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Cheaper Health Insurance — Maybe You Can Afford to Retire Before 65

Retirements through the  Social Security system spike at age 65, although you  can sign up as early as age 62 and get reduced benefits, or wait until age 66 for full benefits.

Why does enrollment take a big jump at age 65? “One reason might be the availability of Medicare at 65, particularly for workers who have employer coverage while working but not after they retire,” says a study by the Center for Retirement Research at Boston College.

Lots of folks in their early 60s  with health problems might be ready to retire but figure they can’t afford insurance on their own. Things will change for them January 1 when the Affordable Care Act gives them a chance to buy a policy for much less money.

No Rejection for Pre-Existing Ailments

New rules say insurance companies won’t be allowed to turn you down for coverage if you have a pre-existing medical condition. And they are limited in what they can charge: the range is no more than three times what the company would charge for the youngest, healthiest person it ensures. Under the current system, there may be a five-fold difference in charges, depending on your age.

The  health exchanges, which opened on October 1, will be the place to look for a new policy. You can buy insurance anywhere and from any company, but the exchange will offer policies that come with subsidies and tax breaks if you are eligible.

Adults between 50 and 64 are members of a vulnerable group, too young for Medicare, but at an age where health problems and concerns are growing.  A large number, nearly 9 million, were uninsured during 2010 , according to an AARP study.

And their prospects for buying insurance at an affordable price were scant, because companies screened them carefully, and often rejected those with chronic health conditions, or offered them policies at extremely high rates.  The ranks of the uninsured have grown by 3.7 million persons since the year 2000.

For some who would like to retire, the cost of insurance creates a job lock. The individual may feel he has enough pension or 401(k), or savings and investments to manage in retirement, but the thought of paying many thousands of dollar a year for health insurance, is daunting. And he or she won’t quit the job for fear that insurance might not be available at any price.

The Affordable Care Act will change the situation, because it forbids a company from rejecting for coverage someone who has heart disease, or severe arthritis, or cancer.

Open enrollment under the Affordable Care Act runs through March 31, 2014.  If you sign up by December 15, coverage begins on January 1. If you enroll by the end of March, coverage starts in April. And the next open enrollment session won’t begin until Oct. 1, for coverage starting in 2015.

Here are some example of costs and subsidies, using a standard silver policy. Here are the income levels and the MAXIMUM premiums AFTER the government calculates your tax subsidy.

  • The federal poverty line for 2013 is $11,490 for a single person  Figures are for ANNUAL MAXIMUM premiums
  • 133% of poverty $15,281      Premium is up to 2% of income or  $305.63 for the year
  • 150% of poverty $17,236     Premium up to 4% of income or $689.40
  • 200% of poverty  $22,980    Premium up to 6.3% of income or $1,447.74
  • 250% of poverty  $28,725     Premium up to 6.8% of income or $2,312.96
  • 300% of  poverty $34,470    Premium up to 9.5% of income or $3,274.65
  • 400% poverty $45,960          Premium up to 9.5% of income or $4,348.3

The actual premiums will vary depending on the plan you purchase. There are silver, gold and platinum plans, all with different charges.

Policies and rates are available at the federal exchange


Written by Bob Rosenblatt

Bob Rosenblatt is a researcher, writer and journalist who helps people looking for up-to-date answers and information on the perplexing issues at the intersection of finances and aging. Bob publishes a weekly report — please take a moment to subscribe in the upper right hand corner of this page.

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