Kiplinger’s Personal Finance
If you’re 65 or older when you retire, you can rest easy knowing you’ll be eligible for Medicare. But if you want to leave the workforce sooner than that, you’ll need to find a way to bridge a health insurance gap.
Here are some options:
Access your spouse’s plan. If your spouse is still working and has access to employer-sponsored group coverage, see if you can also enroll in the plan. If so, joining the employment plan can provide solid coverage at an affordable price.
You usually have 30 days from the time you leave your job to apply for special enrollment in your spouse’s plan. The employer may subsidize a lower premium for a spouse than for the employee. Some employers charge a surcharge, for example $100 a month, to add a spouse who has other coverage available through their own employment. But that shouldn’t be a problem if you’re retired.
Use COBRA. This federal law allows workers to continue their health coverage after they leave their jobs. If you work for a company with at least 20 employees, the company must allow you, your spouse and your dependent children to remain in the company’s group health plan after your employment ends (unless you were fired for severe). You can usually stay on the plan for up to 18 months.
Some states have “mini COBRA” laws that require small employers to provide extended coverage as well, but the length of the terms and the events that qualify you for it vary.
COBRA is an expensive prospect for most. You usually have to pay the full premium, including the amount your employer covered when you were an employee, plus a 2% administrative fee.
If you are less than 18 months away from turning 65, COBRA coverage will bring you up to Medicare eligibility, which can make it a relatively hassle-free option if you can afford it. You usually have 60 days from the date you get the notice to elect COBRA or the date you would lose coverage (whichever is later) to sign up. Coverage is retroactive as long as you pay any back premiums you owe.
Explore ACA plans. At www.healthcare.gov, you can apply for insurance through a marketplace established under the Affordable Care Act. These marketplace plans must cover essential benefits, including hospitalization, prescription drugs, and preventive and wellness services. Plans can’t deny you coverage or charge you more if you have a pre-existing condition.
Marketplace plans often have higher deductibles and out-of-pocket limits than employer plans. Since marketplace plan premiums are age-related, if you’re 60, you can expect a marketplace premium to at least work. $1,000 a month if you don’t qualify for a premium tax credit, he said Karen Politzsenior scholarship do Foundation of the Kaiser family. The good news is that more people are now eligible for income-based subsidies thanks to the provisions of a COVID-19 relief law that was recently extended through 2025.
You generally have 60 days from the time you lose coverage from work to enroll in a marketplace plan. Otherwise, you can register during open enrollment; for 2023 plans, go so far January 15, 2023.
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