You have a
bunch of options, even if you aren't working.
Kent McDill • November 30,
2021 • Editor's Note: This story originally appeared on The Penny Hoarder.
The old standby that
people retire when they turn 65 years of age no longer holds true. For one
reason or another, people are hanging up their work boots well before they
reach the age when Medicare kicks in.
What is the problem then?
The problem is that you are too young to qualify for Medicare and you need
insurance to cover your medical costs until you hit 65. Finding health
insurance for early retirees is job No. 1.
It is possible that you
have been forced into
retirement, and your need for health insurance coverage is even
more dire because you may need it quickly. On the flip side of this, you may
have been offered an early retirement package that includes health care.
Consider yourself lucky if this is the case.
Health benefits are a big
consideration when you leave a job and this is especially true of older
Americans who likely need more health care. It will take some work by you to
figure out the best option for you and your wallet.
The following information
about each option can point you in the right direction.
1.
Don’t Retire Completely
“Retire” means different
things to different people. You may be interested in accepting a part-time job
that offers benefits that include medical insurance.
Do such jobs exist? The
answer is yes. We found seven places, including the federal government, that
offer benefits to people
who work part time.
According to the rules of
the Affordable Care Act, companies of a certain size must offer their employees
health coverage if they work 30 hours a week or more. But some employers who
depend on part-time workers who work fewer than 30 hours a week actually
trumpet the fact that they offer part-timers health benefits.
You can work and collect Social Security benefits, though you need to know the
government guidelines so you don’t get yourself into trouble.
Costco and United Parcel
Service are among the largest businesses that offer health insurance coverage
to part-time employees.
2.
Private Health Insurance Coverage
You certainly can get
health insurance through private insurers on your own. Such policies often
provide less coverage than more standard insurance policies you would get
through the ACA, but they would also be much less expensive.
Short-term health
insurance can be a bridge until Medicare kicks in because you do not want to
have a major health crisis and have no insurance to help with the high costs of
medical care. A short-term health insurance policy can provide that kind of
coverage to benefit your mental health and reduce anxiety.
See Also:
The 2 Biggest Retirement Fears of Baby Boomers
If you are several years
away from age 65 when your Medicare coverage kicks in, you can buy long-term
private health insurance. The cost will depend on your age, your location, your
finances (income and expenses), the number of family members you are going to
insure, and your health history.
However, it is possible
to get an estimated cost of your coverage at the website of nearly every
private health insurance company. A bit of research on your own will save you
time and allow you to make decisions before you consult with a private health
insurer or a health insurance broker.
3.
COBRA Coverage
COBRA stands for the
Consolidated Omnibus Budget Reconciliation Act and is a program designed for
people exactly in your situation: those who have left a job either willingly or
otherwise and are not eligible for Medicare or Medicaid.
COBRA is
administered through the U.S. Department of Labor with the goal
of preventing anyone from going without health insurance for the first 18
months after losing a job.
There is one advantage
and two disadvantages to COBRA coverage. The advantage is that you get to keep
all of your current doctors and other medical contacts because your coverage
does not change. The two disadvantages are that COBRA only lasts for 18 months
under most circumstances, and it is expensive, since your former company is no longer
covering its share of the costs.
COBRA is offered by
employers with at least 20 employees to any employee who was covered by the
employer-sponsored health insurance at the time of the loss of the job.
The former employees must
receive notice of COBRA availability within 14 days of the qualifying event,
and the former employee has 60 days to decide if they want to access COBRA.
COBRA starts immediately upon accepted signup.
4. The
Affordable Care Act
The Affordable Care Act
of 2010 was designed for people who do not get health care through their
employer, a population that has grown over the years as companies have gone to
more contract or freelance employees than full-time ones.
The health insurance
marketplace can be complicated, and there is a tight window of one month — Nov.
15 to Dec. 15 — when the open enrollment period is in operation. When you sign
up, your coverage usually begins Jan. 1.
There are four tiers of
coverage under the ACA: Bronze, Silver, Gold, and Platinum. Those tiers
differentiate themselves by how much insurance covers (60% for Bronze up to 90%
for Platinum) once you have exhausted your deductible.
The average cost of
Bronze coverage (lowest premiums, highest deductibles) for 2021 was $328 a
month, and the average cost Gold coverage (higher premiums, lower deductibles)
was $482. In California, the range was $323 to $444, and in Florida the average
was $339 to $489.
The best way to attack
the health insurance marketplace is to do your due diligence by determining
just what you believe you are going to need in terms of coverage before you
reach the age where
you are eligible for Medicare.
Here is
an easy-to-use marketplace cost calculator.
Help With ACA Plans
The ACA website provides
chat capabilities for anyone with questions about acquiring health insurance
through the federal marketplace.
There are also private
agents and brokers who can help find insurance for people who do not have
employer-sponsored insurance and are too young to qualify for Medicare.
The federal website healthcare.gov explains
the difference between an agent and a broker (agents usually work for one firm,
while brokers can compare rates for you from several private insurance
companies) and provides a link to
a list of approved agents and brokers in your area.
For the best result, have
all of your information in front of you, from personal financial and health
history to the needs you have for health insurance coverage.
Frequently
Asked Questions (FAQs)
What Is the Average Cost
of Health Insurance for Retirees?
There is a federal law
that states that your health insurance coverage cannot be more than 8.3% of
your household income. According to AARP, that means a household with an annual
income of $50,000 would pay as much as $346 a month or $4,150 annually. But all
plans, whether through the ACA or from private insurers, vary depending on how
much you want to pay in premiums versus how much you want to pay when you get
medical service. Basically, the more you pay in premiums means the more
insurance covers when you have a medical cost. The range is from Bronze, where
you pay 40% and insurance pays 60% after copays, to Platinum, where you pay
only 10% and insurance pays 90% after copays. The Platinum monthly premium will
be much higher than the Bronze monthly premium.
Can You Get Medicaid if
You Retire at 62?
In most states, Medicaid is
available to adults under the age of 65 if their income is
below 138% of the poverty level. The poverty level for the 48 contiguous U.S.
states is $26,500. The poverty levels for Alaska and Hawaii are slightly
different.
What Is the Full
Retirement Age According to Social Security?
The full retirement age
is 66 if you were born from 1943 to 1954. The full retirement age increases
gradually if you were born from 1955 to 1960, until it reaches 67. For anyone
born 1960 or later, full retirement age is 67.
Disclosure: The
information you read here is always objective. However, we sometimes receive
compensation when you click links within our stories.
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