Health Insurance Options for Early Retirees

Dear Savvy Senior,

I’m going to retire in a few months and need to get some temporary health insurance until I can enroll in Medicare at age 65. What are my options?

     --Early Retiree

Dear Early,

There are several places early retirees can find health insurance coverage before Medicare kicks in, but the best option for you will depend on your income level, your health care needs and how long you’ll need coverage for. Here’s where to look.

Affordable Care Act: For most early retirees who aren’t yet eligible for Medicare, the Affordable Care Act (ACA) health insurance marketplace, also known as Obamacare, is the best option for getting comprehensive health coverage. And you won’t be denied coverage or charged extra for preexisting health conditions.

And, if your income falls below the 400 percent poverty level after you retire – anything below $60,240 for a single or $81,760 for a couple in 2024 – you’ll also be eligible for a subsidy that will reduce your monthly premiums. The ACA also ensures that at least through 2025, households with incomes above that 400 percent poverty level will not have to pay more than 8.5 percent of their income for a benchmark policy.

To see how much subsidy you may be eligible for, use Kaiser Family Foundation subsidy calculator at KFF.org/interactive/subsidy-calculator.

To shop for ACA plans in your state, visit HealthCare.gov or call 800-318-2596. Or, if you want some extra help, contact a certified agent or broker at HealthCare.gov/find-assistance.

COBRA: Another temporary health insurance option you may be eligible for is the Consolidated Omnibus Budget Reconciliation Act (COBRA). Under this federal law, if you work for a company that has 20 or more employees, you can remain on your employer’s group health plan for at least 18 months – but could last up to 36 months. But be aware that COBRA isn’t cheap. You’ll pay the full monthly premium yourself, plus a 2 percent administrative fee.

To learn more, talk to your employer benefits administrator or contact the Employee Benefits Security Administration (Askebsa.dol.gov; 866-444-3272).

If, however, the company you work for has fewer than 20 employees, you may still be able to get continued coverage through your company if your state has “mini-COBRA.” Contact your state insurance department to see if this is available where you live.

Short-Term Health Insurance: If you can’t find an affordable ACA plan and COBRA is too expensive, another possible option is short-term health insurance. These plans, which are not available in every state, are cheaper, bare-bones health plans that provide coverage for up to 3 months with a one-month extension available. But be aware that short-term plans don’t comply with the ACA so they can deny sick people coverage, they don’t cover preexisting conditions and they can exclude coverage essentials like prescription drugs.

To find and compare short-term health plans, try sites like eHealthInsurance.com or PivotHealth.com.

Healthcare sharing ministries: If the previously listed options don’t work for you, another temporary solution could be healthcare sharing ministries (HCSM). These are cost-sharing health plans in which members – who typically share a religious belief – make monthly payments to cover expenses of other members, including themselves.

HCSM’s are cheaper than paying full out-of-pocket costs for traditional health insurance but be aware that HCSM’s are not health insurance. They don’t have to comply with the consumer protections of the ACA, and they can also reject or limit coverage for having pre-existing health issues and limit how much you’ll be reimbursed for your medical costs. Preventive care typically isn’t covered either.

To look for these plans, comparison shop at the three largest providers – Samaritan Ministries (SamaritanMinistries.org), Medi-Share (MyChristianCare.org), and Christian Healthcare Ministries (Chministries.org).

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.