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How to retire with health insurance if you're too young for Medicare

Finding low-cost, high-quality healthcare coverage in early retirement can be a challenge.


If you're waiting for Medicare to kick in at 65, usually the most cost-effective option for health insurance - if available to you - is joining a working spouse's employer-sponsored plan


Otherwise you may consider continuing coverage through a former employer under COBRA; browsing coverage options and potential subsidies through the Affordable Care Act marketplace; researching health-sharing plans; or getting a part-time job.


Whether you're angling to retire early or think you may be forced into it, you'll need to make a plan for healthcare coverage.

Medicare doesn't kick in until age 65 for most Americans, so those who leave work earlier are generally left to their own devices when it comes to finding low-cost, high-quality healthcare.

Below, find out what options are available when it comes to securing healthcare before 65.

1. Check your spouse's health insurance plan

This is usually the best place to start, but is conditional on at least two factors: that your spouse is still working and that their employer's health plan covers spouses or families.


Joining a spouse's health plan at work is often the most cost-effective option an early retiree will find.

2. Consider Cobra

Named for the Consolidated Omnibus Budget Reconciliation Act of 1985, COBRA allows a person to continue receiving the exact same health coverage they've been getting from their employer after they leave. It's offered by most employers with 20 or more employees.

While COBRA enables a former employee to retain coverage at group insurance rates, the individual is often required to pay both the employer and the employee's portion, plus an administrative fee, driving up costs significantly.

An individual usually has 60 days to elect to receive coverage under COBRA after leaving the company. Coverage can last between 18 and 36 months, depending on the nature of the "qualifying event," or the reason for leaving.


For those who did not choose to retire early and instead suffered job loss due to economic reasons, a special tax credit may be available to help cover the cost of COBRA premiums.

3. Browse the Health Insurance Marketplace

If you've lost employer health insurance and decide COBRA is too expensive (or you didn't like your former employer's plan), you may turn to the Health Insurance Marketplace.

Established by the Affordable Care Act, the Marketplace is a resource available to most US citizens and can help narrow down health insurance coverage options, and find out whether tax breaks or other subsidies are available. Notably, insurance offered through the Marketplace cannot deny any individual coverage, even for pre-existing conditions.

First you have to fill out an application with your estimated income for the year, including interest income, capital gains, unemployment income, and withdrawals from retirement plans. This creates a list of what's available to you, which may include Medicaid or the Children's Health Insurance Program (CHIP) for families with kids.


When comparing plans, you'll want to look at enrollment fees, premium costs, per individual and per family deductibles, copayments, hospital costs, and coverage details, like whether extra costs are levied to visit out-of-network providers.

The Marketplace's open enrollment period for 2020 health coverage runs from November 1, 2019 to December 15, 2019. However, losing job-based coverage at any point during the year may qualify you for a special enrollment period.

4. Consider a health-sharing plan

Health-sharing ministries are an alternative to run-of-the-mill health insurance.These non-profit organizations are funded by monthly premiums, called the sharing amount, paid by the members and require a deductible-like amount to be met before coverage kicks in.

While not considered health insurance coverage under the Affordable Care Act, individuals belonging to health-sharing ministries before 2019 were exempt from the "Shared Responsibility Payment," or the fee mandated for not having health insurance. They do, however, operate on the good will of others - they're largely voluntary and recourse isn't guaranteed.

These organizations are generally faith-based and require that members follow guidelines, such as no tobacco use and regular worship, in lieu of a standard evaluation based on gender, age, weight, and other health factors. As with anything, understand the fine print before signing on.


5. Get a part time job.

If you're still willing to work part time in early retirement, it may be worth considering a side gig just for the health insurance benefits.

Whole Foods, Starbucks, and Costco are just a few great companies to work for that offer health insurance for part-timers.

Correction: A previous version of this article stated that health-sharing ministries do meet the standards outlined in the Affordable Care Act for qualifying health insurance. They do not meet the standards for insurance under ACA, however, there is no longer a "Shared Responsibility Payment," or penalty, for individuals without health insurance beginning in the 2019 plan year.


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