Medicare, like Medicaid, is a public health plan. However, Medicare takes effect when you turn 65, along with Social Security, and is typically the main type of health insurance for retirees. Enrollment for Medicare opens three months before your 65th birthday and ends three months after you turn 65.
If you’re younger than 65 and need new coverage because you lost your previous coverage or changed jobs, there are a few options. Changing jobs or losing coverage is a qualifying life event, meaning that a special enrollment period outside of the typical November 1 through December 15 open enrollment period will begin, allowing you to sign up for insurance at other points in the year.
But what if you retire early?
If you’re retiring before age 65 and looking for more information about health insurance for retirees, read on to find out what choices you have and how to sign up for them.
Retiring Before 65? Health Insurance for Retirees
Because Medicare only opens once you’re a few months from turning 65, some retirees experience a coverage gap. These retirees no longer have their former, typically employer-provided coverage, but do not yet qualify for Medicare because they do not meet the age requirement.
If you fall into this category, the good news is that you have a few different options to cover your healthcare needs until you qualify for Medicare.
Group Retiree Health Plan
Certain companies in the private sector and some employers in the public sector offer early retirees an option to keep their previous health insurance. This retiree coverage option typically allows you to keep the same coverage you previously had while working for your employer. It will either last for a pre-set period or until you meet the period for Medicare eligibility.
Group retiree health insurance means that you’ll remain grouped with the other employees who are still actively working for your former employer. Your health insurance will continue as normal, and you won’t need to make changes to your plan to continue.
This type of plan is rare and typically offered by government agencies, but your employer may offer it. If you’re going for early retirement, check with your employer’s plan to see if retiree health benefits are part of your healthcare plan.
Health Insurance Marketplace
The federal government created the Health Insurance Marketplace in 2010 with the advent of the Affordable Care Act. The Marketplace is an area where people can search for insurance based on costs and plan affordability related to your income level. While these plans correlate with income level, there is still a yearly rise in premiums that often comes with these plans. Overall, though, they present a cheaper option for most people.
You can sign up through the Marketplace for your chosen plan beginning 60 days before your official retirement date, with enrollment closing 60 days after your retirement date. If you currently have a Marketplace plan, you can keep it until you qualify for Medicare.
Retirees typically have the option to keep their current health insurance for at least 18 months. This policy is called COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, and is a federal law. If you worked for a smaller company, typically under 20 employees, you might not qualify for COBRA.
While COBRA offers you the same health insurance access you had while still actively employed, you’ll have to pay out of pocket for the health insurance premium, even what your employer previously paid while you were working for them. COBRA policies are also liable to run you an additional 2% charge to cover administrative fees.
While COBRA is convenient in that you can keep seeing the same healthcare providers you had while working, it is often extremely expensive, involving out of pocket costs for the client.
How to Sign Up for Health Insurance
Signing up for health insurance coverage can be a confusing process, especially when you’re looking for plans after using employer-provided coverage. You can use a few different methods to look for insurance and a few things to look out for when looking for a plan.
Steps to Take to Sign Up for Health Benefits
While Medicare often activates once you turn 65, other plans require more work to join them. The Health Insurance Marketplace requires an application with information about other family members applying, along with tax and employment information. Beyond that, most plans require you to pick your plan, any additional coverage, and enroll.
Using the Health Insurance Marketplace
Any US citizen or national, except for those incarcerated, is eligible to sign up for a Marketplace plan through Healthcare.gov, put into place by the ACA.
You can search the Marketplace by inputting your location and see finalized costs after signing up for an account.
Every plan in the Marketplace currently covers several factors and services, including:
- Essential services, which includes doctors’ visits, outpatient and inpatient hospital visits, a prescription drug plan, mental health, pregnancy, and childbirth, among others
- Pre Existing conditions
- Preventive services
The Marketplace also helps users by giving ratings between one and five stars to different plans based on their quality, based on member experience, care, and insurance company administration.
What to Look for in a Healthcare Plan
There are four different levels of healthcare plans: bronze, silver, gold, and platinum. These names don’t indicate the plan’s quality, only how much you and your insurance provider pay for the designated plan. The levels balance out between the costs of their monthly premiums and how much you pay when you use them. For example, a lower monthly premium plan, like a bronze plan, will have higher costs when you go in for care.
The monthly premium is also important for plans you’re interested in, and remember to account for deductibles. Also, be aware of the different plans and types of networks. Something else to consider is whether an HMO, PPO, POS, or EPO plan would work best for your needs. Medical expenses are a top concern for Americans, so be sure to choose the best health plan for you.
Suppose you’re thinking of retiring early and are curious about what options you have before qualifying for Medicare. In that case, you have a few different options for keeping up with your healthcare, especially if you’re between the ages of 50 and 64.