RV Depreciation

As usual, this blog post turns out to be a long one. If you’re just interested in quick RV depreciation opinions then scroll down to the text in red.

Karen and I decided to make a run to Grain Valley Missouri which for us is only a 45-minute drive. The town is home to three RV dealerships.  It was also the first time in a week Karen could get out of the house for an extended time. She had cataract surgery and received a new lens. She has had very bad eyesight her entire life. Those days are over. It was wonderful watching her excitement as we drove through the rolling hills which are in full bloom with green trees she can see at a distance.  Karen took a book to read for the drive as she normally does. She never opened it. The best part of the trip for me, now that I think about it, was watching Karen’s excitement. She gets the next eye fixed in a week.  Glad we have the time and money before taking off in 2019 to see the rest of the country together. Money well spent!

Speaking of money well spent what about depreciation on an RV purchase? I recall a conversation I had with a person when I was 18 years old regarding the need to purchasing a new television. Back then the selection of televisions was not as complicated compared to today’s models in varying sizes, resolutions and technical capabilities. Although I still don’t know what they mean by a “smart TV” because the darn things still require someone smarter than me to figure out how to set them up and use them. When I was 18 I hated spending money on something that might have to be replaced and still do. Because spending it reduces your net worth, a concept I had way back then. Perhaps the attitude came from learning the value of a dollar as a child, especially when you don’t have a lot of those dollars. The value of a dollar was further ingrained in my personality perhaps because I was a business major in college.  I spent some time in the corporate world, earning an income above our monthly needs. I kept the attitude to live below my means. I moved into public service as a law enforcement officer and the hourly pay became once again barely enough to save for a future. So, I found myself once again comparing expenditures as reducing my net worth, like I was 18 again. I compare the costs of large purchases against the hard-earned hourly rate for my time at work.

I’m sure these attitudes about the costs of things are shared with each one of you, regardless of income or life experiences. There is much evidence of this. The cost of living full time in an RV is front and center in much of what I read in your blogs, forums and articles.  It’s evident the ability to finance a retirement through savings and pensions may well be among reasons most of us do not retire a lot earlier. Especially for those of us who are in a hurry to move on to retirement, having already lived two thirds of our life expectancy.

I’ve not found the depreciation costs of an RV listed in other’s posted budgets.  It’s not in my estimated monthly budget either and will never be. It is however listed in my long-term financial plan. I know what our budget is for the RV and the truck purchases. I know my net worth and what it should look like if we stay on the road for six years beginning in October of 2019. I have an educated guess at what the value of the RV and truck might be worth when and if we sell it and move back to a stick built home. All the planning might not work out but I do have a couple plan Bs to cover possible changes. Although I can’t control most of what would affect Karen and me in the event of a financial catastrophe. Short of staying on the job until I’m much older, retiring and dying in what could be a short time later. I’m not willing to do that. Neither is Karen.

As part of long-term planning I researched what others had already figured out for RV depreciation schedules. I hope you would agree the variables for what might affect depreciation are considerable. What someone paid for the RV to start with and what the economy might be at the time of sale are a couple big variables. Especially if they overpaid for the RV or sell it when the rest of the baby-boomers finally sell theirs, saturating the market.

Speaking of the baby-boomer generation who will eventually sell their RV’s, assuming they don’t kept them until they have zero value. It’s a little off topic but should be a concern for anyone who might want to buy a used RV or attempt to sell one in the future. I did a study back in the mid 1990’s as part of preparing for a presentation. I was assigned to work in the crime prevention unit at the time. I have a passion for protecting the elderly which developed after a terrible event involving an elderly person. I wrote a research paper trying to win a federal grant to fund a crime prevention program. Working with a local Rockhurst University professor, part of the grant had to do with estimating the average age of persons in my jurisdiction in various future years. What I discovered was that here in Missouri, the percentage of persons turning 60 years of age, as a percentage of the population, would change significantly in 2010 and peek in 2020.  This was based on census data. If I recall the figures correctly, our state would be moving from an annual rate of .7 percent of our population turning 60 years of age to 1.7% beginning in 2010.  It was a significant shift in our demographics. Birth rates might have changed some of those figures, regardless you can see the point.  It’s effecting RV purchases now with record sales of new RVs and may cause a future record for used units on the market. Hmm, this might even present an opportunity for those that have the time to find the right used unit.

