How Do I Afford Healthcare If I Retire Before 65? CRNAs & Early Retirement
Picture this: you’re 58 years old, a CRNA who has saved diligently and is ready to retire. Your 401k looks solid, and you’re ready to hang up your scrubs. But then reality hits: Medicare doesn’t start until age 65. That’s up to seven years of needing health insurance on your own, a critical gap that could drain your retirement savings faster than a patient going into shock.
A CRNA recently told me they saw Cobra premiums of $2,600 a month for themselves and their spouse—that’s over $30,000 a year just for health insurance. This guide provides a clear roadmap for navigating healthcare costs and protecting your early retirement dreams.
The High Cost of Waiting for Medicare
The average retirement age in the US is 62, not 65, which means most people face a healthcare coverage gap. For CRNAs, the desire to retire early is often even stronger due to a physically and emotionally demanding career. But healthcare can be a major financial threat. A healthy 65-year-old couple may use nearly 70% of their lifetime Social Security benefits to cover medical costs even with Medicare. The gap between retirement and Medicare eligibility is not just expensive; it is a dangerous period where going without insurance is not an option.
Option 1: COBRA Coverage
COBRA is a well-known option that allows you to keep your employer-sponsored health insurance for up to 18 months after you leave your job. The advantage is that you keep the same coverage, doctors, and network. The major downside is that you pay the full premium because the employer’s subsidy vanishes. With employers covering an average of 73% of family premiums, this can lead to sticker shock. COBRA makes the most sense if you are close to 65 and only need a few months of coverage.
Option 2: Health Sharing Plans
Health sharing plans are a more affordable, though riskier, option. They are not technically insurance but function similarly, with nearly 2 million users. While they offer much lower costs than traditional insurance, they are less regulated. Most are faith-based, may not cover pre-existing conditions, and can cap total payouts. It is critical to do your research, understand the risks, and ensure you are comfortable with the plan’s limitations before enrolling.
Option 3: The Health Insurance Marketplace
For most people retiring early, the Affordable Care Act (ACA) marketplace is the most common solution. While premiums can be high, you may not have to pay the full price due to premium tax credits. These credits are based on your household income, and in early retirement, you have control over how much income you report on your tax return. For example, a 62-year-old couple in Missouri saw a monthly premium of $2,653 reduced to just $172 by strategically structuring their retirement income to show a modified adjusted gross income of only $50,000.
Other Critical Planning Tools
- Health Savings Accounts (HSAs): If you’ve built up a balance in an HSA, you can use these tax-free dollars to pay for COBRA premiums or other qualified medical expenses, even after you enroll in Medicare. The money grows tax-free and has no RMDs.
- Long-Term Care: Medicare does not cover long-term care like nursing home stays. With nearly 70% of people turning 65 needing some form of long-term care, it’s a financial risk you can’t ignore. Consider hybrid life insurance policies with long-term care riders as a solution.
- Veterans: Retiring service members have additional options, including TRICARE Prime, TRICARE Select, and TRICARE Retired Reserve.
Your Early Retirement Strategy
To help avoid the struggle of the healthcare gap, plan ahead. Whether you use COBRA for a few months or a marketplace plan for several years, your decisions should be part of an overall retirement strategy from the beginning.
Working with a financial advisor who understands the interplay between your retirement income and healthcare costs can help you structure your income to protect both your health and your wealth. You’ve spent your career taking care of others; you deserve to retire on your terms.
Ready to see how Oak Capital Advisors can help? Schedule a meeting.
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