Bridging The Gap in Health Insurance Most Common Obstacle to Early Retirement
With the prospect of retirement on the horizon for so many "aging baby boomers", a good deal cannot wait until 65 to start enjoying the Golden Years. But many financial planners agree that the largest obstacle to turning the dream of early retirement into reality is the gap in health insurance that can occur if you leave your job before qualifying for Federal health insurance benefits.
An unfortunate reality of the healthcare cost containment wars is that the practice of employers continuing to provide medical benefits to retirees was one of the first causalities. While continuing on company paid benefits after you retire is becoming increasingly rare, except in the case of certain Union or Municipal jobs, your company must comply with COBRA regulations that mandate you can continue your existing healthcare coverage after you leave the job, if you pay for the benefits. This may be an expensive proposition, but depending on how close you are to full retirement age, it may make sense. If your spouse is still working check and see what the cost would be to be covered under his or her plan when you retire early, it may very well be cheaper than COBRA.
Most financial planners and insurance professionals agree that the best way for those 55 and older who are thinking about retiring early to bridge the Gap to Medicare coverage is to purchase an individual short term health insurance policy. In a time where everybody is talking about the high costs of medical insurance, short-term health insurance or temporary health insurance is probably the most affordable medical coverage you can purchase. And since as an early retiree your are in a position to only need insurance for a short period of time until you qualify for other benefits, it is a great time to take advantage of low cost temporary benefits. Believe it or not because of growing need for transitional health insurance and increased competition among insurance companies in this sector, temporary or short-term policies can be purchased for less then 200.00 month in some cases. The downside? As the name implies these policies are short term and temporary. While in some states temporary health insurance can be purchased for as much as 36 months, most plans are sold for a maximum of 12 months. Still if you are basically healthy and only a year or two away from retirement age, a short term plan may be all the piece of mind you need to start enjoying the "good life" that retirement can bring.