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Early Retirement Health Insurance

Health care costs during retirement can be a major expense. And if you retire before Medicare eligibility kicks in at age 65, those expenses may be magnified. Finding the right coverage at the right price is key and may take some time to research. The good news is that you may have several options to choose from. Consider the following:

1. Retiree health insurance. If you worked in the public sector, you’re much more likely to have coverage once you leave employment than if you worked in the private sector. Coverage may be tied to your pension benefit or based on your years of service and may change, and be secondary to Medicare, once you reach age 65. Also, increasingly prevalent are tax-advantaged benefits that help employees prefund and save for health care costs in a dedicated account. Retirement Health Savings (RHS) plans that MissionSquare Retirement makes available are one example – www.missionsq.org/rhs.
   • Contact your former employer’s benefits office to learn more about specific terms and eligibility.
2. Government Marketplaces that resulted from the Affordable Care Act (Obamacare). While older individuals generally pay higher premiums, limits apply, and you can buy a policy and not be charged more for it regardless of your health. You may also qualify for a tax credit based on your income that reduces the amount you have to pay.
   • Visit www.healthcare.gov to find options in your state.
   • Visit www.kff.org/interactive/subsidy-calculator to estimate premiums and subsidies.
   • If you enroll in retiree insurance, you can later buy a Government Marketplace plan instead, although you won’t get income-based tax credits you might otherwise qualify for. Visit www.healthcare.gov/retirees to learn more.
3. Medicaid coverage through your state. If your income is low, you may qualify for free or low-cost coverage.
   • www.healthcare.gov/medicaid-chip
4. Individual policies purchased from insurance companies, brokers or agents. You can’t qualify for a tax credit but the menu of options must be similar to the Government Marketplaces and you similarly can’t be denied coverage or charged more for pre-existing conditions. This option may make sense if you don’t qualify for government subsidies and are able to find lower premiums or better doctor or hospital coverage.
   • A number of online shopping sites are available for you to search for and compare policies.
5. COBRA coverage allows you to former employer’s insurance for up to 18 months, or longer under certain conditions. This may make sense if you like your employer’s coverage and just need it to last for a short period before you are eligible for Medicare. The downside is it can be expensive because the employer is not required to subsidize it and can charge an administrative fee. If you need time to review your options after leaving employment, electing COBRA will keep you covered and won't limit subsequent eligibility for the government marketplace coverage or a tax credit.
   • Visit www.dol.gov/cobra
6. Your spouse's or partner's policy. If your spouse or partner has coverage through their employer, you may be able to be added, likely for an added cost.
   • Your spouse or partner should contact their benefits office to learn more.
   When choosing among these options and when reviewing insurance plans within each option, consider the following:
   • Are your preferred doctors and hospitals covered? If not, how important is that to you?
   • What are all the costs that might apply? Review premiums, deductibles and co-insurance payments. The lowest premium option might not be the lowest cost one.
   • Are prescription drugs covered? How about vision, hearing and dental coverage?

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