{"id":329347,"date":"2025-10-24T14:38:17","date_gmt":"2025-10-24T14:38:17","guid":{"rendered":"https:\/\/www.europesays.com\/us\/329347\/"},"modified":"2025-10-24T14:38:17","modified_gmt":"2025-10-24T14:38:17","slug":"millionaire-early-retirees-shouldnt-get-healthcare-subsidies","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/329347\/","title":{"rendered":"Millionaire Early Retirees Shouldn’t Get Healthcare Subsidies"},"content":{"rendered":"

If healthcare in America weren\u2019t so egregiously expensive, more people would retire earlier and live better, happier lives. We\u2019re one of the few countries in the world where affordable healthcare is tied to employment, making financial independence that much harder to achieve.<\/p>\n

Given the high cost of coverage, before you decide to retire early by choice, try to negotiate a severance package<\/a> and use your final year of work to get in the best shape of your life. Think of it as investing in your future health dividends. The stronger and healthier you are, the less likely you\u2019ll need to rely on costly medical care. In addition, the longer you can stretch your freedom dollars.<\/p>\n

\"AverageThe average cost of a family health insurance plan is now ~$27,000. Source: The WSJ<\/p>\n

My Decision To Voluntarily Retire Early While Considering Healthcare Costs<\/p>\n

When I voluntarily retired in 2012, one of my biggest concerns was figuring out how to pay for healthcare. For 13 years, my employers had subsidized a portion of my premiums through a group plan. Instead of paying $850 a month for coverage, I was only paying around $375 toward the end.<\/p>\n

So when I left work, after my 6 months of 100% subsidies healthcare ran out as part of my severance package, I faced an $850 monthly bill as a healthy 34-year-old who barely used the system. It felt excessive and I needed a plan.<\/p>\n

At the time, I asked my 31-year-old wife not to YOLO her career away with me. Instead, I encouraged her to embrace equality and keep working another three years to ensure my risky move wouldn\u2019t put our household in financial jeopardy. Thankfully, she agreed.<\/p>\n

During that time, she maintained her employer-sponsored healthcare plan, which also covered me. Many of her colleagues had family coverage anyway, so joining her plan was perfectly normal.<\/p>\n

Our Cost For Healthcare Is Expensive<\/p>\n

In 2015, at age 34, we finally initiated the process of engineering her own layoff as a high-performer<\/a> to receive a severance package. We knew we\u2019d lose our healthcare subsidy and have to pay about $1,680 a month<\/strong>, but this was a conscious choice we made in exchange for freedom. It felt wrong to manipulate our income just to qualify for government healthcare subsidies when we could afford to pay full price.<\/p>\n

Today, for our household of four, we pay $2,633.59 a month<\/strong> in\u00a0unsubsidized premiums\u00a0for a Silver plan, not even a Gold or Platinum plan. $2,633.59 doesn’t sound affordable to me, despite the government calling it the \u201cAffordable Care Act.\u201d Next year, our monthly premium is expected to jump to $3,000<\/strong>. But the way the system works is that those who make more than 400% of the Federal Poverty Limit subsidize those who do not.<\/p>\n

In essence, we have a high deductible health insurance plan. I’m hoping my new investment in value stock<\/a> UnitedHealthcare will help us pay for our premiums in the future. UNH certainly makes a fortune from us.<\/p>\n

\"VoluntaryOur monthly unsubsidized healthcare premium <\/p>\n

Plenty of Millionaire Early Retirees Get Subsidies<\/p>\n

The reality is, plenty of early retirees take advantage of healthcare subsidies\u2014even if they\u2019re millionaires or multi-millionaires<\/a>. Some even brag about it online. That\u2019s always rubbed me the wrong way, because I doubt the government\u2019s intent was to subsidize the top 6% of wealth holders. Or maybe it was so our politicians are mostly millionaires.<\/p>\n

For example, let\u2019s say you have a $2 million portfolio generating $80,000 a year in income. As dual unemployed parents (DUPs<\/a>) with two children, your household income is around 250% of the Federal Poverty Level (FPL), which qualifies you for heavy healthcare subsidies. Remember, subsidies extend all the way up to 400% of the FPL.<\/p>\n

