Top 9 Health Care Solutions for Early Retirement
TL/DR –
The article discusses the challenges and options for healthcare coverage for early retirees, defined as those retiring before age 65 and therefore ineligible for Medicare. Nine options suggested include COBRA, the Health Insurance Marketplace, health insurance from a part-time job, funds from a Health Savings Account (HSA), short-term health insurance plans, private health insurance, insurance through a spouse, AARP health benefits for members, and Medicaid. The article emphasizes the importance of careful planning considering individual health needs, budget, and available resources to ensure adequate health coverage during early retirement.
Planning for Healthcare in Early Retirement
Planning for early retirement can be both thrilling and complex, particularly when addressing healthcare. Unlike those who retire at 65 or later, early retirees aren’t eligible for Medicare, the government healthcare program for older Americans. This article explores nine health insurance options for early retirement to bridge the gap to Medicare eligibility.
What does early retirement mean?
Early retirement typically refers to retiring before the age of 65, when Medicare benefits commence. It involves planning for years without a regular paycheck and one of the most vital considerations are healthcare costs. If enrolled in an employer-sponsored healthcare plan, this coverage is lost upon retirement.
Healthcare options for early retirees
Here are nine considerations for those planning to retire early:
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) offers temporary continuation of health coverage for those who lose their employer-sponsored health insurance. COBRA allows early retirees to retain existing coverage for up to 18 months at the full premium cost.
Health Insurance Marketplace
The Health Insurance Marketplace helps individuals shop for affordable health insurance. The Marketplace offers a variety of plans that may qualify for premium tax credits and savings based on household size and income.
Part-time Job Insurance
Early retirees can obtain health insurance through a part-time job, a method popular within the Financial Independence, Retire Early (FIRE) community. This involves working minimal hours to qualify for health insurance benefits offered by certain employers, such as Starbucks.
Health Savings Account (HSA)
Funds from a Health Savings Account (HSA) can be used to pay for qualified medical expenses tax-free in early retirement. After age 65, HSA funds can pay certain Medicare expenses.
Short-term Health Insurance Plans
Short-term health insurance plans offer temporary coverage for early retirees before Medicare eligibility. These plans are generally less expensive but provide less comprehensive coverage.
Private Health Insurance
Early retirees may consider private health insurance options. These plans offer a range of coverage options but may be costlier as they aren’t eligible for premium tax credits.
Spouse’s Insurance
If a spouse is still working and has employer-sponsored health insurance, early retirees can consider staying on their plan.
AARP Health Benefits
The American Association of Retired Persons (AARP) offers health benefits for its members. However, their specific health insurance benefits are generally geared towards those eligible for Medicare.
Medicaid
Early retirees may qualify for Medicaid if their income drops to a fairly low level after retirement. Medicaid is available to adults under 65 if their income doesn’t exceed 138% of the poverty level in most states.
Budgeting for Healthcare Costs in Retirement
When budgeting for healthcare costs in early retirement, it’s crucial to consider several factors like chronic conditions, medications, out-of-pocket costs, and maximum out-of-pocket payment. Various health insurance options are available to early retirees like private health insurance plans, the Health Insurance Marketplace, spouse’s insurance, part-time work, COBRA, and Medicaid.
Concluding Thoughts
Healthcare planning in early retirement requires careful consideration of health needs, budget, and available resources. With careful planning, early retirees can secure the health coverage necessary to enjoy their retirement.
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