Health Insurance Options For Early Retirees

Early retirement is not an easy decision. It comes with its own set of consequences with your future and your family at stake. Stepping away from a productive life means you are prepared for a new life ahead. You need to be properly insured because, no matter how organized you are, you don’t know what lies ahead. You need to have enough money for covering medical expenses including hospitalization and other emergencies that your personal savings alone cannot shoulder. Health insurance premiums play an important role in securing your future as an early retiree. If you decide to retire before the age of 65, there are 3 types of health insurance you can consider.

Federal Exchanges

The Affordable Care Act (ACA) enables people to secure health insurance regardless of their income brackets. This means that a retiree has the option to sign up for insurance coverage via the government’s website or the assigned enrollees 60 days before or after the date of retirement. Even with the ongoing premium increases, this option is still deemed as an affordable alternative. In searching for a policy that suits your needs, you can visit healthcare.gov. This website will take you to the federal or insurance exchange of your state. In some cases, people need to wait for open enrollment which commences this month in November. Due to the option to retire early, you can lose your coverage and this is already considered as a qualifying life event, which gives you the opportunity to benefit from special enrollment period.

COBRA

Early retirement makes you ineligible for the coverage you used to enjoy when you were employed. You can extend your coverage by taking advantage of the Consolidated Omnibus Budget Reconciliation Act (COBRA), which gives you the 18-month insurance coverage extension. If you are eligible for Medicare, your children and spouse can have the coverage which lasts for 36 months. For some, time limits can be an issue. You will also have to keep in mind that COBRA is more expensive than other health insurance options since you need to pay 100% of the total insurance premium.

Group Employee Health Insurance

Current employees secure group employee health insurance as most employers subsidize their premium cost. Once you retire, you also lose the insurance privileges for yourself and for your spouse and children. Although health insurance is commonly offered by large companies, only a few are inclined to offer retiree medical benefits. Those companies that offer such have to end the coverage by the time employees are 65. They have the option to continue subsidizing some of the costs by contributing to Medicare deductibles and premiums.

There is also a formal phased-retirement plan which gives workers a chance to reduce their work hours or switch to a less demanding job without compromising their benefits. If the company you are working for does not have a formal program, you can make a deal especially if you are an asset to the company.

Before you consider early retirement, you have to know the health care costs. You can make a sound decision if you talk to an insurance specialist about your options. Walking away from a life full of productivity may overwhelm you but having access to a wealth of information will help you stay on the right track.