Retiring from the workforce just as you enter your fifth decade of life means you still have ten to fifteen years until you’re eligible for Medicare. That means you’ll likely spend hundreds of thousands of dollars funding your own health coverage in the ensuing years. 

A 65-year old couple retiring this year can expect to spend $315,000 in health care and medical expenses throughout retirement. For single retirees, the 2023 estimate is $157,000.¹

So no matter how tempting it may be to tell your boss goodbye, first be sure you can shoulder the heavy burden that healthcare can be. That’s money you could use during retirement, and this is no time to run out! For more information on healthcare in early retirement, be sure to check out our course entitled “Early Retirement Healthcare 101.”

In the meantime, here are some of the options you have if you decide to retire before you’re eligible for Medicare. 

Spouse’s Insurance

The easiest and most cost-effective way to get health insurance in early retirement is to be added on to your spouse’s company insurance plan.  

Employer-Sponsored Health Insurance

Though this valuable benefit has seen a steady decline in recent decades, some large companies (over 200 employees) do still offer health benefits to retirees. It’s estimated that only about 30% of companies offer these types of plans anymore, but if yours does, this could be a great way to continue your coverage until Medicare kicks in. These plans are often your least expensive option, and the best news is that it’s likely to be insurance you’re familiar with.²

COBRA

COBRA provides 18 months of coverage under your current employer’s plan, but there are two major drawbacks for you to consider if you’re hoping to retire in your fifties.

• You’ll shoulder the full cost of the premium (where before it was shared with your employer); COBRA coverage is good, but it is one of the most costly options. The average monthly premium amount for an individual on COBRA is $703 and for a family, $1,997.³
• This is only a short-term option that won’t get you anywhere close to Medicare age (65) if you’ll be retiring in your early 50s. Even if your target retirement age is closer to the end of your fifties, you’ll still need another insurance plan to cover you until you are eligible for Medicare.

Affordable Care Act (Obamacare)

The average cost of an ACA individual plan is $430 per month, and family plan $1,159.⁴ It’s an expensive solution, but the good news is that you can’t be denied coverage regardless of age or health condition. If you’re in your 50s, expect to pay around $766 for ACA coverage, but expect your costs to increase towards $1,163 as you approach 60.⁵

ACA premiums can be reduced if you are eligible for advance premium credits. These are based on income and taxable household size. Penalties apply if you underestimate your income and pay a lower rate, so it’s better to overestimate income on your application. 

Note: You must apply for this insurance within 60 days before or after retiring. Check out our Early Retirement Healthcare course for more information on the Affordable Care Act.

Short-Term Health Insurance

Another stop-gap insurance plan is a short-term medical plan. This type of plan could be an option for you if you’re in good health, have no chronic medical conditions, rarely see a doctor and take few to no prescriptions. That’s because coverage is minimal, and expenses above basic medical needs can add up quickly. 

Before deciding on a short-term medical plan, it’s important to know that you can expect very high deductibles, even though the monthly payment tends to be reasonable. For a 55-year-old non-smoking female living in  Virginia, you could expect to pay anywhere from $260 to $657 per month for a 6-month plan with a $5,000 to $10,000 deductible.⁶ But chronic or pre-existing conditions can increase premiums or even disqualify you for a short-term medical plan, unlike an ACA plan. Short-term medical plans last for up to a year and can be canceled at any time.

Find Part-Time Work That Offers Insurance

You’re only in your fifties. It’s not improbable that you may want to pursue another occupation or open your own business. Be sure to do what you love, but try to find a gig that offers insurance benefits. 

SOURCES

1. “Fidelity Releases 2023 Retiree Health Care Cost Estimate: For The First Time In Nearly A Decade, Retirees See Relief As Estimate Stays Flat Year-Over-Year.” Fidelity Investments, 21 June 2023, https://preview.thenewsmarket.com/Previews/FINP/DocumentAssets/645024.pdf. Accessed 18 October 2023.
2. “2023 Employer Health Benefits Survey.”kff.org, 18 October 2023, https://www.kff.org/report-section/ehbs-2023-section-1-cost-of-health-insurance/. Accessed 14 November 2023.
3. Ilbd.
4. “Plan Year 2024 Qualified Health Plan Choice and Premiums in HealthCare.gov Marketplaces.” CMS.gov, 25 October 2023, https://www.cms.gov/files/document/2024-qhp-premiums-choice-report.pdf. Accessed 13 November 2023.
5. “2024 QHP landscape data.” healthcare.gov, https://www.healthcare.gov/health-plan-information-2024/. Accessed 13 November 2023.
6. “Short-Term Health Insurance.” eHealth, https://www.ehealthinsurance.com/short-term-health-insurance. Accessed 29 November 2023.