Congratulations on your early retirement! If you’re like many who retire before the age of 65, you may be wondering what your options are for health insurance to help you bridge the gap until you’re eligible for Medicare.
HealthPartners individual and family health insurance plans are a great choice for early retirees. With a variety of strong networks plus dependable coverage, you can get the care you need when you need it. Let’s find a plan that fits.
Typically, you won’t be eligible for Medicare before the age of 65. It’s a common misconception that you can get Medicare at age 62, because you can start claiming your Social Security benefits at age 62. But Medicare at 65 is the milestone for most people (though there are exceptions for people with certain disabilities or certain medical conditions).
Even though Medicare may not be possible yet, there are plenty of other options for those under 65. Before you compare different plans, it can be helpful to take some time to organize your budget and consider your health requirements. Think of your current and future health care needs, and your budget in terms of overall insurance costs.
Often, that means factoring in monthly premiums and deductibles, copays and coinsurance, and the maximum out-of-pocket payments you can afford. Then, you can find a plan that fits your budget and has the coverage you need.
COBRA is a good temporary health insurance option for early retirees. Through COBRA, you can continue receiving your former employer-sponsored health insurance plan benefits for up to 18 months. This can be a great choice for people who retire a year or two before 65. However, this option can be expensive because you’re responsible for paying the plan’s entire monthly premium yourself, including the portion your employer used to pay.
If your spouse is still working, joining their employee-sponsored health plan may be an option. It’s an affordable way to get insurance, but it can mean your spouse will pay higher premiums.
Another popular choice for early retirees is an individual or family plan you purchase yourself directly from an insurance company or through a broker. These plans aren’t offered on your state’s health insurance marketplace. But most are required to meet the same coverage and cost-sharing standards as plans purchased on the health insurance marketplace. With a plan you purchase directly, you can enjoy the simplicity of straightforward enrollment with an insurance carrier rather than the additional administrative work that can come with having your plan managed through the marketplace.
Buying a plan on the health insurance marketplace, which is an online exchange where you can shop for individual and family health coverage, is another choice early retirees can consider.
Also known as qualified health plans (QHPs), these plans are offered by different insurers through the marketplace, and you can compare prices, coverage limitations and benefits at your own pace. QHPs are certified by the health insurance marketplace and offer at least minimum essential coverage. They also follow regulatory limits on cost-sharing to ensure the out-of-pocket costs you’re responsible for, like deductibles, copays, coinsurance and out-of-pocket maximums, don’t go over a certain amount.
In Minnesota, the health insurance marketplace is called MNsure. Wisconsin doesn’t have a state-specific marketplace; instead, it uses the federal marketplace HealthCare.gov.
When looking for an early retiree health plan, there are more things to consider than just the premium you pay each month.
Most health insurance plans you can choose from have levels (tiers): gold, silver and bronze. Levels are based on how often you expect to use your health plan, and monthly premium costs. Plus, if you’re enrolled in a qualifying high-deductible health plan (HDHP), you may be able to contribute to a health savings account (HSA).
- Gold plans: If you have health conditions that need ongoing management and you expect to visit the doctor frequently throughout the year, a gold plan may work best for you. Your monthly premiums will generally be higher than other plan tiers, but you’ll pay less when you receive care.
- Silver plans: If you want more than basic coverage and you anticipate going to the doctor a couple of times per year, a silver plan may fit your needs. With a silver plan, you’ll pay a moderate amount for your monthly premiums and a moderate amount when you receive care.
- Bronze plans: If you don’t expect to visit the doctor often, this level may work for you. Bronze plans tend to have the lowest monthly premiums, but you’ll pay more when you need care.
- Health savings accounts (HSAs): An HSA isn’t a health plan but rather a type of savings account used specifically for certain out-of-pocket medical expenses. Early retirees can benefit greatly from an HSA, because the deposits you make into the account, as well as investment earnings and withdrawals for qualified medical costs, are all tax free. All bronze plans and many silver plans are HSA-eligible.
When people retire, they typically see a drop in income. This may mean they’re eligible for ACA Premium Tax Credits, which can help lower monthly premiums for on-exchange plans.
Eligibility for these tax credits is based largely on modified adjusted gross income (MAGI). This means that even if you have substantial retirement savings or a large investment portfolio, you may still qualify if your actual taxable income is low. You can get the credits in advance and apply them directly to your premiums, or you can claim them when you file your taxes.
Only plans purchased from the marketplace qualify for these tax credits. In addition, to claim these credits, neither you, your spouse nor your dependents can be eligible for an employee-sponsored health plan.
When you retire, you lose health care coverage through your employer, which is a Qualifying Life Event (QLE) that triggers a Special Enrollment Period (SEP). That means you can sign up for a new health plan right away upon retirement, and you don’t have to wait for coverage.
The time frame to sign up during the SEP varies by state, but generally, you have 60 days after you retire to enroll in a new plan. Some states even allow you to enroll 60 days before you retire, so check the requirements well before you retire so you don’t experience a gap in coverage.
You can also enroll during the annual Open Enrollment Period (OEP) every fall. And other events can trigger an SEP, including marriage, divorce, a change of address and more.
Now that you’re retired, you want to focus on your next big trip, not your health plan. That’s why HealthPartners offers simple and affordable individual and family plans. We’ll help take care of all the details with options that fit your early retiree lifestyle and budget, including:
- 100% coverage for preventive care and a $25 cap on insulin per month
- Strong provider networks that offer access to major care systems where you live as well as local, independent providers
- Extra perks and benefits like travel assistance, well-being programs, a Member Assistance Program and condition management support services to help you enjoy your golden years
Prior to 2019, the Affordable Care Act (ACA) imposed a tax penalty at the federal level if you didn’t have health insurance for two consecutive months. But in 2019, the tax penalty was removed with the enactment of the Tax Cuts and Jobs Act. This means that while having health insurance is still technically required, you no longer have to pay a tax penalty if you don’t have it.
California, Massachusetts, New Jersey, Rhode Island, Vermont and Washington, D.C., have separate requirements at the state level that mandate that people have health insurance. If you’re a resident of one of these states and don’t have health insurance, you’ll be responsible for paying a tax penalty.
So in Minnesota and Wisconsin, whether you have health insurance is up to you. But keep in mind that your own individual health needs can change, and health care costs can be tough to predict. A HealthPartners health insurance plan can offer greater peace of mind through 100% coverage for preventive care, access to high-quality care systems when you need them, coverage for prescription drugs, extra perks and benefits, and much more. That makes investing in health insurance a good way to help protect your future for the years to come.
Yes. Since many early retirees see a drop in income when they stop working, they tend to qualify for health insurance tax credits. Also known as ACA Premium Tax Credits, these lower your monthly health insurance premiums for plans purchased on your state’s health insurance marketplace. The tax credits are based on several factors, including household size and modified adjusted gross income.
Yes. Just like any other individual and family health insurance plan, your insurance plan can cover eligible family members. You’ll be the primary policyholder, but you can add your legally married spouse, dependent children up to age 26 and other qualifying dependents you claim on your tax return.
When you become eligible, you can move from whatever plan you’re on to Medicare. HealthPartners has a variety of affordable Medicare plans that meet the needs of retirees. From hospital care and doctor visits to prescription medications and travel benefits, we have you covered.
The information on this webpage is for informational purposes only and should not be considered tax advice. For questions regarding your specific tax situation, consult a tax professional.
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