Health Insurance for 55 and Older: Real Life Questions and Answers for Health Insurance Before Medicare Eligibility | NewRetirement (2024)

Many people want to retire before they are eligible for Medicare at age 65. However, figuring out health insurance — and how to afford that coverage — is very difficult. Health insurance for 55 and older can be very expensive, depending on your circ*mstances! And, let’s face facts, health factors are more prevalent and unpredictable at this age. You need answersHealth Insurance for 55 and Older: Real Life Questions and Answers for Health Insurance Before Medicare Eligibility | NewRetirement (1)The very first NewRetirement “Ask me Anything” zoom seminar was focused on your questions about healthcare and retirement. Below we offer all of the real life questions and the expert answers about medical coverage before the age of 65. (Sign up for future “Ask me Anythings” and other live (Zoom) NewRetirement events.

Explore below the questions and answers about health insurance for 55 and over. (Or, Link to a summary of 9 Ways to Cover Early Retirement HealthCare Costs.)

Question: What is a reasonable self funded healthcare cost for a couple in our late 50s?

Answer:

Costs can vary widely depending on where you live, your income level, the type of coverage you choose and your health status. However, the average cost for a Silver Plan with the Affordable Care Act for two non-smoking adults age 58 — assuming no subsidies — would be $1,797 per month.

That might sound expensive. However, if you are eligible, the subsidies can slash the cost dramatically. With subsidies or not, getting coverage from the Affordable Care Act is usually going to be your best bet for health insurance for 55 or any age before Medicare kicks in.

However, the total costs for health insurance for 55 and over are going to be high. If you were funding the premiums for seven years — age 58-65 — without subsidies, it would total: $150,948 — plus other out of pocket expenses like co pays and out of pocket deductibles.

However, the costs will vary widely by state and county and whether you are eligible for subsidies or not. For instance, in California, where I live, the average cost at age 58 (without subsidies) of a Silver Plan is $2,134 — significantly higher than the nationwide average. You can get estimates for your location here.

NOTE: If eligible, the amount of your tax credit is based on the price of a silver plan in your area, but you can use your premium tax credit to purchase any Marketplace plan, including Bronze, Gold, and Platinum plans.

In order for you to get a better picture of your scenario you should visit the KFF subsidy calculator.

Q: What is reasonable for inflation projections on medical expenses?

Answer:

Good question. Not everyone realizes that medical costs are rising at a much higher rate than most other goods and services.

For healthcare inflation, you should assume two to three times the Consumer Price Index (CPI) rate. (The CPI is an inflation metric that measures average prices of a group of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item and averaging them.)

The NewRetirement Retirement Planner allows you to calculate your estimate for medical cost inflation separately from general inflation.

Q: Any advantages to doing a COBRA plan before Medicare starts?

Answer:

If you are retiring and have had coverage through your employer, you can fund a COBRA plan or get coverage privately or through the ACA. An advantage of COBRA is that you might get better pricing than is offered by the ACA as the cost to you will be 101% of your employer’s group coverage cost.

Furthermore, you will also be assured of having access to the same doctors and benefits that you had when you were employed.

However, the premiums for a plan under the ACA exchange might actually be cheaper, particularly if you qualify for premium tax credits.

You will have to compare after tax costs as well as plan features, e.g. PPO vs HMO, deductibles, out of pocket costs, etc.

Q: Any tips for the best coverage option in the Marketplace?

Question:

It’s likely my wife and I will need to obtain insurance from the “open market” upon retirement when I turn 59.5 until Medicare starts. This is about 18 months away. Do you have any tips on “how to shop” the healthcare insurance market to make sure we are getting the best option in terms of cost and quality?

Answer:

In general, your best bet for shopping for coverage is probably to visit Healthcare.gov. This web site will route you to your state’s exchange, if it has one. If it doesn’t, you shop plans offered through the Federal exchange.

Additional tips for getting the best coverage from the ACA include evaluating:

Your location: Costs are highly variable based on location — so you could consider a lower heatlh care cost state. However, lower costs might sometimes be indicative of lower quality.

Your Income: Your income level has to be pretty low to qualify for subsidies. However, there are substantial Premium Tax Credits made available through the Affordable Care Act (ACA) based on your income.

Tax credits are available for families with incomes of 100% to 400% of the Federal Poverty Level (FPL). These individuals and families will have to pay no more than 2.08% – 9.86% of their incomes for a mid-level plan (“silver”) premium.

Anything above that is paid by the government.

Type of Coverage: There are four levels of coverage available from the ACA: bronze, silver, gold, platinum. Choosing the right coverage for you and your needs can help you save money.

In general, the less you tend to use healthcare the more likely the lower level of coverage will suit you. If you use healthcare services more readily the more you will want to opt for higher premium, lower out of pocket plans, i.e. gold or platinum.

You will also have opportunities to compare the costs of different types of plans:

  • Exclusive Provider Organization (EPO)
  • Health Maintenance Organization (HMO)
  • Point of Service (POS)
  • Preferred Provider Organization (PPO)

NOTE: Not all of these types are available everywhere.

