Why this retiree said no to buying health insurance
I was wide open to it, but the costs and benefits didn't add up
My entire full-time work life was spent at employers who had benefits plans and I was wide open to buying similar coverage when I retired.
After careful consideration of policies from five or so providers, I made a choice. Self-insurance rather than buying coverage from an insurance company for prescriptions, dental and professional services like massage, chiropractor and physiotherapy.
Self-insurance means setting up a fund to cover health-related costs. For my wife and I, a block of money goes into our health spending account once per month. This money is available to pay for dental bills, prescriptions and other costs. If it’s not enough, we have additional emergency savings to use. For worst-case situations, we’d tap into a travel fund that would obviously go unused if one of us was seriously ill.
Part of my motivation for looking at health care insurance was that my workplace coverage stopped when I retired from full-time work. Benefits do continue for some people in retirement, but it’s not the norm. I also had budgeting concerns with respect to medical and dental costs.
As a worker with an employee benefit plan, I was used to paying premiums for coverage that were deducted from my paycheque plus small deductibles for things like dental work and prescriptions. My concern as a retiree was how to cover unexpected costs like major dental work, pricey prescriptions or a sequence of visits for paramedical services like physio.
In theory, the appeal of insurance is that you lock in your health-related costs through your monthly premiums. In practice, those premiums don’t come close to covering everything unless you buy an expensive premium policy. Even those have gaps. Here’s an example of what I’m talking about:
