tend to conflate insurance with care. They are not the same and must be approached separately. The ACA is a subsidized insurance with progressive fees. When we reach Medicare age we can move to Medicare Advantage plans that insurance companies loved because of the profits generated.
I do have a Medicare Advantage plan. My out-of-pocket costs have always been what I consider to be “reasonable”, particularly when I review the various statements. In one year, the total billed was more than $750,000; the next was about $500,000. My out of pocket never exceed two percent, including the cost of transportation and insurance.
In general, I’ve received excellent care. In 2023 I was given a few months to live. I’ve greatly exceeded that, in large part because of the efforts of my doctors and my involvement in my care. I have an opinion about insurance and then I have a separate opinion about medical care. I further differentiate between hospitals and other care. Hospital emergency rooms are a crap shoot. Quality of such care is determined by the doctors on call and the hospital. No matter what the circumstances, there are always going to be risks. One has to be an advocate for oneself, become educated about treatments, conditions and risks.
Staying alive and living a useful life may require real work.
What matters most is the quality of available care. How to pay for it is another matter. For too long, Americans have made assumptions about this, and with the specialization of doctors, which is where the money is, it is becoming increasingly difficult to find a GP. For that reason, both my spouse and I have a Nurse Practitioner supported by specialists.
A challenge with the current approach is determining how to get care. Hospital Emergency Rooms and Urgent Care facilities are always an option. But I prefer to avoid them. For example, I recently experienced what seemed to be a kidney infection. I contacted my nephrologist, who is responsible for my kidney care. However, I found out that I really needed to speak with my urologist about this. I also routinely and periodically require a bilateral nephrostomy replacement. Neither the nephrologist or the urologist handle this. It is required that I contact Interventional Radiology. Periodic CT and MRI’s are arranged with my oncologist. I make copies of lab and imaging results and so on, and provide them to my NP. Why? First, I want an objective individual to monitor my health. Second, because transfer from one department or to another, or to a different medical group is difficult. I’m not the only one who experiences this, with others telling me of their experiences in MI, CT, NY, IL and AZ.
The costs of dealing with extreme old age and deadly disease, and the attendant quality of life issues are another problem, altogether.
I recall when the ACA was being debated and the proponents stated that if not approved there would be “death camps” in America. Fear was a primary motivator and remains so, today.
I know this is a discussion about the expiring ACA subsidies but I have to say this. Our health care system is a mess. The way someone qualifies for insurance, the way they pay or not pay for it, all the entities taking a percentage of the healthcare dollar, it’s all illogical and it cost us in lives since we spend the most but don’t get the results.
it is absolutely a mess. an embarrassment.
Yes it is, but be cautious about results. We do get excellent care and when comparing with other systems results there is more too it than care system, like life style, obesity rates, even poverty levels. You might be interested in the article I wrote about our insurance system.
https://quinnscommentary.net/2025/10/13/there-is-no-other-viable-option-human-nature-will-not-allow-any-other-system-to-work-we-have-proved-that-already/
Some people get excellent care. A lot of people get OK care. Some people get substandard care. Some people get too much care. Compare infant mortality rates.
As a mentioned once before Kristine, enjoy it while you can and hope it doesn’t get so bad your former employer changes the rules down the road. It happens all the time especially where retirees are concerned because they do not have union protections. .
There’s obviously no way of knowing if the benefit will eventually be done away with, but so far they seem to be standing behind it. They stopped offering the early retiree health care benefit I have around 2004 or so. The benefit current employees get is generous but not nearly as generous as the one I have.
The college I worked for has an excellent “financial health” rating at the moment. I believe they have one of the largest endowments for a school their size. That said, I think college and universities will continue to close/consolidate at a rapid rate over the next decade or so. The ‘enrollment cliff’ is upon us and it seems like the desire to go to a traditional college is trending down.
I stopped retiree health care benefits for employees hired after 1995. The idea was to lower future costs while protecting current employees and retirees from future cuts.
Twelve years after I retired new people were in charge and wanted to save more money so they eliminated supplemental and Rx coverage for those of us on Medicare and replaced it with an annual payment.
Those changes shifted thousands in Rx costs to many retirees. And already the annual payment is insufficient to cover premiums and the gap is growing, especially for 2026. My Part D premium is going from $17 or so to $78 per month.
