Medical insurance choices for early retirees

People who retire early – before the age of 65, if Medicare Eligibility begins – you need to find a health insurance option that can cover it in the meantime. Even if you don’t retire too early for Medicare, a younger spouse may need insurance to fill the gap until they can qualify as well.

Early retirement health insurance options

The best options for health insurance if you are an early retiree are:

  • Health insurance for group employees.

  • Affordable Care Act individual or family plans.

Health insurance for group employees

Many companies offer group health insurance to their current employees, and most of these employers subsidize the cost. People who are retiring usually lose this coverage for themselves, as well as their spouses and children.

In the past, health insurance for retirees was common in large corporations, but today fewer than one in five large corporations provide medical care for retirees. Those who do can end coverage at 65 or at least continue to subsidize some of the cost by contributing to Medicare premiums and deductibles.

Around one in ten employers have a formal partial retirement plan that allows workers to shorten their working hours (or move to less demanding jobs) while typically continuing to receive benefits, including health insurance. If your employer doesn’t have a formal program, they may still be willing to cut you off such a deal, especially if you are a high achiever.

Another option is to switch to a working spouse’s health insurance, if available. You may have had your own coverage at work, or both of you may have chosen to use your coverage because it was better. However, even a mediocre group staff plan can be better than the other choices.

Please note that if you are 65 years of age or older and have health insurance for a currently employed spouse and the company has 20 or more employees, you can postpone enrollment Medicare Part B. a little bit longer. ((Medicare Part A.which covers hospital care is free so sign up for it. However, a monthly premium is required for Medicare Part B, which covers doctor visits.)

If the company has fewer than 20 employees and you need to enroll for Medicare Part B, you need to do so. Once your spouse is no longer employed, you must enroll for Medicare Part B within eight months or they will pay a permanent monthly penalty.

Exchange of Affordable Care Act

Before the ACA came into force, early retirees were often confronted with breathtaking health insurance premiums, if they could be covered at all. Insurers were allowed to deny people with only minor pre-existing conditions and charge much higher rates for older people. Insurers have also routinely capped payouts so people with serious illness or injury could face catastrophically high bills.

These practices ended with the ACA, which also gives subsidies to most people to make health insurance more affordable. You can start your search for a policy under HealthCare.govThis points you to the insurance exchange of your state or to the federal exchange if your state does not offer an insurance market.

Most people will have to wait for an open enrollment in November to get a policy. However, the loss of coverage due to retirement is considered a “qualifying life event” and you can avail of a special enrollment period.

COBRA

If you have health insurance at work but lose it in retirement and your employer had at least 20 employees, you have the right to use the Consolidated Omnibus Budget Voting Act (COBRA) to extend coverage for 18 months. If you are eligible for Medicare, coverage for your spouse and children can last 36 months.

These deadlines can be a problem. Another problem: the COBRA cover is expensive. You lose your employer grant and have to pay 100% of the total premium plus an administration fee of 2%. Note that in 2018, the average annual family insurance premium was $ 19,616 Kaiser Family Foundation. For singles it was $ 6,896. Employees pay, on average, only 29% of the cost of family insurance and 18% of the cost of individual insurance. Covering the entire bill can therefore cause a major sticker shock. Most people can find a better deal on an exchange under the Affordable Care Act.

Other health insurance options that retirees might consider

The following options have significant disadvantages, but may be an option for some.

Health sharing plans

Health-sharing plans (also known as health-sharing ministries), where members agree to pay each other’s medical bills, are actually not health insurance and may not be a good substitute for the elderly. These plans usually do not cover or limit the coverage of those conditions that are already in place. This can be a serious problem for the elderly, most of whom have at least one chronic or recurrent illness.

People with expensive, ongoing prescriptions may be out of luck, as the plans usually only cover prescription drugs for a specific, short-term need. Members cannot be tobacco users and, among others, must usually be Christians who attend church.

The plans also emphasize that sharing is voluntary. Participants are not obliged by law or by a binding contract to help you with your bills. If you like the idea of ​​billing other like-minded people and you qualify, make sure you understand the plan’s limitations and limitations before signing up.

Emigrate

France is often cited as one of the best healthcare systems in the world, but Portugal, Italy and Malta also offer good and affordable care, according to expat site International Living. According to International Living and its competitor Live and Invest Overseas, Mexico, Ecuador, Costa Rica, Thailand and Malaysia are also good candidates.

Get naked

You might be tempted to cross your fingers and go without cover in the hopes that nothing bad will happen. But even if you’ve never been sick in your life, you are not immune to disaster.

A single illness or accident can lead to massive bills. Some people are “proof of judgment,” which means they have no property or income that a believer can confiscate. They could be proof of judgment if all of your income is from Social Security and you don’t own a home. Retirement income, 401 (k) s, and most IRAs are also protected from creditors.

However, in most states, home equity is not fully protected and assets outside of retirement accounts can be confiscated. Once you are determined to roll the dice, you should speak to a bankruptcy attorney who is familiar with the creditor laws in your state so that you can better understand how much you stand by to lose.

Health insurance options for early retirees

Often not available after retirement

No subsidy for people with higher incomes

Can continue employer’s health insurance for 18 months

No subsidy, so you pay 100% of the premium + 2% administration fee

Affordable way for members to cut some medical costs

No insurance, not everyone qualified, limited coverage of pre-existing conditions

Many countries have high quality healthcare at a much lower cost

Requires uprooting your whole life; not for the shy

No cost – until something goes wrong

Potentially bankrupt medical bills are just an accident or illness away

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