How To Afford Early Retirement Health Insurance

Retirement Health Insurance

December 20th, 2018   |   Updated on April 8th, 2023

Early retirement is something everyone dreams of. But what about the early retirement health insurance costs? Here’s how to afford them.

The average American retires at 66 years old. Given that people in the USA have a life expectancy is about 82, that doesn’t leave much time for living post-work life.

That’s why more people are aiming to retire early too start enjoying the high quality of life they’ve spent most hours at their office desk imagining.

There’s only one hiccup with this plan… Health insurance.

If you’re retiring before your 62nd birthday, you won’t qualify for Medicare (in most cases). How then can you get affordable health insurance coverage?

Fortunately, you have options to bridge the Medicare eligibility gap and keep early retirement health insurance costs in check.

Here are some of the most commonly leveraged strategies utilized by early retirees.

1. Utilize Your Spouse’s Coverage

Retirement Health Insurance

If you’re looking to keep your early retirement health insurance costs down and are lucky enough to have a spouse who gets coverage through their work, you’re in luck!

In nearly all cases, you’ll be able to jump in on their plan.

The amount your spouse needs to contribute to their health insurance premiums will likely go up slightly given that coverage will be for two people as opposed to one. Still, the upcharge is nominal and you can be assured quality health coverage until you’re Medicare eligible and can start purchasing Medigap insurance.

2. Pick Up An ACA Plan

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The Affordable Care Act (ACA) was a piece of legislation that aimed to simplify the process of getting health insurance. While different aspects of affordable care are still debated, the fact that you can pick up a health insurance plan in its marketplace is not debatable.

A lot of people worry that if they quit their job outside of the ACA enrollment window (around October) that they won’t be able to to get coverage until the window opens up again.

Fortunately, that’s not the case.

The ACA will allow you to enroll at any time of the year if you’ve experienced a life-changing circumstance (like losing insurance through your job).

3. Opt Into COBRA

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In some cases, employees that are losing their insurance coverage through their job will qualify for COBRA. COBRA is a temporary plan that allows you to continue to enjoy your employee health benefits for up to 18 months. This privilege, however, comes with a steep uptick in your health care premiums.

The affordability of COBRA often makes it so people don’t find it to be a viable option. Still, you should take the time to analyze the COBRA offer that’s presented to you (assuming one is presented at all) to discern whether or not the coverage is valuable.

4. Start Putting Money Into a Health Savings Account Early

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There’s always the option to pay your healthcare expenses out of pocket. For most, the steep price of doing so would be prohibitive.

If you saved up for years leading up to your early retirement though, you may be able to get by if you limit your doctor’s visits.

In order to pay for your early recruitment health insurance costs out of pocket, you’ll want to establish a health savings account as early as possible and start making contributions to it.

Your health savings account will have special tax benefits so be sure to discuss with your accountant what the best course of action is around managing it.

5. Keep Doctor’s Visits To a Minimum

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For a lot of people, getting health insurance and paying the monthly premiums isn’t that big of a deal. The bigger issue is paying high co-pays.

Some basic health insurance doesn’t even help you with medical expenses until you’ve already spent thousands of dollars out of pocket.

That’s bad news if you see the doctor a lot and palatable news if you don’t see the doctor that much.

To make sure that you don’t go bankrupt on co-pays, try to limit your doctor’s visits. The healthier you can stay during your Medicare eligibility gap, the less money you’ll spend.

6. Pad Your Retirement Account

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If the money you have coming in is high, there’ a good chance that you’ll be able to afford any medical snafus that arise prior to your qualifying for Medicare. Your ability to make money while you’re retired will probably be tied in large part to the amount of money you contributed to your retirement accounts.

Remember, experts say that you should aim to contribute roughly 10% of your income each month to your retirement. If you can put more than that in, you’ll shield yourself from medical expenses derailing your retirement goals.

7. Join a Healthshare

Join a Healthshare

Some people, particularly those with religious backgrounds, opt out of healthcare and instead join a healthshare community to manage early retirement health insurance costs. Healthshares are groups of people that all pool together to cover one another’s health related expenses (like a miniature insurance network).

Healthshares are typically much cheaper than traditional health insurance plans and can provide decent coverage for basic health needs.

It’s important to note that healthshares may be less reliable than traditional insurers. Furthermore, healthshares do not cover a lot of things that are considered “non-religious”.

You’ll have to consult with your prospective healthshare’s point of contact to make sure that a healthcare alternative like this is right for you.

Wrapping Up How to Afford Early Retirement Health Insurance Costs

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If you’re planning on retiring early and are worried about paying for early retirement health insurance costs, we hope that this article has brought you some peace.

Early retirement is a treat and it would be a shame to see that healthcare (or lack thereof) derails your dreams of enjoying it.

Sp, get out there and start weighing your options!

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