You know I can’t stop from writing a desertion about anything RV related. I started just wanting to write out what I’ve researched regarding a simple RV depreciation schedule. Sorry, can’t do that. I write like I think and to this point I believe the above information must be considered when estimating what our rigs will be worth in the future. And more importantly how do any of us justify spending hard earned money on any large purchase that does nothing but depreciate? You already know the answer to that question but I’ll still give you my opinion in a few moments.

If you scrolled down for quick information on RV depreciation then start reading here.

In my own financial planning, I’m figuring a new  high-profile luxury fifth wheel RV will depreciate 54% in 6 years.  I’m using 50% for the depreciation on a new one-ton diesel truck over a six-year period. Right now, my total budget is $84,655 for the trailer and $66,700 for the truck to include taxes and some of the items needed to equip the RV and truck. Although I suspect we will purchase some of the RV/camping equipment with current income rather than out of savings as we plan to purchase our rig up to a year before retirement. I’ve got just over eight weeks of vacation to use in 2019!  I have already decided it is most likely we will buy a one year old truck with well under 20,000 miles on it and save an estimated 22.24% compared to a new truck.

I found an interesting article written at Camper Reports.com. The writer’s conclusion is on average a new RV loses 21% of its value when it leaves the lot. The best value is found in buying a used five-year-old RV based on his depreciation schedule research. He believes there is “no significant difference from year one since model years are announced a year in advance–helping resale of a two-year-old trailer which seems to be only one year old to a potential buyer.” You can check the trailer label for the date of manufacture. The author’s research goes on to estimate depression off the purchased price on fifth wheels at 25% by year three, 29% by year four, 37% by year five and 38% by year six. Depreciation begins to level off at year five. So, if I’m reading his article correctly, total depreciation by year six off the manufacturer’s suggested retail price is 59%. That assumes you lose 21% when you drive it off the lot and another 38% by year six.

I can’t find the link but have it in my notes the writer at RV Research.com estimated the depreciated in general for RV’s at 50% by year five. This guy at Axleaddict.com has done a lot of research on motorhome depreciation where he compared two specific units. His research estimates total average depreciation at 58.9% through year five.

It’s okay to stop reading if you were just after a few opinions on depreciation schedules.

There may be other cost considerations as part of this. Such as inflation rates and what one loses in interest by not keeping the money in the stock market (or whatever) rather than spending it.  The “old me” might have considered that! I’m planning not to think so much about the money details someday which will be the “new me”.

For my planning, the estimated depreciation only tells me what I might be able to sell everything for and then use the money to buy a home or whatever should we ever come off the road. OR elect to buy another RV and continue on.  The old me sees the depreciation in our budget as something costing on average around $7,618 a year or $634 a month. Add the truck and the monthly expense becomes $1,097 given our budgeted purchase prices over a six-year period. I know some of you are going to figure it up on your own – it comes out to $78,984 for six years.  At 7% earnings that money would generate $33,178 if invested rather than spent. Sorry – the old me chimed in at the last moment.

So how does one justify the expense of it all. The old me says; the hotel rooms for a year could cost over $27,000 or maybe $162,000 in six years, the food would be expensive if not cooked at home and you have to own a car anyway.  The new me says; what price does one place on looking out over a view that photos can’t capture, what price do you place on spending time with family and friends, what have you been saving for, is it really that important to work until death and I hope we can do this before the North Koreans figure out how to launch a long-range missile. If you want more opinions on if the depreciation is worth it, go to this 22 page forum thread.

Karen, with her new eyes, and I are going on an adventure. I’m not giving a second look at depreciation because it does not matter short of how much will we have left for our next adventure.

Family Time in Another Wonderful Missouri Park

I has been a while since my last post. We got busy living life. Our family just completed a four-day campout which was wonderful. More on that later in this post.

Over the past few weeks we finally finished replacing appliances in our kitchen with installation of the new stove. It has a convection oven which is a first for us. Seems silly but Karen and I watched through the glass window as a pan of biscuits cooked evenly in half the time of our previous standard electric stove. She is looking forward to learning to cook in a convection microwave once we get our rig. I know from experience and having talked to contractors who restore homes for sale that fixing up a kitchen and bathrooms adds value to the home at the time of resale. We decided to remodel the kitchen a couple years before we sell the house so we could enjoy it. The appliances should still look good as new by the time we sell, perhaps as early as the spring of 2019. A friend’s family is in the real estate business and says around here they are having trouble getting enough listings to sell. Everything is selling quickly. Hope the market holds out for a while!

