“If you or your spouse has some years between when they retire and when they had planned to retire, you may encounter the stress of finding affordable, quality health care coverage to bridge the gap until Medicare kicks in.” Paul Hubbard III

By Paul Hubbard

A typical working-class couple, George and Delores’ rigid adherence to their financial plan was finally paying off. After forty years as a machinist, George retired.

Delores, who’d been a mother and homemaker for many years, was happy to have George home again. She was planning lots of activities to keep him active and healthy. And, with three grown children and a grandchild on the way, the couple couldn’t wait to spend more time with their family.

Then, a tragedy upended everything for which they had so diligently worked. While doing a household chore, Delores slipped and fell, causing significant damage to her back, neck, and hips. She became bedridden, requiring daily assistance with essential activities. Delores also needed extensive physical therapy and costly pain medication. Alarmed, George watched as medical bills piled, draining his retirement accounts more quickly than he could ever have imagined. He started to worry that even if Delores fully recovered, the couple might run out of money early in their retirement.

At the start of their retirement planning process, George and his wife were in good health, not thinking about any potential health crisis. They assumed that when the time came to retire, Medicare would take care of things. George had looked into long-term care standalone policies to help offset their medical costs in retirement. But ultimately, he decided against purchasing LTC insurance because of the high price and “use-it-or-lose it” nature.

When he decided to retire, George was old enough to enroll in Medicare for his health coverage. However, his wife, who had been on his company health plan, was only 63 and did not yet qualify for Medicare. Although many larger companies allow their retirees and spouses to remain on the group health plan, George’s former employer was a small family enterprise. The company did not offer retiree health benefits to retired employees and their spouses.

The couple’s retirement income planner had mentioned this “gap” as a potential issue, but he hadn’t seemed that concerned and did not offer many suggestions to bridge the gap. George and Delores decided that rather than purchasing expensive private health insurance, they would take their chances until Delores was old enough for Medicare.

This decision was detrimental to their retirement goals as they found themselves on the hook for thousands of dollars of bills related to Delores’ fall.

Unfortunately, George and Delores’ situation has become increasingly common, especially in a post-pandemic world that pushed millions into early retirement. Health concerns, family issues, and the economic downturn forced many older Americans to retire early, sometimes years before they had planned. If you are one of many Americans retiring before age 65 and your employer does not offer retiree coverage, you have four essential means of obtaining gap coverage.

  1. You could access your spouse’s plan. If your spouse or partner is still employed and has health benefits, it may be possible to add you to their employer’s plan. This may be the most flexible and least expensive option for many people. Although this wasn’t the case for George and Delores, if your retired spouse has retiree medical coverage, that plan may also let you obtain coverage.
  2. You might qualify for COBRA. COBRA (The Consolidated Omnibus Budget Reconciliation Act of 1985) lets you continue your current health care coverage for a specified time. You may, however, be required to pay the total cost of your health coverage plus an additional 2% charge. Employers rarely continue to pay a portion of your premiums when you continue coverage through COBRA, making it an unaffordable choice for many seniors.
  3. You might find coverage in the public marketplace. The public exchange is usually one of the best choices for pre-65 retirees who do not have access to an employer-sponsored retiree medical plan. These plans are sometimes known as”on-exchange” policies. The Affordable Care Act (ACA) created on-exchange plans to give health insurance options to anyone who is not yet eligible for Medicare. Costs for ACA plans vary according to your location and participating carriers. If you purchase a plan from the marketplace, you will not be denied coverage for any reason, including pre-existing conditions. Some people may qualify for subsidies through premium tax credits. The Inflation Reduction Act of 2022 extends those subsidies until 2025.
  4. You could purchase private health insurance. For some people, it makes sense to look to their local health insurance agent, trade, or professional associations for health insurance. Some areas may also have what is known as a “private exchange.” These marketplaces offer plans from multiple insurance companies. However, you should be aware government tax credits don’t apply to policies purchased from these marketplaces.


Paul’s Perspectives: Even though you may have done an exceptional job planning your life after work, you or your spouse may find it necessary to alter your plans due to unforeseen circumstances. You could be forced to enter retirement years ahead of schedule due to a layoff or chronic health issues. Such an unexpected departure from your job may strain your finances and cause you to lose critical health coverage. You would be wise to explore your healthcare choices before Medicare eligibility and decide what tools are best for closing the gap.

Once your gap plan is in place, you will need a thorough understanding of Medicare basics, including enrollment and eligibility requirements. Having a health insurance blueprint worked out ahead of time will help you avoid making costly healthcare mistakes that could negatively impact your finances when you retire.

Need more guidance for Medicare? Better call Paul!

(770) 374-4604