Forgive my ignorance in this. DH and I are both mid-50’s, thinking about retiring more and more! We both work for corporations with excellent insurance - if we both retired at 60, our only option would be some kind of pricy private insurance? At 65 we qualify for Medicaid? I’d love for both of us to retire at 60. Any tips on researching this are also appreciated! Does anyone have insurance through professional organizations? I was a consultant/freelancer for a while and used to receive offers - not sure if they were any good though.
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At 65 you will qualify for Medicare…not Medicaid.
You can both buy insurance off the exchange. Depending on your income, it might not be a bargain…but you would be able to do so.
You can see an insurance navigator in your state for help.
You can Cobra your current insurance but that is for a limited amount of time, and will likely be the full cost of whatever plan you currently have. This is something to ask your HR departments about.
If you are a member of a professional organization, why not contact them or look at their websites for insurance info.
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So here is what we did to bridge the time between early retirement and Medicare (note Medicare is for old people not Medicaid). This was advice given to us by a consultant.
At early retirement, or in my husband’s case, a layoff which caused an early retirement, we continued with his cooperate health insurance to end out the year. We had already been too invested in deductibles etc. to start any new insurance that late in the year.
For the next year, and all the subsequent years until he is eligible for Medicare, we are using the state insurance marketplace. Although we have retirement assets, we are choosing to not tap into them until true retirement (65). We are living off our other assets for these few years. Because of this, our income is very low and the state health plan is subsidized. This makes the rates very attractive (depending upon your state).
Depending upon what precipitates your early retirement, you could continue to get insurance from your corporate employer at lower than COBRA rates. If they lay you off at a certain age they may offer you insurance to bridge the gap at a better rate than just COBRA. My husband’s company did this (but the marketplace was more affordable).
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I am not an expert by any means.
That being said, you would need to find insurance between when you retire and when you qualify for MEDICARE (not Medicaid) individually at age 65.
You should check with your corporations to see what benefits continue into retirement as some allow you to tap into their group rate indefinitely. COBRA is usually only available for 18 months after departure, but that involves paying both the employee and employer share of premiums.
Beyond that, your options would be on the exchange, unless one of you continues to work in a capacity that allows for affordable health care.
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H’s company allows us to pay for insurance after retirement, until each of us hits Medicare eligibility (1st day of the month in which you turn 65). It wasn’t as inexpensive as his insurance was before retirement, because we had to pay the full amount without an employer subsidy, but it was less than buying it on our own because it was a rate negotiated by the employer.
I have some friends who worked for employers that continue coverage into retirement (especially those who worked at state universities long enough to be covered under old systems). Other friends have no retiree insurance through their former employers, so they buy on the insurance exchange. That can be expensive, but if your income after retirement is low enough, you may qualify for a reduced rate (subsidy). A lot of people try to keep their taxable income low enough between retirement and Medicare to qualify for subsidies. Building up a savings cushion before retiring can make this possible for some.
If you’re thinking about retiring, it’s really important to understand how insurance and Social Security work, how your pension, if any, works (for example, I know people whose pension amount reduces when they hit 62, and I know others who get an increased pension amount if they wait until they are older to begin taking the pension), and how to best position your savings for retirement. Libraries and colleges often host free sessions to discuss these things, and there is plenty of information available on the internet to help you get a handle on issues that impact retirement before you take the plunge.
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I wanted to retire earlyish but we have four kids relying on my family plan at work. 
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We are currently in this situation. My Husband is retiring end of this year and I took early retirement 1 1/2 years ago. We had researched our options and had planned on using the Marketplace insurance for the Gap years until we are eligible for Medicare. For me, 2 years and my husband 3 years.
One issue with the Marketplace insurance is that they use your current income to determine costs which are high due to stock payouts and compensation packages in our case. So we will be paying full price for any insurance at least for next year and probably the following year. Also I have found that many Medical groups are no longer accepting certain Marketplace insurers since they renegotiate their contracts yearly. Right now it looks like if we want to keep our same doctors, will have to use COBRA or go to private insurance. COBRA benefits are for 18 months, but can be extended up to 36 months.
My friends both retired at 55 and used Cobra for the 18 months then switched to the Marketplace providers after their income had stabilized and was reduced for retirement.
Just plan to spend a decent portion of your income for Health insurance the first couple of years before you have settle in your retirement budget.
Good luck and I am still researching my options.
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I seem to remember that for the first year of marketplace insurance (which was the year after my husband was laid off and had a huge income which included his severance), I was able to fill out some extra paperwork to say, hey he had income then but now he is unemployed. It worked and we got the insurance cheaper. This was in NJ and with the help of the free consultants that NJ supplies.
We are now in MA, and things work a little differently. No free consultants to help you navigate the market.
Yes, when we transitioned to the marketplace, we chose the plans which were accepted by the doctors we were already using. The move to MA means getting all new doctors, so we are choosing ones that accept the marketplace plan we chose.