Wallace State Park – North of Kansas City Missouri

A couple weeks ago while looking for a day trip to take, we decided to head up the highway about 30 minutes from home to check out a potential RV parking spot for times we return “home” for a longer visit. Friends of ours who have been on the road fulltime for six years split their visits between a local county lake and a state park which we decided to tour. We continue to drive out to all the local RV spots in search of the perfect place to park for a few weeks or a couple of months. This is the 100th year of a special Missouri tax for conservation. We have wonderful state parks because of it. Wallace State Park could be a place we split our time when back home near Kansas City.

Our family got together at Pomme De Terre Lake/State Park in southern Missouri over the holiday. Much of the shoreline camping is flooded from recent heavy rains. So was the first choice for tenting camping. Fortunately, several family members live a short distance away and were able to recon a replacement spot (thanks Matt and Mary). We ended up near the dam at Damsite Campground. All I can say about the camp spot was thank you Mother Nature for flooding the lake. Turns out we had a point on the lake to ourselves in a little-known camp area. The spots were designed for shorter RVs so the tent campers don’t know about it. With the flooding, a circle drive became our beachhead from which we launched our kayaks or fished. Some just sat in chairs watching the skyline and enjoying the weather and I suspect wondering when someone would tip a boat. Karen, myself, sister, nieces and nephews gave our Sea Eagle Fast Track a workout. (Click to enlarge photos)

The girls came up with a menu for each day. Food was brought or purchased from a very reasonably priced, and nearby, store. As the family had booked all the spots that were not underwater in this area, we had one spot just for eating and meeting. Each arm of the family had a spot to themselves. Two family members had RVs while the rest of use enjoyed deluxe tent camping. There was not a dull moment. Games during the day, movies off the side of a RV at night or just sitting around the campfire listening to guitar music to name just a few of the events. A very special event was being witness to a nephew’s baptism in the lake by a minister.

Karen spent a day secretly dropping items around the camp area which were later to be found as an item in the scavenger hunt. But most of the items were provided by nature. I wanted her to put collection of a poisonous snake on the list but was overruled. My nephews would have found them, this I know for sure.

The entire family shared the feeling of reliving our yesteryears when family campouts were setup with our grandparents and parents. There are no words that can describe what the trip meant to each as it’s somewhat spiritual and individual. We all could agree, without talking much about it, that our parents were looking down from heaven. I’d like to think they had a part in pushing the bad thunderstorms around us that came up one night. Seems like we were inside about a mile stretch of a relatively calmer area.

Karen and I took 156 photos. That was not enough to capture the event and all the family. I mined out a few to show the family in this blog and would be happy to email the others. Love you guys. Thank you to the entire family for bringing their special personality and love to the mix. By the way, “look at the size of this snake” turned out to be a wonderful phrase to use in order to get someone to face the camera for a photo. Here are a few of the photos: (Click to enlarge photos)

 


Don’t want to forget to write about it. I spent considerable time researching battery operated lighting for the tent camping event. I highly recommend the Steamlight Siege 44931 LED lantern. I bought the one that operates on D size batteries because it’s the same battery size as my air mattress pump so I have extra batteries if needed. Works great for hanging inside a tent and lasts forever on one set of batteries. Here is a link to the model I bought through Amazon. (I don’t get a kick-back from Amazon, it’s just a good place to point people to the actual model.) The low setting will light a tent and is advertised to last 295 hours on one set of batteries. Glad I left the gas lantern at home because on the bright setting the Steamlight easily replaced it.

During my next post, I’d like to discuss a few changes in the RV industry, specifically for Forest River, that has a potential of causing an effect on the timeliness of RV repairs and certainly response to recall notices. I have also found a couple articles on RV size selection and depreciation schedules I’d like to share.

Updated Summary of Trailer and Truck Purchase Decisions.

