More and more Americans are looking to retire early. In most cases, they’re not necessarily retiring from work altogether, but are ready to embark on a new journey. This might mean starting a business, pursuing a hobby they’re passionate about, spending more time with family, or travelling full time. The options are truly endless, but the fact remains: early retirees have limited healthcare options to consider.
If you’re considering early retirement, you’re likely trying to lock down a plan for your health insurance before you qualify for Medicare. Many options available to you may be more expensive than you realize, while others may not offer you the same level of coverage you had with your previous employer. As you move through retirement, your medical expenses increase as you age. Finding healthcare that fits within the framework of your financial plan and your budget, while still protecting you sufficiently is key. Luckily, you have a few different healthcare choices to consider as an early retiree.
COBRA
COBRA allows you to use the same healthcare coverage that you had with your previous employer for up to 18 months after leaving your job. It’s incredibly convenient to maintain your same level of coverage. However, you end up paying the price for convenience. Your coverage doesn’t change through COBRA, but without your employer’s subsidy, you’re responsible for the full amount of the monthly premium. These health insurance premiums will continue each month until Medicare kicks in. Depending on your medical situation, and what you plan to retire to, this option may or may not make sense.
Affordable Care Act Marketplace Health Coverage
If you don’t qualify for Medicare, and are still in search of a retirement healthcare solution – The ACA Marketplace is worth looking into. It’s even possible that you qualify for subsidies that could reduce the total cost of your coverage.
As is the case with the majority of healthcare plans, the ACA categorizes their coverage into three unique tiers. However, just because you were on a “Silver” level plan at your previous employer doesn’t mean that “Silver” level coverage through the ACA marketplace has comparable coverage – so be sure to carefully compare your existing coverage with any new options you’re exploring. Knowing what’s covered – and what’s not – can help you make an ideal decision for you and your family.
Retiree Health Insurance
Your employer may offer a health insurance program specifically for retirees who don’t qualify for Medicare. Not every employer offers these programs. In fact, they’re relatively rare. However, if you’re fortunate enough to have one of these opportunities, you’ll likely have the same level of coverage you did when you were employed at a discounted rate. It’s important that you check your eligibility, and ensure that the coverage is, in fact, the same as it was when you were employed full-time.
Spouse’s Health Insurance
It’s possible that you and your spouse are retiring at different times, especially if you’re considering retiring early. If your spouse has insurance available through their employer, it may make the most sense to enroll in their plan. Your retirement is a qualifying life event, and insurance that’s being subsidized by an employer will usually have both sufficient coverage and a reasonable monthly premium. Keep in mind that you only have 30-60 days (depending on your health insurance provider) to enroll in your spouse’s health insurance after a qualifying life event.
Do Your Research
Healthcare coverage is a primary cause for concern among early retirees. They want to balance coverage flexibility with reasonable rates that fit within their budget. Regardless of your motivation for retiring early, protecting yourself against high medical costs is incredibly important. A lack of coverage, or having relatively poor coverage, could result in astronomical medical bills that deplete your retirement savings and prevent you from living the retirement you’ve always dreamed of.
Having healthcare coverage is still mandatory by law during 2018. This may change in the future, but right now it’s both illegal and unwise to go uninsured. If the pressure to make a decision that will carry you through until you qualify for Medicare is hampering your ability to pursue your dream of early retirement, speaking with a financial planner can help you to fully understand all of your available options, and which of them will work best for you. At Goepper Burkhardt, we’re invested in helping our clients realize their vision for retirement, whether that’s continuing to work in a secondary career, or pursuing their passions for their days as a retiree. Contact us today to learn more.