While there were high hopes President Joe Biden’s latest relief bill would include a provision to drop Medicare’s qualifying age to 60 from 65, we now know that’s not going to happen.
So what’s a person to do if they’ve left the workforce, along with their employer-provided health insurance, but are still too young to apply for Medicare?
Fortunately, you have a few options to take finding affordable health insurance into your own hands.
Alternatives to Medicare for those not yet 65
As you age, health care becomes increasingly important, which translates into higher premium prices every year of your life.
But just because you’re looking at retiring early or already have, that doesn’t mean your only option for affordable health care is to simply count down the days to your 65th birthday.
Instead of crossing off the days on your calendar, try one of these action-based alternatives:
Talk to HR before you leave
Employers with fewer than 20 employees aren’t legally required to provide you with coverage after you’ve retired, but some may offer partial or temporary coverage or even a full extension of your benefits in retirement.
If you have a comprehensive benefits plan while you’re still working, it may be worth inquiring about your company’s policy on benefits after retirement. You should be able to find most answers to your questions in your plan’s benefit booklet.
Failing that, give your union or employer’s benefits administrator a call and ask them what your options are.
Visit the Obamacare marketplace
Earlier this year, President Biden reopened healthcare.gov for a special enrollment period that runs until Aug. 15. And in March, the administration introduced generous new federal subsidies on Obamacare health plans as part of the $1.9 trillion COVID relief bill.
Thanks to the new subsidies, which are in effect until at least the end of 2022, anyone making more than $51,000 will be able to find coverage for about $1,000 less per month than before the bill was passed. So now is the perfect time to lock in cheap health insurance on the ACA marketplace.
Call on COBRA
A federal law called the Consolidated Omnibus Budget Reconciliation Act (COBRA) mandates that many private sector employers must keep you on their group health plan for at least 18 months.
This applies for any company with 20 or more employees.
But be prepared to have to pay your full premiums, which includes whatever percentage your employer covered when you were still working. And on top of that, your insurer can tack on an extra 2% to cover its administrative fees — which can translate into hundreds of dollars a month.
It’s not a cheap option, but it could be enough to tide you over until you get Medicare coverage.
Get coverage through your spouse’s employer
If you’re living that “freedom 55” lifestyle but your spouse is still clocking in every day, you may be in luck.
While it’s often more affordable for some couples to get their own insurance coverage through their direct employer, once you retire, if you lose your coverage, you may want to consider getting onto your spouse’s plan.
That usually shouldn’t be an issue to set up. Last year, 95% of employers offering health benefits extended their coverage to an employee’s spouse, according to the Kaiser Family Foundation.
You may end up paying a higher premium — but it will be more affordable than having no health coverage at all when you need it.
Take on a side hustle
It’s becoming increasingly more popular for older Americans to put off retiring or to return to work part-time — whether that’s for health insurance or other financial motivations.
The U.S. Bureau of Labor Statistics predicts that by 2024, about one-quarter of the workforce, or 41 million people, will be over the age of 55 — including 13 million over age 65.
And more than half say they’re working past retirement because of financial reasons, according to a Transamerica Center for Retirement Studies report.
Picking up work on your terms after retiring isn’t such a bad idea. Finding a profitable side hustle based on your hobbies or talents could give you more spending money or cash to cover your health care needs.
What if none of those options are a good fit for you?
If none of the options we provided make sense for you, your best option may be to just prepare to cover your health care expenses as they pop up.
This can get expensive, so you’ll want to ensure you’re prepared for that. Here are a few options you may want to explore:
Cut the costs of your other insurance bills. You may be overpaying for your auto and home insurance by up to $2,000 a year. When it comes to car insurance, save yourself up to $1,000 just by shopping around for the best price. Using the same technique could help you save hundreds on homeowners insurance every month.
Consolidate — and annihilate — your debt. Credit cards may be convenient, but they come along with expensive interest. Tackle your credit card debt — and clear it sooner — by rolling your balances into a single debt consolidation loan with a lower interest rate.
Invest in a brighter future. Hopefully you’ve been investing for retirement for a good chunk of your career. But if you’re not drawing a regular paycheck, why not look into an investing app that allow you to invest your "spare change”, turning the change from your everyday purchases into a diversified portfolio.