Retiring early is a fear to which many people aspire, but that so few can realistically accomplish before they are of age anyway. That’s because it takes a lot of intelligent planning to be able to achieve, and you have to be incredibly smart with your money. Not only do you have to have savings to pay for all of your living expenses, but you also need to think about other things, such as early retirement health insurance. Just because you were able to retire early doesn’t mean that your health insurance benefits are going to be needed any less, and you have to be sure that you have coverage especially for when you get older.
There are quite a few options available to you, but just as you have to be smart about how you retire early financially, you have to be smart about the early retirement health insurance options that you look into. There are quite a few options out there, and some of them can prove to be real life savers, but you will still need to think about your choices and manage your money carefully. Otherwise you can end up without a plan that’s going to see you through for the rest of your life:
1) Individual health insurance.
The easiest way to ensure that you’re covered is just to buy into your own plan from a privatized health insurance company. However, the major problem with these is that they are quite expensive, and are usually the most costly option on the list. Moreover, they also will charge you more and more money for coverage the older that you get because you’ll be more and more likely to need medical care as you do get older.
Of course, you’ll also have the most options for care here as well, so that you can ensure you’re going to be able to choose just the style of plan that you need. If you want something that will provide you with coverage so that you can afford prescription drugs, as well as dental and vision care as well. Just that amount of freedom and quality of care can be well worth the money in and of itself.
2) A health savings account can help deal with individual insurance.
While individual health insurance is really expensive, you can cut down the cost with a high deductible plan. That extremely lowers your premiums, and so long as you have a health savings account you don’t have to worry about the higher deductible. With a health savings account, the benefit that you actually get, is the advantage of having money that you can save specifically for health related payments. These are tax free accounts in which you’re able to file away money that can be used for medical expenses, without having to pay the cost of income taxes. While not early retirement health insurance per say, it is an option to help you pay for the cost of standard insurance.
So let’s say you break your leg, and insurance dictates you have to spend $500 on the cost of getting your leg fixed, before they will start paying out cash as well. You can use up your saved money on that, which goes towards your deductible and doesn’t come out of pocket, then insurance kicks in without you ever having had to worry about the money you will have to pay. You’ll find that contributions are limited however, and you can only donate so much at any one time.
3) COBRA health insurance to buy you some time.
This is a government option that enables you to actually keep your current employer offered insurance, only you pay out of pocket, for a limited period of time. Typically you can maintain benefits for a period of up to 18 months, which can at least buy you time so that you can think about where you want to go next. You’re going to find that this isn’t always the best option because of the cost, and it is only temporary so you’re on a ticking clock from the time that you get COBRA benefits, to the time that you’re going to need something to take over for you.