Health Insurance Options for Early Retirees

There are several places early retirees can find health insurance coverage before Medicare kicks in, but your options will depend on your income level, your health care needs and the length of time you need coverage.

Affordable Care Act: For most early retirees who are not yet eligible for Medicare, the Affordable Care Act (ACA) health insurance marketplace, also known as Obamacare, is the best option for getting comprehensive health coverage. Coverage will not be denied or cost more for preexisting health conditions.

If your income falls between 400% to 100% of the poverty level (or to 138% in states with expanded Medicaid coverage) after you retire, you will also be eligible for a subsidy that will reduce your monthly premiums. In 2024, 400% of poverty level is $60,240 for one individual or $81,760 for a married couple. Those with incomes below 100% of poverty level (or 138% in Medicaid expansion states), will qualify for Medicaid. For those with household incomes above 400% of poverty level, the ACA also provides subsidies to ensure premiums do not exceed more than 8.5% of their income for a benchmark policy.

To see how much subsidy you are eligible for, use the subsidy calculator at https://www.healthcare.gov/lower-costs/. To shop for ACA plans in your state, visit HealthCare.gov or call 800-318-2596. For extra help, contact a certified agent or broker at HealthCare.gov/find-assistance.

COBRA: Another temporary health insurance option you may be eligible for is the Consolidated Omnibus Budget Reconciliation Act (COBRA). Under this federal law, if you work for a company that has 20 or more employees, you can remain on your employer’s group health plan for at least 18 months – but could last up to 36 months. It is important to note that with COBRA, you will pay the full monthly premium yourself, plus a 2% administrative fee.

For more information, talk to your employer’s benefits administrator or contact the Employee Benefits Security Administration at Askebsa.dol.gov or call them at 866-444-3272.

If the company you work for has fewer than 20 employees, you may still be able to get continued coverage through your company if your state has “mini-COBRA.” Contact your state insurance department to see if this is available where you live.

Short-Term Health Insurance: If you cannot find an affordable ACA plan and COBRA is too expensive, another possible option is short-term health insurance. These plans, which are not available in every state, are more affordable, basic health plans that provide coverage for up to three months with a one-month extension available. Please note that short-term plans do not need to comply with the ACA so they can deny coverage, exclude preexisting conditions and may not cover prescription drugs.

Healthcare sharing ministries: If the previously listed options do not work for you, another temporary solution could be healthcare sharing ministries (HCSM). These are cost-sharing health plans in which members – who typically share a religious belief – make monthly payments to cover expenses of other members, including themselves.

HCSMs are less expensive than paying full out-of-pocket costs for traditional health insurance but be aware that HCSMs are not health insurance. They do not have to comply with the consumer protections of the ACA, and they can also reject or limit coverage for having pre-existing health issues and limit how much you will be reimbursed for your medical costs. Preventive care is also typically not covered either.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.