Bridging the Health Care Gap
One of the largest expenses for early retirees is health care. Deciding what option is best and planning for the extra costs can help you have a successful retirement. There are four main ways to obtain health care coverage before you qualify for Medicare. 

When Do I qualify for Medicare?
In most cases once you turn 65 you will qualify for Medicare. If you are under 65, you may be able to enroll in Medicare if you have:

  • A disability and have been receiving Social Security benefits for more than 24 months, also known as the 2-year waiting period.
  • ESRD (end stage renal disease). You may qualify for Medicare if you have been diagnosed with kidney failure.
  • ALS (also called Lou Gehrig’s Disease). If you received benefits because of this, you do not have the two-year waiting period and Medicare will begin the first month you receive Social Security Disability Insurance (SSDI).

To see if you qualify for benefits, contact your local Social Security Administration (SSA) office. 

Health Care Options before Medicare
When you retire you will likely have the option of continuing your employer’s healthcare coverage for at least 18 months. However, if you continue the company plan under COBRA you are on the hook for the entire premium (including what your employee paid while you were working). You may be required to pay an additional 2% charge by the insurance company to cover administrative fees. 

Before choosing this option, it usually makes sense to see if there is an alternative plan that is cheaper or suits your needs better. 

Spouse’s Plan
If your spouse is employed and has health care coverage, you may be able to get covered on their employer’s plan. This is often the best and most cost-effective option if available.

Typically, employees may only be able to make changes to their plan during the open enrollment period, which is normally one month out of the year. You may want to plan your retirement around this time so you don’t go without health insurance 

Public marketplace 
In 2010, the Affordable Care Act created health insurance marketplace for each state. The policies can be pricey, but insurers can’t deny you coverage because you have a pre-existing condition (to find your states site, visit Depending on income, retirees may qualify for tax subsidies to help offset the cost of their health insurance coverage purchased through the exchange.  

Private insurance 
If cost is not the determining factor, you may wish to look toward policies outside your state’s exchange. You may find more plan options checking directly with insurance carriers. Unlike the public marketplace, you can buy private insurance outside the open enrollment period, at anytime of the year. These plans can be found through insurance companies, agents, brokers, and online health insurance sellers. 

To receive Medicaid, you’ll need an income that is considered to be very low. Visit your state’s website to see if you qualify. If you qualify, this may be your cheapest option.

It’s good to review all your options and decide what is best for your situation. Generally, the public marketplace is usually a good option for individuals retiring before age 65 that do not have access to employee sponsored medical plans. After reviewing your options, you may be convinced to work longer, that could be a part time or full-time job. Others may have enough saved to bridge the gap.  

If you have any questions or would like to schedule a free consultation, call us at 847-550-6100 or email me at 

Sources / Disclaimers:

Social Security Administration

Please consult your financial advisor regarding your specific situation. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.