Karen and I started touring RVs in January 2015 with a visit to the local RV show. In time, I came up with an outline of seven steps we might consider leading to the eventual purchase. As usual my personality provokes me into over-thinking every aspect of the decision. It has been a fun process as I enjoy research and meeting others who have gone through the process of selecting their rig. Karen and I agree with the concept of buying your third trailer first. In other words, whatever we get we are planning to keep for a long time and avoid taking a hit on depreciation should we trade out the trailer within a couple of years. I have read several times where others estimate trailers depreciate quickly in the first five years.

Continue reading

Final Truck Research

Five weeks ago, I posted an article regarding my initial truck research. Because of the trailer weights we are considering, our truck will be a one ton dually. A second article was posted a couple weeks later.  Readers passed along the pin weights of their fifth wheel trailers were running between 19 and 21% of their total trailer weight. That’s also consistent with what others are reporting in forums. The pin is the front of the trailer that rides on the truck’s rear tires and is a reason we are going with a one ton dually.

I found all three manufacturers can handle the weights we are interested in. I researched the 2016 and 2017 truck models. Base prices on their least expensive trucks were within $720 of each other. The manufacturer’s suggested retail price (MSRP) for 18 new truck builds, with the options I was initially interested in, varied as much as $18,435. And of those new trucks, 12 were over our budget.  In a roundabout way, it helped to further narrow the list with our decision that we wanting leather interior. None of the new truck models were within our budget with leather interior. The decision then became what used trucks we could afford that had the options we were interested in.  There were huge changes from 2016 to 2017 in Ford heavy duty trucks. The Ram was unchanged between those years and there were a few changes in the Chevy/GMC. It took some time but I was able to locate used trucks with most of the options we are interested in.

Research showed an average discount of 22.24% off the new MSRP for trucks if bought one year old. And those are compared with ones located on dealers’ lots at their asking prices. Many had mileage of less than 10,000. Several were even at local dealerships.

2017 Used Truck Prices_LI

All things considered and for what are my preferences, the Ford F350 Lariat and Ram Laramie 3500 were the two trucks I am most interested in. As a side note, I was surprised to find the Ram is the only one of the four brands that’s available in 2017 with factory air suspension.

Another point I want to make is about brand loyalty. I get it. The last three trucks I’ve purchased were Fords. On several occasions folks have suggested they wished they could buy one companies engine paired with another’s transmission. ALL four manufactures have the same powertrain warranty. So, if they think their truck has a better setup then why not show it in the warranty? Personally, I’m hoping that having a couple trucks in mind to purchase will at least double the chances of finding a fair deal.

2017 Truck Warranty

We should purchase our truck next year and will most likely trade-in one family car at the time. Most likely we will keep Karen’s car to be sold sometime before we leave in 2019 on our future in an RV. We are discussing selling it earlier if she is comfortable driving the larger truck. I posted about going to one family car.

Because I’ll have at least three specific trailers selected and know their critical weights, I have no problem buying the truck first.

I put together a spreadsheet on the topic.  Sorry, I only knew how to post the spreadsheet link as a PDF. If you have trouble loading the spreadsheet and want a copy send me an email at mseneker@hotmail.com. I’m happy to send it.

Truck Comparisons PDF  (click here to see the spreadsheet). The nuts and bolts of the research is outlined in the spreadsheet which was easier than repeating it all within this blog post.

Here are a few internet links of more interest than others:

  • From the Big Truck Big RV YouTube site: 2017 truck of the year opinion. He owns a 2016 Ford and selected the 2017 Ram. Here is the link. He adds all three manufacturers can handle a 20,000 pound fifth wheel and believed no engine/transmission is better than another.
  • Roads Less Traveled blog has several postings regarding their 2016 truck upgrade. They test drove all of them!
  • Side by Side Video: 2017 one tons by MrTruckTV and another guy I’ve seen in a lot of videos. Towing around 22,000 pounds. Pin weight in this test is at 19% or over 4,180 pounds. Max tow for the Chevy is 23,000 pounds so they had to limit in order to compare. Chevy won the race with Ram coming in second place.

If you find any details in this post to be incorrect, please let me know. I’m no expert and don’t want to put out any bad information.

After writing this blog post I’ve kept looking at truck adds each day. I’m finding some wonderful trucks around the 20,000 mile mark. Found a 2015 Ram 3500 Laramie Longhorn Limited Edition for an asking price of $51,700 at a local dealership. And a loaded 2016 Ford F350 Lariat with less than 10,000 miles at another local dealership listed at $55,000. There are newer dually Ram Tradesmen Editions out there in the mid 40’s in great condition.

