Planning for early retirement is great, but planning for healthcare coverage at the same time is sometimes more difficult. Healthcare costs are high, and finding ways to bridge the gap between the age you retire and the time you are eligible for Medicare may take a lot of planning. If you are close to your desired retirement age but are still a little ways off from Medicare eligibility, below are a few strategies for navigating healthcare costs during that gap period.
1. Consider COBRA Coverage
Under the Consolidated Omnibus Budget Reconciliation Act of 1985, you may be able to continue your employer-sponsored healthcare coverage for 18 months or longer. To continue the coverage, you must elect COBRA and pay the premiums plus an additional 2% fee. Depending on the type of coverage, this may be pricey, but if you have health conditions that require regular treatment or care, it may be one of the better options.1
2. Look at Your Spouse's Insurance Coverage
If your spouse has not yet retired and they have coverage available through their employer, the most cost-effective option might be adding yourself to their policy. Losing your previous medical coverage will act as a qualifying event, allowing you to go onto a spouse's policy even if it is outside the open enrollment period. It is important to consider the costs, deductibles, and co-insurance to ensure the option will provide you with the coverage you need.1
3. Research Private Insurance Companies
You also have the option of using private healthcare coverage through a local insurance agent or professional organization to secure the coverage you need to bridge the gap. When looking into private healthcare, you will be able to choose from varying coverage options and costs to build a plan to fit your healthcare needs. The main drawback is that these policies are often more expensive than other options if you are looking for lower deductibles and out-of-pocket costs.1
4. Price Coverage on the Public Marketplace
Before getting new insurance, you may want to price different coverage options on the public marketplace. If you are not eligible for Medicare, you are eligible for healthcare coverage in the public marketplace and will not be denied even if you have a previous medical condition. The coverage cost and types of coverage will vary greatly from plan to plan, which gives you many options to find the coverage you need that will be able to be worked into your budget.1
While it is critical to plan for healthcare coverage from the time you retire until you are Medicare-eligible, it is just as critical to be prepared for when you need to apply for Medicare. Ensure you are aware of all the information you need, documentation, and deadlines you will need to follow so you don't incur any penalties or lapses in coverage.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #516245-01
1 Managing Healthcare Costs, CMS.gov, https://www.cms.gov/about-cms/agency-information/omh/downloads/c2c-manage-your-healthcare-costs-508.pdf