592 Gap Years Health Insurance
This is Retirement Talk. I’m Del Lowery.
This podcast is a follow up on a request I put out about a month ago concerning health insurance and the gap years between retirement and when Medicare becomes your primary insurer.
I got a request from a listener, Kim, who is going to retire soon. She has everything figured out about retiring except for health care. It is causing one big question and stress. What to do about health insurance between your retirement time and medicare. This gap is proving unsettling. She has it reduced down to three choices none of which sound good: buying on the open market and getting a part time job to pay for it, purchasing COBRA which is expensive and limited, or going without (not a good idea). What to do? She wondered if any of the listeners to these podcasts have discovered or developed another option that is better? If you have done something that works for you please let me know and I will include that option in an upcoming episode and we can help Kim and others going into retirement become a little less stressed. And that is the way retirement should be: less stressed.
Well, I received the following three letters in response to the request from one listener.
There are some details and numbers that you might want to remember. I will post the text form of this podcast at the same time I post the audio version. So...no worries.
Dear Mr. Lowery, getting health insurance between retirement age and 65 is a major problem for only two groups: those making more than 400% of the federal poverty level and those making less than 100% of the poverty level who live in states that have not expanded Medicaid. If your income is between 100% and 400% of the poverty level , you can get an Obamacare plan for 2 to 9.5 % of income, plus most states help with out of pocket expenses for people with lower incomes. People over 60 making more than 400 % of the poverty level might have to pay over $1000 a month in premiums for an Obamacare plan , $1900 in my state, plus a high deductible. I would advise someone making over 400% of the poverty level to defer as much income as possible until after 65 . If your over 59.5 , it might pay to take distributions from your retirement accounts while still covered by your employers insurance and then live on your savings until you are 65. If you are healthy, a so called skinny health care plan could be much cheaper. Also some churches and fraternal organizations have medical cost sharing programs that are much cheaper than health insurance, but many of these don't cover health problems caused by drugs, smoking or alcohol and may charge you more if you are overweight. Disability forced me into early retirement and although I had considerable assets, by deferring all income and living on my savings , I was able to get a silver Obamacare plan for $20 a month and my out of pocket expenses were negligible. Now that I am on Medicare, I pay $190 a month for a Medicare Advantage Plan and my out of pocket costs are much higher- I long for the days when I was on Obamacare... I am not an expert on healthcare, just someone who spent the last 5 years wandering through Americas bewildering healthcare maze………………… You have a great podcast. I wish I had been able to retire as early as you did, but better late than never...…………..Sincerely
The sender asked that I not include his name for personal reasons. Then the following two emails came which expand on the topic.
Dear Mr. Lowery, I think your listener will find getting healthcare a major problem only if his income is below the federal poverty level and he lives in a state that didn't expand Medicaid, or if his income is just above the range needed to qualify for an Obamacare Advanced Premium Tax credit. Kaiser Premanete has an excellent calculator that will give you a good estimate of Obamacare premiums, just google Kaiser Permanete , calculator- I tried to attach the link , but it didn't work.. The information and percentages I gave were from memory, but I believe they are accurate. Before the Affordable Care Act , it was difficult or impossible for early retirees to get health insurance, now it is a much smaller problem for most people and it was a complete nonissue for me. ...………..
Dear Mr. Lowery, I noticed a slight error in the email I sent you about healthcare. I stated that Obamacare plans are available for people making below 100% and 400% of the poverty level; why this is true is states that did not expand Medicaid, in states that did the expansion, you can buy plans on the exchange if your income is between138% and 400% of the poverty level- people making below !38% of the poverty level in these states are shunted into Medicaid...
This email came just today from Beth another listener.
I listen to your podcast and appreciate your thoughts. We are not retired yet, but are working towards it. I heard you ask about input as it regards health insurance before someone is eligible for Medicare, other than the ACA Marketplace, and I was surprised that no one replied to your request.
There are several medical sharing entities that exist. Some of them are faith-based, and I know of at least one that is not. They work by their members sharing costs for larger health items. We do not have personal experience using one, as we still have health coverage through an employer, but our financial planner uses one himself. We plan to look into this more closely as the need arises.
Here are some to check out - there may be others:
Hope that helps,
I want to thank the listeners who took the time and effort to clarify this issue for me and anyone who might be facing this issue. If you are not facing it you probably know someone who does. It might be well to share the information.
I know little to nothing of this issue. But these explanation seem very illuminating and helpful to me. Healthcare is expensive and can wreck havoc on anyone’s working salary or retirement plans.
I’ll break with tradition and post the text to this episode right along with the audio. It should help you with the details stated in the program.
This is Retirement Talk.
If you have questions, comments or suggestions contact firstname.lastname@example.org