There are many hurdles to overcome when figuring out how to retire early before age 65. However, health insurance after early retirement is one of the most financially challenging. Medical costs are high no matter when you retire, but the situation is even worse for those who retire early, whether willingly or not.
Medicare isn’t available until age 65, and self-insurance in your 40s, 50s, and 60s can be prohibitively expensive. Typically, as we age, we experience more health problems and are therefore more likely to seek medical care.
how much? Average cost of health insurance for ages 62 to 65
The average cost of health insurance for people between the ages of 62 and 65 varies widely depending on factors such as location, health status, and type of plan chosen.
Here’s a rough estimate of the average cost of different types of coverage:
- ACA Marketplace: $800 to $1,200 per month (unsubsidized)
- Employer Sponsor: $200-$600 per month (if still employed)
- COBRA: $700 to $1,500 per month (depending on previous employer’s plan)
Can you afford medical expenses and early retirement benefits after early retirement?
Find out if you can afford to retire early today with the Boldin Retirement Planner and consider:
9 possibilities to cover medical expenses after early retirement
1. Make it private
Private individual coverage may be the most expensive, but most flexible insurance option. It is worth pricing this option and comparing it with other insurance policies.
2. Take advantage of the Affordable Care Act (ACA or Obamacare) for early retirement.
Whether you like the program or not, the Affordable Care Act (ACA) has made early retirement health insurance much more affordable and affordable.
One of the ideas behind the ACA was that everyone should have insurance. Pre-existing conditions are not a factor. This is especially helpful for people in their 50s and 60s. Most of them have had or are currently facing some kind of health problem.
This system also provides subsidies depending on household income. If possible, it may be worth keeping your income, especially your Modified Adjusted Gross Income (MAGI), low to minimize insurance costs for early retirement.
Note: Some retirees seek to make a living with withdrawals from Roth or non-retirement brokerage accounts in order to minimize their MAGI and qualify for ACA subsidies.
Whether you qualify for subsidies or not, it’s worth considering your Obamacare health insurance options. healthcare.gov Or get a cost estimate from. Kaiser Family Foundation Health Insurance Marketplace Calculator.
3. Early Retirement Health Insurance — Am I eligible for COBRA?
In certain circumstances, if you lose your job, you can still benefit from your company’s group health insurance for a limited time. “Using the Consolidated Omnibus Budget Reconciliation Act (cobra), you can expect to pay about 2% more than the full cost of health insurance in your old company’s plan,” says Corey Pulcutt, founder and CEO of Northwoods Financial Planning.
“It’s more expensive than if you worked for a company, but it’s still cheaper than paying for your own health insurance,” he says. “The only way someone won’t qualify for COBRA is in a situation where there is a very good reason for the person to be released, such as a criminal investigation.”
Continuation coverage under COBRA is typically available for a relatively short period of time (usually 18 to 30 months).
4. Spousal benefits provide insurance for early retirement.
If you are married, your option is to use your spouse’s health insurance plan.
It’s common for one spouse to retire early while the other is still working full time. This is a great situation because you can save a lot of money if your spouse’s insurance covers you for a few years until you turn 62.
5. Cover your costs with an HSA
HSAs (Health Savings Accounts) are a powerful tool for early retirees to bridge the gap between retirement and Medicare eligibility at age 65. Contributing to an HSA while you’re working can help you build up a tax-free reserve to cover medical expenses in early retirement, especially if you’re 55 or older and can recontribute. Contributions are tax-deductible and funds grow tax-free, which is a great advantage for long-term savings.
In retirement, you can use your HSA funds to pay for out-of-pocket medical expenses, such as deductibles, copays, prescriptions, and eligible expenses like dental and vision exams. You can also use your HSA to make COBRA payments insurance premium Or, if you qualify, you can pay for your health insurance premiums while receiving unemployment benefits, allowing you to manage your medical costs without tapping into other retirement savings. HSA funds generally cannot be used for ACA Marketplace premiums, but they can significantly reduce your medical burden by covering other medical expenses until you qualify for Medicare.
Learn more about the many benefits of an HSA.
6. Don’t just buy insurance, take care of your health
However, the biggest thing to remember about early retirement is to stay active and healthy.
“The last thing you want to do in retirement is sit around the house all day,” says Purkat. “Be sure to exercise, stay involved in your community, or even get a part-time job. All of these activities contribute to your overall health and well-being and can help reduce health care costs.”
the study Staying physically active has also been shown to help prevent the development of Alzheimer’s disease, the most common neurodegenerative disease. This highlights the dangers of a sedentary lifestyle.
7. Get a part-time job with benefits
Part-time work is becoming an increasingly popular option for receiving medical benefits for early retirement.
If you retire, you can still find a less stressful job that offers health care as a benefit for both part-time and full-time employees.
There are fewer and fewer national companies offering these types of benefits, but check out the companies below that offer health care for part-time help. To qualify, you must work during your probationary period, typically at least 20 hours per week.
- Whole Foods (Requires 20 hours per week; you qualify after the first 800 hours.)
- Costco (20 hours per week, eligible after first 180 days)
- Lowe’s (No minimum hours per week; eligible within first 31 days of employment.)
- Starbucks (20 hours per week)
- UPS (1 hour per week; applicable from 1st year onwards)
- JPMorgan Chase (20 hours per week; qualification available in 90 days)
8. Explore healthcare sharing programs
Healthcare sharing programs are a very new phenomenon. These programs are defined by like-minded people coming together to pay for each other’s medical expenses.
The most well-known healthcare sharing programs are Christian-based and require you to be of Christian faith to participate. (These health sharing programs can be formed based on legal religious exemptions.)
Dr. Jim Dahl, White Coat Investor, describes the program as follows: Although it’s not technically health insurance, it’s similar in that it can be used to help cover unexpected medical expenses. ”
“The real benefit is that it will be dramatically cheaper. Some of the things that health insurance currently covers will not be covered. So there is some risk there, but his theory is that if… It means that even if you develop a severe illness or chronic illness, within a few months you will be able to go to the exchanges and buy insurance covered by the Affordable Care Act and a type of hedge. [your] I bet so. ”
Perhaps most troubling, these programs are not classified as insurance and have no legal obligation to pay medical claims.
Below are some of the most popular Christian healthcare sharing programs.
9. Have a solid overall retirement plan.
Whether you retire early or late, it’s always important to cover your health costs.
It is imperative that you have an overall plan for how you will fund your retirement.
A really good retirement plan defines how much money you have now and in the future, and explains how much you will spend now and in the future. The Boldin Retirement Planner is an easy-to-use tool to help you figure this out. This tool was recently named the best retirement calculator by the American Association of Individual Investors (Ahhh).