That means a household with a $5 million growth-stock-heavy portfolio<\/a> earning only a 1.3% dividend yield\u2014roughly $65,000 a year\u2014would sit around 210% of the FPL and qualify for a\u00a090%+ discount<\/strong>\u00a0on healthcare premiums. Instead of a family of 4 paying $3,000 a month, they\u2019d pay just $300 a month or less. Pretty incredible!<\/p>\n

\"Federal<\/p>\n

The Debate in Congress Over Extending Healthcare Subsidies<\/p>\n

Congress is currently debating whether to\u00a0extend the enhanced healthcare subsidies\u00a0<\/strong>for households earning above 400% of the Federal Poverty Level. Democrats want to make the temporary expansion permanent, while Republicans prefer reverting to the original rules.<\/p>\n

The American Rescue Plan Act of 2021, under the Democrats, temporarily raised the value of the premium tax credits and expanded eligibility beyond 400% of FPL. These \u201cenhanced\u201d subsidies capped a household\u2019s premium costs at 8.5% of income.<\/p>\n

Then, in 2022, the Inflation Reduction Act, under the Democrats, extended those enhanced subsidies through 2025. Now they\u2019re set to expire at the end of 2025 under the Trump administration.<\/p>\n

According to the\u00a0Congressional Budget Office<\/a>, extending these enhanced subsidies would cost about\u00a0$350 billion over 10 years, or $35 billion a year. Not great given the size of the existing budget deficit.<\/p>\n

Costs Reverting Back To The Old Trajectory<\/p>\n

Without the extension, the\u00a0average 60-year-old couple\u00a0making $85,000 a year (just over 400% of FPL) would see premiums jump by\u00a0$1,900 a month, or nearly\u00a0$23,000 a year\u00a0in 2026, according to KFF<\/a>. If true, that is an egregious amount to pay under the \u201cAffordable Care Act.\u201d However, that also means the 60-year-old couple has had at least $91,200 in healthcare subsidies since the American Rescue Plan Act of 2021 passed. <\/p>\n

If that $91,200 in healthcare subsidies was saved or invested since 2021, as all renters say they do to justify not buying a primary residence<\/a>, they have enough to pay for the next four years of higher healthcare premiums. At least, that’s how personal finance enthusiasts think.<\/p>\n

Fighting to Keep Subsidies for Early Retiree Millionaires Feels Off<\/p>\n

But doesn’t arguing for more healthcare subsidies for millionaires feel a little off to you? If you make $85,000 a year as a retired couple, that means your pension<\/a> or investments are worth $2,125,000<\/strong> at a 4% safe withdrawal rate! Most people would argue you’ll be alright, especially if you have no debt. And if you’re an early retiree with that type of net worth, then receiving subsidies seems completely strange. <\/p>\n

CNBC<\/a> recently profiled a \u201cearly retiree\u201d couple, Bill (61) and Shelly (59), who will earn $127,000 a year in pension income in 2026\u2014above the 400% FPL threshold. Their premiums would rise from $442 a month to $1,700, which sounds more realistic than KFF’s above estimate. That\u2019s painful, but they\u2019ve also enjoyed roughly\u00a0$70,000 in enhanced premium tax credits<\/strong>\u00a0since 2021.<\/p>\n

Still, a $127,000 pension is worth roughly\u00a0$3.2 million<\/strong>\u00a0in annuity value at a 4% rate of return. Should the ACA really be subsidizing retirees with multimillion-dollar pensions and portfolios? Resources should focus on those without six-figure pensions or significant savings<\/a>. You know, the ~85% of Americans who don’t have lifetime pensions.<\/p>\n

No one in America should have to suffer through a health crisis simply because they can\u2019t afford care. Healthcare is a basic right, not a privilege. Therefore, redirecting healthcare subsidies toward the lower middle class and poor makes far more logical sense.<\/p>\n

\"HealthcareSenator Klobuchar fighting for early retirees with $127,000 lifetime pensions <\/p>\n

Capitalize The Value Of Your Pension And Investment Income<\/p>\n

Now I\u2019m starting to wonder \u2014 do the average American, financial reporter, or politician\u00a0not know how to capitalize the value of an income stream<\/strong>\u00a0to determine its true worth? We do this all the time in finance, and on Financial Samurai. Simply take a reasonable rate of return or withdrawal rate\u2014say 4% or 5%\u2014and divide your pension or investment income by that number.<\/p>\n

Let\u2019s find out the\u00a0capitalized value\u00a0of a pension<\/a> based on various Federal Poverty Level (FPL) income limits for a family of four:<\/p>\n