With Rising Health Insurance Costs, Early Retirement Dreams Fade

By Jacqueline Lee
Contributing Writer

Many people work with the dream of retiring from their jobs long before they turn 65. They dream of traveling, enjoying their grandchildren and having new adventures while they’re still in the best of health.

Unfortunately, many workers who want to retire early have deferred their dreams because of rising healthcare costs. People between the ages of 55 and 64 pay approximately $598 per month for health insurance, compared to younger policy holders who pay just $279.

The Affordable Care Act will eliminate higher premiums based on pre-existing conditions, and the law will limit the amount that insurers can hike premiums because of age.

Currently, only 17 percent of firms offer healthcare coverage to early retirees. Retirees also don’t become eligible for Medicare until they’re 65 years old.

To cut costs, retirees should consider investing in a Health Savings Account (HSA). HSA funds can cut the cost of both over-the-counter and prescription medications, as well as cover physicals and other routine doctor visits.

In 2013, all Americans can save up to $3,250 in an HSA, and people 55 or older can save $4,250.

Retirees should also avoid opting for the cheapest available plan. If an accident or unexpected health emergency arises, the cheapest plans may not provide the best coverage. Find a balance of value and benefits from a company with an excellent reputation.

Additionally, if you can afford it, choose a high deductible to cut premiums.

Other cheaper insurance options may be available through trade associations or business groups. Some employers are members of private insurance exchanges, which help them to manage retirement benefits. Your employer may be willing to connect you to better insurance options through an exchange.

Finally, never hesitate to get advice. Comparison websites, health exchanges and customer service from organizations like AARP can help to direct you to a more affordable policy. If all else fails, take COBRA, but it will cost you.

Premiums usually come in at about $5,615 for singles and $15,745 for families.