Whether you hope to retire in five years or 15, now is the time to start planning for health insurance. Start by determining how long you’ll need coverage and how much that coverage might cost you.
If you’re planning to retire early, ensure you’re accounting for the cost of health care in the years before you’re eligible for Medicare (age 65 for most individuals). Your financial advisor can help build health care costs – both those before 65 and Medicare costs once you become eligible – into your plan for retirement.
Even if you’re planning on working until at least age 65, you may still want your financial advisor to run scenarios in which you retire earlier than expected. The median age for retirement is 623, so planning for at least three years of unexpected health care expenses before Medicare eligibility is a good way to stress test your plan.
If you’re close to retirement, you may be able to estimate your costs more precisely. You’ll want to estimate your premiums as well as expected out-of-pocket costs.
- Contact your employer’s HR department: If you’re employed, ask your HR department for information on their retiree benefits and COBRA coverage.
- Contact your spouse’s HR department: If you’re married or have a partner, look into benefits that may be available from their employer.
- Check into ACA Marketplace plans: You can get a personalized estimate of available ACA Marketplace plans at healthcare.gov.
If you’re further away from retirement, you may just want to use estimates. Be sure to adjust for inflation.
- Employer Coverage: If you expect to continue employer coverage, start with an estimate of $9,400 for a single plan (2021 – accounts for premiums plus a deductible).4
- ACA Marketplace Coverage: If you think you may need to rely on an ACA Marketplace plan, the cost will depend on a variety of factors including your location, age, smoking status and income. Below are national estimates of single, annual premiums plus a deductible for 2021. (Assumes the person is a non-smoker whose income is high enough they don’t qualify for any subsidies.5) If your income qualifies you for premium and/or cost-sharing subsidies, the cost could be significantly lower.
ACA Marketplace national cost estimates of single, annual premiums plus a deductible for 2021.
Incorporating these costs will help ensure you can keep health insurance and afford necessary health care in your early retirement years.