For Mark Roberts’ Use: Most workers expect to retire at age 65 or later, but in reality things do not always work out this way. In fact, 7 out of 10 current retirees stopped working before reaching age 65. Sometimes this is due to personal preference, but often an unexpected illness or disability forces an early retirement. Since seniors are not eligible for Medicare until age 65, retirees are often presented with the challenge of securing their own health insurance coverage.

Before rising healthcare costs drove large companies to make drastic changes to insurance provisions, those facing early retirement might have been covered by employer-sponsored retiree health insurance. These policies bridged the gap between employer-sponsored health insurance and Medicare eligibility, allowing those who retired before age 65 to continue receiving coverage. Now, however, only about half of large companies still offer such plans. A recent study found that many more companies plan to discontinue such retiree health insurance coverage over the next two years, making such benefits nearly obsolete.

Those who retire before age 65, and are no longer covered by an employer-sponsored health insurance plan, will be able to shop for their own insurance policy. The Affordable Care Act established exchanges, operated at either a federal or state level (depending up your state), in which individuals can compare health insurance plans and pricing. Some companies are choosing to provide a stipend to help retirees afford this coverage. This leaves retirees to choose their own plans; those in good health may find that out-of-pocket expenses are now lower, but those with health problems may be forced to choose policies with high premiums.

Workers who are getting ready to retire in the next year or two should pay special attention to any communications from their company on the topic of health insurance coverage. Don’t count on a retiree insurance plan, and educate yourself on how the health insurance exchanges work just in case you need to purchase your own policy to bridge the gap between retirement and Medicare eligibility.


Employee Benefit Research Institute, 2013, September 9, 2013, November 13, 2013