Medicare is available to retirees only after they turn 65. Therefore, the cost of health insurance is one of the most significant factors to consider in any early retirement decision.
Health insurance coverage is available as:
- Individual coverage - usually much more expensive for comparable coverage; can be difficult to obtain for people with pre-existing health conditions.
- Group coverage - almost always preferable if available.
Early retirees might have access to group health insurance in several ways:
- by getting a new job that offers group health insurance benefits
- current employer might provide it as part of the retirement incentive package - either at the employer's expense, your expense, or shared expense
- continuation of group coverage with current employer's plan as provided through COBRA law, for up to 18 months, at your expense, probably with a slightly higher premium to cover additional administrative cost.
Realistically work health care and insurance costs into your financial projections for retirement.
- If you will be responsible to pay the all or part of the premium, have you seen specific cost figures? Have you explored the likelihood of premium increases in coming years, and how big those increases might be?
- If your coverage will change, how will that affect your out-of-pocket costs? (co-payments, deductibles, coverage of specific services such as prescriptions, regular check-ups, dental care, vision care)
Later, when you become enrolled in Medicare, you may choose to purchase a Medicare Supplement insurance policy and or a Medicare Prescription Drug policy. For guidance in selecting these policies, and for cost comparisons of different plans with different companies, the Senior Health Insurance Information Program (SHIIP) is the premier source of information for Iowans. SHIIP also provides information on long-term care policies and trains volunteers to assist with specific individuals' needs.
Find a program like SHIIP in another state.