Health insurance options for early retirees

Dear Savvy Senior: At age 63, I will be retiring in a few months and need to find some health insurance coverage for my wife and me until Medicare kicks in. Is the Affordable Care Act my only option? — About to Retire

Dear About: There are actually several places early (pre-Medicare) retirees can go to find health insurance coverage — the Affordable Care Act isn’t the only game in town. Here are your options depending on your income and health care needs.

GOVERNMENT MARKETPLACES

If your yearly income falls below the 400 percent poverty level, the Affordable Care Act insurance marketplace is probably your best option for getting health coverage because of the federal tax credits offered, which will reduce the amount you’ll have to pay for a policy.

To qualify for the tax credits, your household’s modified adjusted gross income for 2013 must have been under $45,960 for an individual, or $62,040 for a couple. If your income will drop below the 400 percent poverty level in 2014 or 2015 because of your retirement, it may still make sense to buy coverage through the Affordable Care Act marketplace, even if you don’t qualify for the tax credits based on last year’s income.

To help you see how much you can save, see the subsidy calculator on the Kaiser Family Foundation website at kff.org/interactive/subsidy-calculator.

To shop for marketplace plans in your state, visit healthcare.gov or call toll-free 800-318-2596.

OUTSIDE THE MARKETPLACE

If you aren’t eligible for the government subsidy, or you want additional policy options to what the Affordable Care Act offers, you can also buy health coverage outside the government marketplaces directly through insurance companies, brokers or agents. This option isn’t available if you live in Washington, D.C., or Vermont.

These policies don’t offer the federal tax credits, but they are required to offer the same menu of essential benefits as Affordable Care Act policies do, and they can’t deny you coverage or charge extra for pre-existing health conditions. You might even find slightly lower premiums on outside policies, assuming that you don’t qualify for the tax credits.

Another possible reason for shopping outside the marketplace is to find a plan that has your preferred doctors and hospitals in its network. Many plans offered in the Affordable Care Act marketplaces provide a very limited number of health care providers.

To shop for these policies, contact insurance companies, brokers or agents and ask them whether they offer policies that are not available through the government marketplaces.

To find a local broker or agent who sells insurance plans, check the National Association of Health Underwriters website (nahu.org) which has an online directory. But keep in mind that agents won’t necessarily show you all available policies, just the ones from insurers they work with.

COBRA

If you only need health insurance coverage for a short stint before becoming Medicare-eligible, you may want to consider the Consolidated Omnibus Budget Reconciliation Act, or COBRA. COBRA coverage allows you to remain on your former employer’s group health plan for up to 18 months, but not every employer plan is COBRA-eligible. Contact your employer benefits administrator to find out if yours is.

In most cases, COBRA is expensive, requiring you to pay the full monthly premium yourself. But, if you’ve already met or nearly met your employer plan’s deductible and/or out-of-pocket maximum for the year, and don’t want to start over with a new plan; or if you find your employer’s health plan to be better or more affordable than the government or off-marketplace options, it makes sense to keep your current coverage under COBRA.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.