What are your options for insuring yourself prior to age 65?
If you retire before age 65, you must be prepared to address two insurance issues.
One, finding health coverage in the period before you can sign up for Medicare. Two, finding a way to pay for that coverage.
You know it will probably be expensive, but do you realize just how expensive? A single retiree may pay as much as $500-1,000 per month for private health insurance. For a couple, the monthly premiums can surpass $2,000. These are ballpark figures; fortunately, seniors without pre-existing health conditions can locate some less expensive plans offering short-term coverage, albeit with high deductibles.1,2
If you find yourself in this situation, what are your options?
It is time to examine a few.
You could retire gradually or take a part-time job with access to a group health plan.
Ask your employer if a phased retirement is possible, so you can maintain the coverage you have a bit longer. Securing part-time work with health benefits elsewhere could be a tall order, as it may be much tougher to find a job in your early sixties; not all employers value experience as much as they should.
You could turn to the health insurance exchanges.
Purchasing your own coverage could be a first for you, and you may not be optimistic about your prospects at the Health Insurance Marketplace (healthcare.gov) or a state exchange. Your prospects could be better than you assume. As a Miami Herald article points out, a married couple younger than 65 earning around $65,000 could likely get a bronze plan for free through the Marketplace, thanks to federal government subsidies. A couple would be eligible for such aid with projected 2019 earnings in the range of $16,460-$65,840. For the record, the open enrollment period for buying 2019 coverage ends December 15.2
You could arrange COBRA coverage. If you voluntarily or involuntarily retire from a company or organization that has 20 or more employees and a group health plan, that employer must give you the option of extending the health insurance you had while working for up to 18 months (or in some instances, up to 36 months). This is federal law, part of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. (There is a notable exception to this: an employer can legally choose not to offer you COBRA benefits if you were fired due to “gross misconduct,” though the law defines that term hazily.) COBRA coverage is expensive: you effectively pay your employer’s monthly premium as well as your own, plus a 2% administrative fee. If you miss a premium payment by more than 30 days, your COBRA benefits may be canceled.3,4
You might be lucky enough to secure retiree health insurance.
Some employers do offer this to retiring workers; if yours does not, your spouse’s employer might. It is not cheap by any means, but it may be worthwhile.1
As a last option, you could move to another country (or state).
You could relocate to a nation that has either a universal health care system or much cheaper health care costs than ours does, either temporarily or permanently. If you decide to stay in that nation for the long term, you will really need to think about whether or not you want to sign up for Medicare at 65. Alternately, another state may present you with a cheaper health care picture than your current state does; a little research may reveal some potential savings.1
Review these options before you retire.
See how the costs fit into your budget. Have a conversation about this topic with an insurance or financial professional, because you may end up leaving work years prior to age 65.
Rich Ramsay may be reached at 651-429-3151 or email.
https://www.ramsaywealth.com/
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Citations.
1 - forbes.com/sites/nextavenue/2018/08/07/shopping-for-health-insurance-before-medicare-kicks-in/ [8/7/18]
2 - tinyurl.com/yccclxmc [10/18/18]
3 - bizfilings.com/toolkit/research-topics/office-hr/what-is-cobra-what-employers-need-to-know [10/23/18]
4 - forbes.com/sites/heatherlocus/2018/10/21/what-you-need-to-know-about-3-key-options-for-health-insurance-after-divorce/ [10/21/18]
News
- News
- Tax Deductions Gone in 2018
- Avoiding the Cybercrooks
- What Do You Have in Reserve for 2018?
- The Medical Expense Deduction in 2018
- The Backdoor Roth IRA
- How New Tax Laws Affect Small Businesses
- Watch for These Insurance Blind Spots
- Tax Changes Around the Home
- Why the U.S. Might Be Less Affected by a Trade War
- Debunking a Few Popular Retirement Myths
- Searching for Health Coverage in the Years Before Medicare
- Is Generation X Preparing Adequately for Retirement?
- A Retirement Fact Sheet
- When a Family Member Dies
- Section 199A Business Tax Deductions
- Certain Uncertainties in Retirement
- Retirement Now vs. Retirement Then
- The Chapters of Retirement
- Three Key Questions to Answer Before Taking Social Security
- Retiring Single
- Eight Mistakes That Can Upend Your Retirement
- Why Having a Financial Professional Matters
- Retirement Wellness
- Systematic Withdrawal Strategies
- Measuring the Value of a Financial Advisor
- Debunking Common Retirement Assumptions
- Tax Considerations for Retirees
- Key Provisions of the CARES Act
- A Stock Market Lesson to Remember
- Eldercare Choices in the COVID-19 Era
- Before You Claim Social Security
- A Checklist for When a Spouse or Parent Passes
- Why Medicare Should Be Part of Your Retirement Strategy
- Year-End Estate Strategies
- The Social Security Administration Announces 2021 COLA
- 2021 Limits for IRAs, 401(k)s and More
- Building a Healthy Financial Foundation
- Earnings Season Gets Underway
- Tax Efficiency in Retirement
- Paying for the Infrastructure Bill
- 2021 Retirement Confidence Survey
- A COLA with Your Social Security?
- Conducting Your Mid-Year Financial Checkup
- A 6.1% Bump in Social Security?
- 401(k) Millionaires
- The Social Security Administration Announces 2022 COLA
- Wise Decisions with Retirement in Mind
- Fed Chair Changes His Tune
- Outlook for 2022
- Retirement Preparation Mistakes
- Getting (Mentally) Ready to Retire
- Are You Retiring Within the Next 5 Years?
- The Retirement Reality Check
- Rehearsing for Retirement
- Creating a Retirement Strategy
- Required Minimum Distributions 101
- 5 Retirement Concerns Too Often Overlooked
- Should We Reconsider What “Retirement” Means?
- End-of-the-Year Money Moves
- New Retirement Contribution Limits for 2023
- Managing Probate When Setting Up Your Estate
- What Happens When There Are No Beneficiaries
- Couples Retiring on the Same Page
- 9 Facts About Social Security
- Eight Mistakes That Can Upend Your Retirement
- Healthcare Costs in Retirement
- Navigating Retirement Pitfalls
- Does Your Portfolio Fit Your Retirement Lifestyle?
- Helpful Retirement Strategies for Women
- Orchestrating Your Retirement Accounts
- Important Birthdays Over 50
- Social Security: Five Facts You Need to Know
- How Will Working Affect Social Security Benefits?
- Women and Wealth: A Pivot Towards Retirement
- Immediate vs. Deferred Annuities
- How Retirement Spending Changes with Time
- The A, B, C, & D of Medicare
- Understanding Money Market Funds
- Glossary
- White Papers
- Blog