That’s what happens when people want to make a name for themselves saving money at others expense.
The mega-corp I worked for did the same. Now they have replaced the annual payment (which never went up) with a Medicare Advantage plan. It’s currently a good plan, with no restrictions on which doctors you can see, but I have no faith it will remain that good, and am on Original Medicare plus Medigap despite the cost.
When I reach Medicare age, my employer is supposed to offer me a monthly cash benefit (currently about $400, I think) that I can use to apply towards any Medigap coverage I want. We’ll see if that benefit exists in a few years…
This happened to my father when he retired from a major medical center. The benefit was a cut of a million pieces.
I have used the ACA for a number of years and received subsidies, and the enhanced subsidies were quite a gift given they are based on income, not ability to pay or my net wealth.
The ACA is wonderful, like many others I would not be able to get insurance without the program due to pre-existing conditions. I track healthcare, ACA, policy closely and have done best to help friends understand the options for ACA and exchanges.
A close friend of mine was recently quoted by his broker that his premium could rises to $2,400/month (for a 60-year-old single person) for his 2026 plan. I’m certain this is a bad estimate but trying to help my friend understand his estimated quote and subsidies (vs enhanced subsidies) turned into a difficult conversation.
Agreed that healthcare for a couple at $1,700 a month is comparable to the employee/employer cost if they were getting healthcare through their employer. Even traditional Medicare at $185/month + Medigap and Part D is easily $600+ a month. (And increasing to $206.50 monthly in 2026.)
I very much want to see healthcare subsidies and the ACA continue, just wish there was an easier way to help compare the cost of healthcare thru ACA vs. Medicare or company plans. And wish the politicians could come together to look at subsidies for 2026 and beyond – original subsidies made sense, enhanced subsidies need a fresh look given we’re no longer dealing with Covid.
I agree with everything you say.
Keep in mind, the subsidies were not just used by early retirees and those with ample $$, but by millions of people who could not otherwise afford health insurance. That’s what we’re talking about here. If millions of people cannot afford health insurance, that will bring EVERYONE’s insurance costs up. People will be less likely to go to checkups, they will report to the ER for everything instead, they will not be able to pay, insurance rates go up. There is no excuse for this country to NOT subsidize health care insurance for its citizens.
I have no problem with any of that; in fact, I support it. But for those making the lifestyle choice to retire early— not so sure. I’ve done taxes for clients through Goidwill for several years. I’ve done the necessary filings for those using the ACA marketplace. All of those folks were employed.
I am an early retiree and I do understand your point, but I must say it has been hard to plan and budget without a clear healthcare strategy in this country and one that is constantly changing. Also, insurance companies who constantly raise rates well above the rate of inflation. When we made the decision to retire early it was based on the exiting healthcare strategy. We saved to retire early and this all just feels like a bait and switch to me. People retire early for different reasons.I think we need to get beyond this thinking about healthcare this way. Healthcare should be put in place so that we as a collective are taken care of.
I have no problem if someone decides to retire early. But if that person wants my tax dollars to subsidize their health care costs while they’re living their best life, that’s another issue.
There are many subsidies using my tax dollars I disagree with but I think the majority of ACA subsidies are going to people that are not living their best life.
That’s undoubtedly true— but I believe the purpose of the subsidies (helping people who otherwise couldn’t afford health care) would be better served if there were better eligibility requirements. Such guidelines might also benefit those considering early retirement, since they’d have a better understanding of likely out of pocket costs before they pull the plug on their jobs.
The article Katherine cited singled out a couple with chronic health issues who spent more that $20,000 on health care expenses in both 2023 and 2024. The article noted that if their health care costs remain the same next year, the increase in the cost of insurance will mean that their health care costs will comprise more than 25% of their income. The husband has had 10 eye surgeries in the past 10 years and is blind in one eye, and the wife has had two spinal fusions. They took early retirement because of their health issues.
We all know that the abuse of gov’t programs is a large scale ongoing program. This is likely to especially be true of new programs where policy makers haven’t become aware of all of the loopholes. Rather than using examples of abuse to justify eliminating programs, I would prefer to see them adjusted to be more in line with their original intent.
