Early retirement is good, but what about health coverage?

Q: I read your last column about readers who want to retire much earlier than expected. Well, count me. I’m pretty sure I have enough savings to pay for all of my expenses, with one notable exception: health care. I’m 58 and plan to work until 65, not because I need the money, but because I need health insurance. What do people who retire early from Medicare do? What are the options?

A: That’s a great question. Unfortunately, the United States is one of the few developed countries in the world that relies on employers to provide health insurance for its citizens. We’re used to this reality, but when you stop there and think about it, it’s completely nuts. It started around WWII, and I wrote about the economic reasons that caused it. But that still doesn’t make sense. Moving forward is our reality.

So the Financial Independence Community (FI) has given it a lot of thought and here are some of the ideas they come up with:

Buy ACA in the open market exchange, with subsidies – Most people who retire early tend to have lower incomes because they have reduced their consumption, reduced or eliminated their debt and know exactly where to spend the money to give them the most satisfaction. Lower income (below 400% of the federal poverty line) means you are eligible for grants. But, even without grants, ACA is an option.

Direct primary care – It was new to me, but it seems popular with the FI crowd, especially the younger ones. It’s a subscription model like Netflix, you pay a monthly amount “about the amount of your cell phone bill,” according to the website, and you have unlimited access to a primary care doctor.

Wait to see if lowering Medicare eligibility age to 60 gains momentum and is approved – This is a very popular proposal by President Biden that has broad support from Americans, regardless of party. Analysts say it would save the employer money because it would take older workers out of their private insurance. I also think that many people in their early sixties (like you) would retire if they had access to Medicare, making room in the ranks for younger workers.

There is a lot more out there – “Medical Tourism” anyone? But these three are a good start.

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About Edward Weddle

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