Can the new health care law help you retire early?

One of the biggest obstacles to retiring early is health care.  If you want to retire at 62, but don’t become eligible for Medicare until 65, you have a three-year window where you need to bridge the gap between your employer’s coverage and Medicare.  Traditionally, that has meant either going without insurance (not a good idea) or paying for an individual policy (mucho deniro or not available due to pre-existing conditions).

The new health care law has elements that could make it easier to bridge the gap between employer coverage and Medicare, thus making early retirement a more viable option.  The law phases in over time, so I’ll discuss the options available to you between now and 2014 and those after 2014.

Between now and January 1, 2014

In the short term, the law makes $5 billion available to employers to spend on insurance for employees who decide to retire early (visit www.errp.gov for more info).  The drawback here is that your employer needs to offer retirement insurance benefits, which most don’t.

If you’re willing to buy an individual policy to bridge the gap, but don’t qualify due to a pre-existing condition, the new law also has a pre-existing conditions insurance plan.  Visit HealthCare.gov to get details for your state and information on how to apply.

After January 1, 2014

Both the early retiree and pre-existing conditions programs mentioned above expire at the end of 2013.  What replaces them?  Starting January 1, 2014 insurers will no longer be allowed to deny coverage based on pre-existing conditions, so you can shop around with private insurers regardless of your health.  If you want to retire early and still can’t find affordable coverage with a private insurance company, states will have “exchanges” where anyone can buy health insurance.

So if you plan on retiring early, it looks like you’ll have a few more options for health coverage.  Work with a trusted adviser to see if these options are right for you.

 

One Response to “Can the new health care law help you retire early?”

  1. Thomas Rockford February 20, 2014 at 3:17 pm #

    By the time you pay the premiums and co-pays for Part D drug coverage under medicare, plus the reduction in your social security retirement check for having purchased a Part D policy, Part D covers only about 60% of the costs of Rx’s. Then the big hit comes after you and the pharmacy have, combined, paid about $2,900 in Rx’s, you pay about 85% of all additional Rx’s until you’ve spent out of pocket $4,700. All of which is taxed.

    All of these costs are on top of the premiums we all paid into medicare for the past 45 years while working. Then, just to add insult to injury (pun intended) the IRS taxes you on all of the premiums and co-pays unless you are able to itemize and meet the high hurdle to be able to itemize. It’s a total rip off for the elderly. LIES and more LIES from the government and the perfidious Obama cabal.

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