Many people dream of early retirement, but in reality this means additional logistics. If you plan to retire before you qualify for Medicare, you may need to consider how to purchase health insurance in the meantime. This may include continued group coverage under COBRA or participation in a private health plan such as Medicare Advantage, Medicaid, or a combination of both.
The decision you make will probably depend on how early you plan to retire, but how much you will need will depend on your age, income, and other factors, such as your health insurance coverage.
The average couple will need about $285,000 to cover health and medical expenses in retirement. If you plan to retire before Medicare, much of your retirement savings will likely go toward health expenses such as deductibles, co-payments, and other medical expenses. Your health care costs could run into hundreds of thousands of dollars in retirement, so look for ways to keep them as low as possible, even if you plan to retire early.
The Pivot Health Bridge Medicare plan is one such solution, and it can be particularly budget-friendly. When you consider pre-Medicare coverage, remember that COBRA and ACA plans are not your only options. You may also want to consider benefits designed specifically for pre-and post-Medicare retirees.
If you are eligible for Medicare on or after January 1, 2020 or later, you can apply for a Medicare supplemental insurance plan with one of the above plans. If you choose the Medicare Advantage plan, you also need a “Medicare Supplement Insurance” plan. You must use a network of participating providers to get the full benefits of this plan (this depends on your plan type, and some plan types do not work together).
Note: Medicare Supplement Plan G is similar to Plan F except that it does not cover the annual deductibles of Medicare Part B. Part D coverage will be added to the prescription coverage already included in the Medicare Advantage plan.
Many people decide to pair original Medicare with a supplemental policy — aka Medigap — to help cover out-of-pocket costs such as deductibles and coinsurance. You cannot, however, pair a Medigap policy with an Advantage Plan.
According to CNBC, “of people without any type of extra coverage beyond basic Medicare, 28% have either struggled to pay their medical bills or to get care due to the cost, according to the Kaiser Family Foundation.”
“Monthly premiums vary for each plan, but are typically more costly – effectively once you are eligible for Medicare. Aside from Medicare, you might want to consider supplemental insurance, also known as Medigap insurance. These plans offered by private insurers are designed to help cover your costs in the event of a medical emergency such as a heart attack, stroke or other medical condition”.
Keep in mind that you may need additional coverage to pay for other health costs – related expenses. Medicare is available to people 65 and older to help with hospitalizations and doctor visits.
Different parts of Medicare are covered, and it’s important to understand how they fit into your long-term plan. Before deciding whether you need additional Medicare insurance when you retire, you might want to read a quick rundown of these types of plans.
In most states, Medicare supplement insurance plans are standardized and labeled with a letter. If you have Medicare Part A or Part B, you may be able to purchase supplemental Medicare insurance that helps you pay for Medicare. The gap between what Medicare pays you and the amount you owe for medical care is sometimes referred to as the Medicare coverage gap.
If you are covered by your spouse’s insurance, you may be able to extend your COBRA coverage for up to 36 months. For a couple with an age difference, your medical care is considered a qualified medical effort, with two notable exceptions, including when the account holder reaches age 65. To make your co-insurance more affordable, you can pay your premiums from your Health Savings Account (HSA), provided you have or had a highly deductible health plan. If you link this to your age difference, you may be able to stay in COCRA even longer, and you may even be able to extend it for another two or three years.
If you have one, consider what to do with the money in your Health Savings Account (HSA), and you can continue to use it to pay for your healthcare costs such as deductibles, co-payments, and other expenses.
Although retirement plans can be different for everyone, there is no one-size-fits-all approach to Medicare. If you understand the differences, you know what to expect when you start weighing up your options for early retirement.
COBRA requires certain employers to offer continuation insurance to their employees if they lose it as a result of a qualifying life event, such as dismissal, dismissal or reduction in working hours. If you qualify for COBRA, you have the opportunity to choose COBRA in the following qualifying events for early retirement in your case. As mentioned above, you may have limited amounts of cover that you can maintain, as well as a limit on the number of years that you can maintain.