There’s a reason many older Americans wait until age 65 or later to retire. Waiting until age 65 not only increases your retirement savings, but also allows for a smoother transition when it comes to health insurance.
Medicare eligibility usually begins at age 65. If you retire early, you may be in trouble with your health insurance.
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But what if you are forced to retire before age 65? For example, if your company lays off employees when you are 64, it may be difficult for you to find a new job at that time. Or at that stage in life, it might not be worth learning the ropes in a new place of employment.
One thing you don’t want to do in this situation is go without health insurance. An accident can cost you horrifically high bills if you end up needing emergency care. If you retire before enrolling in Medicare, here are some health insurance options to consider.
If your spouse is still working, joining their workplace plan may be an option. You may be eligible for a special enrollment window due to the loss of coverage, even beyond the general enrollment period for your spouse’s employment health insurance.
COBRA allows people to keep their employer’s health insurance for a limited time—usually up to 18 months. If there is enough time to bridge the gap before your 65th birthday, you may want to consider this option as it allows you to keep a familiar plan.
That said, COBRA can be very expensive because you pay health insurance premiums without employer subsidies. If you don’t have significant savings, you may want to consider other most cost-effective options.
If you lose your employer coverage, you generally qualify for a special enrollment period that allows you to purchase coverage through the Affordable Care Act’s health insurance marketplace. You may or may not qualify for premium subsidies, depending on your income.
Market plans are categorized by tiers – Bronze, Silver, Gold and Platinum. Bronze plans have the lowest premiums, while platinum plans have the highest premiums. But be aware that plans with lower premiums tend to have higher deductibles and other out-of-pocket costs.
