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Too young for Medicare? Here are 5 health insurance options to try instead

·5 min read
Too young for Medicare? Here are 5 health insurance options to try instead
Too young for Medicare? Here are 5 health insurance options to try instead

Millions of soon-to-be seniors are watching with envy this week as open enrollment for Medicare begins.

While there were high hopes President Joe Biden would lower the qualifying age from 65 to 60 through his massive Build Back Better plan, 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, there's more than one way to get your hands on reliable, affordable health insurance.

Alternatives to Medicare for those not yet 65

Doctor talking to patient in office, patient's back to the camera.
goodluz / Shutterstock

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 you have to sit around counting the days to your 65th birthday.

Take your health into your own hands by exploring one of these 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

Person holding finger out, reaching it towards a search bar imposed over their body that says Open Enrollment
stoatphoto / Shutterstock

Earlier this year, the Biden administration introduced generous new subsidies on Obamacare health plans as part of the $1.9 trillion COVID relief bill.

Thanks to the new discounts, 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 Affordable Care Act marketplace.

Open enrollment begins Nov. 1, but you can qualify for a special enrollment period for several reasons — including if you retire before age 65 and lose your job-based health plan when you do.

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 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

Woman showing man something on a piece of paper while they sit in an office.
fizkes / Shutterstock

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, 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 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.

How to pay for your new premiums

business accounting with saving money with hand putting coins in jug glass concept financial
lovelyday12 / Shutterstock

Depending on the options available to you, there's a chance the new cost of your premiums will be higher than you're used to.

And if you're retiring, you'll need to start carefully managing your savings.

Here are a few ways to free up some extra money in your monthly budget to pay for health care:

  • Cut the costs of your other insurance bills. If you haven’t compared quotes recently, you could be drastically overpaying for your coverage. You might save up to $1,000 a year on your car insurance just by shopping around for a better price, and the same move could save you hundreds on home insurance, too.

  • 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 you don't need to stop now. Try using an app that allows you to invest your "spare change,” turning your pennies into a diversified portfolio.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.