Money Advice

Retiring before age 65? Here are 6 healthcare options

Posted by The Simply Money Advisors Team on Jan 16, 2019 6:29:38 AM

Do you have a plan for healthcare in retirement?

You probably said, “Well, yes. Medicare.” But according to the U.S. Census Bureau, the average retirement age for a U.S. worker is 63.[1] Plus, close to half of all current retirees had to leave the workforce earlier than they originally planned.[2]

The problem? Eligibility for Medicare doesn’t begin until age 65.


Luckily, you have options to bridge this healthcare gap. Here are the six main ways to get coverage no matter if you’re retiring early by choice or if you’re forced into retirement by circumstances beyond your control.

1. Stay on your current employer’s coverage

While this is the most ideal option, it’s fairly rare: only one in four large companies offer health insurance to early retirees.[3] But don’t automatically assume your company doesn’t offer this benefit. Talk with your HR department prior to officially retiring so you know what options, if any, you have available.

2. Join your spouse’s employer policy

If your spouse is still working, this is another ideal option. Retirement counts as a ‘qualifying life event,’ so have your spouse contact their HR department to find out if you can join his or her plan.

3. Buy a policy on a state or federal exchange

The Affordable Care Act (ACA) provides an opportunity for you to buy health insurance through a ‘marketplace’ in your state or through the federal government. Since the ACA also considers retirement a ‘qualifying life event,’ this triggers a special enrollment window – 60 days prior to (or 60 days after) your effective retirement date.[4]

The ACA provides income-based subsidies to those who qualify, so, depending on your new household income in retirement, you could catch a break on some of the cost. Use this calculator from the Kaiser Foundation, a non-partisan research organization, to estimate if you would qualify for subsidy assistance.

4. Buy private insurance

This involves buying a health plan directly through an insurance company. To compare costs, use a website like GoHealth or eHealth. Working with an insurance broker to help you navigate the world of private insurance is an additional option.

5. Continue with COBRA coverage

While COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to keep your current group coverage for up to 18 months, you’ll pay the full premium cost since your employer will no longer be paying for part of it. In many cases, this makes COBRA the most expensive option you have available. But it’s still worthwhile to check out.

6. Pick up a part-time job that includes benefits

If you’re OK with the idea of working a little bit during your retirement until you reach age 65, it could make financial sense to work for a company that provides part-time workers with health benefits. Home Depot, Whole Foods, FedEx, Starbucks, Costco, and UPS are among some of the biggest names to offer this perk.[5]

Another added benefit? You’ll have extra income coming in to help fund your retirement.

The Simply Money Point

Retiring before age 65 can be liberating if you’re doing so on your own terms, or terrifying if you’re not. But no matter which scenario might describe your situation, you need to get a plan in place for healthcare.

Our biggest piece of advice is to research all your choices before you make a final decision. Never make assumptions until you run the numbers. You might realize the one option you initially dismissed is actually the best avenue for you to take.

And to learn more about how to manage a forced retirement, visit out Retirement Resources library.

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Topics: Retirement Planning


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