How to Get Health Insurance if You Retire Early to Bridge Your Coverage Gap

You’ve done it. You are living the dream and retiring early. You’ve worked hard all your life and earned this reward. That is an accomplishment to be proud of! But before you settle into your slippers and pajamas, there are a few things you might want to have in order first, and one of them is healthcare and knowing how to get health insurance if you retire early. If you’re retiring before you’re eligible for Medicare, you’re going to have a window of time without coverage unless you take action now.

If you’ve worked hard and put money aside for early retirement, the last thing you want is for an unexpected medical situation to pop up and deplete your savings. You need to consider how you can protect your financial stability while maintaining your health and wellbeing. You won’t be on your employer’s group plan anymore after retirement, and you’re not yet old enough for Medicare, so what do you do?

Well, it’s time to explore your early retirement health insurance options so you can rest assured you can afford to stay healthy during all that newfound free time you worked so hard toward. This article will help you identify your early retirement and health insurance options and how to retire early with health insurance.

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Can You Qualify for Medicare Before You are 65?

Is there any way to enroll in Medicare before you turn 65? While the answer is yes, it is highly uncommon. To qualify for Medicare health care coverage, you have to be 65 years of age or older. There are only two rare instances where you may be considered for Medicare a little bit earlier. They are:

  • When you have been receiving Social Security disability insurance benefits for 24 months or more.
  • When you have been diagnosed with end-stage renal disease.

Outside of these two scenarios, you have to be 65 years of age to qualify for Medicare. If you do not meet either of these two conditions, that means that if you retire at age 60, you’re looking at five years of medical coverage you won’t have without exploring health insurance options before Medicare. But don’t go cancelling your early retirement yet, because there are a few excellent options for health insurance before Medicare that are affordable and have easy enrollment. Some call it short-term health insurance before Medicare, while others call it bridge health insurance before Medicare, as what you need is a short-term health insurance policy that bridges the gap between your employer’s group plan and Medicare.

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Health Insurance Before Medicare: an Overview

Early retirement health insurance is a form of short-term health care insurance that can cover any medical and hospital costs that arise during the gap between your health care plan through your employment and qualifying for Medicare at age 65. This window of time between early retirement and qualifying for Medicare is a crucial time to have coverage as we tend to need more frequent doctor’s visits as we get older. Spending this time uninsured is a considerable risk, so before you retire early, make sure that health insurance after early retirement is part of your plan.


Luckily for you, early retirees paved the way before you and carved out early retirement health insurance coverage choices. There are insurance providers who offer comprehensive health care insurance for early retirees. There are also other options, aside from taking out a whole new health insurance policy. Here are some of the choices you have as an early retiree looking for health insurance before Medicare kicks in:

  1. COBRA
  2. Medicaid
  3. Part-time employment
  4. Membership-based health insurance
  5. Health insurance marketplace
  6. Spouse’s health insurance
  7. Retiree health insurance benefits

Let’s jump into the details of each of these options so you can make an informed decision about health insurance when you retire early:

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COBRA

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which is an act that was passed in 1985. This legislation aims to require that group health plans offered through employers with more than twenty employees allow some individuals to remain on the plan for some time after they have left that workplace. COBRA is a federal law in the United States, so every American can take advantage of it if they need to.

In this scenario, you can extend your employer’s group health care benefits into your early retirement by up to 18 months in most cases. Your previous employer does have the option to extend those 18 months. However, you are on the hook for the full premiums as soon as you retire, and, as you no longer receive a paycheck from that employer, you will have to arrange payment on your own rather than rely on pay deductions. If you can stretch this coverage out until you qualify for Medicare, this could be the perfect solution for you in early retirement. If you plan to retire more than 18 months before you are Medicare eligible, you can still take advantage of COBRA and follow it up with interim health insurance before Medicare.

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Medicaid

As the largest source of medical coverage in the United States, Medicaid is an option for many people. However, there are strict income and asset thresholds that have to be met to qualify for the coverage offered by Medicaid. As each state manages Medicaid, you will have to check the specific thresholds for your state to see if you are eligible. As a general rule, however, you will qualify if you have less than $2,000 in assets beyond the necessities of life (home, car, etc.). You’ll also need to prove you are a US citizen or that you have landed immigrant status.

Medicaid is inexpensive, but there are downsides. For instance, Medicaid is not accepted by many health care providers, so you will have to ensure that you can find a health care provider and doctor who takes your insurance plan. You may also live in a state that has Medicaid cost-sharing programs, which means it might not cover as much of the costs associated with health care as you would like. However, the low premiums could potentially offset this, leaving Medicaid one of the best options for interim health insurance for retirees before Medicare.

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Part-time Employment

Finding a part-time job might sound counterproductive for someone who has worked hard to be able to retire early, but hear us out. Part-time jobs can be enjoyable and rewarding for retirees. Many retirees find adjusting to nothing but free time jarring and hard to get used to. They may feel isolated in the first few months of retirement and miss the daily connection with other human beings in the workplace. A part-time job can replace those things you miss about employment, and if you choose an easy, entry-level position, it comes without the burden of heavy responsibility. If you can find a job that offers health care benefits, then you’re also tackling several problems at once. Part-time jobs get you out into the community, interacting with people every day and filling up some of the free time you don’t know what to do with. At the same time, it’s solving your health care insurance problems by providing health insurance options when retiring early. A little extra income during your early retirement is another plus that can help ensure your retirement savings aren’t going too fast during those early years after your career.

