Retiring At 62 Or Before 9 Ways To Cover Your Health Costs For An Early Retirement
There are a lot of hurdles to overcome when figuring out how to retire early before 65. However, early retirement health care is one of the most fiscally challenging. Medical care is going to be expensive no matter when you retire, but the picture is more serious for those who retire early, by choice or otherwise.
Medicare isnt available until age 65 and self-insurance in your 40s, 50s, and 60s can be prohibitively expensive. Never mind that you typically face more health challenges as you age and are therefore more likely to use health care.
Use the NewRetirement Retirement Planner to find out now if you can afford an early retirement and explore the following 9 possibilities for how to cover early retirement health care costs:
Coverage Through The State Exchanges
Depending on what state you live in, you may be able to purchase private insurance through a state-run health insurance exchange. By law, these plans cover essential health benefits, pre-existing conditions and preventive care. Some plans include dental coverage. For those that dont, free-standing dental coverage is available.
If you apply through your states exchange, you may qualify for premium tax credits and lower out-of-pocket costs, depending on your income and household size. In addition, some states are also expanding Medicaid to cover more people with limited income.
Using The Health Insurance Marketplace
Any US citizen or national, except for those incarcerated, is eligible to sign up for a Marketplace plan through Healthcare.gov, put into place by the ACA.
You can search the Marketplace by inputting your location and see finalized costs after signing up for an account.
Every plan in the Marketplace currently covers several factors and services, including:
- Essential services, which includes doctors visits, outpatient and inpatient hospital visits, a prescription drug plan, mental health, pregnancy, and childbirth, among others
- Pre Existing conditions
- Preventive services
The Marketplace also helps users by giving ratings between one and five stars to different plans based on their quality, based on member experience, care, and insurance company administration.
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Coordination Of Benefits And Claims
I am covered under an active plan, but my spouse is age 65, what do we do?
- If you and your spouse are covered under a UN active plan, your spouse does not have to enroll in Medicare Part B until you retire
- Upon your retirement, your spouse must immediately apply for Medicare Part B
- If the Social Security Administration office requires a Verification of Employment Letter, submit the document to the Health and Life Insurance Section for completion
Do I have to file claim forms with Medicare and Aetna or Empire Blue Cross?
- If your medical provider participates in either the Aetna or Empire Blue Cross networks and accepts Medicare, your medical provider will file the claim forms on your behalf.
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% are 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.
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When You Plan To Retire And Are 65 Or Older
It is recommended to talk with your HBR or Human Resources department ahead of your retirement to plan your steps and submit your retirement paperwork at least 120 days prior to your planned retirement date.
Medicare Primary members have several options for health plan coverage. These options include the following plans:
- Humana Group Medicare Advantage Base Plan
- Humana Group Medicare Advantage Enhanced Plan
- 70/30 Plan
In order for a retiree to be eligible for the Humana Group Medicare Advantage Plans, the retiree must be enrolled in Medicare Parts A and B.
To enroll in Medicare, please contact the Social Security Administration at or www.socialsecurity.gov.
If you are eligible for State Health Plan benefits under the State Retirement Systems, then you will be auto-enrolled into either the Humana Group Medicare Advantage Base Plan or the 70/30 PPO Plan. The plan will be dependent upon when your retirement paperwork is processed and approved by the State Retirement Systems. Please see the table below.
A Spouse’s Workplace Coverage May Cover You Before Medicare Signup
You also may be eligible to join a working spouses workplace plan. Although they arent required to do so, some employer-provided health plans will cover an employees family members. Losing your own coverage qualifies for special enrollment outside the companys usual open enrollment window. The costs, though, may not be the same as your spouses because employers dont have to contribute anything toward a family members coverage.
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Key Health Care Options Between Early Retirement And Medicare
“With more and more employers dropping their pre-65 retiree medical plans,* the questions of where and how to get the right coverage did not disappear with the Affordable Care Act and may still create indecision and uncertainty in someone who is otherwise ready to retire,” says Greg Gagliano, senior vice president of product management at Fidelity.
