Six Ways to Secure Health Insurance If You Retire Before 65

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Are you in this situation?

• You are under 65.
• You are retiring.

If so, this can be both an exciting and stressful time.

Many people leave the workforce before reaching 65, the age when Medicare begins.

The challenge is clear: once you stop working, you may lose your employer-sponsored health benefits. Yet if you are still under 65, you are not eligible for Medicare, which means you need another way to cover medical expenses until that coverage starts. For early retirees, finding health insurance quickly becomes a top priority.

Some people are pushed into retirement and may need coverage immediately. Others are offered early-retirement packages that include health benefits, which can be a welcome advantage.

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Six Health Insurance Choices for Early Retirees

Health coverage is one of the biggest issues to sort out when leaving a job, especially for older adults who are more likely to need medical care. Figuring out the best option for your needs and budget can take some effort.

1. Join Your Spouse’s Plan

If your spouse or partner has coverage through an employer, you may be able to move onto that plan. Leaving a job is generally considered a qualifying life event, and you usually have 30 to 60 days after losing coverage to enroll in your spouse’s workplace plan. Adding you may increase the amount taken from your spouse’s paycheck, so be sure to account for that cost in your budget.

This is often the easiest solution, but it is not available to single people or to those whose partners are not working or do not have job-based coverage.

2. Keep Working Part Time

Retirement does not have the same meaning for everyone. You may prefer a part-time job that includes medical benefits.

Under Affordable Care Act rules, larger employers must offer health coverage to employees who work at least 30 hours a week. Still, some employers offer benefits to part-time workers who put in fewer hours as a way to attract applicants.

3. Buy Private Health Insurance

You can also purchase coverage directly from private insurers. This route may give you more plan choices than the public marketplace, though you generally cannot use tax credits the way you can with marketplace plans.

Short-term health insurance can serve as a bridge until Medicare begins, helping protect you from large medical bills if an unexpected health issue arises. That kind of temporary coverage can also reduce stress while you wait for Medicare eligibility.

If Medicare is still several years away, long-term private coverage may be an option. Premiums depend on factors such as age, location, income and expenses, family size, and health history.

You can shop for private plans directly from insurance companies or work with an insurance agent or broker.

4. Use COBRA Coverage

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is overseen through the U.S. Department of Labor and is intended to help people avoid a gap in health coverage after losing a job.

It has one major benefit and two clear drawbacks. The benefit is continuity: you can keep the same doctors and medical providers because your coverage does not change. The drawbacks are that COBRA usually lasts only 18 months and can be costly. If you enroll, you must pay the share of the premium your employer used to cover, plus a 2% administrative fee. If you have a Health Savings Account, you may be able to use those funds to help pay premiums.

Employers with at least 20 workers must offer COBRA to employees who had employer-sponsored coverage when they lost their job. You normally should receive notice of COBRA eligibility within 14 days of the qualifying event, and you have 60 days to decide whether to take it.

5. Shop on the Affordable Care Act Marketplace

The Affordable Care Act was created for people who do not get insurance through an employer, a group that has grown as more companies rely on contract and freelance workers instead of full-time employees.

The marketplace can be complicated, and enrollment is available only during a limited window. Open enrollment generally runs from Nov. 1 to Jan. 15. If you enroll by Dec. 15, coverage usually starts on Jan. 1. If you enroll between Dec. 16 and Jan. 15, coverage typically begins on Feb. 1.

ACA plans come in four levels: Bronze, Silver, Gold and Platinum. These tiers differ mainly in how much the plan pays after you meet your deductible.

Bronze plans generally have the lowest premiums and highest deductibles, while Silver plans have higher premiums and lower deductibles. Costs vary by state, and if you qualify, federal premium tax credits may help reduce the price.

You can compare and enroll in plans at healthcare.gov, which also offers chat support if you have questions. The site can also help you find approved agents and brokers in your area.

6. Check Whether You Qualify for Medicaid

Forty states and the District of Columbia have expanded Medicaid under the ACA. In those places, adults under 65 may qualify if their income is below 138% of the poverty level. But 10 states — Florida, Alabama, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming — have not expanded Medicaid. In those states, childless adults without disabilities generally do not qualify, no matter how low their income is.

Whatever option you choose, it helps to have all of your information ready, including personal details, financial information, health history and a clear idea of what you need from your coverage.