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Membership-Based Health Insurance

Are you a member of any professional associations, networking groups or religious organizations? If so, this could be the answer to finding retirement health insurance before Medicare. Some groups and organizations offer their members access to group health benefits. Such groups and organizations can include chambers of commerce, professional associations, religious organizations and more. If you are a member of a group of any kind, it might be worth it to reach out and ask if they offer any group health care insurance coverage to members. These are often opt-in programs, and members must arrange their payment of premiums. These plans can include coverage as good or better than your previous plan through your employer; however, your premiums may not be the same. Some memberships might afford the policyholder a discount on insurance rates, while others might be more expensive than you are used to. If you are a member of more than one group that offers options for health care insurance, it allows you to compare rates and coverage and choose the one that fits your budget and lifestyle the best. Membership-based health insurance coverage could be your best and most comprehensive choice for health insurance in retirement before Medicare.

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Health Insurance Marketplace

The Health Insurance Marketplace is an excellent option for health insurance options when retiring early. The Affordable Care Act was signed into law in 2010 and ensures every American is eligible for health insurance even if they have a preexisting condition. As part of this act, the Health Insurance Marketplace was created, bringing to life an avenue for regular people like you to find affordable health care, even in retirement. While some states run their own Health Insurance Marketplace, most states rely on the marketplace run by the federal government at Healthcare.gov. On this website, you can find the marketplace in your state and start searching and comparison shopping for health care insurance that can fill the gap between early retirement and qualifying for Medicare. As a bonus, this marketplace will notify you of tax credits you might be eligible for as well as government-sponsored health care coverage for you and your family. While this may not be the least expensive option when you’re looking for health care coverage between employment and qualifying for Medicare, it is easy, effective and affordable. If this is the option you’d like to choose for early retirement health care insurance, you can start shopping for your health care benefits on this page.

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Spouse’s Health Insurance

Suppose you are married and your partner plans to continue working after your early retirement. In that case, you may be able to rely on their employer’s group insurance benefits to fill the gap until you qualify for Medicare. One of the most significant advantages of this option is that you will be able to get your insurance for far less than you would if you bought a policy on your own. Even if you did not qualify for your spouse's plan before your retirement, you might still consider this option. Often unemployment can help you meet the qualifications needed to be added to your spouse’s health care plan. However, before choosing this route, it may be worth your while to compare prices and coverage as each health care insurance plan is different and may not be what you need.

When planning early retirement and health insurance before Medicare, this can be a great place to start. Speak to your spouse, get the details on what you need to qualify, and then price out the cost. It can make things much easier to be on the same plan as everyone else in your family.

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Retiree Health Insurance Benefits

Some employers offer retiree health insurance benefits, so it’s worth your time to reach out to your employer as you prepare to retire. Find out if they offer a retiree health care insurance plan. You might be pleasantly surprised that your employer is one of the few who cover part of your premiums until you qualify for Medicare, too. You may even be able to carry over your retiree health care benefits from your employer into the period after you are eligible for Medicare as a form of supplemental health care benefits. The more coverage you have, the less you will have to pay out of pocket when unexpected medical events happen, making supplemental health care insurance worth hanging onto when you have the opportunity. However, once you qualify for Medicare, you would have to enroll and use it as your primary coverage. To find out if you have this option, contact your employer’s human resources department and ask for more details if they offer this plan.

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How to Pay for Health Insurance After Retirement and Before Medicare

No matter which option you choose for health care coverage before you qualify for Medicare, you will have to plan for the cost. Health care can be one of your most significant expenses in retirement, and statistical estimates have put averages as high as $300,000 in out-of-pocket medical expenses for retirees. There is no doubt it pays to have a solid plan in place to cover these expenses. A great starting place is to create a retirement budget and set aside at least 10-15% for medical expenses.

How can we ensure we will meet these costs? One way to do so is to have a health savings account. Your health insurance plan and some financial institutions offer such accounts. Withdrawals are tax-free when used to pay for medical expenses.

There is also the possibility that your employer may offer a Retirement Health Reimbursement Account (RHRA). An RHRA is a savings account funded by your employer and used to pay for your medical expenses in retirement.

Another option is to use a penalty-free IRA withdrawal. There are two ways to do this. One is to withdraw from your IRA on the grounds that you are unemployed and need the money to pay for your health care coverage. The other is to find out if you are eligible for a hardship withdrawal. This type of withdrawal can pay for medical expenses not covered by insurance. Each type of withdrawal avoids the 10% early withdrawal penalty.

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Start Your Free Plan Today

If you’re planning on retiring early but don’t know where to start preparing for the future, sign up for your free Everdays account. Everdays can assist you with how to get health insurance if you retire early — you’ll get information and assistance on choosing health care coverage, and you’ll be able to do it all with ease, earning yourself some peace of mind and a positive outlook for the future. Enrollment with Everdays is free and marks the first step in a financially sound early retirement. Sign up today to get started.

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© 2022 Everdays, Inc. All rights reserved.

The Everdays mark and the Everdays logo are registered trademarks of Everdays, Inc.
* This app is owned and operated by Everdays, Inc., a Delaware corporation doing business in California as Everdays Moments Insurance Marketing.