Some of us luck out, and are able to retire earlier than planned. For others, an early retirement might happen due to disability, work conditions, or family circumstances. Whatever the reason, leaving your job could mean losing your group healthcare plan… So what do you do, if you’re not eligible for Medicare yet? If you’re retiring before age 65, look into these other options.
Join your spouse’s plan. It’s possible that your spouse is also eligible for a group healthcare plan through their job, whether or not you know about it. If you’ve always used your plan, the two of you might not have explored this option until now. Check with your spouse’s employer to determine whether a healthcare plan is available, but don’t join it just yet. You should evaluate the plan and compare it to the other options listed here, because group healthcare plans are not all created equally.
Investigate COBRA coverage. If your employer participates in COBRA, you could maintain your existing healthcare plan for 18 months, or up to 36 months in some circumstances. However, in many cases the premiums for COBRA coverage could be much higher than they were during your employment. So this is an issue to explore before you retire, if possible.
Shop for a plan on the state or federal exchange. In California, our state exchange is called Covered California. If you decide to relocate to another state in retirement, investigate whether they use their own state exchange or the federal one. Exchanges allow you to shop for healthcare plans and even apply for a subsidy to help with the cost of the premiums. Your subsidy is determined by your income and household size, so if your income will decrease in retirement (this is common) then you might get some help with your healthcare plan.
Planning ahead, when you can, is your safest bet. If you’re considering an early retirement, inquire about a health savings account now. This type of account allows you to save pre-tax dollars that you can use for qualified healthcare expenses. But when you don’t use funds in the account each year, it rolls over to future years. You can even take the account with you when you retire, and use it to pay for healthcare plan premiums, co-payments, deductibles, and more. Planning now means you could have more options for a healthcare plan in the event that you do retire before the age of Medicare eligibility.
And on that note, give us a call to discuss those options. We can help you locate the plans available in your area, and decide which type of coverage suits your situation if you decide to retire early.