|February 2022 Volume 20, Number 2|
Early Retirees Need Health Coverage Options
It’s a dream come true for many Americans when they realize they can retire early.
Normally, retirees can take advantage of Medicare, which is the federal health insurance program for people 65 or older (though it may also cover younger people with disabilities or people with End-Stage Renal Disease).
COBRA (Consolidated Omnibus Budget Reconciliation Act), in general, requires employers with 20 or more employees offering health plans to provide employees and certain family members the option to extend their plan for up to 18 months when coverage would have lapsed, such as upon retirement. The downside with COBRA is that employers are not required to subsidize the costs of the plan as they normally would. Consequently, the coverage may be unaffordable. In addition, employees might have to pay an additional 2 percent administrative fee.
Many large firms used to offer formal phased-retirement plans that included health insurance, but now only one in 10 employers does, according to NerdWallet. Alternatively, companies offering early retirement health insurance usually provide an alternate program with fewer benefits or the company health insurance at a higher premium than they offer to current employees.
Early retiring employees with an employed spouse or partner who has employer-sponsored health coverage may be able to obtain coverage through their spouse or partner’s plan.
Early retirees may wish to apply for private insurance, though prices are likely to be a lot more than they’ve been paying.
Short-term health insurance is intended as temporary for people who have a health insurance coverage gap. Coverage varies from one month to one year and, depending on the state, there is an option to renew for up to three years.
The ACA Health Insurance Marketplace offers major medical coverage including the 10 essential health benefits required by the ACA. These benefits range from emergency to laboratory services. No one who applies can be denied coverage for having a pre-existing health condition.
Direct Primary Care
Direct primary care, often referred to as concierge care, is a way for early retirees to get coverage for basic doctor services. This type of coverage is growing in popularity because patients get same-day visits, 24-hour availability, low waiting room times, and house calls.