Q: Health Coverage for Nomadic RVers?

Question:

Are there any states that offer plans that you can use nationwide under the ACA? We are going to be full timing in an RV. I’ve heard Florida does?

Answer:

You are likely going to want to look for a PPO plan, which will offer benefits when using out of network providers.

An HMO plan will offer limited benefits outside of the health maintenance organization and may be limited to emergency care.

Q: I hope to cut my retirement costs by living in Central America. What are my insurance options?

Answer:

Your costs and the quality of services will differ from country to country. However, you will probably need to buy private international medical insurance from a specialty insurer.

International health insurance is usually cheaper than comparable U.S. health insurance. Cigna, Bupa and HTH Worldwide are three top international insurance companies to consider.

Here are more tips for retiring abroad.

Q: Where can I get pre 65 health insurance? It’s all fake on the Internet?

Answer:

Healthcare.gov will link you to your state’s exchange if it has one. If you are looking for information about healthcare, the Kaiser Family Foundation is a great resource for data.

Q: I would like to hear about medishare programs.

Answer:

Medishare — also known as health care sharing programs — are a relatively new way to fund healthcare.

These programs are defined by a group of like-minded people (Christian groups) banding together to help pay each other’s medical expenses.

Depending on your healthcare needs, it may not be the most affordable health care option though. You would want to have excellent health and decent savings to be able to pay for out of pocket costs for routine care (check ups, other routine screenings and other costs are not typically part of cost-sharing programs). The programs are designed to provide funding for the truly unexpected like broken bones and cancer.

A belief in the Christian faith is usually required to participate. (These health sharing programs are able to be formed based on legal religious exemptions.)

Here are some of the more popular Christian healthcare sharing programs:

Q: Do you think the ACA will continue to be available to retirees?

Answer:

Regarding the future of ACA, I would say that it is up in the air. However, healthcare appears to be a high priority political issue and a large majority of Americans — especially retirees — want preexisting conditions to be covered. So, I am cautiously optimistic that the ACA will continue to be available.

Q: Am I allowed to switch plans from Cobra to the exchange?

Question:

If I take advantage of Cobra to finish out a benefit year, can I sign up for an exchange plan for the next year or do I have to wait until the Cobra has expired in 18 months?

Answer:

You can switch from COBRA to an ACA plan during the open enrollment period. Additionally, if your COBRA period has expired you may enroll in ACA outside of the open enrollment period. Note that failure to pay your premium does not count as COBRA expiration and will not enable you to enroll outside of the open enrollment period.

Also note that coverage for dependents can extend up to 36 months in total if the former employee becomes eligible for Medicare during the initial COBRA period.

Q: What is the best asset allocation for an HSA account?

Question:

What is the best asset allocation for an HSA account assuming at least $2,000 must remain in a cash account?

Answer:

The asset allocation of your HSA will depend upon your age and the amount of money in the fund.

If you will be using the funds within the next few years then is should be in cash, cash equivalents and short term bonds.

Funds invested in the equity market should have a time horizon of a minimum of 5 years and allocations to higher risk assets such small cap stocks, emerging markets, etc. should have time horizons of ten years or more.

Note that at the current time, investment choices within most HSA plans are very limited.

Q: Any Tricks for More Affordable Coverage?

Question:

Are there any tricks for making medical insurance before age 65 more affordable?

Answer:

Many retirees choose to get a part time job that offers health coverage. This can actually be a great option.

Q: How am I supposed to budget pre 65 healthcare costs and what in the world will Medicare cost me?

Answer:

Healthcare is the second biggest retirement cost after housing. So, good for you for thinking about how to budget your medical expenses.

The NewRetirement Retirement Planner has a variety of features that makes it relatively easy to reliably planyour health spending.

  • Medical Inflation: Medical costs rise faster than the costs for other goods and services. Set the rate at which you think medical costs will increase.
  • Pre Medicare Medical Spending: Document your total annual out of pocket spending and project how you think those costs might evolve.
  • Medicare Spending: Get a personalized estimate based on where you live, annual income levels (some premiums vary with income), type of coverage, health factors and your expected longevity.
  • Long Term Care: Long term care is not usually covered by health insurance — not pre 65 coverage nor Medicare. Choose how you want to plan for this expense if you wind up needing it.

Estimate your total retirement healthcare expense now and find out if you can afford these important costs.

Who Are the Experts?

These questions were answered by a panel of retirement and healthcare experts:

Steve Chen, Founder, NewRetirement

Bill Smith, NewRetirement Advisors, Certified Financial Planner (CFP®) and Chartered Financial Analyst (CFA ®)

Mark Miller, Founder, Retirement Revised, Social Security and Medicare Expert

Fred Riccardi, President of the Medicare Rights Center

Michelle Dash, Financial Advisor, CFP ® Candidate

Health Insurance for 55 and Older: Real Life Questions and Answers for Health Insurance Before Medicare Eligibility | NewRetirement (2)

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Health Insurance for 55 and Older: Real Life Questions and Answers for Health Insurance Before Medicare Eligibility | NewRetirement (2024)

FAQs

What insurance can I get if I retire at 55? ›

What health insurance options are available if you retire early?
  • COBRA. ...
  • Employer-sponsored retiree benefits. ...
  • Health insurance marketplace plans. ...
  • Medicaid. ...
  • Insurance through a part-time job. ...
  • Private health insurance. ...
  • Short-term insurance plans. ...
  • Spousal insurance.
Feb 12, 2024

What is a pre-Medicare plan? ›

Your pre-Medicare health insurance options may include continuing group coverage through COBRA or enrolling in an individual or short-term health insurance plan. The decision you make will likely depend on factors such as premium cost, how early you plan on retiring, and your healthcare needs.

