Early Retirees Struggle To Stay Covered

The New York Times has recently published an article featuring the problems faced by people who retire before age 65. Until recently, Americans have been able to rely on their employers to keep them covered until they become Medicare-eligible. Some employers even offered additional supplemental coverage to their Medicare-eligible retirees. However, the recent rise in health care costs have forced some employers to reduce or even eliminate the health benefits they offer to retirees.

The New York Times article points out that there has been little activity at either the state or federal level to address this problem. There are less than 1 million uninsured retirees, which is not enough to warrant attention from Congress. And states often do not have the resources to address the needs of this group.

Early retirees must be creative in finding health care. Searching for coverage in the individual market may prove fruitless, as most states allow insurers to medically underwrite policies and charge higher premiums based on age. Many early retirees may not be able to buy individual policies at all - for any price - due to pre-existing health conditions. Thus, many would-be retirees stay with their employer just to keep their coverage going, or opt for COBRA continuation coverage for up to 18 months of coverage after retirement. Also, some companies allow retirees to remain on their job-based plan indefinitely - so long as they pay.

The moral of the story is that those thinking of early retirement should factor health care costs into their decision. Before retiring, make sure you have other coverage lined up - an individual policy, COBRA continuation, an employer's plan, retiree coverage, or coverage through a spouse.