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I have PRHSX at 9.8% of portfolio, while healthcare total is 26% per morningstar xray. Planning to reduce PRHSX by a fifth to 8% and move to vtsax. HC is getting a severe shaving+ amazon effect in last 2 days. Would like your take, pl. Retiring next month at FRA.
---Any of these transactions in taxable accounts? ---The transfer you noted to VTSAX has about 14% of its holdings in healthcare. ---The Amazon, JP Morgan, Buffet statement about building a viable self insured healthcare plan may have legs at some point in the future; as well as a Trump statement yesterday about he, too; will be going after the pharma market to reduce the costs. Ascension Health and 2 other large hospital groups announced two weeks ago that they plan to form their own "company" to product generic drugs. If these announcements cause concern for your current holdings and you expect ongoing negative impact into healthcare, you may be best to sell all of PRHSX and move the money to VTSAX. Perhaps a most critical question, too; is how long have you held PRHSX to help measure your satisfaction with this fund to this point. A 4% shave in 2 days is not kind, without a doubt; but much of this sector was up almost 11% YTD.
We maintain about 35% of our equity in healthcare, and will remain for now.
Your retiring statement.......are you moving to France? I found 256 acronyms for "FRA".
The health care sector has to change, or does it. I don't think the collaboration between Amazon. JPM and BRK is going to amount to much. It's been tried before unsuccessfully, but it makes a good statement. What it may do is push government to make some decisions. In any case the movement you are talking about makes absolutely little to no impact on you total portfolio return, so if you sleep easier doing it, go for it. IMHO
Just a guess, but in the context of retirement, FRA could easily stand for Full Retirement Age (currently 66 - see SSA).
Trump just appointed Alex Azar, former head of Eli Lilly's US division as HHS Secretary. One of his first tasks was to accept the resignation of CDC Director Brenda Fitzgerald due to investment conflicts of interest, who was appointed by former HHS Secretary Tom Price, who resigned after spending over $1/2 M on private charter flights (or was it his investments in health care companies).
Trump seems too busy repopulating the swamp to do anything about drug prices. The stock market seems to agree:
When then-President-elect Donald Trump said pharma was "getting away with murder" one year ago and pledged to lower prices, share prices quickly plummeted. ... But this time, despite the familiar words, the president's comments didn't touch off nearly the same reaction on Wall Street, signaling that industry and investors may be more skeptical about the threat of pricing reform.
FRA= full retirement age. Eagerly waiting. Could have done at 62, but did not want to get into ACA. No way I am going to France. Not even getting out of Chicago...like it. PRHSX 9.8% is in taxable (direct at TRP=7.7% since 2010 or so) and traditional IRA( 2.1% at vanguard since 3 years just before closing of fund). Actually instead of getting dividend, and paying regular tax, planning to use long term cap gains++soc security for the monthly expenses.
I love the stock market. It's the only market I know of where when something goes on sale people run in the opposite direction and/or toss away what they already have of it at lower and lower prices. Good plan.
FRA= full retirement age. Eagerly waiting. Could have done at 62, but did not want to get into ACA.
Medicare is available at age 65. No need to wait for FRA to avoid individual health insurance. COBRA would let you back up to 63.5, and some states (e.g. Cal-COBRA) provide COBRA-type coverage for three years. That could back you up all the way to 62.
In 2003 when I was out of job for 6 months+ and no savings, the cobra for me and my wife was $800 pm or more at united healthcare, I do not remember correctly. The amount is as poisonous as the plan name.
Agree with dickson on Cobra. I was in-between jobs at the start of 2014 and had to use it. The loop hole on Cobra is you don't have to pay until the 4th month starts. Go 3 months or less and it's basically free. Start that 4th month and you have to back pay those 3 months. So, it's a stop gap to give you time to get insurance, not a good policy to hold for too long (at least that was the case in NY state. Don't know if there is different rules elsewhere).
ISTM that people are complaining about the high cost of medical coverage (as reflected in insurance costs). Whether group coverage (COBRA) or individual coverage (exchange), they'd rather have someone else pay for it.
COBRA charges virtually the same as what your employer is paying for the insurance (only a 2% surcharge is allowed for the first 18 months; states do vary by what they allow in the second 18 months). This is not gouging - you're paying the real cost.
Even when your employer pays for it, you're still paying indirectly. When companies hire someone, they budget loaded (all in) costs, including pay, 401k match, health insurance, desk space, etc. They don't care how that's split. More for insurance, less for pay.
COBRA just gives you a window into what your insurance is costing you.
The loop hole on Cobra is you don't have to pay until the 4th month starts. Go 3 months or less and it's basically free.
" 60 days after the later of (1) the date that the qualified beneficiary would lose coverage due to the qualifying event, or (2) the date that the qualified beneficiary is sent notice of his or her right to elect COBRA continuation coverage." http://www.dfs.ny.gov/consumer/faqs/faqs_cobra.htm
You may be confusing this with the three month nonpayment period that ACA allows if you are getting advance premium tax credits (i.e. you have pre-qualified for subsidized premiums). But that only kicks in if you've already made at least one premium payment. https://www.healthcare.gov/apply-and-enroll/health-insurance-grace-period/
My error on the Cobra deadlines/forfeitures. I'd quoted the time period to sign up, not the grace period for nonpayment. The whole thing is a bit more complicated.