I was an early retiree late 50s that used ACA plans to retire earlier than planned. I didn’t do so to live a luxury retirement lifestyle, but to better focus on my health and eliminate the stress in my life that I felt could shorten my life. I paid full cost for my health insurance for several years, but did receive credits for a few years before Medicare kicked in. I believe Jonathan would not want this discussion devolving into politics- all I will say is the ACA plans have been in place for several years now, and are being used by more and more folks in the mainstream. I believe the use of an income based credit system is the right approach to maintaining these plans.
A side benefit of folks retiring early is that positions they hold in the marketplace can be filled by younger more energetic workers that might not otherwise have the opportunity to advance. Just my $.02.
“but to better focus on my health and eliminate the stress in my life that I felt could shorten my life.” Wouldn’t that apply to anyone who works? Maybe no one should work? Who would pay taxes to fund your early retirement?
And nobody ever subsidized yours, like Medicare or maybe an employer.? You do know retirees only pay 25% of the cost of Part B, the rest from general tax dollars.
Certainly health care is a major employee benefit— emphasis on employee. But I see no reason that taxpayers, many of whom are working, should be subsidizing the lifestyle choices of early retirees. I believe the reason health care in this country became so attached to employment is because back when labor unions traded off wage increases for health benefits.
As a person deeply in IRMAA hell, I’m paying more than 25% of my Medicare benefit. That’s ok with me— I’m perfectly willing to help subsidize other older people who haven’t been as financially fortunate.
The basic premium for Part B is 25% of the actual cost so even if you were paying 100% of that premium, you and I are still being subsidized by all taxpayers.
I too am deep into IRMAA and income wise lucky to be so and in addition, I hope I don’t collect another penny in Medicare benefits, but recent events show that isn’t going to happen.
You may want to read an article from KFF on the history of employer sponsored insurance(ESI) which includes the following –
The exclusion of ESI from federal income taxes (also FICA taxes and state income taxes) is a long-standing and somewhat controversial part of federal tax policy, first appearing due to a decision by the War Labor Board in 1942, which in turn allowed employers to use fringe benefits to attract workers during the war.
So it was a 1942 government policy that started the mess that we currently have for health insurance.
I am not now nor have I ever been a member of a union.
I am not and never have been a union member. But I believe that is totally irrelevant here. I mentioned unions because they are often times the major negotiators for wages and benefits. Doing that was sloppy!
For many reasons, employers have chosen to substitute better benefits for wage increases. For example, my husband and I don’t pay our gap coverage. That’s because years ago, WI negotiated a deal whereby retiree accumulated unused sick time would be converted to money that could be used to pay for gap coverage in lieu of a wage increase. Was that a good deal for most retirees? I don’t know.
If I read it correctly, the artcle from KKF indicates that the fed govt has an annual tax loss of about $900 per employee with employer health insurance. That could be considered a subsidy, but that’s nowhere close to the amounts mentioned in Kristine’s post for the early retirees using the ACA marketplace.
I disagree that this topic is too political for HD. Health care spending is high and continues to grow— I don’t see an end in sight. At the same time, increasing number of employees are embracing the idea of work-life balance which includes retirement in the 50s or even sooner. The intersection of these circumstances certainly has important ramifications for personal finance as well as for societal well being. We all need to get up to speed on these issues.
Only governments can afford to be that generous with benefits and taxpayer money. I sat on three governors task forces to evaluate public employee benefits. Compared with private sector they are very generous. Nearly 90% of public employees still have DB pensions.
Getting to use sick days for anything other than sick days off is a good example.
This was the state’s idea so the employees wouldn’t get a raise. My husband worked for the university for 44 years and the only time he took off was when our parents died. Last count, he has enough benefits to last until he’s 123!! But I also accrued a huge number of sick days. All of mY benefit will revert to the state when we both die.
True— we do have very good pensions— but they are fully funded. The states you looked at may have been willing to cater to special interest groups. Not here— the state has been pretty stingy and university salaries here have long tended to fall below those of our peers.
There were wage and price controls and fringe benefits were the alternative negotiated compensation. I have records from my old employer back then and full hospital and medical coverage was $42 a month for a family but did not include Rx coverage or physician services outside the hospital. Even when I started with the company in 1961 that coverage was the same. The next year we added major medical for outpatient services and Rx all subject to a $100 deductible and 20% coinsurance. On the other hand an office visit was $5.00. Employees didn’t have to contribute to the cost.
Thanks Richard. I was hoping you would share your relevant knowledge on this topic.
That was my thinking as well.