Bridging the Gap

Between Retirement and Medicare Eligibility

This week, Craig Siminski, of the Equity Design Group, shares some helpful information for those who may face being retired prior to medicare eligibility:

Almost seven out of 10 retirees left the workforce before reaching the Medicare eligibility age of 65. Most current workers expect to retire at 65 or later, but retirees’ experiences suggest this may not be realistic.  If you (and your spouse) retire early, bridging the health insurance coverage gap between retirement and Medicare eligibility could be a challenge.

In the past, employer-sponsored retiree health insurance often provided a solution, especially for those who worked for larger companies. This has changed over the last 30 years. In 2018, only 18% of large employers that offered health-care coverage to active workers also offered retiree coverage, down from 66% in 1988.

Here are some options to consider if you need coverage after losing employer-based insurance, whether through retirement or for other reasons. An individual plan may be significantly more expensive than your share of employer-based coverage, but it’s unwise to go without insurance protection. Although the penalty for not having coverage no longer applies beginning in 2019, high medical expenses could quickly erode your savings and force you to change your retirement lifestyle.

COBRA — The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more employees to offer continuation coverage to covered employees, spouses, and dependents when coverage is lost due to certain events, including retirement. COBRA coverage must be identical to the coverage available under your employer plan, but you may pay the full cost plus 2% for administration fees. Coverage typically lasts up to…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 20 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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