Between the first year we went on the marketplace and the third year, the renegotiated rates for the plan we were on actually went down. The health plan consultant said that it had proved to be profitable to the insurance company so they had lowered the rates. Again this was in NJ, not sure this has happened in other states.
Thank you for the information. We are in California but I will check it out. Right now the COBRA package is lower than any of the Marketplace options even with a reduced retirement income. With the uncertainty of our doctors not accepting the Marketplace providers, COBRA might be the way to go since they have been accepting our current provider.
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The high costs of insurance for the average Joe keeps people like me working till 65 simply because health insurance is not how I want to spend my $$$$. As shown above there are ways around it and/or options depending on your savings, etc. - but definitely one of those things that in theory sounds great but once on paper…sounds expensive!
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Good for you for researching. Yes, Cobra can be a good deal… but it has time limit (often 18 months), especially for the employee - dependent spouse can be a lot more.
When we were researching, my rule of thumb is that we’d need about $2000/month to cover us both pre-Medicare. Possibly cheaper on Marketplace, but we were going to be doing Roth rollovers that increased income.
There really can be a lot of advantage if only one retires early and the other carries medical insurance. Travel grandly during that time, to keep that worker happy 
In our case, hubby is 7 years older. He retired age 64, and I kept working a year. Once he went on Medicare, I retired. Cobra for self for 18 months ($430). Now I am in a phase using a company future health account created when they took away retiree medical…. cost is about $800/month, but not out of my pocket. It will run out after a few years, and I’ll be back here looking for hints
NOTE: Medicare makes health insurance cheaper. But depending on your circumstances and the plan you pick it might still cost a few hundred per month.
Just to give you an idea of the California Healthcare costs I have been looking at:
COBRA for both= $1508/month
Marketplace for both with current income= $2695/month
Private Insurance for both= $2555/month
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Depending on your income, you can qualify for BOTH Medicare and Medicaid. The former is automatic, and you have to pay a means tested premium. The latter is used as the secondary (aka Medigap) if your income is low enough that you’ll qualify.
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We are looking at early retirement, too, and are planning for insurance to cost $2,200-2,500/month or so until we reach 65 — whether we go through the exchange or COBRA.
That is partly because we are still covering our college student for three more years and do not want a lower-priced exchange plan that will not be accepted by current providers (not that ANY of the exchange plans are far less).
At first, I thought we’d only have to pay that for a year until our income went way down and then the cost would be adjusted in our favor. But now I suspect we will do ROTH conversions (as someone else mentioned above), which will artificially inflate our income. Eventually, our child will drop off, but insurance costs keep rising, so I am not sure it will help.
So now our strategy is to try to pay off our mortgage before retiring (not the original plan), and use the money previously applied to the mortgage for health insurance.
Having our health system so heavily tied to employer-provided care is a huge problem IMO.
I should have noted that my planning numbers were from about 8 years ago (lower rates). Also I use very high deductible plans to keep rate low. I have no health issues and do have an HSA account I could dip into if I encounter unexpected expenses.
This is an issue that makes planning very complicated, especially if both spouses are high earners and expect a large Social Security payment. Sometimes it’s better to be less efficient early in order to be more efficient later. RMDs can created a large, unanticipated tax bill. Good you’re thinking about that now.
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Yes, and the ACA has been a solid step in the right direction, enabling many more people to consider retiring early, or job hop or do gig work without a company health plan.
It could’ve been so. much. more.
Sigh.
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Some exchange insurance plans do not apply to out of state care. So you need to take into account your college student’s location. It might be cost effective to move the college student to the health plan offered by her school. You will need to research this.
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We haven’t had group insurance in 35 year. Since ACA I buy off the exchange with no subsidy. I just got my quote for next year and it’s almost 1300.00 for a blue shield PPO with a $1750 deductible. It goes up every year. I don’t love that the Dr list isn’t as large as I would like.
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This was not the case with us. I spent a lot of time reading the fine print and on the phone with the ACA and our ACA advisor (can’t remember his official title) to confirm this. My DH retired on April 30. The exchange had us project what income we would take from taxable investments to live on for the rest of the year, add that to the income my DH earned between Jan 1 and April 30 and divide that total by 12 to get the estimated monthly income. I also had to upload a letter of explanation about how we arrived at that figure.
I will say I got several different answers from the first few customer service reps that I talked to and it took a lot of time to get a superviser on the phone who confirmed my understanding of the fine print instructions.
Your premiums are based on your policy year income. If you do use your employment income but qualify for subsidies based on your retirement income, you will get a refund for premium overpayments at tax time, but I would think that getting a refund on any deductible or copay overpayments would be a nightmare if it’s possible at all. There were no issues for us at tax time last year. Fortunately my estimates were accurate so we did not have to settle up on any underpayment.
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