Retiring early

You've worked hard and saved over the years, and now your dream is to retire early. But have you thought about what you'll do for health insurance in the years before you become eligible for Medicare? Here are some important questions you need to ask before making the leap into a leisurely life.

 

How does employer-sponsored retiree coverage differ for early retirees? Some employers offer health insurance benefits in an early retirement package, but many do not. And if you lose your job and decide to take early retirement, COBRA can offer health insurance benefits through your former employer for up to 18 months. Also, many HMOs will allow individuals between age 60 and 65 to join their programs at rates comparable to what they would have paid for COBRA if they had been employed.

 

What about individual health insurance? This option may give you the most choices and depending on your state you may have several companies providing individual health insurance plans.

The Internet is a good place to start when attempting to find out more about individual health insurance plans. Online sites can provide a variety of insurers and agents. And most important, you can compare prices quickly and conveniently.

 

Is there another option? Yes, if your spouse works for a company that offers employer-sponsored coverage and that company provides benefits for spouses, you could both enroll in the plan.

 

SOURCES: Health Insurance Costs and Early Retirement Decisions (Aug. 1999), The Urban Institute, Washington, D.C.; Current Trends and Future Outlook for Retiree Health Benefits (Dec. 2004), Henry J. Kaiser Family Foundation, Menlo Park, Calif., and Hewitt Associates, Lincolnshire, Ill.; Effects of Access to Post-Retirement Health Insurance on Retirement Behavior and Insurance Coverage (1998), Rand Health, Santa Monica, Calif.; Planning to Retire Early? Better Think About Health Care Costs (Feb. 2005), Changes in Health Care Financing & Organization, Academy Health, Washington, D.C.; Employee Benefits Security Administration, U.S. Department of Labor, Washington, D.C.; National Acadamies of Science, 2005 Retiree Health Insurance Options If You Are Transitioning To Retirement