The old preference for people to retire at the age of 65 no longer applies. For one reason or another, people drop their work boots long before they reach the age of Medicare.
What is the problem then? The problem is, you are too young to qualify for Medicare and you will need insurance to cover your medical expenses by age 65.
It is possible that you have been forced to retire and your need for health insurance coverage is even more pressing because you may need it quickly. On the other hand, you may have been offered an early retirement package that includes health benefits. If this is the case, consider yourself lucky.
Other coverage scenarios
There are standard answers to the question of how early retirees can be insured. If your spouse or partner has health insurance, you can transfer your insurance needs to this policy. This is the best possible scenario for many people, but not a reality for single people or those whose partners are not employed or have no professional insurance. Maybe they were dependent on you.
Another option is to extend your employer’s insurance benefits for 18 months through COBRA, although it is expensive.
The cost of COBRA averages $ 400 to $ 700 per person per month. If you depend on COBRA to cover your family’s health care coverage, you need to calculate your costs based on the number of people you want coverage to cover. More on this in the COBRA section below.
4 health insurance options for early retirees
Health benefits are a big consideration when quitting a job, and this is especially true for older Americans who are likely to need more health care. It will take some work on your part to find the best option for you and your wallet.
The following information about each option can point you in the right direction.
Don’t retire completely
“Retirement” means different things to different people. You may be interested in getting a part-time job that offers benefits such as health insurance.
Are there such jobs? The answer is yes. We found seven jobs, including the federal government, that offer social benefits to part-time workers.
According to the rules of the Long-Term Care Act, companies of a certain size must offer their employees health insurance for working hours of 30 hours or more per week. But some employers who rely on part-time workers who work less than 30 hours a week actually trumpet about offering health services to part-time workers.
Costco and United Parcel Service are among the largest providers of health insurance for part-time workers.
Private health insurance protection
Of course, you can take out health insurance yourself with private insurers. Such policies often offer less coverage than traditional insurance policies that you would get through the ACA, but they would also be much cheaper.
Short-term health insurance can be a bridge to the onset of Medicare because you don’t want a major health crisis and you don’t have insurance to cover the high cost of medical care. Short-term health insurance can provide this type of coverage to improve your mental health and reduce anxiety.
If you are several years away from the age of 65 at the time your Medicare coverage takes effect, you can get long-term private health insurance. The cost depends on your age, where you live, your finances (income and expenses), the number of family members you are insured and your medical history.
However, it is possible to get a quote for your coverage on the website of almost any private health insurance company. Doing your own research will save you time and allow you to make decisions before you contact a private health insurance company or health insurance broker.
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act and was developed for people exactly in your situation: those who have voluntarily or otherwise left their jobs and are not entitled to Medicare or Medicaid.
COBRA is administered by the US Department of Labor with the aim of preventing someone from going without health insurance for the first 18 months after losing their job.
The COBRA cover has one advantage and two disadvantages. The advantage is that you can keep all of your current doctors and other medical contacts as your insurance coverage does not change. The two disadvantages are that in most cases COBRA only lasts 18 months and is expensive because the company no longer pays its share of the costs.
COBRA is offered by employers with at least 20 employees to every employee who was covered by health insurance at the time of losing their job.
The former employee must be notified of the availability of COBRA within 14 days of the qualifying event, and the former employee has 60 days to decide whether to access COBRA. COBRA begins immediately after the registration has been accepted.
The Affordable Care Act
The Affordable Care Act was designed for people who do not receive health care through their employer, a population that has grown over the years as companies employ more contract or freelance workers than full-time employees.
The health insurance market can be complicated and there is a tight window of one month – November 15th to December 15th – when the open enrollment deadline is in place. When you sign up, your coverage usually starts on January 1st.
There are four levels of coverage under the ACA – bronze, silver, gold and platinum. These levels differ in the amount of insurance coverage (60 percent for bronze up to 90 percent for platinum) after the deductible has been exhausted.
The average cost of bronze coverage (lowest premiums, highest deductibles) for 2021 was $ 328 per month, and the average cost of gold coverage (higher premiums, lower deductibles) was $ 482. In California the range was $ 323 to $ 444, and in Florida the average was $ 339 to $ 489.
The best way to attack the health insurance market is to do your due diligence by determining exactly what you think you will need in terms of coverage before you reach the age at which you are eligible for Medicare .
Here is an easy to use marketplace cost calculator.
Help with ACA plans
The ACA website offers chat functions for everyone who has questions about purchasing health insurance via the federal marketplace.
There are also private agents and brokers who can help find insurance for people who do not have employer-funded insurance and are too young to qualify for Medicare.
The federal healthcare.gov website explains the difference between a broker and a broker (agents typically work for a firm while brokers can compare the rates of several private insurance companies for you) and provides a link to a list of approved brokers and brokers in your area.
For the best result, have all of your information in front of you, from personal financial and medical history to what needs you have for health insurance coverage.
Frequently asked questions (FAQs)
What is the Average Cost of Health Insurance for Retirees?
There is a federal law that says your health insurance can’t be more than 8.3% of your household income. According to the AARP, that means a household with an annual income of $ 50,000 would pay up to $ 346 per month, or $ 4,150 per year. But all plans, whether through the ACA or from private insurers, vary based on how much you want to pay in premiums and how much you want to pay when you get medical attention. Basically, the more premiums you pay in, the more insurance cover there is for medical expenses. The spectrum ranges from bronze, where you pay 40% and the insurance pays 60% as a copay, to platinum, where you only pay 10% and the insurance pays 90% after copays. The monthly platinum premium will be much higher than the monthly bronze premium.
Can you get Medicaid if you retire at 62?
In most states, Medicaid is available to adults under 65 if their income is below 138% of the poverty line. The poverty line for the 48 contiguous US states is $ 26,500. The poverty levels for Alaska and Hawaii are slightly different.
How high is the retirement age according to social security?
The full retirement age is 66 if you were born between 1943 and 1954. The full retirement age gradually increases if you were born between 1955 and 1960 until it reaches 67. Anyone born in 1960 or later will be paid full retirement age at age 67, but your social security benefits will continue to increase after you reach full retirement age until you start receiving social security payments.
Kent McDill is a seasoned journalist who has specialized in personal finance topics since 2013. He is a contributor for The Penny Hoarder.