Every day, thousands of people are making the decision to retire. You probably even know of someone personally. A good number of those who are making that decision are doing it prior to turning age 65. And it never fails that some of them will do it NAKED! No, I don’t mean without clothes…at least I hope not. What I mean is they are doing it without insurance coverage.
You may say, “Who would ever take that chance!” Well, most of them didn’t do it on purpose. They did it accidentally through a lack of planning. It usually starts with them making the assumption that they will automatically qualify for coverage because they have always had insurance coverage. That is not the case. When you are age 65, you can go on Medicare and get a medicare supplement regardless of your health. The same cannot be said if you retire prior to Medicare age. If you retire at age 62 for instance, a health insurance company can refuse to insure you based on your current health. Some health conditions that may cause you to be declined include heart conditions, insulin dependent diabetes, Alzheimer’s disease, etc.
Another common mistake I see is when an individual retires early and goes on COBRA coverage. COBRA coverage is temporary! It normally lasts only 18 months (36 months in some circumstances). I recently spoke with an individual whose COBRA coverage ran out 6 months prior to him turning age 65, and he had an uninsurable heart condition. So what are his choices?
He has only 3 options…
Option 1: Because he has exhausted his COBRA insurance, he qualifies as a HIPPA eligible individual. This means he can get health insurance regardless of any preexisting health conditions. GREAT! Problem solved. The only problem is he will have to pay $1,2oo a month for a plan with limited coverage. “But what about the Obama healthcare reform, didn’t it take care of people being left without insurance?” Not really, which brings us to…
Option 2: The new healthcare reform set up high risk pools in each state to help the uninsured get health insurance. There’s one big problem, you have to be without insurance for 6 months before you qualify. So this solves nothing for the gentleman I was talking to because by the time he would qualify for the high risk pool, he could go on Medicare. Even if he wasn’t Medicare age yet, who wants to be NAKED for 6 months. So what’s his last option…
Option 3: Go without insurance coverage until he turns 65 and goes on Medicare. Definitely not a good option, but for many this is what they are left with. And with an open heart surgery costing well over $200,000 this could be devastating.
Retiring naked is not only cold, but could be detrimental to everything you worked your whole life for. So, before you decide to retire, do a little planning and PUT SOME CLOTHES ON!