If you are retiring before age 65 and you don’t have access to retiree health care coverage from your employer, there are 4 main ways to obtain health care coverage to bridge the period between retirement and Medicare:
How To File A Claim
As all claim processes for active staff as well as retirees are administered and processed by the respective Third-Party Administrators , we kindly refer you to your TPA member page in order to access information related to the claim processes and requirements. Please find below a list of the member pages for the different plans:
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Bridging The Gap Between Retirement And Medicare: Early Retirement Health Insurance Options
Many baby-boomers are facing the prospect of retirement. For some in this age bracket a lifetime of hard work will add up to a good pension and ongoing benefits after they leave the daily grind. But for others, including those whose employers have converted their retirement benefits, the prospects are more precarious.
In conjunction with the National Association of Insurance Commissioners, I want to offer these tips for those who are considering early retirement or who are already exploring their retirement health insurance options.
As you age, health care becomes an even more important commodity, but unless you have a good employer plan health insurance can be harder and more expensive to obtain prior to reaching Medicare eligibility at age 65. If your employer is not offering to extend health insurance coverage beyond your retirement date, here are some options for finding continuing coverage.
Your Action Plan: Health Insurance In Retirement
- If you retire before youre 65, learn about your health insurance options to cover you before youre eligible for Medicare.
- If you retire when youre 65 or older, find out about Medicare, Medicare Advantage and Medigap.
- If you have dual eligibility for Medicare and Medicaid, learn how they work together.
- If you retired from the military, find out if youre eligible for VA health benefits and TRICARE health insurance.
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How Does Medicare Work With My Job
Once you stop working, Medicare will pay first and any retiree coverage or supplemental coverage that works with Medicare will pay second.
You may be able to get COBRA coverage to continue your health insurance through the employers plan .
Dont wait until your COBRA coverage ends to sign up for Part B Getting COBRA doesnt extend your limited time to sign up for Medicare.
If you get COBRA:
Before you sign up for Medicare
Your COBRA coverage will probably end when you sign up for Medicare.
After you sign up for Medicare
COBRA pays after Medicare .
Finding The Right Plan For You
Whenshopping for health insurance its important to consider your currenthealthcare needs and any needs you anticipate in the future. Its alsoimportant to consider your budget and what you can afford.
Need help figuring out what coverage is right for you? eHealth is here to help. eHeath is the first and largest online health insurance brokerage, so you can be sure that you will find the best plan for you and your needs with us.
Our online tools are here to not only help save you money but help you keep your doctors when making the switch. eHealths comparison tool allows you to easily compare a large range of health insurance options, so that you can find a plan that fits your budget and coverage needs.
Start shopping for individual and family health insurance now!
And when you turn 65 and are ready for Medicare, let eHealth help you with that transition as well.
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The Affordable Care Act
The Affordable Care Act was designed for people who do not get healthcare 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 once you have exhausted your deductible.
The average cost of Bronze coverage for 2021 was $328 a month, and the average cost Gold coverage 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.
Coverage On The Open Market
If you prefer, you may purchase health insurance directly from the provider of your choice, rather than go through the state or federal exchanges. Plans purchased directly from providers offer the same basic benefits as those purchased on an exchange. However, if you buy insurance outside of an exchange, you will not be eligible for premium tax credits or lower out-of-pocket costs based on your income.
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When You Approach 65 And Plan To Continue Working
Many State Health Plan members continue working after the age of 65. The State Health Plan mails you a Medicare eligibility letter prior to your 65th birthday. The letter asks that you confirm your eligibility for Medicare benefits.
If you are actively working for the state after 65, the Plan will continue to be your primary coverage and Medicare will be secondary. This means you can choose to enroll in Medicare Part A but you can delay enrollment into Medicare Part B until you actually retire from state employment. However, it will be important to remember to enroll in Medicare Part B to become effective as of your retirement date.
