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How Can Early Retirement Impact Your Health Insurance?

Early retirement, whether desired or forced, can dramatically impact your health insurance coverage. Depending on the circumstances, you may find yourself responsible for funding your own coverage. In addition, the cost of monthly premiums varies widely based on your age, location, and benefit needs.

As a North Carolina resident, it’s essential to consider how these additional costs could impact your quality of life in retirement.

HealthPlans of NC

Health Plans of NC, Kelly Quinn

Early retirement and COVID-19

When the COVID-19-19 pandemic first hit the US in 2020, many people living in North Carolina and across America who had planned to wait until reaching 65 to retire reexamined their plans. Some found that businesses they had grown from the ground up were suddenly struggling to make ends meet. Others discovered their hours had been cut and their occupations furloughed. Regardless of the specific reason, many people began to consider early retirement. 

Financial impacts of early retirement

Although some people considering an early retirement have managed to establish themselves financially to ensure a comfortable retirement, many people have seen their retirement plans change significantly due to COVID-19 and are not as financially secure heading into retirement. 

According to Teresa Ghilarducci, a New School for Social Research professor of economics and policy analysis, most people considering early retirement due to the pandemic have much more modest means when exiting the workforce.

That means many people entering early retirement are taking a conservative approach to spending to help make their money last for their retirement years. This includes recognizing the impact of long-term costs like healthcare. Organizing affordable health insurance plans in North Carolina can be essential to working out your retirement budget. More importantly, the right level of insurance can protect your most important asset, your health. 

If you’re leaving a job where your employer helped cover some or all of your insurance premiums, it’s unsurprising if you’re concerned about how you’ll pay for your health insurance coverage in retirement. Employer-sponsored health insurance plans are a significant employer benefit that many people look for when applying for jobs. Paying for your insurance premiums can be expensive, depending on your plan. Your monthly premium costs vary depending on where you live, how old you are, and what coverage you need. So, it’s essential to consider North Carolina health insurance and speak to an expert if you need guidance.

Securing early retirement health insurance

Since most people lose their health insurance coverage when their employment ends, it’s important to consider how you’ll provide for your health care needs in retirement. To help you secure insurance coverage at a price you can afford, it’s good to consider your early retirement health insurance options before you retire. 

Your coverage options may include:

  • COBRA: Just as when you leave one job to move to another, you may be eligible for COBRA, or continuation coverage, if you face early retirement. If you choose to continue your insurance through COBRA, you will be required to pick up the total cost of your health insurance plan costs. Still, you can continue for some time (usually 18 to 36 months) to obtain your health care coverage under the plan your past employer established.

  • Your spouse’s health insurance: Assuming you’re married to a partner with an employer-sponsored health insurance plan, the most straightforward and often most cost-efficient choice will be to have them add you to their existing health insurance plan. 

  • Retiree health insurance benefits: If you have worked in a union or a highly valued occupation, you may have access to what is referred to as retiree health insurance through your past employer, your union, or, in some instances, an established trust. This plan is generally a group health insurance plan explicitly established to support employees and their spouses in retirement.

  • Health Insurance Marketplace coverage with a subsidy: If you fall between 100 and 400% of the federal poverty limit, you can find some health insurance plans through the Marketplace that give you a governmental subsidy, regardless of which state you live in. If you choose this route, you should understand which plans allow you to use a subsidy. Even if you qualify for a government subsidy, they are only available on some plans. 

  • Private insurance without a subsidy: You can buy your health insurance plan from a private agency. However, you should be clear that no governmental subsidies are available to you if you choose this option. If your pandemic stock strategy has placed you outside of the federal subsidies, plenty of options from private insurance agencies are available.   

  • Short-term insurance plans: If you are looking for an insurance plan to get you over a short stint, you may wish to consider a short-term plan. However, You will want to make sure that you understand that these plans often fail to cover preexisting medical conditions. Also, if you have a history of complex medical issues, you can be turned down for these plans.

Choosing the best health insurance option for you

The best health insurance plan for you depends on what NC health insurance best meets your needs. The three steps below are an excellent place to start when considering your options.

Determine your budget and requirements

Understand how much you want to spend and the level of coverage you’d ideally like to have. For some people, this can mean looking for a low-cost health insurance option that falls within your monthly budget and offers very basic coverage. If so, you may want to consider buying your insurance plan through the Health Insurance Marketplace. Even if you have failed to meet the criteria for subsidies here in the past, you may meet the requirements this year. As part of the American Rescue Plan Act of 2021, tax credit subsidies were increased and extended to cover individuals with higher income levels than were covered in the past. 

Consider your options carefully

If you qualify for insurance coverage through your spouse’s company, you will unlikely be eligible for a government subsidy through the Marketplace. However, it’s still important to compare your health insurance options. If you’re choosing between having your spouse add you to their plan or using a COBRA plan, it’s likely to be less expensive to have your spouse put you on their plan. This option may be more cost-effective than a COBRA plan or plans you can acquire through private insurance companies. When choosing, remember to compare all costs of the individual plans, not just the cost of your monthly premiums. Understand all copayments, deductibles, and out-of-pocket maximums associated with each plan you are considering. 

Weigh up the benefits of short-term coverage

If you don’t qualify for a subsidy through the Health Insurance Marketplace and the other options are too expensive, consider a short-term insurance plan. This can be a good option if you’re in good health and are only waiting a short time to become eligible for Medicare coverage. However, be aware these plans aren’t required to provide the minimum essential benefits required by the Affordable Care Act (ACA). This means that your preexisting conditions are unlikely to be covered. Some of the medical concerns covered under your plans in the Health Insurance Marketplace may not be covered in your short-term plan. SEE ALSO: How Medicare Agents Get PaidHow Medicare And Employer Coverage WorksWhen & How to Tell Your Insurer About Life Changes

Need help with North Carolina health insurance?

Sometimes, selecting the right health insurance coverage can be overwhelming, particularly if you retire early. It can be helpful to talk to a local health insurance agent who can help you work out your options. Our NC health insurance agents can discuss your budget and the various early retirement health insurance options. Contact us today to find out more.

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