Global Health Insurance
Mention health insurance to anyone in the US and eyes glaze over and fire shoots from their nostrils. Research consistently shows that healthcare and its evil twin, health insurance, is one of the top concerns for US citizens. It’s also one of the largest expenses in a typical person’s budget. A sabbatical can bring those worries to the surface, as employer provided health insurance may no longer be an option and sticker shock sets in.
Unless you’re comfortable with unpredictable and unlimited financial risk (you shouldn’t be), health insurance is a mandatory part of life. There are hundreds of plan options available that are a real pain to weed through. But, here are the main health insurance types to consider as part of your sabbatical planning:
COBRA- a federal law requiring employers to make the same group health insurance policy available to past employees for 18 months after an employee leaves a company. If you have good coverage and want to keep it, this is an option to do so. But, it’s worthwhile to check on pricing early because you’ll likely be surprised by how much it will cost you without an employer subsidy.
Affordable Care Act- domestic marketplace for health insurance that is either offered by State or Federal government through an exchange. Normally, you can only sign-up for ACA plans at certain times of the year, but leaving your job (and your employer provided health insurance coverage) counts as a “qualifying event” so you can enroll at that time regardless of when it is during the year. ACA insurance premiums are based on family size and income (keep in mind that W-2, 1099, stock sale gains, and dividends are all counted as income).
If you are going to be within the US during your sabbatical, your low income for the year may make ACA a great option. There are a number of resources available to help sort through the different plans. One additional note is that there are very few nationwide coverage plans left on the exchanges. So, if you plan to be moving around the US a lot, it may be worth looking at alternative options.
Travel Medical Insurance- typically provides limited coverage only while outside of the US. This option is viewed by most US travelers as supplemental insurance since it usually does not cover pre-existing conditions, ongoing expenses within the US, and a host of other items. Most conclude that a travel health insurance policy does not offer the necessary protection from financial risk to be your only policy. You could layer a travel medical insurance plan on top of a domestic policy to provide necessary short-term coverage .
International + Domestic Insurance- bundled US and international health insurance plan. If you’re like a lot of people taking time off work for a sabbatical, a mix of time in the US and international travel may be on your agenda. There are a handful of domestic insurers and brokers that provide combined domestic and international insurance options. The benefit is that you receive comprehensive coverage and can clearly assess potential financial liability and care coverage in a single package. You also only have to work with a single agency for benefit questions and claims.
Reviewing health insurance contract plan options requires some real fortitude. Boiling it down to the most important elements, these are the coverage technicalities to take into consideration:
Plan type- choosing a PPO, HMO, international, or other type of plan determines the extent of coverage you get within a network of designated providers. Note that coverage networks are getting smaller, but all plans under the ACA must cover emergency care even if out of state and/or out of network (though this does not apply to international coverage).
Premium- amount paid (on a monthly or annual basis) to buy access to the coverage plan. This is the minimum amount you will pay for coverage.
Deductible- how much you have to pay before the health insurance starts covering costs. If you choose a qualified, high deductible health plan, you are eligible to contribute to a health savings account, which can be a great option for turbocharging tax-free retirement savings
Co-Insurance- how much (usually shown as a percentage) you have to pay once your deductible is paid. This is one of the key ways insurance providers split the cost of paying for services with consumers.
Co-Pay- how much you have to pay out of pocket for an office visit, test, or prescription
Out of pocket maximum- the most you would be on the hook to pay in any given plan year. This is the most important number to consider. Healthcare expenses are the number one reason for individuals filing for bankruptcy, likely because people lack an understanding (or fail to fully consider) the worst case scenario.
Lifetime maximum- how much in total the insurance will pay over the lifetime of the policy. Also important for worst case scenario considerations.
Case Study: Global Insurance For Global Citizens
By 2017, I had sufficiently organized my finances, transitioned my work and downsized my material possessions. At that point, the freedom to relocate made many of the places I had been thinking about going while on sabbatical become real possibilities.
Setting up shop in a low cost of living area where I could enjoy a higher quality of life had already been on my mind. And the culture, cuisine and climate of Mexico was calling my name. First though, I needed to make sure I had adequate health insurance coverage.
At the time I was preparing to head South of the Border, my healthcare costs were covered by the employer provided policy through my wife’s full-time job. When she left her job, we both transitioned to COBRA (luckily partially subsidized for 6-months by her employer as part her exit package negotiations), and added an affordable supplemental travel insurance on top of it.
