Today, let’s talk about why early retirement could seem like a good idea but run into problems. I think that for some, early retirement is the American Dream, “I want to retire when I’m 58 years of age,” or whatever age you’re thinking about. The issue is how do we factor in health insurance costs or healthcare costs from your retirement age until your Medicare eligibility at age 65?
That’s a really important topic. It gets even more complex if you have a spouse who is younger than you. How do you keep your spouse insured? There are a couple of things that you may want to keep in mind as you think through your retirement.
Protecting Your Health Insurance Coverage
First, ideally, you want to work until you’re 63-and-a-half, continuing to work for your employer so you can maintain your benefits. At that point, you would at least have the option of COBRA to take you from your retirement age to age 65. That’s a nice, easy bridge.
Secondly, if you’re 58 and want to retire early, what do you do about your healthcare costs because you’ve got to figure out the next seven years of health insurance coverage?
The problem is there’s a great unknown right in this subject. Unfortunately, we’re going to have an exponential growth of healthcare costs over the next five to 10 years until we have single pay healthcare options.
If you make this decision to retire at 58, you’re going to have COBRA for a period of time, and then you’ll have to go to Obamacare for your coverage.
An Alternative to Obamacare/Affordable Care Act
As an alternative to that, some of you who want to retire early may still want to do your own thing. You may want to start your own small business. You may want to run a consulting business. You may want to start a landscaping business or have rental properties.
Therefore, then, you could create for yourself your own small group insurance plan. You and your spouse would be the two employees of that new group. That would be a very good cost-effective alternative for your health insurance to get you to age 65.
One reason why that benefits you is that those premiums are generally lower than Obamacare enrollments. Obamacare enrollments, remember, are tied to one’s income. The higher one’s income, the higher one’s premium. If you’re retiring early, you’re generally set up so that you’re going to have higher income, so this could be a good alternative.
The small group insurance option gives you access to a full network of doctors and hospitals. Obamacare enrollments typically have limited networks. They’re limited in that many are HMO plans, whereas small group insurance plans are PPO plans that are available anywhere.
Talk to Us to Get the Right Advice on Early Retirement
These are just a few of the topics that you should sit down and talk over with an insurance agent so they can explain your options to you. We are happy to help you here at MBhealth Insurance Agency. Give us a call at (314) 544-5400.
