Early retirement comes with many financial considerations including how you will bridge the gap in healthcare coverage between your retirement and when you qualify for Medicare. If you’re planning on early retirement, you should consider the insurance option that fits your budget and needs.
Retiree Healthcare Coverage
Most people lose their healthcare coverage under their employer at the time of retirement, but you should check with your human resources department prior to retirement to see if they offer any kind of retiree health insurance benefits. Some employers maintain group health benefits for retirees and may even cover part of the premium.
Individual Healthcare Coverage
Pennie is Pennsylvania’s insurance marketplace and provides individuals and families with the ability to shop for high-quality healthcare plans and easily apply for financial assistance. Losing health coverage as a result of retiring early qualifies you for a Special Enrollment Period for up to 60 days after the qualifying event. This means you can enroll in a health plan even if it’s outside the annual Open Enrollment Period. If you miss the 60-day special enrollment period, the normal enrollment period begins November 1 and lasts through December 15 for coverage beginning January 1 of the following year.
If you apply for coverage through the Pennie Marketplace, you may be eligible for premium tax credits depending on your household income, number of people in your household, and other factors. You can apply some or all of this tax credit to your monthly insurance premium payment.
If you live outside of Pennsylvania, you still have the ability to enroll or change your plan and apply for tax credits on the Federal Marketplace website. We can help you determine what individual coverage best fits your needs and budget. Get a quote here.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances which include:
- Voluntary or involuntary job loss
- Reduction in the hours worked
- Transition between job
- Death, divorce, and other life events
Qualified individuals may be required to pay the entire premium for coverage up to 105% of the cost to the plan, so it’s important to evaluate the benefits versus the costs carefully and compare with alternative options.
Spouse Health Insurance
If you’re married and your spouse is employed, you may be eligible to join their insurance plan through their employer. Compare costs versus your need. It may make more sense to have a plan with a lower deductible and higher monthly premiums if you or your spouse has a chronic health condition.
Medicaid
Medicaid provides health insurance coverage for low-income adults, children, pregnant women, elderly adults, and people with disabilities. This may be an option for you depending on your household income.
Group Membership Health Plans
If you’re affiliated with a membership or professional organization, you may have access to health insurance coverage or discounts. Examples include religious organizations and membership-based organizations like AARP.
Healthcare coverage is one of the largest expenses you’ll have in retirement. If you are considering an early retirement, you want to make sure that you don’t cut into your retirement savings for later. We can help you explore your options in early retirement and beyond.
Updated February 10, 2025
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