Additional Health Care Planning

This will be the last of three blog posts concerning health care. I just completed truck research and will get that posted soon.  I’ve come up with a short list of trucks I’m interested in as well as an idea of how we intend to purchase one and when. 

Snap 2017-04-10 at 19.18.44
On the home front, Karen now has an
Instant Pot and loves it.  Three people at work also bought one and we all plan to share recipes. Karen made the best spaghetti she has ever made, browning the meat, putting in the sauce and noodles without dirtying any other dishes. And the chicken wings she cooked up were as good as any restaurant. 

 

Now on to health care.  I want to mention a few notes about legislature that’s in the works as well as a seldom known way to fund a Health Savings Account if you have a high deductible health insurance plan.

In an earlier post I mentioned how a co-worker uses a doctor who does not except insurance. His doctor is following this blog. On Dr. Rigg’s website there is a link to the Primary Care Enhancement Act of 2017 as well as a host of information concerning health care reform.

Per congress.gov  “this bill will permit an individual to pay primary care service arrangement costs from a health savings account; and allow an eligible taxpayer enrolled in a high-deductible health plan to take a tax deduction for cash paid into a health savings account, even if the taxpayer is simultaneously enrolled in a primary care service arrangement. Under a primary care service arrangement, an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for such services. For the purposes of certain tax-deductible expenses for medical care, the bill expands the definition of “medical care” to include periodic provider fees, including: (1) periodic fees paid to a primary care physician for a defined set of medical services or the right to receive medical services on an as-needed basis; and (2) pre-paid primary care services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.”

If I understand it correctly, this would allow an individual to pay a monthly fee to their doctor who provides primary care services for basic medical needs. And one could make the payments from a tax-exempt Health Savings Account (HSA) which might be a reason it is contested. In other words, this would become a form of health insurance whereby the darn insurance company (and their profits) are taken out of the equation.

Regarding funding a Health Savings Account (HSA): Karen and I are doing this through a plan at work whereby my employer also contributes money. At retirement, I hope to have built the account up. I’ll turn 55 years of age next year and will take advantage of the catch-up rule where I can contribute an additional $1,000 on top of the maximum allowed for a family. I just found out the law allows a once in a lifetime contribution to an HSA from an IRA.  I think this one-time transfer would be rarely used but might be a way to fund an HSA if one does not have the cash during a given year to make a contribution to an HSA. Here are my notes:

One time transfer of IRA money to a HSA account. The once-in-a-lifetime transfer from an IRA to an HSA does not increase the maximum you can transfer is your normal HSA contribution limit. In other words it’s not on top of your normal contribution limit. If you do the transfer, it reduces dollar-for-dollar the amount you can contribute in other ways, either directly or through your employer. The transfer from your IRA to your HSA is not taxable, but you also lose the tax deduction you otherwise would get if you contribute normally. If you do the transfer you must also commit to staying with an HSA-eligible high deductible health plan for 12 months. If you fail the commitment, the transfer becomes taxable and you’d have to pay a 10% penalty. The benefit is that the transferred funds and all earnings thereon could eventually come out tax-free, provided they are used for medical expenses. A qualified transfer from an IRA to HSA once you are on Medicare is not allowed.

  • As a side note, government rules allow an investor to distribute IRA funds to pay for medical expenses. The 10% early distribution penalty may be avoided if proceeds are distribution prior to 59½. So you don’t need to move money from an IRA to an HSA to use it for medical expense. However there are special rules such as if you spend out of the IRA that years medical expenses must be at least 10% of your adjusted gross income.
  • For 2017 the IRS defined “high deductible” as any deductible higher than $1,300 for an individual or $2,600 for a family, so your health insurance plan has to meet that threshold for you to qualfy for an HSA.
  • My HSA has investment options so I would not be losing what the IRA savings would have earned through investment. 

Do your own homework before you decide to transfer money to an HSA from an IRA.

new flash Here is an interesting web site: Travel Tax.com – from Camper Cornicles blog.

Health Care Research – Direct Medical Care

Just a quick follow up to my last post regarding health care planning. I had mentioned a coworker uses his health savings account (HSA) to pay for medical care with his family of four. His doctor charges a set fee which is believed to be about what an insurance company would have paid the doctor or less.  I met with him briefly for more details.

