MoneyDo: Potential Early Retirees – Consider What Health Insurance Option Will Help Bridge the Gap Until You Apply For Medicare

Are you thinking of retiring before 65?  Have you thought about what type of health insurance you’ll have to bridge the gap until you can apply for Medicare?

Before the tax reform bill, you could have been charged a penalty for not having health insurance during that time.

Now that tax reform has become law, starting in 2019, the penalty for not having minimum essential coverage was reduced to zero. Although this may increase the options available for coverage, it’s still important to have a plan in place for those gap years.

Here are some of the common options available:

Employer Options – Some employers provide retiree health benefits capable of carrying you to Medicare. Check with your benefits administrator to find out if you have any options available.

COBRA – The COBRA option allows you to stay on your employer’s group health plan, but you pay 100% of the premiums including a small administrative fee.  COBRA can get very expensive, and it has a time limitation – it can last for18 months after a qualifying event, such as termination.

Health Care Marketplace – Also known as the ‘exchange’, the health care marketplace is a way for individuals to shop for various health plans through a federally-operated platform.  You can look at various options at HealthCare.gov, and depending on your income, you may be able to receive a reduction in premiums.

Stand-alone Plans – Many insurance carriers offer plans outside of the Marketplace, which may or may not meet the standards for minimum essential coverage for 2018. Among the offerings are various types of plans, like catastrophic health plans, which have lower monthly premiums but have higher out-of-pocket annual deductibles.

Medical Cost Sharing Plan – Various organizations, like Medi-Share, offer alternative healthcare expense sharing options, which are plans which allow members to share in other’s medical expenses. Medi-Share is just one example of the types of plans out there.

As you research and study alternatives, make sure you’re aware of what’s available, what works best given your health care needs, and the costs associated with them. If you need help, seek out a financial advisor you can trust to help you make an appropriate decision for you.