Health Insurance Choices
Hi Terry, I recently retired early at 55. My company offers a lump sum healthcare retiree program. I received $39000 in account that I can draw reimbursements to be used to pay monthly fees if I use my current employer’s plan or one of the exchanges. The cost that mirrors my current Health, Dental and Vision coverage is $1200 per month ($14544 /yr). I received notice of the option to choose COBRA for 18 months and the cost is only $560 ($6480/yr) but I would have to pay from my pocket and would be able to convert back to my former employer’s healthcare and utilize the $39K after COBRA runs out in 2020 until it is depleted. I believe using COBRA first is best as that will extend my coverage at the lowest cost for a longer period of time as I have a 10 year gap until Medicare kicks in. While I would have out of pocket, I defer paying the higher amount and have more coverage at a lower amount overall. Does this seem like the best option to you?
Terry Says
I think you have figured it out exactly right. COBRA should be the same as your current insurance, and you currently have the exposure to uncovered costs. Just thinking on an actuarial basis, your larger costs should come later on. In fact, this is such a generous offer that I’m a bit skeptical that you could really return to your old plan after COBRA runs out! Would that cover any pre-existing conditions? Read the fine print carefully.
