Are you retiring and still have some time left before Medicare kicks in? Then today’s blog is for you. Many people save and invest wisely throughout their working years, giving them the flexibility to retire early in life. When this wonderful milestone is achieved, sometimes the retiree can be left in a lurch as it pertains to their health insurance. The retiree may lose their group health plan but are too young to start Medicare, so what are they to do?
That’s where the Consolidated Omnibus Budget Reconciliation Act (COBRA) comes in. It was created to help you maintain your employer’s health insurance benefits for the next 18-36 months, depending on your situation. This could be the perfect solution to your needs; however, because your former employer does not subsidize COBRA premiums, you will pay much more, up to 102% of the cost of the plan. This sizeable premium can be a deterrent to many retirees. Not to worry though, there are alternatives you can explore. Three examples of alternatives are:
- Affordable Care Act (Obamacare) – Obamacare allows you to shop and purchase personal health insurance. You can visit Healthcare.gov or your state’s health insurance exchange to review your options and to purchase a health insurance plan. You may even qualify for a subsidized monthly premium which can make it more affordable than COBRA. In order to use one of these plans, you only have 60 days from the loss of your employer-based coverage to qualify for a special enrollment period outside of the annual Open Enrollment Period. Just like all plans, Obamacare plans are not without their issues: monthly premiums are often high without a subsidy, networks are narrow, and many insurers have pulled out of this market altogether, meaning fewer insurance plan options for consumers.
- Short Term Independent health insurance (STM) policies are individual health insurance plans that you purchase from private insurance companies. STM plans are considered creditable coverage. Short-term health insurance can be much less expensive than COBRA and an Obamacare policy. Signups can occur any time during the year and coverage may begin the following day. STM are short-term; therefore, plans may not exceed three months, so you must reapply for a second plan if you need longer coverage. Also, STM does not cover benefits like preventative care, and you could be rejected based on your health history, and pre-existing conditions are not covered. Visit www.texasinsurancebrokerage.com to learn more about independent plans, both short and long-term options.
- Health Care Sharing Ministries are not insurance. These ministries are Christian membership-based, non-profit organizations that help facilitate the voluntary sharing between members to pay each other’s medical costs. There are services that will not be covered if they fall outside the stated values of the group. Generally, these plans do not discriminate based on age, weight, or health history. Members are not limited to any network and may seek providers both in and out of state. Health Care Sharing Ministries can exclude pre-existing conditions or cover them at a staggered rate. Christian Healthcare Ministries, Medi-Share, and Liberty HealthShare are good places to research to start learning more about these ministries.
These three examples of COBRA alternatives are just the tip of the iceberg. To make the correct choice for your individual healthcare situation, carefully consider COBRA and the alternatives available to you. Your goal should be to choose a plan that grants you the care that your household needs, when you need it, and at a cost that you can afford. To see how your choice will affect your overall financial plan in retirement, give us a call. We’re not only Lockheed Martin specialists, but we are also experts at providing advice like this for your financial planning and retirement needs! Call us today at 817-210-3444 or click HERE to book a complimentary consultation!
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