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Health Insurance for the Almost-Medicare Aged and Early Retirees

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Health Insurance for the Almost-Medicare Aged and Early Retirees

If your Medicare benefits are on the horizon, look for specific pre-Medicare health plans.

Hal Levy
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Updated: March 19, 2019    Published: March 8, 2019

pre-Medicare health insurance | older adult holding small child

Medicare is healthcare heaven. When Medicare begins, you’ll see almost any doctor … forget about health insurance denials … and use the benefits you’ve paid into for a lifetime.

As you move towards Medicare age, it may become more difficult to pay for healthcare. Thankfully, a growing number of new health plans are offering to get you over the Medicare finish line.

Unique Challenges for the “Almost Medicare Eligible” (between 62 and 65)

Traditional health insurance tends to discriminate against adults taking early retirement and other pre-Medicare Americans. Even if you stay in shape until Medicare kicks in, frequent checkups and age-based premiums can be burdensome all the same.

Unbalanced Payments: One of the few ways that health insurance can legally discriminate is based on age. In most states, you may have to pay 3 times what a 30-year-old would for the exact same health insurance plan.

Pre-Existing Conditions: Since the Affordable Care Act was passed, most health plans must accept folks regardless of prior medical history. However, certain plan types can continue to lock people out.

Doctor Transitions: You may have to hop from plan to plan to find the best deal. But losing your doctor network every few years can make it harder to get your records in order, even before Medicare comes around.

Calendar Hijinks: Nowadays, healthcare regulators have begun playing with narrow signup dates and rigid plan lengths. Unless you expect to join Medicare on January 1, health insurance calendar rules disadvantage you when it comes towards paying for your care.

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Common Medical Expenses Before Medicare

You’re one step away from Medicare if you’re near age 65. Plan to pay for basic services now, as a way to balance your upcoming Medicare coverage and your current health needs.

Getting checkups and screenings is important when you’re not quite Medicare eligible. They’ll let you proactively identify health issues before those issues get out of hand. If that’s not possible, keeping up with primary care will give you a head start on more extensive health needs once Medicare does come around.

Some services are clearly better without Medicare. Medicare does not cover most vision care, dental care, hearing aids, or RX drugs (although add-on plans are available). If you can get these benefits through an existing health plan in your early 60s, make sure to use these benefits to the fullest.

It's better to get glasses and dental cleanings from private health insurance plans instead of #Medicare. Click To Tweet

Once you do join Medicare, some services may be covered well beyond what you could expect from Affordable Care Act plans or employer insurance. Inpatient hospital stays, post-care rehabilitation facilities, ambulance rides, and hospice treatment are where Medicare typically shines during your golden years.

Bridge to Medicare Plans Open for 62-Year-Olds

One of the first new plan types to launch after recent health insurance reforms, Bridge to Medicare plans are designed to help people aged 62 and up safely make it to Medicare.

Bridge to Medicare is a health insurance plan that generally costs far less than Affordable Care Act (ACA) coverage. It doesn’t include standard ACA benefits like maternity coverage, pediatric services, or substance abuse treatment.

Instead, Bridge to Medicare combines health insurance for serious health issues with fixed cash benefits for common pre-Medicare services like testing and checkups. This format mirrors Medicare, which is split between Part A for inpatient care and Part B for outpatient care.

Bridge to Medicare also bundles prescription drug benefits with other modern services like telemedicine, eye and hearing discounts and emergency transportation. If you’re enrolled in a Bridge to Medicare plan, it will renew each year without regard to your current health status.

NO Balance Billing: The same doctors who take Medicare patients will want to take Bridge to Medicare. It pays doctors, up to 125 percent of Medicare’s rate for doctor office visits and up to 150 percent of Medicare’s rate for medical facilities. If there’s still a shortfall between what you’re charged and what your plan pays, Bridge to Medicare will cover the difference.

