Early Retirement – What Are Your Healthcare Options?

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By Brenda Panin

seniorcoupleexercisesmallOne of the biggest concerns for retirees in today’s economy is healthcare. For those workers who are thinking of retirement prior to turning 65, health insurance can become a major consideration. Where these employees may have enjoyed the benefits of a group health insurance plan with their employers, they now find themselves faced with having to consider options on their own. Hopefully, the following ideas will help you in assessing what you can do if you are pondering an early retirement.

1. COBRA insurance- Acronym for Consolidated Omnibus Budget Reconciliation Act. This allows workers who have had group health insurance with their previous employer the opportunity to continue that same coverage at a group rate. However, the downside is that you pay the entire insurance premium which can be quite costly. You will pay your share of the cost as you may have done before, but, in addition, you now also pay the employer’s portion, an amount you may have never considered. Moreover, this coverage only lasts up to 18 months after your employment. While COBRA coverage is a relatively expensive option, it might be a short-term solution if you are within a few months of turning 65 and qualifying for Medicare.

2. Employer-offered retiree health insurance – Some employers may offer their own retiree insurance plans to long-term employees. Usually, a formula of combining your age and years of employment is used to determine eligibility. Keep in mind that this is not the same as COBRA coverage, but insurance plans that are specifically set up for retirees. Due to the, you may want to check with your employer early on if you are seriously considering early retirement.

3. Spouse insurance – If your spouse works and has individual coverage through his or her employment, consider having them check to see if their insurance can be converted to a family health plan. The additional premium may cost less than other options.

Unfortunately, many early retirees have to return to full-time work to obtain health care benefits.

4. Part-time employment insurance – Unfortunately, many early retirees have to return to full-time work to obtain health care benefits. However, there are companies that offer part-time employees full health benefits after a period of time. Similar to the COBRA insurance, if you are within a few months to a year of turning 65, this could be a temporary solution until getting Medicare.

5. Private insurance – This is perhaps the most costly option. While other options may involve employer group discounts, purchasing private insurance offers no such discount. Also, while pre-existing conditions may not be a factor when dealing with former employers or coverage through a spouse, starting fresh with a private insurance company may be different.

6. High-deductible catastrophic insurance – This option allows for a low premium, but carries a high deductible and only covers major medical or catastrophic occurrences. This option may not be preferable for younger retirees whose out-of-pocket costs for other medical needs would be quite high.

Undoubtedly, the recent health reform laws have an impact on the foregoing options. With a great number of workers now retiring between the ages of 55 to 64, recent health care reform laws have targeted businesses to offer more employer-sponsored health plans and in some cases are offered incentives to do so. As well, the new laws have prohibited private insurance companies from denying insurance based on pre-existing conditions.

Above all, whatever option or path you happen to pursue regarding early retirement healthcare, start your research early and investigate your options. Obviously, your choices will be different if your only just a few months away from 65 rather than a few years.

– Brenda Panin is a passionate blogger interested in health and fitness. In her free time she enjoys exercising, preparing healthy meals for her family and reading books and articles related to health insurance and new policies.