Retiring Early? Here Are Your Healthcare Options | Allworth Financial

This guide will walk you through the different healthcare options available for early retirees. We’ll weigh the benefits and challenges of each option, helping you figure out what might be the best fit for your situation. That way, you can make a confident decision and focus on enjoying your retirement

1. COBRA Coverage

One of the first options to look into is COBRA. This allows you to keep your employer’s health insurance plan for up to 18 months after you leave your job. It’s an easy way to maintain the coverage you’re already familiar with.

Pros of COBRA:

• Familiar doctors and care: You get to keep the same plan you had while working, so you won’t have to switch doctors or hospitals.
• No disruption in care: If you’re managing a condition or undergoing treatment, COBRA helps you continue your care without making any changes.
• Family stays covered: If your spouse or children were on your employer’s plan, they’ll continue to be covered under COBRA.

Cons of COBRA:

• High cost: While you were employed, your company likely paid part of your health insurance premium. Under COBRA, you’re responsible for the full premium, plus a small administrative fee. This can lead to significantly higher monthly costs.
• Temporary coverage: COBRA only lasts 18 months. If you retire early and have more than a year and a half before you qualify for Medicare, you’ll need to plan for additional coverage after it runs out.

COBRA can be a great option if you’re within a year or two of qualifying for Medicare. However, if you’re retiring earlier or are looking to lower costs, it’s worth exploring other healthcare options.

Health Insurance Marketplace (ACA Plans)

The Affordable Care Act (ACA) marketplace is another option for retirees under 65. These plans are available for individuals and families, and depending on your income, you may qualify for subsidies that reduce your monthly premium.

Pros of ACA Marketplace Plans:

• Variety of plans: The marketplace offers multiple coverage levels, ranging from basic to more comprehensive plans. This allows you to choose the right level of coverage for your specific needs and budget.
• Potential for subsidies: If your retirement income falls below certain thresholds, you may be eligible for subsidies that can significantly reduce your premiums.
• Coverage for pre-existing conditions: ACA plans are required to cover pre-existing conditions, so you won’t be turned away or charged extra based on your medical history.

Cons of ACA Marketplace Plans:

• Can be costly without subsidies: If your income is higher than the threshold for subsidies, ACA plans can be pricey, especially for more comprehensive coverage.
• Limited provider networks: Some ACA plans have smaller networks of doctors and hospitals, which might mean switching providers if your current ones aren’t in-network.
• Varies by location: The availability and quality of ACA plans can differ depending on your state, so it’s important to research what’s offered in your area.

ACA plans can be a solid choice, particularly if you’re looking for longer-term coverage before Medicare eligibility. The potential for subsidies makes them an affordable option for many retirees, but it’s important to check premiums, deductibles, and networks before choosing a plan.

Private Health Insurance

Another option to consider is purchasing private health insurance directly from an insurance provider. These plans tend to offer more flexibility in terms of coverage, but they can also come with higher premiums.

Pros of Private Health Insurance:

• More choices: Private insurance offers a variety of coverage levels and can be tailored to meet your specific healthcare needs.
• Broader networks: Many private plans offer larger networks of healthcare providers, which means you might have more flexibility in choosing your doctors.
• Additional coverage options: You may have the option to add supplemental coverage for things like dental, vision, or long-term care.

Cons of Private Health Insurance:

• Higher costs: Private health insurance can be expensive, especially if you need comprehensive coverage. Pre-existing conditions or other risk factors can also increase your premium.
• Complexity: Comparing and selecting private health insurance plans can be a bit overwhelming, given the number of options and the range of out-of-pocket costs, like deductibles and co-pays.

Private health insurance is a good option if you want more flexibility or don’t mind paying a bit more for the convenience of a wider provider network. Be sure to compare plans carefully to find one that meets your needs and fits within your budget.

Spousal Coverage

If your spouse is still working and has access to employer-sponsored health insurance, joining their plan can be one of the easiest and most affordable options for early retirees.

Pros of Spousal Coverage:

• Cost-effective: Joining your spouse’s employer plan is typically less expensive than purchasing your own insurance, especially if the employer contributes to the premium.
• Seamless transition: You won’t have to worry about shopping for a new plan, and there’s a good chance you can keep your current doctors and providers if the plan has a broad network.
• Family coverage: If your spouse’s plan covers dependents, it can provide coverage for the entire family without extra hassle.

Cons of Spousal Coverage:

• Dependent on spouse’s job: Your coverage is tied to your spouse’s employment, so if they change jobs or retire themselves, you’ll need to find new insurance.
• Limited plan options: You’ll need to accept the terms of your spouse’s plan, which might not offer the same level of coverage or flexibility as your previous employer’s plan.

Spousal coverage is a great option if it’s available, but make sure to have a backup plan in case your spouse leaves their job before you qualify for Medicare.

Healthcare Sharing Ministries

Healthcare sharing ministries are an alternative option for people who want a more cost-effective solution. While not technically insurance, these organizations allow members to share healthcare costs among themselves, usually within a community that shares similar values.

Pros of Healthcare Sharing Ministries:

• Lower costs: Monthly contributions tend to be much lower than traditional insurance premiums.
• Supportive community: Many people find comfort in being part of a community that shares their values, especially when they know that funds are being pooled to help others.

Cons of Healthcare Sharing Ministries:

• Not traditional insurance: These programs aren’t subject to the same regulations as health insurance, which means they don’t have the same guarantees about coverage.
• Limited coverage: Pre-existing conditions, preventive care, and prescriptions may not be covered, which can leave you with out-of-pocket expenses.

Healthcare sharing ministries can be a good fit for those who are healthy and looking for a low-cost alternative, but it’s important to understand their limitations before signing up.

eHealth: A Partner to Help You Find the Right Plan

To make navigating all these options easier, Allworth Financial has partnered with eHealth, a leading online health insurance marketplace. eHealth offers access to a wide range of healthcare plans, from ACA options to private insurance, helping you compare and choose the best plan for your needs. Here’s how eHealth can help you as an early retiree:

• Easy Plan Comparison: eHealth allows you to compare various healthcare plans side by side, so you can make an informed decision about which option works best for your situation.
• Expert Guidance: If you’re unsure about which plan to choose, eHealth’s licensed agents are available to answer your questions and guide you through the process.
• Customized Options: eHealth offers a range of plans tailored to different budgets and healthcare needs, including options that cover pre-existing conditions and other critical factors for early retirees.
• Ongoing Support: Once you’ve chosen a plan, eHealth continues to provide support, helping you manage your policy and answering any questions that come up down the road.

By partnering with eHealth, Allworth Financial aims to provide a seamless, stress-free experience when it comes to finding healthcare coverage before you turn 65. Visit ehealth.com/AllworthFinancial or call 888-871-5685 to speak with a licensed insurance agent. *Note: Service availability may vary by state.

At Allworth Financial, we’re here to help you navigate decisions like these. If you have questions about your healthcare options or other parts of your retirement plan, don’t hesitate to reach out to your Allworth advisor. We’re here to help you make the most of your retirement journey.