Can I choose marketplace coverage instead of Medicare? ›

You can choose Marketplace coverage instead of Medicare if you have to pay a Part A premium. Before making this decision, check if Marketplace coverage meets your needs and fits your budget.

Can you use COBRA as a bridge to Medicare? ›

How does COBRA work with Medicare? If you have COBRA and you're eligible for Medicare but not enrolled, COBRA may only pay for a small portion of the health care services you get, and you may have to pay most of the costs yourself. Contact your COBRA plan and ask what percent they pay.

What do people who retire early do for health insurance? ›

If you retire before you're 65 and lose your job-based health plan when you do, you can use the Health Insurance Marketplace ® to buy a plan. The yearly period (November 1 – January 15) when people can enroll in a Marketplace health insurance plan.

Can you retire at 55 and get Medicare? ›

Medicare: Unless you are eligible due to a disability, you're not eligible for Medicare until you turn 65, regardless of when you stop working. Social Security: Workers who retire early will receive reduced Social Security benefits—as much as 30% less.

What are 4 types of Medicare plans? ›

There are four parts of Medicare: Part A, Part B, Part C, and Part D.
  • Part A provides inpatient/hospital coverage.
  • Part B provides outpatient/medical coverage.
  • Part C offers an alternate way to receive your Medicare benefits (see below for more information).
  • Part D provides prescription drug coverage.

Can I stay on Obamacare instead of Medicare? ›

If you don't have (and don't qualify for) Medicare, the Health Insurance Marketplace® can help you find coverage that fits your needs and budget. Depending on your situation, you may be able to choose the Marketplace instead of Medicare for your health coverage.

How long is the pre existing waiting period for Medicare? ›

In some cases, the Medigap insurance company can refuse to cover your out of pocket costs for these pre‑existing health problems for up to 6 months. This is called a “pre‑existing condition waiting period.” After 6 months, the Medigap policy will cover the pre‑existing condition.

Can you have private health insurance and Medicare at the same time? ›

You can have group health plan coverage or retiree coverage based on your employment or through a family member. After the coordination period ends, Medicare pays first and your group health plan (or retiree coverage) pays second.

Can I drop my employer health insurance and go on Medicare Part B? ›

You should start your Part B coverage as soon as you stop working or lose your current employer coverage (even if you sign up for COBRA or retiree health coverage from your employer). You have 8 months to enroll in Medicare once you stop working OR your employer coverage ends (whichever happens first).

Who is not eligible for Medicare? ›

Generally speaking, anyone under 65 will likely not have access to Medicare. Other people who may fall short of Medicare eligibility criteria include: Undocumented immigrants. People with disabilities who have received SSDI benefits for under two years.

Who is not eligible for COBRA? ›

Why would an employee not qualify to enroll in Cal-COBRA? The employee is enrolled in or eligible for Medicare. The employee does not enroll within 60 days of receiving the notice of eligibility from the employer. The employee is covered by another health plan.

Does COBRA coverage begin immediately? ›

Assuming one pays all required premiums, COBRA coverage starts on the date of the qualifying event, and the length of the period of COBRA coverage will depend on the type of qualifying event which caused the qualified beneficiary to lose group health plan coverage.

How does Cobra insurance work with Medicare? ›

After Medicare pays, COBRA may cover some or all of what Medicare does not pay. Whether you should take COBRA depends on the type of coverage you want and can afford. Your COBRA coverage may include extra benefits that are not covered by Medicare, like coverage for routine dental care or eyeglasses.

Is 55 too late to get life insurance? ›

Many life insurers don't issue term life insurance policies after the would-be policyholder reaches a certain age, with limits ranging from 75 to 90 years of age. If you're 55 or older, you may find it difficult to find term life policies up to 30 years or longer.

What happens if I retire at 55? ›

However, you unfortunately cannot begin receiving Social Security retirement benefits at 55. The earliest age you can begin drawing Social Security retirement benefits is 62. But there's a catch. Taking Social Security benefits prior to reaching your full retirement age results in a reduction of your benefit amount.

Is it worth getting life insurance at 55? ›

If a lump sum of money would help protect your loved ones against financial hardship and provide them with financial peace of mind, you might want to consider life insurance even after age 50.

Can I get COBRA if I retire early? ›

Early retirees can take advantage of the Consolidated Omnibus Budget Reconciliation Act (COBRA), a federal law that allows individuals and their families to continue their employer-sponsored health insurance coverage for a limited period after employment ends.

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