Medical Insurance in Passive Income

[Grace Donahue]

Hi guys,

I'm just wondering how one would go about with medical insurance, if you have quit your job to go into '"passive income" jobs full time?

Would you have to get new insurance? To rephrase, if you've left your 9-5 job, how would you deal with medical insurance via "passive income." Thanks for the replies.

Grace Donahue

[Michael Plaks]

@Grace Donahue

You're in for an unpleasant surprise. After quitting your job, you might have a COBRA option mentioned by @Kevin Gray: it allows you to temporarily stay on your previous employer's insurance, but you pay the full cost out of your pocket. And that cost is most likely very high.

Outside of COBRA, you have to shop for your own individual insurance policy. These days, it probably means Obamacare. Thru your state Obamacare Marketplace, you will have a choice of HMO policies that are not cheap at all. HMO means that you're limited to doctors and hospitals from a specific network; you must have a primary doctor, and you need her referrals to see any specialists. The best hospitals and doctors are rarely part of these HMO networks. A lot of various limitations are imposed. 

If you're used to a good insurance thru your large employer - individual Obamacare policies would probably shock you, as far as their limited benefits and choices.

If your income ends up being real low, you may qualify for Obamacare subsidies which can make this insurance really affordable. But be careful here: your actual income can easily be much higher than you think, especially if you sell some properties or pull out some retirement savings. A lot of my clients applied for and received Obamacare subsidies, only to learn at tax time that they did not qualify and now have to repay thousands of dollars for what they thought was a cheap government insurance.

A popular alternative to traditional health insurance is a ministry-sponsored health-cost sharing plans. You may look into them. They work differently from real insurance, but they do provide an alternative way to cover medical costs.

Finally: watch for pushy self-employed agents selling pretend insurance - like US Advisors. This is not a health insurance at all: they only cover conditions specifically listed on their policies, and only until you reach preset maximum. If you happen to have an illness that is not listed - you're out of luck. Ditto if it's a chronic condition with continuous treatment that exceeds their limits. These agents are specifically trained to sell this garbage as "cheap health insurance where you can chose any doctor and with no deductible!" - but they never disclose the truth. They even deny it when specifically confronted with the stipulations from their policies. Stay away!