Retiree Health Insurance Before Age 65
Retiring before age 65 is a goal for many individuals who find themselves in the middle and upper middle class. With the exception of many government workers and military retirees, health insurance and its attendant cost is the number one worry for early retirees.
There are several options for health care coverage prior to Medicare, and most are costly in comparison to employer provided plans where premiums are shared with an employer.
In our experience, there are five options for potential early retirees to study and monitor as they approach the need for health care services in the independent retired phase before age 65:
- COBRA – which provides the same coverage from the most recent employer for up to 18 months in most situations. The cost is usually double pre-retirement costs.
- Private – Going directly to an insurer for an individual medical plan with various co-pays and deductibles is pretty easy, but usually very costly. It’s not unusual for individuals to pay $1,200 to $2,000 a month for good coverage with low deductibles.
- Exchange – These are the options available under the Affordable Care Act providing comprehensive coverage and sometimes being subsidized at lower income levels.
- Spouse – Having a working spouse with health care benefits can provide coverage for an early retiree.
- Medical Sharing – These are faith-based programs that reimburse for covered expenses out of fund pool that is contributed to on a monthly basis. Pre-existing conditions and some conditions (pregnancy out of wedlock) may not be covered in several of these plans based on a certain belief system.
Here’s what you can do to plan ahead as you search out these alternatives:
- Talk to recent retiree colleagues and ask for their experiences and how they scoped out the health care alternatives.
- Talk to fellow church or social club members to ask about their health care decisions and their experience with the alternatives we’ve mentioned.
- Contact your county Area Agency on Aging for referrals to decision helpers. They provided that information to me when I needed to assist a family member located in another state.
- Talk to your physician and ask them for their opinion on how to pay for medical services.
- Finally, ask other family members and relatives for their opinion about obtaining local medical services as it pertains to cost and value for premiums or cost sharing contributions
Good luck and happy hunting. Remember that you can lower your own medical costs by exercising and eating healthy.