Retiring early can have its pros and cons. If you are planning on an early departure from your career there are a few questions you need to answer. Start by asking, how are you are going to get health insurance and what is it going to cost?
Medicare Eligibility
Medicare, a federal health insurance program, is primarily for people aged 65 and older. However, early retirees under 65 may qualify if they have a qualifying disability or specific medical condition. You’ll need medical documentation to support your application for disability benefits.
If you don’t qualify for Medicare before age 65, you’ll need to explore other health insurance options.
Alternate Health Insurance Options for Early Retirees
- COBRA. If you retire from a company with 20 or more employees, COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue your existing insurance. You’ll pay the full premium, including the employer’s contribution, plus a 2 percent administrative fee. However, COBRA coverage typically lasts only 18 months and may only be a temporary solution before you qualify for Medicare or find alternative coverage.
Check with your HR department for details on any retiree health benefits your company might offer.
- Converting from Group to an Individual Plan. You may have the option to convert your group
health plan to an individual plan, depending on your provider. This can help maintain continuity of care, allowing you to keep your current doctors. However, individual plans usually come with higher premiums and may not be as comprehensive as group plans, which often include dental and vision coverage.
- Affordable Care Act (ACA) Marketplace. You can also purchase health insurance through your
state’s ACA Marketplace. Coverage cannot be denied due to pre-existing conditions, but you
must enroll during specific open enrollment periods or within 60 days of losing your employer
coverage.The Premium Assistance Tax Credit (PATC) can make this option more affordable by reducing your monthly premium based on your income and household size. The lower your income, the higher the credit, which can help manage healthcare costs during your transition to Medicare.
Planning for Early Retirement
Aspiring to retire early requires more than saving a certain amount. There are many issues to address from boredom to purpose, from mental health to cognitive decline, from physical health to healthcare costs. Discuss these and many more questions with your financial planner early in your retirement planning process to make informed decisions and prepare effectively.
Learn here about how you can Retire WELL.