Will the Healthcare Reform Affect the Age you Can Retire?

Ross Quade | Insurance | 24 Mar, 2014 | No Comments

The high cost of medical insurance for retirees as well as the barriers that are placed on insurance coverage for many retirees who have a pre-existing condition has been a problem for many Americans who desire to retire before they turn sixty-five, which is the age that people can gain Medicare. Many people are now wondering whether or not the health reform bill will help or hurt their chances of retiring early. The truth is that for some people, it will in fact help them retire when they want to, however for others, the high expense of medical insurance for retirees will still be a challenge. That being said, Fox News did state that things could be looking up for those between the ages of fifty and sixty-four who want to retire early.

Retiring Before the Age of Sixty-Five

If you’re like many U.S. citizens then you are forced to purchase an individual medical insurance policy if you decide to retire before the age of sixty-five. In most cases the coverage that you seek wont be available if you have any sort of pre-existing condition. In fact, even if you are perfectly healthy, the cost of an individual medical insurance policy can be hefty and prohibit you from retiring early. Because of this, many U.S. citizens decide to push back their retirement.

Retiring After Sixty-Five 

Things change when you reach the age of sixty-five and become eligible for Medicare. You will receive health insurance coverage no matter what condition you’re in. On top of this, most people find their monthly premiums to be quite affordable. Additionally, those health insurance companies that sell a Medigap policy are not allowed to use any pre-existing health conditions in order to deny coverage to you.

Benefits of the Health Care Reform for Retirees 

There are several features of the health care reform that are relevant to those who are interested in retiring early. Firstly, buying health insurance is now mandatory and people can now purchase their health insurance from an American Health Benefit Exchange if their place of employment does not offer coverage. Secondly, premium subsidies will now be given to those families who have an annual income anywhere between 133% and 400% of the poverty line. If you have an annual income that is below the poverty line of 133% then you will become eligible for a more expansive Medicaid policy.

Downside of the Healthcare Reform

If you have an income of more than 400% of the poverty line then you will not receive any subsidy and will have to front the full cost of your health insurance. If this is the case then you may be facing several thousands of dollars in health insurance costs per year.

Variation Between Premiums 

It’s important to keep in mind that despite the healthcare reform, annual premiums can vary drastically because of various plan features. These include co-insurance and deductibles. On top of this, your location can vary your premium as well.

Overall Picture

In summary, the healthcare reform will benefit those retirees that are of a lower income, however the benefits diminish substantially for those who are middle-class and are hoping to retire early. Whether or not you will benefit from the health care reform, it is important that you do the math to figure out what your best options are for your particular circumstance in regards to your health insurance. Unfortunately, the health care reform does not necessarily mean that your health insurance cost will diminish once you retire, especially if you make an income that is more than 400% above the poverty line.

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