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Alternatives to Medicare for those not yet 65

As you age, health care becomes increasingly important, which translates into higher premium prices every year of your life.

But just because you’re looking at retiring early or already have, that doesn’t mean you have to sit around counting the days to your 65th birthday.

Take your health into your own hands by exploring one of these alternatives:

Talk to HR before you leave

Employers with fewer than 20 employees aren’t legally required to provide you with coverage after you’ve retired, but some may offer partial or temporary coverage or even a full extension of your benefits in retirement.

If you have a comprehensive benefits plan while you’re still working, it may be worth inquiring about your company’s policy on benefits after retirement. You should be able to find most answers to your questions in your plan’s benefit booklet.

Failing that, give your union or employer’s benefits administrator a call and ask them what your options are.

Visit the Obamacare marketplace

In 2021, the Biden administration introduced generous new subsidies on Obamacare health plans as part of its $1.9 trillion COVID relief bill.

Read more: The great escape: Rich young professionals earning over $100K are fleeing California and New York — here's why and where they are headed

Those new discounts were only meant to be in effect until the end of 2022, but thanks to the recent Inflation Reduction Act, they’ll be extended until 2025.

Which means that next year, most applicants will be able to get an insurance plan for $10 or less per month, according to ValuePenguin.

Open enrollment in the Affordable Care Act marketplace begins Nov. 1, but you can qualify for a special enrollment period for several reasons — including if you retire before age 65 and lose your job-based health plan when you do.

Call on COBRA

A federal law called the Consolidated Omnibus Budget Reconciliation Act (COBRA) mandates that many private sector employers must keep you on their group health plan for at least 18 months.

This applies for any company with 20 or more employees.

But be prepared to pay your full premiums, which includes whatever percentage your employer covered when you were still working. And on top of that, your insurer can tack on an extra 2% to cover its administrative fees — which can translate into hundreds of dollars a month.

It’s not a cheap option, but it could be enough to tide you over until you get Medicare coverage.

Get coverage through your spouse’s employer

If you’re living that “freedom 55” lifestyle, but your spouse is still clocking in every day, you may be in luck.

While it’s often more affordable for some couples to get their own insurance coverage through their direct employer, once you retire, you may want to consider getting onto your spouse’s plan.

That usually shouldn’t be an issue to set up. In 2020, 95% of employers offering health benefits extended their coverage to an employee’s spouse, according to the Kaiser Family Foundation.

You may end up paying a higher premium — but it will be more affordable than having no health coverage at all when you need it.

Take on a side hustle

It’s becoming increasingly popular for older Americans to put off retiring or to return to work part-time — whether that’s for health insurance or other financial motivations.

The U.S. Bureau of Labor Statistics predicts that by 2024, about one-quarter of the workforce, or 41 million people, will be over the age of 55 — including 13 million over age 65.

And more than half say they’re working past retirement because of financial reasons, according to a Transamerica Center for Retirement Studies report.

Picking up work on your terms after retiring isn’t such a bad idea. Finding a profitable part-time gig based on your hobbies or talents could give you more spending money or cash to cover your health care needs.


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Sigrid Forberg Associate Editor

Sigrid’s is Moneywise.com's associate editor, and she has also worked as a reporter and staff writer on the Moneywise team.


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