One of the biggest challenges early retirees face is finding affordable health insurance until they qualify for Medicare at age 65. The new health law should make it a little easier. Starting in January 2014, insurers may no longer reject you for coverage or charge higher rates because of your health. The law also sets limits on how much insurers may charge older buyers.
If you're eligible, you may still opt for retiree health coverage from a former employer or coverage through a spouse. And most early retirees will have the option to keep their coverage under COBRA for up to 18 months after they leave their job. But come January, you'll have another option: to buy insurance through your state's exchange. Plans on the exchanges won't necessarily be less expensive than today's individual policies (especially if you're healthy). But if you meet certain income thresholds, you may qualify for tax credits to help cover the premiums. Estimate what your income will be after you retire. You may get a subsidy if your income is less than 400 percent of the federal poverty level, which works out to about $46,000 for an individual. If, say, your adjusted gross income is $28,725 and you pay $5,000 per year for premiums, you could get a credit worth about $2,700, depending on your age and coverage costs in your area, according to Families USA.
http://www.healthcare.gov) will help you determine whether you qualify for a subsidy. (The calculators may not be available until open enrollment begins on October 1; until then, use the Kaiser Family Foundation's calculator at http://healthreform.kff.org.) Caveats: To get the tax credit, you must buy coverage through your state's exchange. And if you have an offer of insurance from your employer, such as retiree health coverage, you generally won't qualify for a subsidy.
Policies on the exchanges must fall into one of four categories based on coverage levels: bronze, silver, gold or platinum. The platinum policies will generally cost the most and have the highest level of coverage. Bronze and silver plans may have high deductibles and qualify for health savings accounts, which let you save tax-free for medical expenses. Look at the policies' premiums, out-of-pocket costs, coverage, and the network of doctors and providers (especially if you're a snowbird). Some insurers plan to offer more than one option within the same color level but to charge less for a version with a more restrictive network.
(Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine and the author of Ask Kim for Money Smart Solutions (Kaplan, $18.95). Send your questions and comments to email@example.com. And for more on this and similar money topics, visit http://www.Kiplinger.com.)