But, as the half-year mark approached, I knew we had to re-open the can of worms that is global insurance shopping. The matter was further complicated by the fact that I had some personal commitments that would require me to be back on American soil for a few months, mid sabbatical. A brief but dizzying search of options proved it was practical to pay out of pocket to extend COBRA until we’d be expatriating again. It was a hefty fee, but it was more comprehensive than we’d get for the same price on the open ACA exchange. And we both strategically used that time to do complete rounds of doctor visits and dental check-ups.
Global Health Insurance
Since my intention was to be out of the US for most of my sabbatical, international coverage was weighted more heavily in my decision. At the same time, I wasn’t comfortable going with zero domestic coverage.
Naturally, like any personal finance geek would do, I created a spreadsheet to compare my options. Again, since I wanted to be covered within the US and abroad, I looked at two main categories:
Two other factors that I ruled out and added in:
Coinsurance - Since knew I’d be looking at high deductible plans, I decided early on that coinsurance didn’t make sense , so I only looked at policies with 0% coinsurance.
Maternity coverage - was also a factor for since we were considering having children. But, we weren’t far enough along in our family planning to know where or when it would happen. I did some research on what it would cost to pay out-of-pocket to give birth abroad, and took that into consideration.
My final analysis tallied the monthly premium, deductible, copay and forecasted out-of-pocket expenses to calculate an estimated 6-month cost that helped standardize an otherwise jumbled comparison. Shopping for global insurance is one of those experiences that has a way of always leaving us feeling unsatisfied. The insurance business is based on risk aversion after all. But, ultimately, I was happy with what I got.
IMGlobal was the best health insurance choice for 3 main reasons:
US coverage is available for 6 months and contracts with the UnitedHealthcare PPO network (which I had previously and was happy with)
Maternity is covered after 10 months of continuous coverage and the deductible is subsidized for care provided outside the US
High deductible options offered a good value for “catastrophic coverage” and a decent suite of services
In total, I paid $5,300 for both me and my wife for the year - not cheap! But it gives both of us the comfort to pursue worldwide travel and access care in any state in the US. If the maternity coverage was forgone, the cost would have been $1,000 total. Adding it all up, we got comprehensive global insurance coverage that is a better value than what we get in the US alone—that’s more flexibility and more peace of mind at a more reasonable cost.
Engineering your layoff
Unless you’re one of the lucky few whose employer has a sabbatical program, a planned extended time away from work will likely require parting ways with your employer. But, before you just quit, and end up with nothing more than a going away party, consider negotiating your layoff.
The reality is, nobody likes seeing good employees go – not HR, not managers or company owners. The cost alone to replace an employee can be tens of thousand of dollars (plus intangibles), and the situation is made that much more difficult if a company can’t count on departing employees to help with the transition.
Keep in mind that employers are not obligated to offer anything, and to the State, quitting your job means that you didn’t need the money, so receiving unemployment benefits are off the table too. But with a little forward thinking, you could receive severance of cash, health insurance, unemployment compensation, and more to smooth your pathway to a rejuvenating sabbatical. For a valued mid-level employee, severance can easily amount to $50k or more.
In order to successfully negotiate a layoff, it’s important to understand what’s at stake for the company. And, by knowing what you want before leaving the job to take a sabbatical, you’ll give yourself the upper hand in negotiating the appropriate severance with management. Learn the ins and outs of engineering your layoff to profitably quit your job, and create a financial freedom tailwind as you transition to pursuing your sabbatical dreams.
If you plan to travel during your sabbatical and aren’t travel hacking, then you’re missing out on free money. Taking advantage of credit card travel hacking can help to save thousands of dollars on flights, hotels, car rentals and more.
There’s one caveat -- travel hacking is only worthwhile if you don’t have challenges with debt and can pay off your credit cards in full every month. Carrying a balance on credit cards just to receive bonus rewards is a losing proposition.
Credit card bonuses range from cash back, to airline frequent flier miles, to points that can be applied to various travel-related and other categories of purchases. If you sign-up for the right card, or groups of cards, you can easily build enough rewards to take your family on trips to almost anywhere in the world. Even better is if you currently travel for work and have an opportunity to collect miles, then you’re essentially earning rewards for free from employer-paid travel expenses.
Chase Sapphire cards have offered some of the best rewards programs over the past few years. Offers are constantly changing, and you’ll have to spend a little effort analyzing the details about the requirements to receive the rewards in order to make sure it matches up with your spending and lifestyle. There are some great services that sort through all of the fine print for you and can help to expedite your rewards accumulation in time for your sabbatical.