Health Insurance Options Before Medicare
Making a plan for health insurance to bridge the gap to Medicare
Reviewed by: Michael Howard, Licensed Insurance Agent. Written by: Aaron Garcia.
If you lose your coverage near 65 for any reason, you have insurance options to bridge the gap to Medicare eligibility.
You may be able to receive help paying for your health insurance. Private plans offer Premium Tax Credits and Cost Sharing ReductionsA Cost Sharing Reduction (CSR) is a discount applied to your out-of-pocket costs such as deductibles, co-payments and co-insurance. To qualify, your income must be within 100-250% of the Federal Poverty Level. Also known as a "extra savings." to help manage the cost of your coverage.
High Deductible Health Plans (HDHP)A High Deductible Health Plan (HDHP) is a type of health insurance plan that features higher-than-normal deductibles. These high deductible amounts are usually intended to lower your monthly premium payments. offer low out-of-pocket costs in exchange for a high deductibleA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself..
Turning 65 will unlock your access to Medicare and all of its services. If you need health insurance coverage in the years leading up eligibility, it can be a tricky process. If you’re waiting for Medicare eligibility, here are some options when considering your budget and benefits.
If you retire before you’re 65 and lose employer-based health insurance when you do, you have options for insurance until you reach Medicare eligibility. Losing health coverage qualifies you for a Special Enrollment Period. This means you can enroll in a health plan even if it’s outside the annual Open Enrollment Period.
Stay on Spouse’s Plan
OK, this one’s a bit obvious. Still, it’s important to know if you’re under 65 and decide to retire early. You can stay on your spouse’s health insurance until you’re ready to enroll in Medicare.
Enroll in a Private Plan
If you need health insurance before you turn 65 but can’t afford COBRA’s high premiums, try finding a private plan through a federal or state marketplace. These major medical plans typically cover a wide range of medical and preventive services and don’t exclude coverage for pre-existing conditions.
Need Help With Your Costs?
There are several ways to help control your costs if you enroll in a private plan. High Deductible Health Plans (HDHP) offer low out-of-pocket costs, but you’ll need to meet a high deductible before your plan pays its share. Many HDHP enrollees also participate in a Health Savings Account (HSA) to help offset that high deductible payment.
Depending on your income, you may also qualify for Premium Tax Credits and a Cost Sharing Subsidy (CSR) to lower your costs.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue your coverage when you retire or lose your employer-based coverage if the company has 20 or more employees. If you’re eligible, COBRA will extend your coverage for up to 18 months while you prepare for Medicare enrollment or find other coverage.
Is COBRA insurance expensive?
This option may even leave you with sticker shock, but the COBRA premium is the cost without your employer’s contribution. Depending on how much your employer paid for your plan, COBRA may be much higher than you budgeted.
A short-term health insurance policy can work to bridge a gap in your coverage. A short-term plan can cover you from 30 days to 12 months. For some people, a short-term policy is an excellent option. Still, it’s important to know how these policies differ from other individual or group insurance plans.
- Short-term policy durations can vary by state
- Your plan may require you to meet your full deductible before any costs are shared.
- Does not meet the requirements of a Major Medical Health plan under the Affordable Care Act (ACA), meaning you may be denied coverage for pre-existing conditions or be subject to a tax penalty for not having Major Medical Insurance.
If you retire early and need health insurance nearing 65, a full- or part-time position may provide health insurance. For people that pursue a personal passion after their career, this is a great option.
If you’re not certain about your health insurance and what comes after retirement, it’s easy to feel overwhelmed by the prospect of finding a plan. Here are a couple examples of questions we’ve received from folks in your situation.
Contemplating COBRA as an option?
Let’s say you’re 67 with an employer-sponsored group insurance plan. You are thinking about retirement but your wife is on your plan, and 63 years old. What are the pros and cons of retiring and using COBRA until my wife is eligible for Medicare at 65?
Anyone contemplating this scenario has options. Still, COBRA is an option that may be expensive.
- If you’re over 65, retirement will open a Special Enrollment Period for you to sign up for Medicare.
- Still, your wife needs coverage. If she’s employed and has an option to join a group health plan, that will be much more cost-effective as COBRA enrollees pay the full amount for their monthly premiums.
- Your wife can search for a private plan through your state or federal health insurance marketplace, which may be more cost-effective than COBRA.
- Most important, make sure she doesn’t go without coverage. A lapse in coverage when she does sign up for Medicare can affect her costs down the line.
Can I enroll in Medicare early? Also, will that affect my ability to get Medicare Advantage?
Technically, any U.S. citizen can enroll in Medicare three months before the month they turn 65. It’s called an Initial Enrollment Period. Once you have enrolled in Original Medicare (Part A and Part B) you have the option to enroll in Medicare Advantage. It doesn’t cost you anything to speak with a licensed insurance agent if you’re confused about enrollment periods for Medicare. It’s important to take the time to understand when your coverage starts, what to do before then, and how to enroll.
Can I take money out of my 401(k) at 55?
You’re not alone if you’ve asked, ‘what’s the rule of 55?’ The IRS Rule of 55 states that anyone who is fired, laid off, or quits a job between the ages of 55 and 59 and a half, can withdraw from their savings account without incurring the 10% early withdrawal fee. 
Can I retire at 62?
This is a common question because some people are eligible to begin drawing their Social Security benefits before they’re fully eligible at 67. If this is the case, you may be able to retire or stop working full-time, but you’ll still need to find health coverage until you turn 65.
If you can’t afford Medicare or have a disability, you may be dual eligible; if so, Medicaid and Medicare may work together to provide your health insurance at little or no cost.
When is the earliest I can enroll in Medicare?
Any U.S. citizen can enroll in Medicare three months before the month they turn 65. If you’re under 65, there are different circumstances that may make you eligible for Medicare before 65. They are:
- If you receive Social Security Disability Income (SSDI) for 24 months, you are eligible to enroll in Medicare before 65
- Any U.S. citizen with End Stage Renal Disease (ESRD) may be eligible for Medicare from the time their employment status is deemed “disabled” by government guidelines.
- Any U.S. citizen with Lou Gehrig’s Disease (ALS) is eligible for Medicare once they begin to receive Social Security Disability Income (SSDI).