Retiring Early? How to Get Health Care Coverage Before Medicare

If you retire early, you will need a plan for health insurance. You won’t be able to enroll in Medicare until age 65, so you’ll need a bridge for the coverage gap.

Here are five options to consider:

1. COBRA

The Consolidated Budget Reconciliation Act (COBRA) requires your employer to provide health coverage to you and your dependents for up to 18 months after you leave the company.

You can typically keep the same coverage, which means little disruption to the care you are accustomed to. However, insurance can be pricey, as you will pick up the tab for the amount your employer subsidized in addition to your share.

Still, if you plan to enroll in Medicare within 18 months, COBRA may be a good option.

2. The Federal Marketplace

You can research healthcare.gov to find plans similar to your company coverage. And you can buy coverage regardless of any pre-existing conditions.

Like COBRA, the federal health insurance exchange can be expensive. Your cost is based on your taxable income. However, you may be eligible for a premium tax credit, which can offset expenses considerably.

5. Private Insurance

You can buy an individual insurance policy that is not ACA-compliant to pay for coverage until Medicare begins.

Non-qualified plans don’t follow the required health benefits of ACA plans. That can mean a more affordable policy for you. However, check that the policy meets your needs since coverage may be limited. Also, be aware that you may not find insurance if you have a pre-existing condition.

4. Your Spouse’s Insurance

You may be eligible for coverage under employer-provided insurance for your spouse or partner. This option is worth considering since it will likely be the least expensive choice.

Ask your spouse to check with their human resources department to determine if you are eligible and, if so, the time frame for enrolling. The special enrollment period triggered by your job exit may be short and easily missed.

5. Membership Associations

You may already be a member of an organization that offers health coverage. And because the coverage is a group plan, costs may be more affordable.

Think of the associations you are a member of. For example, are you part of a union? What about an alumni group? Have you joined AARP? Or Costco? Check out these groups’ health offerings on their websites and see whether you can find something that fits your needs and budget.

Don’t Go Without Insurance

Insurance is expensive, and you may feel tempted to let it go until Medicare kicks in. After all, you may feel healthy, and all your family members have enjoyed long lives—so you may think, “What’s the risk? It’s only a few months.”

This decision can end up costing you. You could have an accident that requires medical care. Or a health condition emerges that you didn’t even know you had. The costs will be exorbitant and can hurt your ability to stay retired.

Our retirement planning firm in Greenwood Village, CO, partners with our early-retiree clients to incorporate health coverage into their planning. We offer a complimentary 15-minute call to discuss your financial situation and concerns and share how we may be able to help.

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