Health Insurance Options for Early Retirees
Retiring early is everyone’s dream. Looking for an affordable health insurance is the only thing delaying many people’s dream of retiring. There are people who choose to retire before they reach the age of 65. Retirement age is 65; this is when a person becomes covered by Medicare. If you’re lucky enough to belong in a large company, there’s a chance that your employer will offer you retiree health benefits. There are others who are forced to retire because of health problems, or because of unemployment. There are several options for retirees: continue company sponsored health insurance, purchase an individual health policy or get continued coverage form COBRA.
First option is to continue company sponsored health insurance. Check with your employer if they provide insurance coverage for early retirees. There are specific requirements for each employer; they may vary from age and tenure rules, benefit levels, and premiums.
Even if an employee will be eligible for early retiree benefits, chances are the coverage will be less that what he was getting when he was still employed. Verify which services you will be covered for and how long.
Another option is to join your spouse’s employer-sponsored health insurance, if your spouse is still working. This plan is the most cost-effective and proposes a better coverage.
Individual health insurance
If you are not covered by a group health plan, purchase an individual health plan. Premiums will be based on your age and medical history. Insurance companies may decline your application if they think you are a bad risk. They may sell you insurance policies that do not cover your pre-existing conditions. Do not let high premiums discourage your from purchasing a health insurance. A serious illness can hurt you physically and financially.
COBRA also known as Consolidated Omnibus Budget Reconciliation Act is another option for early retirees. With COBRA, you are able to continue the group health insurance that has been provided by your employer for 18 months after retiring. You will be paid to pay around 102 percent of the group rate. But this option is probably cheaper than purchasing an individual health insurance.
Federal and state assistance programs
If you are not under the coverage of COBRA or you don’t have any health insurance policies, you might be able to ask for coverage from Medicaid or Medicare. It is provided by the state for families who have low-income, low-income seniors and the handicapped.
Each state provides their own eligibility principles and decides on the type, scope, amount and duration of services. States are also required to pay certain deductibles, co-insurance or co-payments for different services. There are some states that extend their help to higher-income people, but need help in medical costs. This is called the “medically needy” program.
If you are forced to retire because of your health, you might qualify for a health insurance with Medicare. You don’t need to pay premium to Medicare if you are under 65; you are a disabled beneficiary of Social Security or Railroad Retirement Board for 24 months.
In choosing a plan, look carefully at the limitations and what is not included.