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Financial Planning and Retirement

Early Retirement Health Insurance – Know Your Options

Early Retirement Health Insurance – Know Your Options

Author: Dan Kline, Director, Financial Planning

Imagine you’ve been saving for decades planning for an early retirement but when the day comes to retire from the workforce, you realize you forgot to adequately plan for health insurance and you have to keep working until Medicare kicks in.

More than half of workers plan to work past the age of 65, according to the Annual Transamerica Retirement Survey of Workers. But who says retirement isn’t until you turn 65 or some certain age? Retirement should be when one has met their goals and objectives to retire. Unfortunately, too many begin to plan (or fail to plan) for this too late. It causes many to believe that they need to wait until they are eligible for Medicare.

How Do I Retire Early and Maintain Health Insurance Coverage?

It’s a common question as people plan for retirement—how will I pay for health coverage as a retiree before I am eligible for Medicare? Health insurance can be one of the more significant costs in retirement and should be given serious attention. However, before closing the door on retiring before you turn 65, it’s important to understand other health insurance options, including:

  • Your Spouse’s Health Insurance:

    If your spouse plans to continue working after you retire, you may be eligible to be added to his or her health plan.

  • Trade Organizations:

    Depending on your profession, some trade organizations offer health insurance plans.

  • The Healthcare Exchange:

    Healthcare exchanges are organizations in each state through which people can purchase health insurance. People can purchase health insurance that complies with the Patient Protection and Affordable Care Act (ACA). There may also be subsidies available depending on your income level.

  • Private Health Insurance:

    You can look into purchasing a health plan directly from an insurer, however, this may be a more expensive option.

  • Veteran’s Administration (VA) Healthcare:

    Most veterans are eligible for health coverage through the VA.

  • Healthcare Sharing Ministries:

    These are faith-based organizations in which health insurance costs are shared among members.

  • COBRA Coverage:

    COBRA is only to be used short-term and is intended to be a bridge to other long-term health coverage.

What Else Should I Keep in Mind?

Health insurance is similar to bulk discount stores in the sense that you may get a better price based on quantity—the more individuals in a particular plan, the lower the price may be. For example, a large trade organization may be able to negotiate lower health insurance costs than a small trade organization. However, it’s still important to compare your coverage options because even larger groups can have higher rates if their members are less healthy.

In addition to weighing your coverage options, it’s important to do what you can to maintain good health. Some insurance plans require health underwriting in determining the cost of your insurance. You may qualify for lower premiums if you are in better health.

Lastly, retirement is different for everyone and health insurance is just one piece of the puzzle, but it is one of the biggest pieces. Retirement healthcare costs are a significant part of most financial plans, so it’s something worth discussing with your financial advisor.

Looking for some advice and guidance when it comes to your insurance coverage? Contact us to see how we may be able to help.

About the Author

Dan Kline is a Financial Planner with FNBO. He specializes in providing comprehensive personalized financial planning incorporating investment, tax, protection, retirement, and estate planning strategies.

This material is provided for informational purposes only.  It is not a recommendation to buy, sell, hold, transfer, or take any particular course of action with regard to any asset, adopt an investment strategy, retain a specific investment manager, or use a particular account type.  It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person.  Investors should work with their financial professional to discuss their specific situation.

This material should be regarded as educational information on health care and is not intended to provide specific advice.  If you have questions regarding your particular situation, you should contact your legal or tax advisors.

This information is general in nature and is not intended to be tax, legal, accounting, or other professional advice.  The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

All expressions of opinion are subject to change without notice in reaction to changing conditions. This information, including any obtained from third parties, is considered reliable.  However, its accuracy, completeness, and/or reliability cannot be guaranteed.  Linking to any third-party materials in no way implies an endorsement or affiliation of any kind with any third party.  This material was created as of the date indicated and reflects the author’s views as of that date.  Neither the publisher nor any other party assumes any liability for loss or damage due to reliance on this material.

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