Early Retirement Health Insurance
If you’re between the ages of 62 and 65 and want to retire, chances are you will not be able to be covered by Medicare just yet. You definitely do not want to experience a gap in health insurance – So what do you do? How do you pay for health insurance when you want to retire before 65?
In this article, we’ll explore some options that could be good alternatives so you don’t have to experience a gap in insurance.
What Age Do You Have To Be To Get Medicare?
You become eligible for Medicare around the time you turn 65, but you may be eligible to enroll in Medicare sooner if you have a special condition or disability.
If you have end-stage renal disease and meet specific eligibility criteria, you are Medicare-eligible at any age – you can learn more at Medicare.gov.
Health Insurance Options For Early Retirement
Insurance can help you lessen any financial risk by providing benefits that help pay for any medical expenses that you may incur from unforeseen illnesses and injuries.
1. Check with your employer to see if you have any options available for early retirement health insurance
- Most employers offer some type of COBRA program, or a continuation of coverage for a specified amount of time so you can stay on your employer’s plan for a bit longer.
- You could also check with your spouse’s employer (if they are not retired) to see if you are eligible to be added to your spouse’s plan.
2. Look for short-term medical insurance
Short-term plans provide temporary benefits (anywhere from 30 to 364 days) that help pay for healthcare when you don’t have major medical insurance or another plan that qualifies as minimum essential coverage under the Affordable Care Act (ACA). If you are a year or less away from qualifying for Medicare, having a plan like this may help to ease your mind while you wait to turn 65. These types of plans don’t usually cover preventative or pre-existing conditions, but would cover you in the case of a catastrophic event that would probably cost you an arm and leg if you weren’t insured in some form or another.
Plans usually include:
- Hospital room, board and general nursing care
- Emergency room visits
- Surgical services
- Intensive or specialized care
- Inpatient doctor visits
- Doctor office visits
Premiums on these plans are generally low, but of course, the more extensive the benefits you choose, the higher the premium you’ll pay, and vice versa.
There is no open enrollment period for short term health insurance. You can enroll year-round. If your application is accepted, you can choose to begin coverage as early as the next day. Benefits do vary by state, so shop around to find a plan that will best meet your needs.
3. Look for major medical insurance
If you opt for major medical insurance, you will be getting the most comprehensive insurance on the market. If you’re someone who has a pre-existing condition or takes prescription drugs, you may want to consider major medical insurance. These plans are in place thanks to the Affordable Care Act and must at least provide the 10 essential medical health benefits, in addition to NO COST preventative care.
Essential services include:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Some of the greatest things about these plans are that your rates can’t be based on health history or based on any pre-existing conditions that you may have…and because you are retired and may have a change in income – you may be eligible for subsidies to help lower your monthly major medical insurance premiums when you buy through HealthCare.gov or a state-based exchange.
To be eligible for subsidies, your annual income must be below 400% of the federal poverty level. For 2018, a one-person household falls below that threshold if annual income is less than $48,560, and for a two-person household, the cut-off is $65,840.
It is important to note that major medical insurance enrollment only happens once per year or during a special enrollment period if you experience a qualifying life event.
4. Check out the “Marketplace” for insurance
In most states, marketplace open enrollment for coverage during the next calendar year runs from November 1 through December 15. But you can still get current year coverage if you’ve had certain life events, such as losing health coverage.
Visit healthcare.gov to shop for a plan that may best fit your medical needs.
5. See if you qualify for Medicaid
If you’re taking an early retirement and you have low income and/or already receive SSI benefits, another option would be to see if you can qualify for Medicaid health insurance.
Read our article about SSI here.
6. Hospital Indemnity Insurance
Hospital indemnity insurance is fixed-benefit coverage that helps with expenses related to hospitalization, surgery and critical illness before you gain access to Medicare. These are considered “standalone policies” and are separate from any other coverage you may have. Benefits are paid out in a fixed amount to the insured. You can apply for this type of insurance year-round.
Hospital indemnity plans DO cover:
- Hospital room and board
- Inpatient physician visit
- Inpatient surgery
- Outpatient surgery
- Ambulance services
- X-rays
- Chemotherapy
- Radiation
The plans DO NOT cover services related to:
- Pre-existing conditions, including pregnancy
- Preventive care such as routine physicals
- Any non-medically necessary surgical procedures
- Outpatient prescription medications
- Experimental procedures
NOTE: You can also try to enroll in a “bundled plan” that includes both short term health insurance and a hospital indemnity plan.
7. Look into a Part-Time Job
You can still retire and find another job that will be fairly easy to manage if you are stepping down from a full-time gig. Benefits (including healthcare benefits) are offered to employees who can commit to at least 20 hours/week. To qualify, you’ll usually need to work for a probationary period before you can receive them… but check out the companies below if you’re looking for somewhere to start:
- Costco (20 hours/week. Eligible after first 180 days.)
- Whole Foods (Must work 20 hours a week. Eligible after first 800 hours.)
- JP Morgan Chase (20 hours/week. Eligible after 90 days.)
- Starbucks (20 hours/week.)
- Lowe’s (No minimum hours/week. Eligible within first 31 days of employment.)
- UPS (1 hour/week. Eligible after first year of employment.)
Want to learn more about Medicare? Read our article here.
Kate writes about retirement benefits for retirementinsurance.org. She has a Masters Degree in Social Work (MSW). She has over a decade of experience in assisting elderly and disabled populations navigate governmental and private programs to obtain the monetary assistance they need to lead better lives. As she watched her parents begin their own retirement journeys and navigate similar systems to obtain Social Security, Medicare and other retirement benefits, she gleaned a further personal knowledge about the topic and is eager to share what she has learned with others.