The doctor’s web page is directmedicalcare.net.  There are two levels of payment depending if your family is a “member” or not. An annual fee is $800 for a couple or $1,200 for a family. Basic doctor’s visits, annual physicals and more are free for members. For non-members a doctor’s visit is $70 for example. And the doctor offers on-line medical care they call “virtual care” at $50 during office hours or $60 after hours. Also, the doctor will met him at the office after hours for care such as if he need stiches at a cost generally lower than an urgent care facility.

I asked my co-worker when he might use his insurance coverage and he said only for major medical issues such as for hospitalizations or referral to a specialist. Under the direct medical care service the doctor’s office does not file insurance claims. You must do that on your own, however the doctor’s office will provide you with the appropriate codes to submit to the insurance company.  I also asked how this affects meeting his annual insurance deductible. He has a high deductible plan and does not worry about it because he does not ever meet the deductible unless his family has a major-medical issue. I’d want to check with the insurance company to see if I could maintain records to show how much I had spent out of pocket or how they are handling services from doctors who except cash payment. Luckily, Karen knows how to file accurate insurance claims.

I could see doing more research in finding a doctor who does not take insurance but charges a lower fee such as this. Perhaps we might find a service in whatever state we decide to domicile in or spend our winters. Then have all the records sent to the new doctor. Or another option might be to switch to a doctor who is near our current home where we intend to later visit family for longer periods. I really am interested in the “virtual visit” portion of the plan. Not only would we not have to subscribe to another service while on the road but our established doctor would have a better idea of our issues before we hit the road, such as the need for prescription medications and more.

I wonder if having an established doctor in the state we select as a domicile will make a difference in establishing a “legal” domicile or not?

This is the first I have ever heard of such as service.  Once I started surfing the internet I found it to be more common than expected. Click on the link for direct medical care and have a look.

Health Care Planning

Thought I would post a few notes about our planning for health care costs.  I also want to say thank you to all the new readers who have signed up to follow this blog lately. It’s good to have you and your ideas so feel free to comment even within the older posts.

Like so many others, I follow Nina’s blog over at Wheelingit. Nina does an amazing job of summarizing current health care options so I’ll leave that to her. We all await future attempts by the US Congress at passing new health care laws. I don’t intend to make political statement so I’ll leave that alone other than to say it does seem reasonable the actual costs associated with health care services must be addressed to get at one root of the problem.  For now, I suppose we must take matters into our own hands based on whatever is available at the time.  So, to that end, I’ll post what I’ve been planning.

Karen and my situation factor in a few “what-ifs” although I don’t like using that phrase when problem solving.

  • We plan to move to fulltime RV living when I’m 56 years old. Karen will be a year from Medicare eligibility. She spent most of her career in medical billing which included helping folks out at hospice to figure out insurance options. I’m lucky to have her around to bounce ideas off.  She also has firsthand experience regarding how health care insurance companies handle claims.
  • Without re-entering the workforce later with health care benefits, I’ll be paying for my own for a good nine years. Our budget will have to include a plan with both of us for the first year. After that there could be supplemental Medicare insurance for Karen. Regarding this, Karen says we have to look at her options in terms of do I keep her on my insurance as a secondary insurance rather than having a supplemental Medicare policy. We will look at that in 2020 when the time arrives.
  • She agrees and I’ve experienced in the past that using COBRA after I leave fulltime employment is about the most expensive option out there. I met with our Human Resources person at work and confirmed its way expensive, even if I’m the only one on the plan. I would have 90 days after leaving a job to decide to file for COBRA which is good for 18 months.
  • In related topics, I’ve done very little research regarding long-term care insurance other than knowing neither of us want the other to ever be in a nursing home. I add this only because it’s health care related and a budget consideration.  Life insurance is in the same category.  At the advice of an experienced friend, I’m to look at the cost difference between taking a reduced pension with survivor benefits verses the cost of life insurance should we decide we even need it.
  • Karen added if she ever had to go in a nursing home she would file for Medicaid and make use of spousal protection clauses to separate our income and assets. She said she would not worry much about only being left with $80 a month from her social security check because she would not live long in a nursing home.
  • All this has to fit in an annual income budgeted at $3,375 a month after taxes and including inflation in 2019 when I plan to leave my job. If you’re interested there is a good thread at the Escapees forum regarding fulltime RV budgets beginning November 2015.
  • I’m always on the hunt for new ways to tax defer income as we have very few deductions to take on our annual taxes.

