Retiring early means that a new and potentially large expense will appear on the horizon: health insurance. Most people who retire from a traditional employer-sponsored plan will be left with no option but to obtain their own medical coverage. The good news is that a number of options exist to bridge the gap between retiring and being eligible for Medicare, including COBRA, short-term retirement insurance plans and marketplace plans. And for those whose income is low enough, Medicaid is available and offers free or affordable health coverage.
Those who are able to afford health insurance may be able to opt for a marketplace plan offered in their state’s exchange. But the ability to qualify for premium subsidies is based on total annual income, not just the income from the months prior to retiring. For many, this could mean that they will find themselves out of eligibility for marketplace plans if their income is too high at the time of their early retirement.
In addition, many employers offer retiree-specific health insurance plans, which are similar to group health insurance plans for active employees. According to one survey, 21% of large companies that offer health benefits provide retiree coverage. These plans are usually less expensive than a marketplace health insurance plan but also typically offer fewer major medical benefits.
For those who wish to sign up for Medicare but are not yet 65, the Social Security Administration takes applications during an initial enrollment period that begins 3 months before the month you turn 65 and ends 3 months after. Those who do not apply during this window may be subject to a penalty. There are also other Medicare-related programs for those who have a permanent disability or end-stage kidney disease, as well as assistance with paying Medicare premiums in New York for those who cannot afford it.
In most cases, the best choice for retirees Retirement medical insurance plans for 65+ individuals is to purchase a Medicare Supplement Insurance (Medigap) policy to cover some of Medicare’s gaps in coverage, such as coinsurance and deductibles. In most states, these policies are available through private health insurance companies for about $1 per day. And those who have a very low income or a disability can seek out public assistance through the Medicaid program, which is free or at a reduced cost for those who qualify. Doing the right thing might not always feel good in the moment, but over time it will benefit you and those around you. The key is to make sure you know what that ‘right thing’ is for you and your family. And then have the courage to act on it.