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Getting to the Medicare Finish Line

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21.11.2020

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The health and economic crisis is triggering a wave of early retirements as some older Americans are laid off or decide that the risk of catching COVID-19 at work isn’t worth staying on the job.

An unexpected retirement brings plenty of financial headaches, and one of the biggest is finding affordable health insurance until you turn 65 and can qualify for Medicare. If you’re in this situation or suspect a layoff is coming, there are ways to bridge the health coverage gap long enough to reach the Medicare finish line, but each has its pros and cons, including whether any pre-existing health conditions are covered.

Although it’s a disappearing perk, 28% of large companies, according to a 2019 Kaiser Family Foundation survey, still offer retiree health benefits to former employees. If your employer is among them, you may be able to remain on the company’s group health plan with no interruption in coverage. The retiree health plan will serve as your primary insurance, covering pre-existing conditions, until you’re eligible for Medicare, when the plan will function as secondary insurance to supplement Medicare.

Don’t assume your retiree health benefits are the same ones you received as an employee, cautions Steve Parrish, co-director of the Center for Retirement Income at the American College of Financial Services. “Employers may offer a different program with fewer benefits or with a higher premium for their retirees versus their employees.”

He also suggests studying the company’s rules to see if you qualify. “How do they define retiring versus quitting, and does it matter for health insurance? For example, if you give two weeks’ notice, does it count as quitting and you’ll lose coverage,........

© Kiplinger


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