For many people, reaching 65 and becoming eligible for Medicare is healthcare heaven. Once enrolled, you can see almost any doctor or specialist since roughly 90% of physicians accept Medicare patients. So do virtually all 5,000 hospitals. However getting to that heaven, as in life, takes some special effort.
As you age, for example, you may need more care just as it becomes more difficult to maintain good health insurance. Studies show that for one reason or another people retire around four years earlier than they planned, too often leaving them scrambling for affordable healthcare insurance. Thankfully, a growing number of new health plans are offering options to get you through coverage purgatory and into Medicare.
Unique Challenges for the “Almost Medicare Eligible” From 62 to 65
Traditional health insurance tends to get more costly for adults taking early retirement and other pre-Medicare Americans. Even if you stay in reasonably good health, you figure to need more frequent checkups just as you face higher age-based premiums.
Health insurance companies can and do legally charge you more based on age. In most states, you may have to pay three times what a 30 year old would for the same health insurance plan.
Since the Affordable Care Act (ACA) was passed a decade ago, most health plans must accept folks regardless of prior medical history. However, certain plan types are not “compliant” with the ACA, and therefore can reject people or charge more because of their health conditions.
Since you may have to hop from plan to plan to find the best deal each year, you may be forced to switch primary doctors. That, in turn, can make it harder for you to maintain your care and keep your records in order before you join Medicare.
Common Medical Expenses Before Medicare
Maintaining your checkups and screenings is always important, including when you’re not quite Medicare eligible. Seeing providers regularly allows you to identify health issues that need immediate attention or others that can be monitored but not treated until you join Medicare.
Keep in mind that Original Medicare does not cover most vision care, dental care, hearing aids, or RX drugs (though you can buy add-on plans). If you can get any of that extra care through an existing health plan in your early 60s, usually at work, make sure to use the benefits to the fullest before you turn 65 and join Medicare.
Another option for some are Medicare Advantage plans, whereby you sign up with licensed private insurers that by law must provide all your Medicare Part A and Part B benefits. Advantage Plans cover Medicare services and prescription drug coverage under one bundled monthly premium, often for around $30 a month. Once you join Medicare, you may see that some services are covered more generously than ACA plans or employer insurance — like Medicare’s inpatient hospital stays, post-care rehabilitation facilities, ambulance rides, and hospice treatment.
Pre-Medicare Health Insurance Options
Short of jumping onto your spouse’s or mate’s health plan while awaiting Medicaid eligibility, you could seek a part-time position at a company that offers health insurance. If you can find such a company, you could be fortunate enough to land a relatively low-stress job with decent health insurance to boot.
Short-term plans are not for everyone, particularly if your income falls below the sums that would qualify you for affordable subsidized ACA insurance: nearly $50,000 for an individual and $103,000 for a family of four for premium tax credits, or nearly $32,000 for individuals and $54,300 for families of three for additional cost-sharing subsidies. People who qualify for significant ACA subsidies can rarely find anything more affordable or comprehensive as an Obamacare plan.
People with incomes below around $17,500 for individuals and $29,500 for a family of three may qualify for Medicaid. However, eligibility rules vary widely state to state, so check with your state’s health administration for details. If you qualify, you can enroll in Medicaid immediately.
COBRA or Early Retirement Plans from Your Old Employer
About a quarter of large employers offer special retiree health benefits. These benefits may include fixed payouts for certain illnesses, payment assistance towards a separate insurance plan, or incentives for workers who move from a company plan onto Medicare. While these practices have become less common, they remain widespread in government employment, transportation, and utility workplaces.
If you’re leaving your job, you can opt to continue getting your existing health insurance under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. With COBRA, you keep your plan but must assume your former employer’s payments, plus a two-percent administrative fee. Obviously, COBRA is expensive. Employers commonly pay most or even all of their workers’ plan costs. With COBRA, you get all those costs, which can easily top $1,000 a month.
Still, COBRA can be a good option if you’re leaving in the middle of the year and have already paid a significant amount of your deductible. Otherwise, COBRA is generally a very expensive option as you move closer to Medicare eligibility. Plus, you only can remain under COBRA for up to 18 months, while your dependents can remain covered for up to three years.
If you’ve accumulated funds in a health savings account (HSA), you’ll want to start spending on care before you join Medicare, especially on dental or vision care not covered by Original Medicare.
Although you don’t lose HSA funds once you reach Medicare age, it’s illegal to continue to contribute to an HSA account once you enroll in Part A or Part B, or if you join for social security benefits. The only exception to continue with your HSA account is to postpone your Medicare effective date. You can do that without penalty, but only until your retirement.
HSAs are often coupled with high-deductible health plans. But HSAs can be compatible with other types of health insurance. For instance, you could have a low-deductible ACA plan or a short-term plan, and spend your HSA on the standard plans’ copayments. You can also use HSA funds for medical expenses that aren’t generally covered like over-the-counter medications.
What to Expect Once You Qualify for Medicare
For relatively healthy people, health insurance prior to Medicare can turn out to be a little-used safety net, giving you peace of mind, until your robust Medicare benefits kick in. Once on Medicare, you then have dependable health coverage for any big bills from day one.
You’ll want to plan ahead. It’s a good idea to read about Medicare well before your 65th birthday. Once you understand your options, you’ll be in a better position to size up your health needs and decide what to treat immediately and what to safely postpone until you join Medicare.