Twenty years ago if you retired before turning 65 and becoming eligible for Medicare health insurance wasn't a big issue. If you didn't have retiree medical benefits you just went out and bought an individual policy with a premium of maybe $300 a month.
My how times have changed. If you retire before turning 65 and become eligible for Medicare here are five health insurance options you need to know about:
1. You could do nothing, in other words, roll the dice, and don't purchase coverage at all. Most financial advisors, myself included would consider this to be a very high-risk proposition because one heart attack could destroy, your financial life.
2. You could purchase an Obamacare policy on the healthcare exchange. This usually makes sense if your income is low enough to qualify for tax credits For couples this would be about $65,000 or less, but the definition of income isn't what you would think.
You have to include 100% of social security income and 100% of municipal bond interest.
While you could try and figure this out on your own at the government website our best suggestion would be to use the help of a- health insurance specialist.
3. Is to enroll in COBRA, you'll end up paying 100% of the cost of your companies medical plan, which could be significantly more than what you're employer has been asking you to contribute as an employee. COBRA coverage usually is the better option if your income is high enough that you don't qualify for tax credits.
4. It might make sense to go back to work maybe for a different company that offers part-time employees full medical benefits. Several large corporations are doing this. The tradeoff is you may not have as much control over your time as you would like.
5. The fifth option that you might not know about is an insurance alternative called Medi-Share. Technically these aren't insurance policies. They are a medical sharing cost-sharing program typically sponsored by faith-based organizations.
If you are reasonably healthy and live a healthy lifestyle this could be an attractive option. Costs could be 50% lower!
However, there is a catch. Routine care isn’t covered and instead of a deductible, you’ll pay an annual household portion before any eligible medical bills would be covered. Your annual household portion could range from $3,000 to $10,000 and will affect your monthly share amount, which is similar to an insurance premium. Because Medi-Share is not insurance, members do not pay premiums and deductibles, they pay monthly share amounts and annual household portions.
Which health insurance option is right for you if you retire before 65? The best answer is it all depends on your unique personal situation and health history. We think your best course of action would be to use the services of an experienced independent health insurance expert.
Keeping your health insurance cost as low as possible in retirement will definitely move you one step closer to experiencing your version of an incredible retirement doing what you want when you want.