Navigating Healthcare Between Retirement and Medicare

Navigating Healthcare Between Retirement and Medicare-Financial Symmetry, Inc.

Are you planning to retire prior to turning 65? If so, have you developed a plan to maintain healthcare coverage between your retirement date and Medicare? If you don’t have access to retiree health coverage through your employer, there are 3 primary options available to obtain coverage to bridge the gap between your retirement and enrolling in Medicare.


By law, your employer is required to extend continuing health coverage to you for at least 18 months, so evaluating this option is a natural first choice.

a. Pros:

Familiarity with the plan: through COBRA, you will remain on the same healthcare plan you have become familiar with while working. In addition to understanding what the plan covers, your preferred care providers will remain in network so long as the employer does not change their plan options.

Ease of transition: to remain on your current employer health plan through COBRA, a COBRA election form will be provided to you within 14 days of your retirement date (or separate qualifying event). If you agree to the terms on the election notice, all you need to do is sign the form and submit it to your insurance provider.

b. Cons:

Cost: while working, your employer likely subsidizes your healthcare coverage, either in full or by paying a portion of your premium. While your employer is required to extend coverage to you post-employment, they are not required to pay any portion of the premium. As such, remaining on your current healthcare plan will result in you having to pay the full cost of coverage plus an additional 2% charge.

Finite Coverage: if the amount time between retirement and Medicare is longer than 18 months (or longer if employer plan allows), you will have to again reevaluate your healthcare options at that time.


2. Spouse’s Healthcare Plan:

Is your spouse planning to continue to work? If so, can they add a spouse to their employer plan?

a. Pros:

Familiarity with the plan: assuming your spouse was previously enrolled on their employer plan, they should be familiar with what is covered, the benefits of the plan, and expected out of pocket costs.

b. Cons:

Cost: premiums will vary by employer, but in general the addition of a spouse to an employer healthcare plan will result in a material increase in monthly premiums. This in turn will result in a reduction in take home pay for your spouse as premiums will be deducted through payroll.



A third option is to explore coverage options available to you on the public healthcare marketplace established through the Affordable Care Act (ACA).

a. Pros:

Possibility to obtain subsidized coverage: depending on your level of income, subsidies may be available to help offset some or all the premiums associated with health insurance plans obtained through the marketplace. Proper income planning is necessary in such cases. If your income goes $1 over the threshold, you will have to repay all or a portion of the subsidy you received.

Variety of Options: numerous plan options will likely be available to choose from. The options come with a range of monthly premiums, deductibles, and maximum out of pocket costs giving you the option to select the plan that best fits your financial and healthcare needs.

b. Cons:

Access to preferred providers: you will want to consider if your preferred care provider is in network for the plan you select. If not, you will either need to select a different plan, which could come at a higher cost, or find providers that are ‘in network’ on your new plan.

Cost: A wide range of monthly premiums will likely be available as you shop for your plan. Several factors go into determining the monthly premium, such as the annual deductible, network providers and out of pocket costs, and can range from modest to highly expensive depending on the level of coverage needed and your age at the time of enrollment.

Uncertainty: in the early years of the ACA, annual premium adjustments have been volatile, at times reaching the double digits. Unexpected increases in monthly premiums can have a profound effect on your financial situation and should be planned for accordingly. In addition to the possibility of increased costs, political climates are subject to change. While the process to change or eliminate the law would be an arduous one, it is a possibility.


Transitioning into retirement comes with numerous decisions. If retiring prior to age 65, one of those decisions will be how you plan to bridge the healthcare gap between retirement and Medicare. Prior to making the decision to retire, consider the healthcare options you have available to you and how the changes in your healthcare coverage may affect your retirement years prior to reaching age 65.


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