How To Retire Early And Get Health Insurance


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How to Get Health Insurance When You Retire Early

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Subsidized Plans From The Affordable Care Act

When I mentioned my premiums earlier through the Affordable Care Act, how many paused when they saw $200?!

Yep, I qualified for a subsidized plan my first year being self-employed and it was glorious.

Keep in mind: That premium was 5 years ago. Health care costs increase faster than standard inflation. Today I think I would’ve paid more. Subsidized plans vary from state to state and based on your income level within the qualifying range.

With FIRE and health coverage income becomes the key phrase as Pete Adeney, a.k.a., Mr. Money Mustache, has pointed out: If you are truly retired with, say, a $1 million portfolio and choosing to live off $25,000 of annual dividends, that is your only taxable income, and you would qualify for very low health insurance premiums.

With that said, it does bring up an ethical and moral dilemma: you can technically afford more, so should you be leaving those plans for the people who actually need them rather than driving up the costs by opting into them?

Lastly, I wouldn’t count on subsidized plans forever. If you accidentally make too much, you won’t qualify come tax time and will have to settle up a hefty outstanding bill. Plus, our political climate is unstable and we really don’t know the future of ACA. These plans could change at any time.

The Early Retirees Guide To Health Insurance

Hereâs how to find health coverage that fits your new lifestyle.

Youâve spent years preparing for this day. Youâve worked hard, faithfully saved your money, and the time has finally come. Congratulations! Youâre about to retire early and will have an abundance of free time on your hands. But before you enter your post-career years, have you considered how not working will affect your health care?

Too Young for Medicare?

Generally, Medicare is available for people age 65 or older. But plenty of people choose to stop working before their 65th birthday and, as retirees, are no longer eligible to receive insurance coverage from their employers. Even if you carefully time your retirement to align with Medicare coverage, a younger spouse might need coverage until they qualify. So how do you manage the gap?

Browse Your Health Insurance Options
Find Out If You Qualify for Financial Help

If you meet specific income requirements, Covered California can match you with financial help that can lower the cost of monthly health insurance premiums. There are also cost-sharing reductions available that reduce out-of-pocket expenses like copays and deductibles. The amount of financial help you may receive is based on your age, how much money you make, your household size and where you live.

Have a Plan

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Your Spouses Health Plan

If your spouse is still working and has access to a health insurance plan that offers spousal coverage, youll be able to enroll in that plan when your own coverage terminates. Your loss of coverage will trigger a special enrollment period for your spouses plan, just as it does for a marketplace plan.

Even if both you and your spouse were covered under your plan, youll both be able to transition to your spouses employers planassuming coverage is availablewhen your existing plan terminates.

Note that if youre eligible to enroll in your spouses plan, youre likely not eligible for a premium subsidy for a marketplace plan. As long as your spouses coverage provides minimum value and is considered affordable for just the employee, the cost to add a spouse is not taken into consideration.

Although the American Rescue Plan made marketplace premium subsidies larger and more widely available, it did not fix this family glitch. The Build Back Better Act also does not address the family glitch.

What If Im Planning To Retire Early Orwork Past 65

Picking the Right Early Retirement Health Insurance ...

You cant sign up for Medicare early, but if you leave your job before turning 65, you can stay on a company plan for 18 or 36 months through COBRA . Be sure to compare options through the Affordable Care Act and your insurance agent.

If you plan to keep working after 65, Kinney warns, you should still sign up for Medicare if youre self-employed. Ive worked with people who assumed that if they werent collecting Social Security yet, they also could wait to sign up for Medicare, she says. So they kept paying privately for their health insurance and didnt sign up.

The result: a hefty penalty. As soon as youre eligible, youve got to enroll unless youre part of an employer plan, she says.

The information in this article was obtained from various sources not associated with State Farm® . While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

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Early Retirement Health Insurance: What You Should Know

Ty Bernicke, CFP®, is President and Executive Wealth Manager at Bernicke Wealth Management based in Eau Claire, WI.


Affordable health insurance is one of the biggest obstacles preventing people from early retirement. The health insurance gap from retirement to Medicare starting at age 65 can be expensive for those who do not have retiree health insurance provided to them by a former employer. The reason health insurance is frequently expensive for many people has less to do with the health insurance and more to do with poor planning.