Other Short-Term Plans for People Nearing Medicare

A significant number of people who use temporary, short-term health insurance are close to age 65. Kiplinger interviewed Coy, a 64-year-old retiree from Louisiana who turned down major medical insurance in favor of a short-term plan.

Coy preferred a temporary insurance plan “because it was such a short period of time” before Medicare came around – and not worth paying ACA premiums and deductibles.

A 2019 survey found that 86 percent of people with short-term plans, including a number of people near Medicare age, were satisfied with their care. In fact, older adults were more likely than other age groups to consider short-term care, primarily for financial reasons.

Although new pre-Medicare products are appearing, common short-term plans can reject folks for medical reasons and don’t have senior-specific language. To safely choose short-term coverage, look for a plan that’s backed by a major insurance company with a high A.M. Best financial stability rating.

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Older Pre-Medicare Health Insurance Options

Semi-Retirement

This kind of defeats the purpose of retirement, doesn’t it? Still, if you find a company which offers health insurance, easy work, and part-time hours, consider it a paid volunteer opportunity. A low-stress job is a great way to stay active and receive health insurance to boot.

ACA Subsidies and Medicaid

Short-term plans are not for everyone, particularly if your income falls in or under the middle class range. Anyone who qualifies for enough monthly income-based ACA discounts to drive their cost of coverage to manageable levels should join a traditional ACA plan.

The Affordable Care Act will pay these premium subsidies directly to your qualified health plan. People who have lower incomes will qualify for Medicaid instead, which is largely free. Either type of individual health insurance before Medicare will give you the same old benefits you’re used to, subject to plan rules.

COBRA or Early Retirement Plans from Your Old Employer

About a quarter of large employers offer special retiree health benefits. These benefits may take the form of fixed payouts for certain illnesses, payment assistance towards a separate insurance plan, or incentives for workers who move from a company plan onto Medicare. While these practices have become less common, they’re still widespread in government, transportation and utilities workplaces.

If you’re leaving your job, you can pay to bring your existing health insurance with you as well. COBRA rules let you take over your company’s payments for an existing health plan, plus a 2 percent administrative fee. Whereas you used to pay very little for the plan, you’ll pay slightly more than it’s worth, in full.

COBRA is a good option if you’re leaving in the middle of the year and have already paid a significant amount of money towards your deductible. Otherwise, COBRA is generally a very expensive way to get care, even if you’re almost Medicare age.

HSA Spenddown

If you’ve accumulated funds in a health savings account (HSA), you’ll want to start spending them now. You don’t lose HSA funds once you reach Medicare age, but you may have contribution restrictions and lose some tax benefits. As such, people take a “use it or lose it” mentality when they have an HSA in their 60s.

HSAs are made to work with high-deductible health plans. But HSAs aren’t always incompatible with other types of health insurance. For instance, you could have a low-deductible ACA plan or a short-term plan, and spend your HSA on standard copayments. You can also use HSA funds on uncovered medical expenses like over-the-counter medications.

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What to Expect Once You Do Qualify for Medicare

For relatively healthy people, health insurance prior to Medicare is just a way to delay health issues until Medicare kicks in. Medicare is supposed to deliver results for most folks as soon as they enroll.

If you know a 64-year-old, you’ve heard stories about Medicare advertisement overload. Take caution with these ads. Many Medicare options are actually quite good, especially if you choose the right one instead of the first one.

You’ll still want to plan ahead for Medicare. To learn what’s going on behind the scenes, it’s a good idea to read about Medicare a few months before your 65th birthday. Once you understand your options, you’ll be in a better position to size up your health needs and make Medicare decisions.

Specific Pre-Medicare Programs Make Sense

Not all health insurance plans are designed with older adults in mind. Choosing something that’s tailored to people of a certain age, like Bridge to Medicare, may provide you with extra financial and medical security. Try comparing different healthcare options online – for the last time! – as you make it to Medicare age.

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