I Retired Early – What About Medicare?

I Retired Early What About MedicareIf you’ve been planning an early retirement you have probably spent some time wondering about healthcare options. The reality is that before you become eligible for Medicare, you may be on your own in ensuring that you have the coverage you want at the standard you need.

Here’s what you need to know, and how you can work to find the best solutions for you and your family.

The basics

For most people, eligibility for Medicare begins at age 65.

At around age 65, you’ll have a 7-month open enrollment period that will typically:

  • Start 3 months before the month of your 65th birthday
  • Include your birthday month
  • End 3 months after your birthday month

It is very important to take advantage of enrollment when you can: otherwise, you may have a gap in coverage or need to pay penalties on Part B. That’s why it’s advisable to enroll in Part A when you become eligible, even if you don’t need coverage right away. Part A is often free.


Medicare Basics Guide

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Typical sources of outside coverage

If you’re not yet eligible for Medicare, you have several options for health insurance. This list is unlikely to be exhaustive, so make sure to speak to your insurance broker, financial advisor, or (if you haven’t retired yet) your Human Resources department at work to find out more.

Individual coverage: You could consider looking into individual coverage through the Affordable Care Act (Obamacare). Losing insurance coverage through your employer is a qualifying life event for signing up outside of the annual open enrollment period.

You might qualify for subsidies depending on your income; if you do not, speak to your financial or tax advisor about whether there are any steps you can take to reduce your taxable income for the year.

COBRA: This option is typically going to raise your costs compared to what you paid through your employer, but it does provide relief in that you can maintain the same level of benefits you enjoyed before. Just keep in mind that COBRA benefits are typically limited to a set period of time.

Short term plans: These policies, which are intended to bridge a brief gap in coverage, are typically more expensive than other plans and may deny coverage for pre-existing conditions, prescription drugs, and other basics. But if you have a small stretch of time to cover, it could be a logical option.

Spousal plan: If your spouse is still employed you might consider using his or her plan to tide you over, which can also be incredibly cost effective.

Self-insurance: Self-insuring essentially means relying on your own savings to cover health care costs until you become eligible for Medicare. It’s a risky option because, as may pre-retirees already know, the sky can be the limit when it comes to healthcare costs.

Eligibility for Medicare before age 65

There are circumstances where you’ll be eligible for Medicare before age 65.

These include:

  • Receiving Social Security disability benefits or certain disability benefits from the Railroad Retirement Board (for a period of 24 months in a row)
  • If you have Lou Gehrig’s disease (amyotrophic lateral sclerosis, or ALS)
  • If you have end-stage renal disease (ESRD) and require dialysis

In these situations, you can receive Original Medicare (Part A and Part B), though your enrollment might not be automatic. Check with Medicare.gov to find out more.

Making a decision

We recommend doing a careful assessment of the costs and benefits of each option available to you, with special consideration for your use of medical services, prescription drugs, and specialized care. It can be a complicated process, but it’s also a useful one – after all, choosing a Medicare plan can be similarly complex!


Want to know more about Medicare?

 We recommend our free introductory guide to Medicare plans and decisions, Medicare Basics. With this guide, you’ll get a first look at some of the components – and complications – that you could be facing as you approach retirement.

Download Medicare Basics for free today!


Medicare Basics Guide

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Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

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Important Disclosures

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
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Further Reading

Medicare basics https://www.medicare.gov/sign-up-change-plans/getting-started-with-medicare

Eligibility before age 65 https://www.aarp.org/retirement/social-security/questions-answers/medicare-ss-62/

Plan options https://www.kiplinger.com/article/retirement/T027-C000-S004-finding-health-insurance-before-medicare.html

Qualifying for ACA https://www.healthcare.gov/glossary/qualifying-life-event/