There are many hurdles to overcome when figuring out how to retire early, before age 65. however, health care for early retirement is one of the most fiscally challenging. Health 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 isn’t available until age 65, and self-insurance at age 40, 50, and 60 can be prohibitively expensive. It doesn’t matter that you generally face more health problems as you get older and therefore are more likely to use medical care.
Use the new retirement planner to find out now if you can afford to retire early, and explore the following 9 possibilities on how to cover the health care costs of early retirement:
1. go private
private individual coverage may be your most expensive but most flexible insurance option. It is worth quoting this option and comparing it with other insurances.
2. use obamacare for early retirement
Whether you like the program or hate it, for a few years obamacare made health insurance costs for early retirement much more affordable.
one of the ideas behind obamacare was that everyone could get insurance; pre-existing conditions were not a factor. this was especially helpful for people in their 50s and 60s, most of whom have had or are facing some kind of health problem.
While you can still get coverage if you have a pre-existing condition, obamacare insurance has become much more expensive and the future of the program is changing.
Many insurers have raised premiums significantly, in part because the Trump administration decided to suspend payments to insurers that cover the discounts they must give some low-income customers to cover out-of-pocket costs.
however, if you retire early, it’s worth exploring your obamacare health coverage options at healthcare.gov.
- real life questions and answers (including cost estimates for the Affordable Care Act) for health insurance prior to medicare eligibility.
- whole foods (must work 20 hours per week. eligible after first 800 hours).
- costco (20 hours/week. eligible after first 180 days).
- lowe’s (no minimum hours/week. eligible within first 31 days of employment).
- starbucks (20 hours/week.)
- ups (1 hour/week. Eligible after first year of employment.)
- jp morgan chase (20 hours/week. eligible after 90 days).
- Samaritan Ministries
- Christian health ministries
- shared health freedom
3. Early Retirement Health Insurance: Are You Eligible for Cobra?
In certain circumstances, if you lose your job, you may still be eligible to benefit from your company’s group health plan for a limited period of time. “Using the Consolidated Omnibus Budget Reconciliation Act (COBRA), you can expect to pay about 2 percent more than the full cost of health insurance in your old company’s plan,” says Northwoods Financial Planning Founder and CEO Corey purkat.
“It’s going to be more expensive than if you were still employed at a company, but it’s still going to be less expensive than paying for your health insurance on your own,” he says. “The only way someone wouldn’t be eligible for cobra would be in situations where there was a very good reason someone was fired, like a criminal investigation.”
Cobra continuation coverage is generally available for a relatively short period of time, typically 18 to 30 months.
4. spousal benefits may allow insurance for early retirement
One option you may have if you’re married is to use your spouse’s health insurance plan, Purkat explains.
“I see that in many cases, one spouse may retire early, but the other is still working full time,” Purkat says. “This is a great situation because if he can cover the years before his 62nd birthday with his spouse’s insurance, it can save him a lot of money.”
5. self-fund with a health savings account (hsa)
If you’re retiring at or before age 62, or anytime before Medicare eligibility at age 65, and you really have no other options left, you can always self-insure, Purkat explains.
“Unfortunately, this can be the most expensive option,” he says. “but, if you have time on your side, i always recommend a health savings account (hsa) to help with some of the high copays.”
An HSA is a good option no matter your age, and it can be a big help if you’re retiring early and need funds to pay copays and other things before your high-deductible health plan kicks in. or other out-of-service expenses. out-of-pocket health care costs.
Little known fact: HSAS can also be used to cover most dental and vision costs!
“This type of savings account has triple tax benefits and also grows tax-free as it sits,” Purkat says. “With this option, it makes it a little easier for someone to self-fund their health insurance and then use the funds from an HSA to pay premiums and intermediate costs.”
Please note that to be eligible for an HSA, certain criteria must be met. Before you establish and contribute to an HSA, make sure you’re actually eligible to do so.
Learn more about the many benefits of an HSA.
6. ensure, but also take good care of your health
however, the most important thing to remember about retiring early is to stay active and healthy, purkat actions.
“The worst thing you can do in retirement is sit at home all day,” he says. “Make sure you exercise, stay involved in your community, or even have a part-time job. All of these acts will contribute to your overall health and wellness and can help keep your health care costs down.”
Studies have shown that staying physically active can also help fight the onset of Alzheimer’s disease, the most common neurodegenerative disorder. this underscores the danger of a sedentary lifestyle.
7. get a part-time job with benefits
An increasingly popular option for getting medical benefits for early retirement is a part-time job.
You can retire, but find a low-stress job somewhere that offers health care as a benefit for full- and part-time employees.
There are fewer and fewer national companies offering these types of benefits, but take a look at the following companies that do offer healthcare to your part-time help. To qualify, you’ll need to work a trial period, and typically commit to working at least 20 hours a week:
8. explore shared health care programs
Shared care programs are a very new phenomenon. these programs are defined by a group of like-minded people coming together to help pay for each other’s medical expenses.
Most popular shared health care programs are Christian-based and require belief in the Christian faith to participate. (These shared health programs may be formed based on statutory religious exemptions.)
dr. Jim Dahle, the white-coated investor, describes the programs like this: “One option that one of my partners has used (for early retirement coverage) is to use one of the Christian shared health ministry options. This isn’t really health insurance, but it’s similar to it in that you can use it to help lessen the burden of unexpected health care costs.”
“The real benefit is that it is much cheaper. Now, it doesn’t cover some things that health insurance does. so there’s some risk, but their theory is that if you develop something that’s terrible or some chronic condition, within a few months, you’ll be able to go to the exchange and buy an affordable care act eligible policy and a type of coverage [your] bets that way.”
These are some of the most popular Christian health care sharing programs:
alieracare can be more flexible and only requires a statement of belief. you can be Christian, Jewish, Muslim or non-denominational to participate.
9. have a good overall retirement plan
covering your health costs as long as you retire, sooner or later, is important.
It is absolutely necessary to have an overall plan on how to finance retirement.
A really good retirement plan defines how much money you have now and in the future and describes how much you will spend now and in the future. the new retirement planner is an easy-to-use tool that helps you solve this. This tool was recently named the best retirement calculator by the American Association of Individual Investors (AAII).