So here is what I’m thinking and doing today for us. Subject to change…

  • I added a Health Savings Account (HSA) plan at work. We use this to pay for our portion of medical expenses. After reaching a certain balance, the extra can be invested. I contribute the maximum amount allowed by the current tax law which is $6,750 annually. I turn 55 during 2018 when I’ll take advantage of the catch-up clause which allows us to add another $1,000 annually. At work, I enrolled in a high deductible health care insurance plan with Blue Cross and Blue Shield. My employer also contributes an amount to our HSA account as part of the annual $6,750 limit and our account is growing quickly. For those that don’t know, an HSA is not the insurance portion, it’s a savings account with a debit card used to pay for certain health care expense. Among other things, an HSA account cannot be used to pay for our current monthly health insurance premium. The money for the HSA account is deducted from my paycheck before taxes. And I’m not taxed on the money when spent! There were several points to consider before we decided to change our health care plan at work.  You must consider your own health situation before doing this.
  • I’m planning to use the established HSA balance to pay for out of pocket health expenses once we hit the road. If Congress votes in an increase on the maximum contribution limit, I’ll take advantage of it at least until I retire. Then after I’ll most likely come up with a minimum amount I want to keep in the HSA account based on our health care insurance plans maximum out of pocket expenses.
  • More than likely, based on today’s health care insurance availability, I’ll be going with a higher deductible plan at retirement. Some refer to this as a catastrophic plan so you don’t go broke if major medical issues arrive. Again, that’s a what if which includes Karen and I not having any huge medical issues when I retire.
  • Months ago, we joined our local community fitness center which costs $50 a month for the two of us. This included three sessions with a fitness trainer. Living a healthy lifestyle is for sure a way to reduce health care costs. Our family genetics for health issues prior to age 65 are not that bad – but then again that’s a “what if.”
  • I figure we will go to Mexico for eye care and dental. I’m still thinking about how to handle prescription drug cost but will certainly follow the law with whatever option we come up with. OR – research how to cut the cost of this and other health care services. Here enters the notion of finding the best care at the least cost. I found a good article here that was written in 2011 as a starting point. I have zero experience shopping around for affordable health care services. Suppose now that payment is coming out of my HSA account that’s about to change. So far, I’ve found two resources of interest which are mdsave.com and healthcarebluebook.com.
  • Karen had a few comments regarding how insurance is billed. You are at the mercy of the doctor’s billing person. Sometimes they code procedures, treatments and facility fees incorrectly. She says to challenge the costs and file an appeal with the insurance company. You might even be able to talk the doctor’s billing person into refiling the claim if they agree the insurance company (or the billing person) made an error. If you don’t believe the insurance was billed correctly you can also go directly to the insurance company to discuss the issue. Of course this is presuming one is able to recognize the error or what appears to be an out of control price from the doctor’s office (see the above online resources). She added an example where the doctor’s office, who are in-network, can only be paid per the contract with the insurance company. It’s typical that Blue Cross will only pay 49% of the total billed to them by the doctor in our region for example. She says the key is if you are paying the cost out of pocket then negotiate a price which is equal to what the insurance company would have paid.
  • A coworker told me his doctor knows he is paying fees out of pocket through his HSA account. He has a family of four. The doctor’s billing is setup to charge him fees that are lower, presumably closer to the rate an insurance company would have paid. He does not have to negotiate the fees at all. Nor does he get a bill later from the doctor’s office because the insurance claim was denied or not paid in full by the insurance company. I’m hoping more doctors will take this approach and I can find a good one out of the group.
  • I’m also very much interested in speaking with doctors through online video services for the more basic needs. Although I’m concerned something like a chronic cough might become something worse, for example, if we don’t meet in person.  I suppose any qualified doctor or nurse online would know enough to refer us to proper medical care?
  • Briefly, regarding what state and county we intend to take up residency (domicile). We all know health care insurance cost, availability and plan coverage will factor in. And of course that will be one of the considerations as to where we officially call our home.

I know enough about the topic to be dangerous. I’m trying not to put out any bad information and really appreciate your ideas, corrections and additions. PS – I don’t qualify for veterans benefits as I did not have enough combined active service when I was in the National Guard.