As you approach retirement at the age of 61, choosing the right insurance coverage can be a daunting task. With the end of employer-provided coverage on the horizon, it is crucial to explore various options to ensure continued healthcare access.

Continue with COBRA

One of the first options to consider is COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA allows you to continue your employer-sponsored health insurance plan for up to 18 months after leaving your job. However, the cost of COBRA can be substantial. It is important to weigh this cost against the benefits of maintaining your current insurance plan.

Private Insurance on the Obamacare Exchanges

Another option is private insurance on the Obamacare exchanges. This path can vary significantly based on your location, income, and the competition available in your area. If your income is below a certain threshold, you may qualify for taxpayer-subsidies, making the cost of insurance more manageable. However, if your income exceeds the subsidy level, and competition in your area is limited, the cost could be quite high.

Medicaid Option

Depending on your state of residence and income, you may also qualify for Medicaid. This program offers free healthcare to low-income individuals and those who cannot afford private insurance. However, the range and quality of healthcare providers under Medicaid can be limited.

HSA for Pre-Existing Conditions

Particularly for those without significant medical expenses, contributing to a Health Savings Account (HSA) may be a viable option. HSAs allow you to save tax-deferred dollars for healthcare expenses. Additionally, many people in this position rely on a 'pay-as-you-go' strategy, using HSA funds to cover medical expenses. If you were to develop a serious medical condition, you can always switch to an Obamacare policy during the next open enrollment period. This strategy requires careful consideration, as it depends heavily on your financial situation and overall health.

Medicare Option at 65

At age 65, you would typically become eligible for Medicare. Medicare Part A and Part B provide a more affordable healthcare option, as 2.9 of your income is shared between multiple people to help cover your premiums.

Securing the Right Coverage for Retirement

If you’re unsure about which plan is best for you, consulting with an insurance broker can be highly beneficial. Insurance brokers work for the insurance companies, not the individual, and can help find the right plan for your needs. They charge a fee for their service, but the insurance company covering your application pays this fee, keeping the cost for you reasonable.

After retiring, you will need to apply for Medicare Part A and Part B. Since your former employer’s group plan is no longer available, you will need to acquire individual insurance from a provider like Aetna, United Healthcare, or Anthem. This transition can be smoother when handled by an insurance expert familiar with the nuances of each policy.