Cobra or Marketplace Insurance

Health insurance is often a huge concern for Retirees, especially for those that are retiring under the age of 65 before they can get on to Medicare. You essentially have two different options. You can either go on COBRA insurance or you can go onto marketplace insurance. Now let’s go and cover what the differences are between those different types of insurances and which one might be best for you. So to start, COBRA, what is it? Well it’s a continuation of your employer coverage. And typically you can continue this for up to 18 months after you retire. And then if your spouse drops the coverage because they go on to Medicare, you can actually continue it for up 36 months there. The benefits of this COBRA coverage is you’re essentially continuing the same coverage that you’ve had your working years. So you know what the deductible is. You know what the max out of pocket is and all those different benefits. The big draw back though is COBRA insurance does typically cost a lot more as far as the premiums go. I’ve seen as high as over $1000 a month for a married couple. So that is something you certainly want to make sure that you’re checking with your HR department on to figure out okay, what is this actually going to cost me when I retire? So that’s one option, right, COBRA insurance. The other option would be marketplace insurance. This is essentially our government’s answer to health care coverage under the age of 65. They created a marketplace. You can shop around with different insurance providers and find different plans that might fit your needs. And the premiums, they’re all based on your income. So if you’re retiring and maybe it’s showing a lower income, well guess what? The premiums are going to be a little bit lower because you’re going to qualify for a decent subsidy to help offset the cost of that health insurance. Now with marketplace insurance because you’re paying typically a lower monthly premium, the deductibles and the max out of pocket are going to be a little bit higher than you’re probably used to. Now these plans are broken down into three different tiers. You can have a bronze plan, a silver plan or a gold plan. The bronze plan, lower premium, but higher deductible, higher out of pocket. The silver plan is more middle of the road and then the gold plan. Obviously, that one is going to cost you the most, but it’s going to have the most comprehensive coverage for you. So there’s the two different options. You can either go with COBRA or marketplace insurance. But which one is best, right? Which one should you go with when you retire? Obviously, there’s a lot of different variables that are associated with that. But let’s just go through a quick scenario here and talk about let’s say that hey, you’re thinking about retiring midway through the year. Maybe you’re not the most healthiest person that’s out there and you’ve already maxed out your employer health insurance deductible. Well in that case you might want to think about continuing with COBRA insurance. Why? Well because that continues on your employer coverage. You’ve already maxed out that deductible. You can carry that out through the end of the year. If you were to switch and go to marketplace insurance, guess what? You’d be starting a whole new insurance plan. A whole new deductible. A whole new max out of pocket and if you’re telling me Nick, hey I’m not the healthiest person that’s out there and you’re going to use this health insurance frequently, it’s probably in your best interest to just continue on COBRA for as long as you can. But then on the flip side, if you said you know what Nick? I’m pretty healthy. I very rarely use my health insurance. I don’t think I want to pay close to $1K a month for COBRA insurance. Well then maybe in that case marketplace might be the best route to go. Oftentimes, you can find a zero premium marketplace plan if you are showing a lower income. So there’s just a high level overview on okay, the different options that you have when you retire for health insurance. Here at Centennial Wealth Advisory we have a whole team behind the scenes. That’s all they do. They specialize in health insurance. So we can walk right beside you and help go over all of these different variables, crunch the numbers and determine which option might be best for you for health insurance when you retire. So please give us a call. Schedule a free, no obligation consultation. The number is right no the screen. And you can also find out a lot more information online by going to our YouTube channel. Thanks so much.