Many employers are doing away providing health benefits for their employees who retire. So if you're thinking about retiring early, you may need to come up with a plan to cover your health care expenses.
If this is the case, you'll have two options: to secure coverage through a private health insurance plan, or to opt for the Consolidated Omnibus Budget Reconciliation Act of 1985, more commonly referred to as COBRA. Either way, funding your own health care benefits can be costly if you don't plan for them in advance.
With COBRA, you can actually extend your health insurance coverage for 18 months after you leave your job. And although the application can be relatively easy to apply for, the premium for this type of continuation coverage often comes with a very high price tag. A more affordable choice may be to find and pay for a private plan. However, it's in your best interest to do some shopping to compare coverage, rates, deductibles and coinsurance before deciding on a policy.
Up until now, we've been talking about health care options for retiring early. If you decide to wait and retire at age 65, then you'll have a third option for Medicare coverage. Now, you'll still have premium payments to make, but waiting can be a less costly option than individual insurance (especially if you're in poor health) compared to a private healthcare plan or COBRA.
For more information on budgeting for retirement and how to retire early, visit the Protective Learning Center.
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