Five Options before Traditional Medicare Age (65)
"With more and more employers dropping their pre-65 retiree medical plans,3 the questions of where and how to get the right coverage did not disappear with the Affordable Care Act, and may still create indecision and uncertainty in someone who is otherwise ready to retire. If you are retiring before you're 65 and don't have access to retiree health care coverage from your employer, there are 5 main ways to obtain health care coverage to bridge the period between retirement and Medicare:
COBRA coverage. The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, allows you to continue your current health care coverage for a certain amount of time, but you may be required to pay the full cost of your health coverage plus an additional 2% charge. While you are working, your employer will typically cover a significant portion of the cost of your coverage, reducing the cost for active employees, but that is rarely the case for those who continue coverage through COBRA.
Your Spouse's group plan through work. If your spouse or partner is employed and has health coverage, you may be able to get covered on their employer's plan—and this may be your best and most cost-effective option. If your spouse or partner is already retired and has retiree medical coverage, you may be able to be added to that coverage as well.
Public marketplace. The marketplace was established by the Affordable Care Act and provides plan options available to anyone who is not yet eligible for Medicare. You can no longer be denied coverage for any reason, including a pre-existing condition. This was often a significant issue for those contemplating early retirement because affordable health insurance coverage was hard to find and obtain, particularly for those with pre-existing medical conditions. Costs for these plans can vary widely, but some people qualify for government-provided subsidies through premium tax credits that can make the coverage more affordable.
Private insurance. To obtain coverage, you can also look to your local health insurance agent, trade or professional associations, and other so-called "private exchanges" that offer plans from multiple carriers. You may have more plan options available to you through these outlets than the public marketplace, but note that government-funded premium tax credits cannot be applied to these plans.
Health-share Plans. Some Health-share plans are designed to look like traditional health insurance with PPO network participation for Primary Care and Catastrophic Care however,Health-share programs are not offered by insurance companies, but rather by recognized medical cost sharing organizations, sometimes called Health Care Sharing Ministries (HCSMs). To qualify, these organizations have been in existence and sharing medical expenses continuously and without interruption since December 31, 1999. They must be set up as a non-profit 501(c) organization. These plans are sometimes a great alternative to higher priced premiums that some retirees might experience through Marketplace and Non-Marketplace carriers.
Healthcare for Early Retirement
You might choose to retire a few years earlier than anticipated. If you are it would be a good idea to explore your health care options before you become eligible for Medicare at age 65. Health care options between retirement and Medicare coverage include COBRA, Off- Marketplace private insurance, the Healthcare Marketplace, and a spouse's plan. On average 1 person out of 4 will retire an average of 4 years sooner than they had planned. For many who do have gap years between when they actually retired and when they had planned to retire, it can be a mad scramble to find affordable, quality health care coverage until they are eligible for Medicare at age 65. We offer full service healthcare planning for all ages up to Medicare age, including Medicare Disability.