Twice a week, I have a conversation about retiring before age 65 and what to do about health insurance. Under an employer’s group health insurance plan, the employee generally only pays about 20% of the monthly premium costs. However, when purchasing insurance on your own, you should expect to pay 100% of that cost. That generally makes retiring before age 65 expensive, but there are options.
The federal health insurance exchange is a convenient option but is also generally considered to be an expensive option for obtaining health insurance before retirement, that is unless you qualify for subsidies. Subsidies can range from nothing at all up to 100% of the premium costs. To qualify for assistance, your taxable income must generally fall between 100% and 400% of the federal poverty level. For 2024 coverage, this range is $14,580 to $58,320 for an individual and $30,000 to $120,000 for a family of four. However, the key phrase here is “taxable income”, because what most don’t realize is that if you plan ahead, your income sources before age 65 could be after-tax sources like cash savings and non-retirement investments. This would put you in the comfortable position of having all the purchasing power you want, but also qualifying for health insurance subsidies.
Another option for obtaining reduced-cost health insurance before age 65 is part-time jobs with full-time benefits. Unlike most jobs, today several kinds of employers offer full-time benefits to their part-time employees. One example of this is Kwik Trip. You could be selling coffee, donuts, and nightcrawlers three days a week, and using your employee discount to buy those things on your four-day weekend fishing trip.
A third option is cost-sharing programs. Cost-sharing programs generally require membership and an agreement to common interests. Your only cost is one low monthly premium, however, don’t get too excited, because what it offers in reduced costs, it makes up for by a lack of convenience. Need a medical service? Be prepared to shop around at the request of the plan administrators, maybe including out-of-state providers.
Are you considering retiring before age 60? If so, now is the time to make plans. Visit Francisway.com or call us at 866-232-6457 to schedule an appointment with one of our ERISA fiduciary financial planners.