The reason ACA insurance costs increase as MAGI increases can be attributed to tax credits. Tax credits are the governments way of providing lower-cost insurance to people with lower incomes. The lower your MAGI, the greater the amount of tax credits you receive, and these tax credits can be used to offset the cost of your ACA health insurance in retirement. Fortunately, many strategies can be used to reduce your MAGI without compromising your spendable income in retirement. Unfortunately, many people delay this type of planning until after retirement, which significantly reduces the benefits.

To understand how to decrease your ACA insurance costs without compromising your spendable income before age 65, it is essential to understand what counts as MAGI and what does not count. The following is a partial list of income streams that count and do not count toward modified adjusted gross income:

Gains from appreciated investments.

Step 1

How Much Does Health Insurance Cost For Early Retirees

Your health insurance costs will depend on your age when you retire, what level of plan you choose, and whether you’re eligible for premium subsidies. The Kaiser Family Foundation reported the average monthly cost for a 40-year-old on a mid-tier plan in 2021 was $452. That number would be higher for older people.

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Who Can Help Me Sort Through All This

Federally funded State Health Insurance Assistance Programs offer certified, unbiased counselors to help you explore Medicare options. Their services are free, and they have offices nationwide.

Plan on at least two meetings to get up to speed, says Kinney maybe a group overview first and a one-on-one session a month later, when a counselor can help you sign up. To locate the office nearest you, call 877-839-2675 or go to and click on Find Local Medicare Help.

What Is The Best Medical Insurance For Seniors

How to Retire Early AND Have Health Insurance!

Medicare: The Most Popular Senior Medical Insurance Plan

  • Medicare Part A, also known as hospital insurance, is designed to cover hospitalization and home health care.
  • Medicare Part B includes medical insurance.
  • Medicare Part C is known as Medicare Advantage.
  • Medicare Part D covers prescription drugs.

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Dont Presume You Dont Need Medicare While Youre Working

Just because you have insurance through work doesnt mean you wont need to sign up for Medicare when youre eligible.

If you miss your initial enrollment period for Medicare you may have to pay a 10% premium penalty for Medicare Part B and Part D for each year you should have been enrolled. Those penalties stick with you for life. If your employer has fewer than 20 employees you should plan on signing up right around your 65th birthday.

Strategies For The Early Retirement Health Insurance Dilemma

Early retirement has become a favorite topic in the personal-finance blogsphere. There are even blogs devoted primarily or entirely to the topic. The general theme is save enough money regularly, and invest it faithfully , and you?ll be able to retire at 55, 50, 45, 40, 35 or even 30. I?ve read a lot of articles on this topic, and if there?s one consistency I?ve noticed it?s that the early retirement health insurance dilemma is completely ignored.

I suppose there?s good reason for that. If it?s taken into consideration, it throws the whole arrangement into doubt. Health insurance is probably the single biggest crisis facing America today. And as bad as it is right now, it promises to get worse.

That?s true on both a national level and an individual one. On the national front, premiums are increasing predictably each and every year. And on an individual level, since we?re all getting older every year, that age-related health insurance premium increase thing is kicking in reliably.

Turning a blind eye to the early retirement health insurance dilemma is akin to ignoring the elephant in the room. Yet it?s exactly what happens in virtually all early-retirement scenarios. After all, if you have to factor health insurance into the equation, the whole rosy scenario collapses.

How bad is the early-retirement health insurance problem, and are there any solutions?

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Retiring Early And Paying For Health Insurance

As a financial advisor, I meet with individuals and couples who hope to retire early all the time – I mean, who doesnt. Once I sit down with them for some basic number-crunching, we work together to create a long-term financial plan that will guide many of their decisions.

This can include how much to invest, when and where to invest, and ways to increase cash flow and returns while keeping long-term costs and taxes to a minimum.

While most of my clients have similar fears about , theres one single worry that pretty much everyone I encounter shares how to pay for health insurance in the midst of wanting to retire early.

Every one of my clients will eventually qualify for Medicare at 65, but what happens until then? While the passage of the Patient Protection and Affordable Care Act, also known as Obamacare, made it so that anyone can get approved for health insurance regardless of pre-existing conditions, those major changes came with a dramatic cost.

