LANSING, Mich. — Roughly 60 to 70 percent of Americans retire before age 65, according to Merrill Lynch — but leaving the workforce early comes with a significant financial hurdle: healthcare coverage.
Because employer-sponsored insurance typically ends when you leave your job, early retirees face a multi-year gap before they become eligible for Medicare. Experts say those out-of-pocket costs can add up fast.
"It can be anywhere from a few hundred dollars all the way over to 1,000 dollars for people that are covering additional members," Tonya Sundermann of Priority Health said.
Early retirees generally rely on a few pathways to bridge that gap:
- The ACA Marketplace (Healthcare.gov): Taxable retirement income may qualify you for premium subsidies.
- COBRA Continuation: Allows you to stay on your former employer's plan for up to 18 months, though you pay the full premium.
- A Working Spouse's Plan: Coverage through a still-employed partner's employer-sponsored insurance.
Sundermann recommends starting research on the government's marketplace website.
"I do recommend people going to the Healthcare dot gov website because even though it is health insurance and it is a government website, it is actually very easy to follow and it does answer those initial questions that people have," Sundermann said.
Only about a third of large employers still offer health benefits to retirees, and even then, the bulk of the premium typically falls on the retiree.
Experts say navigating the pre-Medicare gap requires strict financial planning, as healthcare remains one of the largest expenses for early retirees. Professionals recommend exploring the government marketplace, consulting with an independent health insurance agent, or asking trusted friends and family for local agent recommendations.
Healthcare Research Resources
- Explore Healthcare.gov
- Consult an independent agent
- Ask friends and family for referrals
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