Here are the DOL FAQ and the Centers for Medicare and Medicaid (CMS) Q&A on COBRA.
Basically, you have 60 days to decide to sign up. That's DOL's Q8 that I quoted above. CMS's Q14 says that coverage is retroactive if you elect to sign up within this 60 day period.
Once you sign up, you have 45 days to make the first payment (DOL Q15 and CMS Q45). That's 105 days, or 3.5 months. (It could be longer, these are min. requirements.)
Once you make your first payment, each successive bill has a 30 day grace period. Technically you may not be covered if you don't make payment when it is due, but if you make the payment within the grace period, you'll have coverage restored retroactively. (DOL Q15).
If you miss paying within the 30 day grace period, the insurance company may be nice and allow you to reinstate coverage, but it doesn't have to (DOL Q17).
I know someone who missed a payment in 2017, but the insurance company was nice. It said that it would accept the late payment this time, but if a payment were ever missed again, coverage would be terminated. Sometimes you get lucky.
Comments
Regards,
Ted
---The transfer you noted to VTSAX has about 14% of its holdings in healthcare.
---The Amazon, JP Morgan, Buffet statement about building a viable self insured healthcare plan may have legs at some point in the future; as well as a Trump statement yesterday about he, too; will be going after the pharma market to reduce the costs. Ascension Health and 2 other large hospital groups announced two weeks ago that they plan to form their own "company" to product generic drugs.
If these announcements cause concern for your current holdings and you expect ongoing negative impact into healthcare, you may be best to sell all of PRHSX and move the money to VTSAX. Perhaps a most critical question, too; is how long have you held PRHSX to help measure your satisfaction with this fund to this point. A 4% shave in 2 days is not kind, without a doubt; but much of this sector was up almost 11% YTD.
We maintain about 35% of our equity in healthcare, and will remain for now.
Your retiring statement.......are you moving to France? I found 256 acronyms for "FRA".
My non-credentialed 2 cents worth.
Catch
Trump just appointed Alex Azar, former head of Eli Lilly's US division as HHS Secretary. One of his first tasks was to accept the resignation of CDC Director Brenda Fitzgerald due to investment conflicts of interest, who was appointed by former HHS Secretary Tom Price, who resigned after spending over $1/2 M on private charter flights (or was it his investments in health care companies).
Trump seems too busy repopulating the swamp to do anything about drug prices. The stock market seems to agree: https://www.fiercepharma.com/pharma/as-azar-sworn-trump-pledges-hhs-secretary-will-get-prices-way-down
PRHSX 9.8% is in taxable (direct at TRP=7.7% since 2010 or so) and traditional IRA( 2.1% at vanguard since 3 years just before closing of fund). Actually instead of getting dividend, and paying regular tax, planning to use long term cap gains++soc security for the monthly expenses.
ISTM that people are complaining about the high cost of medical coverage (as reflected in insurance costs). Whether group coverage (COBRA) or individual coverage (exchange), they'd rather have someone else pay for it.
COBRA charges virtually the same as what your employer is paying for the insurance (only a 2% surcharge is allowed for the first 18 months; states do vary by what they allow in the second 18 months). This is not gouging - you're paying the real cost.
Even when your employer pays for it, you're still paying indirectly. When companies hire someone, they budget loaded (all in) costs, including pay, 401k match, health insurance, desk space, etc. They don't care how that's split. More for insurance, less for pay.
COBRA just gives you a window into what your insurance is costing you.
http://www.dfs.ny.gov/consumer/faqs/faqs_cobra.htm
You may be confusing this with the three month nonpayment period that ACA allows if you are getting advance premium tax credits (i.e. you have pre-qualified for subsidized premiums). But that only kicks in if you've already made at least one premium payment.
https://www.healthcare.gov/apply-and-enroll/health-insurance-grace-period/
This insurance (whatever the grace period) is "free" only if you don't use it. If you use it and fail to pay, I believe that COBRA will claw it back. ACA on the other hand does give you one month totally free without clawback.
https://www.healthinsurance.org/faqs/what-happens-if-i-dont-make-my-premium-payment-by-the-end-of-the-grace-period/
Here are the DOL FAQ and the Centers for Medicare and Medicaid (CMS) Q&A on COBRA.
Basically, you have 60 days to decide to sign up. That's DOL's Q8 that I quoted above. CMS's Q14 says that coverage is retroactive if you elect to sign up within this 60 day period.
Once you sign up, you have 45 days to make the first payment (DOL Q15 and CMS Q45). That's 105 days, or 3.5 months. (It could be longer, these are min. requirements.)
Once you make your first payment, each successive bill has a 30 day grace period. Technically you may not be covered if you don't make payment when it is due, but if you make the payment within the grace period, you'll have coverage restored retroactively. (DOL Q15).
If you miss paying within the 30 day grace period, the insurance company may be nice and allow you to reinstate coverage, but it doesn't have to (DOL Q17).
I know someone who missed a payment in 2017, but the insurance company was nice. It said that it would accept the late payment this time, but if a payment were ever missed again, coverage would be terminated. Sometimes you get lucky.