Utilize State Or Federal Health Exchanges Before You’re Eligible For Medicare
The Affordable Care Act, which established the health exchanges, was designed for individual health coverage and requires that all plans sold through the exchanges cover pre-existing conditions. The ACA has an annual open enrollment, which in 2020 falls between Nov. 1 and Dec. 15, but if you leave or lose your job at any other time of year, you have 60 days from that point to sign up for health insurance during a special enrollment period.
To apply for coverage, go to Healthcare.gov or your states health insurance exchange. ACA plans vary depending on the premium, provider network and out-of-pocket costs, such as deductibles and copayments. The plans are categorized by color: bronze, silver, gold and platinum, with higher premiums and lower out-of-pocket costs as you move up the color scale.
The premiums for ACA plans are age-based, so for those above 60, they arent cheap, says Nancy Damato, director of group benefits for consulting firm RDA Benefits Services in Marlton, N.J. The rates vary by location. For example, Damato says, a 62-year-old man in southern New Jersey would pay $690 a month for a health plan with a $3,450 annual deductible and a more restricted provider network, or as much as $1,940 a month, with a $1,500 annual deductible, for a plan with a wider network including some out-of-state doctors.
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Insure But Also Take Good Care Of Your Health
The biggest thing to remember about early retirement, though, is to stay active and healthy, Purkat shares.
The worst thing you can do in retirement is sit around the house all day, He says. Be sure to exercise, stay involved in your community or even work a part-time job. These acts will all contribute to your overall health and wellbeing and can help keep your health care costs lower.
Studies have shown that staying physically active can also help fight off the onset of Alzheimers, the most common neurodegenerative disorder. This underscores the danger of a sedentary lifestyle.
Individual And Family Health Insurance
In some cases, buying your own health insurance may be your only or best option for finding coverage before you age into Medicare.
Navigatingthe health insurance marketplace can be difficult, especially if youve onlyreceived health insurance through your employer in the past. But eHealth ishere to guide you through it!
Youcan enroll in health insurance during the annual openenrollment period,which runs from November 15th through December 15th, inmost states, for coverage starting on January 1st of the followingyear. However, you will likely qualify for a special enrollment period when youretire this 60 day enrollment period allows you to enroll in health insuranceanytime of the year.
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Spousal Benefits Can Enable Insurance For An Early Retirement
An option that you may have if you are married is to use your spouses health insurance plan, Purkat explains.
I see in many cases, one spouse may be retiring early, but the other is still working full-time, Says Purkat. This is a great situation because if you can cover the years before you turn 62 with your spouses insurance, it can save you a lot of money.
What Are The Pros And Cons Of Short
For starters, you’ll have health insurance protection in the unexpected event of an accident or major illness. As with any choice, there are pros and cons to opting for a short-term health plan.
Let’s start with the pros:
- Flexible plan duration: Your coverage period can range from 30 to 364 days, with policy renewal of up to three years, depending on your states rules.
- No long-term commitment: You can choose how long you want to be covered . The coverage automatically ends after that date. Plus, you can cancel your plan anytime.
- Enroll anytime: You can enroll in a temporary health insurance plan any time of year.
- No waiting period: You can get coverage as soon as the day after you apply.
- Keep your doctor: Many temporary health insurance plans have an open network, which means you can see any doctor or hospital youd like. But it’s wise to double check your plan policy to make sure you’re not going out of network.
And the cons:
- No coverage for pre-existing conditions. Short-term health insurance policies are underwritten for risk, which means you can potentially be denied coverage if you have a pre-existing health condition such as diabetes or cancer.
- Limits on the number of covered doctor visits.
- Limits on prescription drug coverage.
- No coverage for maternity.
With these pros and cons in mind, here are five examples where choosing short-term health insurance may make sense:
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