According to a study by, average 2018 health insurance premiums worked out to $790 per month for individuals 55 to 64. Even individuals who fell into the 45-54 age group still paid an average of $541 per month for premiums only.

In other words, health insurance isn’t cheap.

How To Get Health Insurance When You Retire Early

Pin on Retirement

Is the thought of losing your employer-sponsored health plan keeping you from retiring early? Dont stress. There are plenty of ways you can kick off your golden years early while still having affordable health insurance to fall back on when you need it. This guide will walk you through all your options so you can pick the right one and leave the 9-to-5 life for good. And if you want some personalized attention, try our free financial advisor matching tool to get linked to an expert in your area who can best create a strategy for you.

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How Do I Reduce My Health Care Costs In Retirement

Apart from working to stay healthy, there are other ways you can manage your healthcare costs in retirement. Doing so requires carefully planning your income so you don’t bring in too much to qualify for subsidies for a health plan. Putting money in a health savings account is a great way to stow away tax-free money for retirement health expenses. You might also consider getting a part-time job that includes health benefits.

How Can I Save Time

You’re probably more interested in keeping up with your grand-kids, or improving your golf game, than thinking about health insurance. Save your time for the things that matter. It helps to choose a plan with a customized, easy-to-use online website and mobile app, so you can manage your health wherever you are. Get health information, find in-network providers, pay your health insurance premiums, view your health care claims, and print temporary ID cards.

And when you have a health concern on your mind, you want answers. It helps to have a health information line to call. Talk to a clinician 24/7 to get information and help finding answers to your health-related questions.

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How Does Medicare Work

Big picture youll decide between the following:

  • Original Medicare plans include Hospital and Medical insurance. You can also sign up for drug coverage . Original Medicare plans cover any doctor or hospital, but youll usually pay out of pocket until you reach a deductible. Thereafter, youll pay 20 percent of the approved amount . Theres no limit on what you pay out of pocket every year.
  • Medicare Advantage plans work like health maintenance organizations, with approved provider networks drug coverage is usually included. Once you reach the annual limit on out-of-pocket expenses for covered services, youll pay nothing for them for the rest of the year.

About The Author: Jason Ramage

How to Get Health Care if You Retire Early

Jason Ramage is a Paraplanner for TouchPoint Wealth Partners in Cincinnati, Ohio, a Member Firm of Valmark Financial Group. To him, financial planning is about helping people be financially successful while living the life they are made for. He enjoys the adventure of raising a family, board games, cycling, camping, and delicious finds at Japanese convenience stores.

This article is for informational purposes only and is not providing investment or tax advice. Please consult with an advisor concerning your personal situation. Among the companies mentioned in this article, Jason owns a position in FedEx . Companies are named solely as examples with no intended investment recommendation.

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Opening A Health Savings Account Tied To A High

As you shop around, you could consider purchasing a high-deductible health plan and opening a health savings account . The high-deductible health plan will likely have lower premiums than others youâre considering, and the money you invest in an HSA, only available to those who purchase a high-deductible plan, can be used to pay for qualified medical expenses not covered by your insurance. Contributions are tax-deductible, and any interest or other earnings are tax-free. Withdrawals are also tax-free, as long as theyâre used to pay for qualified medical expenses. Any unused balances remain in the account, potentially gaining in value. No other type of tax-advantaged savings account offers all of these features.

âOnce youâre eligible for Medicare and enroll, you can no longer contribute to an HSA, although you can draw on your HSA funds to pay certain Medicare premiums and out-of-pocket medical expenses.â Thereâs also no limit on when you can request HSA reimbursements, notes Storey. âYou can tap your account any time you need the money.â

Dont Only Work Longersave More Now

Even if your health remains solid and your will to work keen, you may not be able to maintain your highest earning years through age 70. While more than 25% of workers surveyed by EBRI in 2021 say they expect to work until at least age 70, just 6% of retirees surveyed made it that long.

Retiring at 70 is a great goal, says Henderson. But theres a really good chance you wont make it that long, so dont want to let up on savings while you can.

Moreover, research from the Urban Institute and ProPublica found that more than half of adults lost a full-time job after they turned 50, and only 10% of those workers who were fired or laid got another job that paid as well.

In short, as with those retiring at 65 or full retirement age, youll want to make sure youre putting in as much as you can into your retirement accounts while you have the highest possible income.

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