Unplanned Early Retirement? Here Are Your Healthcare Options

Susie Valentine
Oct 6, 2021

Unplanned Early Retirement? Here Are Your Healthcare Options

Reclaim your health with us!  This article helps you understand your healthcare options if you have an unplanned early retirement, and covers:

  • What healthcare options are available for retirees who don’t qualify for Medicare?
  • What is COBRA?
  • What is retiree health insurance?
  • How do I qualify for Medicaid?
  • What is a health care sharing program?
  • Are there early retirement healthcare options available for veterans or government workers?

During difficult times, employers are often forced to cut costs dramatically, be it through giving up office space, downsizing, salary cuts, or giving retirement incentives to valued team members in a certain age bracket.  Even under ordinary circumstances, there’s always a possibility that your employer will incentivize you to retire early.  If you find yourself retiring early unexpectedly for this or any other reason, and you’re under the age of 65 and don’t yet qualify for Medicare, how do you make sure your healthcare needs are covered?

If you’re someone who’s always gotten health insurance through your employer, this situation may seem overwhelming, but it’s actually far more common than you think!  Freelancers and independent contractors pay for their own insurance every month; the key is budgeting for it.  As for where you can find insurance, you have a few options.

Before you do anything, be sure to check with your soon-to-be former employer to see if retiree health insurance is something they offer.  This option allows you to stay on your current plan while you’re no longer working for them.  It has become far less common over the years with the rising cost of insurance, so not many employers offer it anymore, as it’s quite costly to them. 

Most employers, however, will offer you the option of staying on their insurance for up to 18 months past your final date of employment through COBRA (Consolidated Omnibus Budget Reconciliation Act).  Your coverage through COBRA is no different whatsoever than your current coverage through your employer.  It will allow you and anyone covered by your plan such as a partner or dependents to receive the exact same coverage for those 18 months.  Unfortunately, you will have to pay a monthly premium for it, even if your health insurance was fully covered by your employer before you retired.  COBRA premiums can also be super costly, so it may work better for your budget to seek other insurance options. 

If you qualify, Medicaid is your most cost-effective option.  How do you qualify?  First, you must meet a certain income level requirement.  In 2020, for example, a resident of Massachusetts must make no more than $552 per week in their retirement in order to qualify (this is for an individual; the eligibility limit for a couple in MA is $747).  You can find a full list of states and their current income requirements here.  In addition to this, you must also be a U.S. national, citizen, or have immigration status that meets certain criteria.  

There’s always the option of buying insurance through your state’s Affordable Care Act (ACA) Marketplace or straight from a private insurer, both of which you can do with the help of an agent or on your own.  The monthly premiums for these plans are often comparable, but be advised that there are providers who don’t accept certain ACA plans.  Even if your favorite doctor appears to accept the health plan you’re eyeballing in the marketplace, it’s best to call their office and double-check that they do indeed accept it.  A doctor who accepts United Healthcare may not accept one or more of United Healthcare’s plans through the Affordable Care Act.  This can be tricky and frustrating, so if you’re committed to one or more of your health providers, do give them a call and make sure they’ll accept your new insurance before you buy it.  

Certain affiliations may make you eligible for even more healthcare options in early retirement.  If you worked for the government or are a veteran, for example, you can look into a program like TRICARE.  You may still have to pay some costs out of pocket, but it will be more cost-effective than getting insurance through the marketplace or a private insurer.  There are also health care sharing programs for people with religious affiliations, such as Christian Healthcare Ministries or Medi-Share.  Members of these programs pay into a monthly share and tap into the pool of money when they need to cover health costs.  

Some folks who have an unplanned early retirement from their full-time jobs decide that what works best for them is taking on a brand new part-time job that offers full or partial health benefits.  For those who’d like to take a bit more time to transition from full-time employment to full retirement, this can be a fulfilling and financially smart option.  Whatever your plan, make sure it works for you, your family, your retirement budget, and all of your healthcare needs.