“When obstacles arise, you change your direction to reach your goal; You do not change your decision to get there.”
Dozens and dozens of times each year, someone mentions to me, “I can’t retire before 65 because I can’t afford health insurance.”
Fortunately, many times, they are incorrect. They simply were unaware of how much income they could get from their investments, what their healthcare options are, and how to bridge-the-gap to Medicare.
For many pre retirees, and for most financial advisors I might add, pre-Medicare health insurance options are a murky subject.
My intent here is to shed a wee bit of light on that.
If you are working, you are likely covered by health insurance through your employer.
When you stop working, you’ll have two main options.
First is the “Marketplace” or “Exchange” which is an online service where individuals and families may shop for and enroll in medical insurance. The Marketplace consolidates all ACA-compliant plans to one location and is intended to simplify the process of determining eligibility, costs, comparing plans, and enrolling in health insurance.
Second is the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Which is the best option?
You can get cost sharing subsidies and premium tax credits for the Marketplace plans.
So if your income is high, you may not qualify for either of those cost reducing options. This is when COBRA may be the best option.
COBRA could be best if you want:
- To maintain your current network providers.
- You have reached your deductible for the current year. If you switch to an ACA plan, you reset your deductible.
- You anticipate going to a new employer or will qualify for Medicare soon and want to avoid many plan changes.
COBRA is a way you keep your former employer’s health insurance. Most of the time, they subsidize a part of your cost. So your cost will likely be higher. This coverage only lasts for 18 months (36 in some special situations).
Healthcare insurance planning is a crucial part of an overall retirement plan.
Make sure you go through all of your options in detail before you retire.
Check out our new video, This Savings Mistake Could Cost You $100,000.
