HEALTH INSURANCE BETWEEN RETIREMENT AND MEDICARE
We get many calls these days to the tune of…
“What’s the cheapest way to insure till Medicare starts?”
It’s a good question.
For one reason, health insurance is the most expensive when you’re in your 60’s.
Age 64 is literally the most expensive time to insure in a person’s life!
Medicare hasn’t started yet for most people.
Age 65 is the time Medicare starts for most people.
Many people retire prior to the turning 65 and being eligible for Medicare.
How do we address this gap?
Let’s go through the three main options:
- Cobra coverage if available
- Covered California
- Short term health insurance
We’re happy to walk through any questions you have.
You can quote Covered Ca or short term here:
Let’s get started
Considerations On Insuring Till Medicare Starts
Here are some key concerns to look at till Medicare starts:
- Tax Credit eligibility based on Income
- Health care needs
- Doctor and facility preferences
Each of these has a role to play in our decision.
We’ll explain further.
Tax Credit With Covered Ca Till Medicare Starts
Here’s the deal.
Losing group coverage due to retirement is a qualified event that allows you to enroll in Covered California.
There can be really big tax credits in Covered Ca based on income.
If you expect to be in the range below for this year (next year’s tax filing):
You may be eligible for tax credits.
If this is the case, Covered Ca will likely be the best option for you.
You can jump to the Covered Ca enrollment right here.
Especially if you’re in your 60’s (waiting for Medicare to start).
Here’s the secret for pre-Medicare seniors with the tax credit.
Covered Ca’s Secret Weapon For Individuals In Their 60’S
It’s the perfect storm.
First, after helping 1000’s of people navigate the process, one trend stands out…
The older you are, the more tax credit you can be eligible for (all other things being equal).
Give us a 25 year old with $25K income and a 63 year old with $25K and it’s not unlikely to see the 63 year old get a lower monthly rate.
Despite the fact that the underlying plan might 2-3 times higher!
It’s the tax credit.
The tax credit is tied to cost and guess what the main driver of health insurance cost is….
You can quickly see what your tax credit might be here:
Make sure to enter your full household (even if everyone is not enrolling).
This includes everyone that files together on a 1040 tax form.
Also, use this year’s best estimate for income (roughly line 7 on the 1040 tax form).
It’s the fax filing you’ll do next April.
One note..standard Social Security will need to be added to this number for the tax credit calculation.
This bring us to the next great advantage people in their 60’s have with Covered Ca.
Income Advantage for Covered Ca
This period of time is traditionally when people’s incomes are lower than usual.
Most have retired after all!
This lower income amount is a huge advantage to qualifying for tax credits.
Again…make sure to add standard Social Security back in!
Covered Ca Plan Benefits Till Medicare
The tax credit is one piece of this equation…and it’s a big one.
It generally makes the decision of what to do.
The other is health status.
The Covered Ca plans and Cobra will more comprehensive coverage than Short term.
In general, both plans:
- Cover pre-existing conditions
- Offer comprehensive benefits including preventative, rx, office, and more
- Have no annual or lifetime cap
- Can be renewed month to month for a longer period of time
Short term doesn’t offer these protections.
That’s a major difference.
If we can qualify for a tax credit, Covered Ca’s probably a slam dunk.
If we don’t qualify for a tax credit but have extensive health care needs and/or need coverage for a longer period of time…
Covered Ca or Cobra probably make more sense.
If we don’t qualify for a tax credit, are in good health, and need the coverage for a relatively short period of time….short term coverage might work till Medicare starts.
It’s a little confusing.
Our assistance with all three is 100% free to you and we’re happy to help.
You can call 800-320-6269 or email us at firstname.lastname@example.org
There’s one more very important concern….Doctors!
Doctor Networks Until Medicare Begins
Here’s the deal…
The doctor networks with individual/family plans (such as Covered Ca) have shrunk by about 1/3rd since 2014.
It’s probably the biggest issue we face (aside from cost).
You can check our doctors through the “Provider Search” link under each plan when you run your on-exchange quote here:
If you don’t see your doctor, call their office and ask them what “Covered California plans do you participate with?”.
It’s common to see a doctor not show up in the provider search online but find out they are actually in-network.
If your doctors do not participate and you absolutely must stay with them, Cobra might be the best option (if you can afford it).
Cobra generally has the broader networks that we miss so much.
There are narrow network plans but if you used your prior group plan with your doctors, Cobra won’t affect that.
Cobra is basically continuation of the employer health plan.
You can use Cobra to keep your doctors till Medicare starts.
Of course, you have to compare this against the cost difference.
Cobra coverage can be really really expensive.
It also has a cap on the amount of time you use it for…usually 18 months.
Some people will have an 18 month Cal-cobra extension option.
You can check with your prior carrier or HR department to see if this is available to you.
So, those are the big three concerns.
Let’s try to re-frame it according to the three options till Medicare arrives.
Covered California Till Medicare
Main attributes of this option:
- May have tax credit (could be very big); Run quote here.
- Covers pre-existing conditions
- Can renew month to month until Medicare starts
- More comprehensive coverage
- Doctor networks are smaller than Cobra
Cobra Until Medicare Starts
- Has full employer doctor networks
- More comprehensive coverage
- Generally very expensive
Short Term Health Between Retirement And Medicare
UPDATE: California banned all short term health insurance plans eff 9/1/2018.
In California we now only have AlieraCare health sharing InterimCare plans.
You can quote AlieraCare short term plans here.
Information below is for States that still have short term health carrier options.
- Can be much less expensive if not eligible for tax credit; Run Quote here
- Does not cover pre-existing conditions
- More catastrophic coverage
- Month to month in 3 month blocks; must qualify/re-apply after 3 months
Health Insurance Options Between Retirement And Medicare Review
Lots of moving pieces.
Here’s how to find the best health insurance between retirement and Medicare:
- Run quote HERE to see if you get on-exchange tax credit
- Make sure your doctors are in Covered Ca network
- Run short term quote here if you don’t qualify for tax credit
- Go with Cobra if required doctors only participate in group network
That’s how we determine which insurance is the best approach after Retirement.
Many people opt for the short term because they can’t afford Cobra and it might only be months till Medicare starts.
In fact, we see people cancel their Covered Ca or Cobra coverage a few month’s prior to Medicare in order to save during that period.
That’s how expensive Cobra or un-subsidized Covered Ca can be!
Of course, we’re happy to help you with any questions.
Call us at 800-320-6269 or email us.
Our assistance is 100% free to you as Certified Covered Ca and Licensed California health agents.
Again, there is absolutely no cost to you for our services. Call 800-320-6269 Today!